Tuesday, February 15, 2011

Indian Giver


Talk amongst yourselves . . .


  1. I suppose it is entirely fair.

    Of course, for the sake of fundamental civil and human rights, Israel would have to give the people of the Sinai the franchise.

    After all, they are the only democracy etc. etc.

    Somehow, I don't think Israel wants another 500,000 Arab citizens.

  2. I suspect that the chances that the new bosses in Egypt will resemble the old bosses. And the new bosses will not have any more impetus to tear up the Camp David Accords than the Mubarakites did - there's all those lovely Yankee dollars. after all...

  3. Israel got the Sinai by military conquest . . . and gave it up in a diplomatic agreement which was very beneficial to Israel . . . but no agreement lasts forever . . . so no, military conquests aren't for keeps . . . as if it weren't obvious.

  4. Seydlitz,

    So does that mean we're giving back the American Southwest to the Mexicans; or how about going whole hog, and go straight to the Indians?

    Your words befuddle me. Why one rule for us, another for them. We're both democracies, right??? I mean, I know we give Mexicans leaf- blowing and dry-walling jobs, but that doesn't make them fully enfranchised.


  5. jim: Israel exists because of force majeure. All the buckwa about Balfour Agreements and international recognition wouldn't have made a lick of difference if the Arab nations had had their shit together in 1948 or 1967 and thrown the Zionists into the sea.

    Likewise, Israel had the option of keeping their '67 conquests. In the case of the Golan and the West Bank, they have, and Syria and Jordan can suck it. With Egypt, as seydlitz points out, they exchanged a fairly worthless piece of desert in return for a pretty good deal, a deal that had worked in the favor for over thirty years. I'd call that a pretty fair exchange.

    Now there is some question about who or what will run Egyptian foreign policy, and part of that may involve increased tension between Egypt and Israel. This tension, if it occurs, will be a new aspect of Egyptian-Israeli relations, unrelated to the Camp David Accords, and so unrelated to any sort of earlier diplomatic agreement between the two nations.

    Would you argue that our assistance from France should have ruled out the Quasi-War of 1789? That the Napoleonic Wars should rule out cooperation between France and Britain? That because we invaded Canada that we shouldn't allow U.S. teams to join the NHL?


  6. Chief,
    I'm not Brooklyn Red Leg.
    I try to keep things simple so that even i can grasp the concepts involved. What i will say is that we stole/ raped a continent , and then criticize the Isrealis.
    Have you ever considered that we don't give a fuck for the Jews and ALL our policies favor the Egyptians and Saudis?
    Oil and transporting it thru the Suez trump any love of Israel. The Egyptians played us like fools v the Rusns, and will flip us again-soon.
    The criticism i read on milpub to US policy being controlled by the Jews is strange,WHEN IN FACT IT'S CONTROLLED BY THE HOUSE OF SAUD.
    Whats simpler than that?

  7. Jim:

    It's not always black and white with regards to Israel/Gulf Arabs; both favor Iraq and Iran, and even Yemen (mil/terr wise) to be neutralized as threats (oil competitor, military competitor). Cui Bono....according to the subject at hand. As for the Palestinian issue vis-a-vis Ayrab leadership; It's all lip service, as you know...all show, no go.

    As to the validity of my screeds; I report, you decide.

  8. Just remember folks, our Omniscient friend Paul Krugman says that the rebellion in Egypt had NOTHING to do with economic problems.


    Economic Turmoil Has Preceded Revolutions, Though Not Egypt’s

    Tuesday 15 February 2011

    by: Paul Krugman, Krugman & Co. | Op-Ed

    Maybe it’s because I spent time working for the United Nations Development Program in the Philippines in the ‘90s — I was a bit surprised that few people have mentioned the parallel between the Egyptian uprising and the People Power Revolution in Manila, which took place in 1986.

  9. jim:

    So all those Security Council vetoes were at the behest of the Saudi King?

    Explain please.

  10. Life is not simple, nor is the foreign relations of one country to another.
    Every country plays the game "of course I'm your friend!" which on the surface, indicates a symbol of stability, but below...regardless of the nefarious plots of individual countries, everyone eyes even their "friends" with suspicion.

    Israel will do what is best for Israel, and the US can kiss their ass if our goals don't line up with theirs.
    And though Saudi Arabia may boo-fucking-hoo Israel publicly, they will secretly feed Israel intel just to keep the nutjob, and may I add, racist Iranians off-guard.
    And even though Syria expounds their contempt of all things Israeli, at least with Israel they know who their enemy is...which is why they will play both Israel and Iran against each other...because Iran still rubs itself raw when it comes to Syria's secular government.

    You see, the world isn't so black and white as we often think it is, or to be perfectly honest about it...as much as our political parties like to sell us a simple world view, the wikileaks reveals a US government fully aware of the waltz that we dance too with the middle east.

    so...this brings us to our little, smart-mouth, punk ass brother in the Middle East, Israel.

    Israel must know that we, their older brother, can only do so much before we begin to slit our own economic throat in regards to how much we can side with them.
    And granted, as it looks increasingly likely that Saudi Arabia has peaked their oil production in 2009, there are other Arab nations who still have the oil turned on, and with some to spare.
    So I bring it up...peak oil...a condition that all nations are going to have to wrestle with...and one that will very likely change the face diplomacy and economics as the years trudge on.

    btw...Egypt's Military has a very good reason to keep the peace with Israel...note, I said Egypts Military, not the government, though one could argue it is one and the same...the Military runs a hefty chunk of the Egyptian economy and messing with that costs them money, hence the reason why they weren't so willing to bop heads...why? because it's bad for business to bop the heads of your customers.

    And so...I think their will be a status quo in the Sinai...namely because the Egyptian military isn't in the business of losing business...and no matter who gets into office...the only thing that will blow Israel's way is, at most, a hot wind...other than that...I think the bigger threat would come from Syria...who really digs themselves access to water...which Israel seems to have.

  11. sheer-

    The Egyptian military is "the government".


    "What i will say is that we stole/ raped a continent , and then criticize the Isrealis."

    The continent that we "stole/raped" didn't "belong" to anyone, at least not it the way we define it. From what you are saying no government in the Western hemisphere has any legitimacy at all. But why stop there?

    What of the Russians, did they not do the same in central Asia and Siberia? The Turks in Anatolia? The Chinese in Tibet and elsewhere? Not to mention the Arab conquests, what the hell are "they" doing in Egypt anyway, doesn't that belong rightfully to the Copts?

  12. jim: When you look at the strange games the U.S. has played in the Middle East, a hell of a lot of them come back to the bind we put ourselves in when we recognized Israel back in '48. I hold no brief for or against Israel, other than liking the Israelis I've met as people, but if we were really in bed with the Saudis we would have had no problem cutting off aid and arms shipments and letting the Arab armies roll over the Israelis back in the Sixties and Seventies.

    BRL: I think because there's no real point; the PI was and is a very different place, and the political situation post-Marcos is very different than post-Mubarak Egypt, if for no other reason than the lack of an Egyptian Cory Aquino.

    And Krugman's comments were not off the mark. Economic conditions in Egypt for the average Egyptian are not significantly worse than those in Jordan for Joe Jordanian or in Syria for Sammy Syrian. While there's no doubt that the oil price speculation/Russia harvest failure/rising world food prices had and is having an impact on popular unrest, there's no reason it should have broken out in Cairo and not Amman or Damascus; it was the politics that drove this one more than the economics.

    Sheerah; nice summation.

  13. jim-

    "The criticism i read on milpub to US policy being controlled by the Jews is strange,WHEN IN FACT IT'S CONTROLLED BY THE HOUSE OF SAUD."

    I think the argument is that Israel exercises significant influence over US foreign policy, something that folks are loath to admit. I don't equate Israel, or rather Likud, with the "Jews". In fact my experience has been that the most tireless opponents of rightwing Israeli policies are British Jewish people, but that's me.

    As to Saudi, well they hardly control things, although they enjoy certain benefits, which they pay for . . .

    What we see happening now, imo, is the collapse of the US hegemonic system that we were able to establish/impose at the end of the Cold War and especially after the end of the First Gulf War. No hegemon is able to stay on top for ever, but that should be obvious from any unbiased reading of history.

  14. "The Egyptian military is "the government"."

    And even that statement carries qualifications...as Egypt's military may have a larger say in the Government, the fact is that there is a tension, a duality, of the Egyptian government in regards to the military.
    Egypt's military enjoys a certain level of autonomy which on one is rather disconcerting, but on the other leaves a certain amount of discretion as to how nutty the government is allowed room to roam.
    For example, lets say, just for kicks and giggles, the Muslim brotherhood does take over government, stacks the government with their ideologues and then decides to put into action their belated past diatribes about Israel into action...how far do you think the Egyptian military is going to be game to that kind of nonsense?
    Sure, the Muslim brotherhood will try to "influence" the military, but over all, the nature of the two lies in the fact that the Muslim brotherhood may hold the reins of public attention...the military holds the cards to tell them to stfu.
    I think, in all seriousness, that the Egyptian government and the Egyptian military enjoy a small, beneficial arrangement...the government keeps things running smoothly, and the military will keep their bread and butter sales going to keep the average Joe Muhammad.

    So...I don't think saying the Egyptian military is the government is a precise and accurate statement...it may seem that way based on who has the ability to "remove" whom, but given the motivations of the military...I'd say it's a mutual arrangement.

  15. sheer-

    I'm not saying that the military will remain the government, but for all intents and purposes, right now, they are.

    The Muslim Brotherhood seems to have missed a whole series of recent opportunities, so it is difficult to see them coming out on top at this point.

    Following what I've read the best outcome would be for the Egyptian military to follow the Turkish example and be the guarantor of the future civil state . . .

    What we are observing can be seen as by definition Weber's concept of "extraordinary politics": the forming of a new political community and following that the supporting state . . . should all go well . . .

  16. And Krugman's comments were not off the mark.

    Ah, but the economic situation is what brought it to the boiling point. It just took one spark and the whole thing flashed.

    That will be how it will happen here in the US if we don't do something soon about the inflationary crap we pass around as 'legal tender' (The Federal Reserve Note). We already have ramped up tension from living in a surveillance-state where cops get away with murdering someone in a failed drug raid where they went into the wrong house.

    I'm sure people are going to say I'm being hyperbolic. People claimed that the collapse and bailout of Greece was isolated, when its systemic. The system has been on life-support for a long time now. Its just the plug has finally been pulled and the body is in its final throes.

  17. "I'm sure people are going to say I'm being hyperbolic"

    Well, if you're being hyperbolic, then I'm overwhelmed with the vapors.
    No, you are right...the system is broke, and Obama, like his predecessor, hasn't allowed an opportunity to go by without waving good-bye to it first.
    And the problem isn't with the fed, it's with Wallstreet...those assclowns are the ones who went batshit crazy for money...and once they found a new source to rape...well, throw the victim on the ground and everyone gets a turn.
    btw, that new victim was/is the American Taxpayer.
    So...who does Wall Street support politically?
    They really don't give a rats ass who is in office...as long as that individual enables their behavior Wall Street is an equal opportunity opportunist.

  18. AEL,
    Pls be specific as to what UN resolutions that you are referring to. Your cmt request is too global for my simple mind.

  19. jim:

    The last 7 middle east Security Council vetoes were:

    On the killing by Israeli forces of several UN employees and the destruction of the World Food Programme (WFP) warehouse

    Demand that Israel halt threats to expel Palestinian leader Yasser Arafat

    Seeks to bar Israel from extending security fence

    Condemns Israel for killing Ahmed Yassin

    Calls For Israel To Halt Gaza Operation

    Calls For Israel To Halt Gaza Operation

    Calls For Israel To Halt Gaza Operation

    Please explain how this was done at the behest of the House of Saud.

  20. And the problem isn't with the fed, it's with Wallstreet...

    Who do you think gave the money to Wallstreet? When the Fed creates money, whose coffers do you think it fills first? Their buddies on Wallstreet.

    Joseph Salerno "Unmasking the Federal Reserve"

    Wallstreet is but a symptom of the problem. You have to treat the cause, which is The Federal Reserve.

  21. Redleg-

    Once can try to blame the govt, but a proper analysis of the real estate/mortgage crisis shows that there was trillions in wealth looking for a reasonably "safe" investment opportunity, and historically, mortgages were "safe" In fact, there was more wealth looking to be invested, much, much more, than there were qualified borrowers. Thus, money was made available to millions of unqualified borrowers through "creative" lending practices designed by private institutions. And the increased risk involved was disguised by that same private sector.

    It's called, "marketing", the creation of a demand for something, and in this case it was demand for debt. This was in no the "Fed" looking to print money.

    Now, as a resident of Greece, I can assure you that the troubles here are not similar to the US. We have a serious public debt problem, but private debt is not an issue at all. The US is faced over reliance on debt in both the public and private sector, and it is the people who wanted such a situation - low taxes and lots of credit with a greedy appetite for goods and services. Now that the "credit limit" has been reached, and/or the "minimum monthly payment" has gotten too high, people are moaning and groaning.

    We may have suffered a convergence of the problems of public and private debt mistakes, but the US public debt errors did not cause the private debt crisis.

  22. The Federal Reserve is a private central bank. It is NOT a portion of the United States government. This is a myth that most people operate under.

  23. BRL-

    The Federal Reserve Bank, unless something has changed dramatically since this morning, is a unique, joint public-private venture. It was structured in that compromise way so that it would not be totally beholden to either sector.

  24. The other thing about the Fed is that it is neither "inflationary" nor "deflationary". Monetary policy can be used to help push the economy either way.

    At the moment if you exclude the petroleum costs (driven up at the moment largely by speculations) and food costs (driven by a combination of poor harvests and fuel costs) the net inflation index is negative or close to it - that is, costs are actually declining as retailers try and buy customers with lowered prices. This has largely failed until just recently, since the problem is that the customers are either out of work, worried about being out of work, or working but with little income to spare, given that wages haven't risen significantly for those below the top quintile.

    There are reasons to be concerned about the U.S. economy's long-term health, but I don't think the Fed is one of them...

  25. Aviator47

    The Federal Reserve Bank, unless something has changed dramatically since this morning, is a unique, joint public-private venture. It was structured in that compromise way so that it would not be totally beholden to either sector.

    The Federal Reserve is a PRIVATE Bank. This is a matter of public record. Buying into their propaganda is an act of cognitive dissonance. For example:

    "Although they are set up like private corporations and member banks hold their stock, the Federal Reserve Banks owe their existence to an act of Congress and have a mandate to serve the public. Therefore, they are not really "private" companies, but rather are "owned" by the citizens of the United States."

    Oh really. If I'm a 1/300 millionth owner of The Federal Reserve, why the F!CK is it I can be imprisoned (or killed) for simply using and/or starting alternate currency, say one backed by gold?


    The other thing about the Fed is that it is neither "inflationary" nor "deflationary". Monetary policy can be used to help push the economy either way.

    To say the Fed isn't inflationary is to miss the fact that our US FRN is worth aprox. $0.02 in purchasing power compared to the US Dollar of 1913. Increasing the money supply increases inflation. This is basic economics, folks.

    There are reasons to be concerned about the U.S. economy's long-term health, but I don't think the Fed is one of them...

    Sorry, our monetary policy is the reason we're in this mess.

  26. Anyway, I actually came to post something I consider to be good news:

    Barbara Lee, Ron Paul float bill to end Afghanistan war

    By Josh Richman
    Oakland Tribune
    © Copyright 2011, Bay Area News Group
    Posted: 02/17/2011 02:28:39 PM PST
    Updated: 02/17/2011 03:59:37 PM PST

    Rep. Barbara Lee joined with two House Republicans to introduce a bill Thursday that they say would end the war in Afghanistan.

    The bill that Lee, D-Oakland, co-authored with Rep. Ron Paul, R-Texas, and Rep. Walter Jones, R-N.C., would require that any money appropriated for the war in Afghanistan "shall be obligated and expended only for purposes of providing for the safe and orderly withdrawal from Afghanistan of all members of the Armed Forces and Department of Defense contractor personnel."

    "It sends, really, a strong message that we've come together today to speak with one voice on this issue," Lee said on a teleconference with reporters.

    Lee noted her lone vote against authorizing the use of force after the Sept. 11, 2001, terrorist attacks, and said her concern that it was a blank check for war hasn't abated since. Had Americans known we'd still be in Afghanistan almost a decade later, she said, perhaps there would've been a more robust debate. "It's costing us $100 billion a year and countless American lives."

    Lee said the bill already has about 46 co-sponsors from both sides of the aisle.


    This can't happen soon enough. We are hemorrhaging blood, treasure and what little good will is left at an appalling rate. We are allowing the CIA to kill indiscriminately anyone that gets in their path (which they later will claim was a 'militant') via Predator Drones. We are protecting the poppy fields that are in-turn used to make heroin that is illegally sold on the streets of the US. I don't want any more of my tax monies going to fund murder, period.

  27. BRL: Yes, but the wages of 1913 were worth $0.02 relative to today's, too.

    Price inflation and cost inflation are two different things, and the first has less to do with the impact of the Fed as much as it does the much larger impact of the economy around it.

    Price inflation is an artifact. There's no reason that we couldn't just "reset" the prices and wages back to the prices of 1913, we've just chosen to let the prices and wages drift upwards. So if a typical steelworker's wage in 1913 waqe was $40 and the cost of a $0.02 loaf of bread was 0.0005% of that and the cost of a $2.50 loaf of bread is still 0.005% of a 2011 steelworker's wage then the only difference is the sliding scale. In that you're right - the increased money supply changes the absolute price of everything. But relative to the steelworker's life it matters not at all. He spends more but gets paid more - A*50 = B*50.

    What IS critical is the level of COST inflation - the rise of prices relative to the rise of wages/income. And that's where monetary policy does come in; the Fed can play with this to make small adjustments in the economy, either to heat it up (as it did over the course of the real estate bubble) or to cool it down. It would if the prices are at 2011's level or at 1913's. That's where the monetary policy of the Fed matters, not the overall price levels.

    Anyway, to address the more nonsensical of your arguments, you can't go to prison for using a "New Jersey dollar". You just won't get anyone to accept it.

    We're getting way the hell off the original subject arguing about the Fed, and it's silly. Regardless of what you call it, any polity that wants to a) rise above barter and b) call itself any sort of unified polity will have a common currency, and that currency will be backed by something LIKE a Fed; a central point of issue. Arguing that our "monetary policy" is the root of our economic problems is like arguing that the sun is the reason we have bad weather.

  28. Al-

    That was about the best analysis I've read on the net in regards to the economic crisis; I think you pretty much covered the bases, but also implied enough of our own folly and lack of understanding even now into it, dark clouds ahead, I'm afraid sir.

  29. Seydlitz-

    Thanks for the compliment. One cannot truly lay the major portion of the blame on anything other than greed on the part of wealth holders.

    Actually, I would have to add that the initial "explosion" in writing high risk loans was by mortgage companies, not banks. However, when the banks saw a growing "market" for mortgages, of which they were getting a declining share, then they too began to make riskier and riskier loans to hold on to "market share". As every marketing professor teaches, "you never want to be holding a declining share of an increasing market." Of course, those professors (self included) were never talking about a market based upon fraud.

    Speaking of "fraud", when I told my Greek attorney about a 69 year old neighbor in the US refinancing his house for 35 years to extract the equity, he was shocked. To him, taking out a mortgage that one could not expect to live to pay off would be fraud. In Greece, one cannot mortgage beyond age 70, or 75 if it's under certain conditions and less than 50% of the real value.

  30. Al,
    Per the mortgage issue and Greece.
    Their mortgage policy sure didn't help much- now did it?
    Let them criticize us- how are they any better?

  31. "Sorry, our monetary policy is the reason we're in this mess."

    So, in Brooklyn Red Leg's alternate universe, the one where libertarian thought reigns supreme and where wars and tax cuts are always positive, it's all about monetary policy. Fiscal policy has nothing to do with our problems in Brooklyn Red Leg's alternate universe. The George Bush tax cuts, the George Bush wars, the George Bush expansion of the Medicare drug benefit and the George Bush Administration's laissez faire approach to regulating markets had nothing to do with our current economic woes.

    Yes, the fed is evil, and yes, Alan Greenspan is indeed the most evil of the gnomes, and yes, he deserves to be in Dante's seventh circle. But, c'mon, Mr. Republican Brooklyn Red Leg, isn't there some room for blame with that Republican Administration that was in office from 2001 to 2009?

  32. jim: Per the mortgage issue and Greece.
    Their mortgage policy sure didn't help much- now did it?
    Let them criticize us- how are they any better?

    jim - you are trying to compare apples and laundry baskets here.

    1. Greece was brought to the brink solely by excess government debt. Private debt is modest and not out of control, as it was in the US.

    2. Greece, unlike the US, cannot "print money", devalue it's currency and worm its way out of debt.

    3. My attorney wasn't criticizing, but making what I saw as a legitimate evaluation. Since my neighbor does not intend to pay off his mortgage in his life time, but probably let the house be foreclosed at his death, that is a somewhat fraudulent contractual agreement.

  33. Back in my freshman undergraduate days (1960), the "Socialist Songbook" had just been released. I offer the following as an insight into what collapsed the US economy. It is as true today as it was back then.


    (Tune: Battle Hymn of the Republic)

    We've built this mighty nation with
    our enterprising cash,
    We've all become accustomed to a
    periodic crash,
    So you mustn't be alarmed if things
    seem to go to smash,
    For Profits must prevail.

    Private enterprise forever,
    Private enterprise forever,
    Private enterprise forever,
    For Profits must prevail.

    Communistic, socialistic, anarchistic
    Revolution, insurrection, strikes,
    et cetera,
    We'll all join together in a long
    and loud "Bushwa",
    For profits must prevail.


    We've organized the N.A.M., the
    Junior C. of C.,
    Our lobbyists are hard at work in
    Washington, D.C.,
    To preserve Congressional confidence
    in a free economy,
    For profits must prevail.


    Our workers strike and organize and
    call us dirty names,
    If their wives and kids are starving,
    we'll admit it's a shame.
    We wish that they would understand
    that we are not to blame,
    For Profits must prevail.

  34. Al-

    Song's kinda catchy . . .

    "a market based upon fraud"

    Not only fraud, but scams making up a good portion of the GDP, politically connected powerful corporations paying essentially no income tax, while overseeing at the same time the writing of government legislation (non-)regulating said corporate activity.

    What a mess!

    On a related note, I've been thinking about Ludwig von Mises (BRL's and the Libertarians' hero). Mises of course is one of the prime movers of the "young" Austrian school of economics, who wrote some classic stuff on monetary theory, hated "statism", and accurately predicted that basic problem of socialist economies (fixing prices). In the final point Max Weber made essentially the same argument . .

    The problem though is that Mises is all about "individual freedom" and he sees the state as operating counter to that, thus there is a political element to Mises's thought - reigning in the state/limiting state involvement in the market - though he is an economic rather than a political theorist.

    But what happens when powerful economic actors utilize their "freedom" to distort not only the state, but the market to their own advantage/profit? "War" or the semblance of war bringing quite distinct economic advantages to the detriment of a "peace" economy. Mises's followers would say the problem's the state, but it's not, it's rather the hollowing out of the state, or even the end of democratic politics . . .


  35. AEL,
    I'm not gonna piss up a rope on the UN resolutions that you list.
    I cannot prove that they were to SA's benefit, but assuredly they are detrimental to Israel.
    It's convenient to make our key ally a whipping boy.
    Why in the hell would any country want to be an ally of the US.?
    Hint- people with mortgages in the US who happen to be over 70 yo were not the cause of our meltdown.

  36. jim-

    "Why in the hell would any country want to be an ally of the US.?"

    Today, there's not much in it, ask Germany, but in the past . . . ?

    I suppose much of it had to do with there being in effect two "Americas". Why did so many people leave their home countries and settle in the US? Even today you ask any European what they think of when then hear the word "America" and you'll probably get a positive response. "The Land of Unlimited Opportunities" is what it was and still is for many non-Americans.

    Now if you ask them what they think of US government policy, you'll get a very different answer . . . I suppose much of our image problem in the world is associated with how these two views have narrowed into a single negative impression.

    Obama of course promised to turn this all around, but that was as we can see now, all just moonshine.

  37. seydlitz,
    I know why my grand parents came here in 1917.
    It was to get away from war-well that worked for them, but left my Dad and myself in a less than peaceful place.
    Today people come here to buy cheap Chinese shit.
    What else is there to America today?

  38. "But what happens when powerful economic actors utilize their "freedom" to distort not only the state, but the market to their own advantage/profit?" Why then you have a "corporatist state" and a rigged market - very like what we're seeing in the West right now. At least the Chinese don't pretend to be "free" - their corporations ARE the state and vice versa.

    What's frustrating about this, seydlitz, is that it isn't rocket science and it was entirely predictable. Adam Smith predicted back in 1776 that "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." At the time he just shrugged and advised we get over it, but the truth is that we have 1929 and the Panics of the 19th Century as a guide and we KNOW how to regulate the market to reduce these booms and crashes. As Publius points out, what has happened over the past 20 years or so is an excercise not so much in collective amnesia as collective hypnosis; Mr. Greenspan and his cronies in the GOP have been beavering away trying to kid us into believing that the Market is Magic and that no such thing as human greed, stupidity, or evil will combine to produce Smith's venal result. The process has gone to far that the so-called Democrats now cannot push back with old-fashioned FDRian class warfare.

    Nope. I which I had Andy's belief that the resultant "crisis" would produce a sane and sensible response. But as we've been seeing lately in the Arab world (and in our own, only in less volitile fashion) the usual human response to crises isn't sanity and sense, but to double-down on Teh Crazy. I'm fully confident that we can do as well or better than the Cairo mob.

  39. Jim-

    You miss the point. Mortgages that are not intended to be paid off are a symptom, just one of many symptoms of a dysfunctional system. Why would a lending institution make such a loan? Not for the general good of the market place, but to make a profit without regard to the life expectancy of the borrower. His life expectancy is a worry for tomorrow, not today. The industry goal was to move paper and lend money, not to exercise stewardship over the money. At every level, high risk was being shuffled off to someone else, until the house of cards fell down. As I said, making 35 and 40 year loans to people who would never live that long was just one symptom.

  40. jim-

    "What else is there to America today?"

    I suppose the next ten years will tell us that, either we some how/some way pull it together, or we don't and go either the USSR or the Yugoslav route . . .

  41. FDChief-

    "What's frustrating about this, seydlitz, is that it isn't rocket science and it was entirely predictable."

    Amen brother! And the more I think about the basic political questions, the more I think far too many on the "right" don't even see this in political terms, but rather in quasi-religious ones . . .

  42. seydlitz: but rather in quasi-religious ones . . .

    "Faith" is a great crutch when intellect is lacking. All too much of what should be political discourse degenerates into something akin to the mantra "The Bible says it, I believe it, and that settles it", when zealots speak in policy terms. Reduce it down to simple slogans like "Socialism bad, Free enterprise good", with no reality involved. It's amazing that a segment of the population that holds the belief that we come into this world totally depraved would think that markets would be inherently self regulating against greed and corruption. I guess they think that free markets are a form of divinity.

  43. jim:
    You made the rather sweeping statement that US policy was controlled by the House of Saud.
    I pointed out that the actual facts do not support such a statement.

    What facts can you muster to demonstrate that US Policy is noticeably influenced by the House of Saud?

  44. ael,
    They -SA-support terrorism and we never say squat.
    That's my proof.
    I totally miss your point on mortgages for old folks.
    -do they not buy insurance for payoff after death?
    -do their estates not cover the final settlement?
    - first time buyers are more of a risk. In fact GWB pushing the ownership society was a precipitating event in this mess.
    - i trust a 70 yo with a 30 year mortgage to be a responsible citizen. Do they have an estate at this point? Call me crazy.

  45. jim- we are talking past each other. If the mortgage contract required life insurance (it didn't), then the lender's interest would be covered. Were there heirs to inherit the debt (there weren't), then they could possibly be considered agents in fact to complete the full term of the mortgage contract. Nor was any attempt made to determine the health or life expectancy of the borrower (not in best of health).

    However, the borrower's plan was, and remains, to extract the equity and default upon death, and nothing in the agreement provided for any thing else. The idea was provided by the mortgage broker. That house is destined to become the lender's property through default within the next 10 years or so, about half way through the term of the mortgage. That's a given, and the lender has no control of the condition the property will be in, no less any other aspect of the value. But the broker had paper to move, and he was doing so in our area with this very specific sales pitch.

  46. P.S. to jim-

    The point in fact is that lenders and or their independent agents (mortgage brokers) surrendered their role as insurers of sound loan conditions. Since they were lending what was ultimately other people's money, why would they care if the borrower was unable to pay or was not intending to fulfill the complete mortgage? The originating lender never expected to hold the note long enough for any "fraud" or other hankey-pankey on the part of the borrower to effect the originator. In fact, lenders created instruments that would be specifically blind to borrower ability or intent. They simply wanted to make the profits involved with writing the loans. Once the loans were written, they make plans, schemes and questionable instruments to pass the loan and liability off to others. Hell, there was a recent article about a couple who's mortgage was sold prior to the first payment coming due, and thus they had trouble making the first payment, as the new holder of the note needed 90 days to get payment instructions to them.

  47. For some serious info on the fraud and conflict of interest leading to fraud in the mortgage industry:



    It's not Glen Beck or Rush Limbaugh level of entertainment, but occasionally, scholarly work is worth the look.

    The current economic crisis in the US was not only predictable, but avoidable, had there been a government in place.

  48. Al,
    I understand your points.
    I will be posting a pic on raw shortly, sent to me from a reader in Thailand.
    It's BHO bowing deeply while kissing the Saudi Kings hand. What a crock.!