Not enough action on Freeman report

An analyst by the name of Kevin Freeman produced a report in 2009 showing how the 2008 economic collapse could have been a result of economic terrorism.

Ron Paul and Glenn Beck have been pushing the report as an issue but on the whole it seems to have been stifled.

Here is the Beck segment on it:

And a scan of the Freeman report someone posted online:

There are some holes in the report that need to be dealt with, for instance phase 1 of the attack, driving commodities higher, was known to have been spearheaded primarily by Goldman Sachs.

A connection between Goldman Sachs and the persons responsible for phase 2 has to be shown.

One respect in which the report has not been entirely fair is that short sales are a necessary part of the financial system. Even at the lowest point of the markets in 2008, the stock markets were still over valued and by a wide margin.

I also don’t agree that the entitites that were brought down were all healthy entities that would have survived but for economic terrorism. By and large the companies that were cleared out were deadwood, it was only a matter of time for them.

However, the manner of the trading appears to have been conducted with a view to bringing about a collapse of the western financial system. As the financial system came closer to collapse there was an increase in the feeding frenzy rather than a backing off. Corporate raiders have a vested interest in not destroying a system that benefits them.

I not that it does not appear that the persons doing the short selling itself broke any laws in doing so.

That said, if some entity tries to take down the financial system and the economy I think that requires follow up and safeguards.

Whoever it is needs to be called out and a public explanation demanded.

I doubt if a foreign power would be involved. China and Russia both have much more to lose than to gain from world economic collapse.

No country with the clout to pull that kind of stunt would have the motive.

Meanwhile, Freeman cannot get further funding to complete his research. Why US officials are obstructing the investigation into possible economic terrorism, I’ll leave to conspiracy theorists.

Globalization, the wave of the past- say, 1848

All the trade barriers taken down by the right wing nutbar politicians were put in place originally to solve problems from 160 years ago or so. The endless boom and bust cycles in the world could only be prevented with government intervention. That has always been and will always be the case.

This is not an issue for binary thinkers and sith lords. It is not necessary to choose between a police state and anarchy. There will be a spot towards the lower end of the government interference continuum with the greatest cost/benefit ratio.

Globalization is a disaster now for the same reason it was a disaster 160 years ago. The blind faith of right wing lunatics that this time it will be different makes this a form of godless religion, a kind of Globalism apostate church enslaving the world.

The next logical thing to do in returning to the state of the world 160 years ago is to start closing public schools so that the children can go work in the factories and coal mines.

Some of our globablization partners already use child labor, so no doubt the western world will eventually need to do that to compete.

It is a race for the bottom. Globalization turns economics on it’s head. The focus shifts from the better corporation winning to the worse corporation winning. If a corporation has costs that are a fraction of those of the competition, it gives a price advantage that is hard to overcome by only having a better product or better service.

The lack of corporate morals and ethics becomes its’ chief competitive advantage.

How low can this go?

Look at the Fukishima reactor situation in Japan. The company involved was allowed to send workers into a nuclear disaster hot spot without proper gear. There were some significant and unnecessary radiation injuries because of this.

Tokyo Electric treats its employees like cannonfodder. There are stories that show there have been other situations where employees were subjected to outrageous safety risks in order to save the corporation some relatively minor expense on safety.

That a nuclear power company would view employees as disposable, even when under a national and international magnifying glass, is shocking. That is the kind of behaviour I would expect in Botswanna, not one of the G7.

At this rate of cultural decay, if there is another nuclear accident in 20 years they’re going to be sending in teenagers in flip flips and T-shirts to clean it up for the then minimum wage.

I see no evidence that the recent experiment with globalization is going any better than the globalization of 160 years ago.

I can see Marxists wanting to rewind to 1848 if they saw that year as a missed opportunity. At that time, globalization was at its’ peak destructive power and the unions looked set to bring on revolution everywhere. The workers had nothing to lose. Their conditions were so awful that getting shot would have been highly preferable to continuing in the same conditions.

Why anybody else would want to rewind to that date, I don’t know.

We can see with the Occupy protests that large scale protests on the left and center are returning.

What was the ultimate resultion of 1848? Conditions improved and something of an implicit arrangement was arrived at over decades whereby the rich could continue to be rich provided that they undertook to improve working conditions and even turn blue collar workers into a form of middle class.

The wiser members of the upper class, such as Ford, realized that the most money was to be made by making factory workers, for instance, wealthy enough to purchase factory made products.

Now, the globalization movement is going the way of all utopian quasi-religious movements.

Any negative feedback, all economic disasters, are explained away as being in part because we have not gone far enough or because wicked people are not with the program.

That type of reasoning, and the reasoning that we all have to do belt tightening now but there will magically be a utopia in the future if we all follow the program, that’s the same way Stalinists and other authoritarians think.

The world blew up under the supervision of Bush, Merkel, Sarkozy (although I don’t blame him), and that baboon Burlesque-oni from Italy.

The Brits wisely stayed out of the Eurozone. Tony Blair’s stupidity in participating in and encouraging the Afghanistan and Iraq imperialist conquests is partly to blame for the world’s present situation, although I can’t say that the socialists own him. His politics in practice were more centre-right than left.

Obama? It didn’t matter who took over after Bush destroyed the country, at least the next 8 years and probably the next 12 or 16 were going to be janitorial/restoration work.

Obama is too cosy with certain right wing interests, especially Goldman Sachs.

There is no magical solution to the economic problems Obama inherited. Really the biggest accomplisment that he has had has been staying out of the way of the Fed and otherwise letting others make key decisions. The Fed people are economists. Obama is a lawyer in his first corporate executive role. I don’t know that having one more cook in the kitchen would have helped in any way.

“I stayed out of the way” isn’t a great campaign slogan but that is another issue.

My point is that the architechs of the economic disasters of the past ten years have all been right wing globalists.

We will hear endless drivel about how it is the pinko, bleeding heart socialists that are responsible and that there have to be more cuts of social programs [always paired with increasing military budgets and subsidies of the richest corporations by a greater amount than the social program cuts].

So who is the pinko socialist in the mix? George Bush? Sarkozy? Burlesque-oni? Merkel?

Fox turning markets into massive pump and dump scheme

Fox hits new lows with misinformation, putting rosy spin on the state of the economy and the Europe fiasco.

The first thing to understand about the markets is that there has not been a “correction” in the english sense of the word since 1987.

The market analysts describe a drop of 10% as a “correction”.

In a way this is Orwellian doublespeak because “correction” suggests that the markets are moving to a more correct level, when in fact they are radically overvalued and were even in the worst of the 2008 crisis.

Stock markets are not the economy. They can impact the economy but are an entirely different animal.

If I buy a million dollars worth of shares and sell them to you for a million and a half dollars, does that make the company traded more profitable? More efficient? Better run? No. The only way in which it affects the traded company at all is if the market capitalization, the total value of all shares, is used as a basis for the company to get credit (and which is, bluntly, a stupid way to assign credit).

In the same way, dump 7 trillion dollars in the Dow and it will probably go up 7,000 points.

But would the companies in it be worth 7 trillion more dollars?

No.

There is more than one way to calculate the value of a company, probably no method that is indisputably the best, but I feel confident in asserting that a company with a stock price that reflects book value plus 300 years of earnings is overvalued.

The picture can become more confused because changes in value are not adjusted for volume.

Low volume trade days can have a big impact on price although they don’t represent any kind of consensus.

There have been a lot of low volume up days in the market this year.

It smacks of manipulation.

It was amazing that the markets were not crashing when it wasn’t clear if the European Union was going to have any solution for Greece.

Notwithstanding the horrific numbers everywhere, the markets are at levels that have priced in more than perfect success with the Greece problem. What they’d priced in is more like Jesus returning with a plan for eternal economic prosperity.

And then when the deal is announced without specifics or a plan for implementation, the stocks go up even further, notwithstanding that the overwhelming consensus is that the proposal has a lot of bugs to work out.

How can the Dow be at boom levels when the economic numbers worldwide are horrific?

I started looking around for the source of rosy optimism, and I think I found it.

Fox’s corporate shills are putting a spin on the situation that would make a politician blush.

That raises stock prices which allows the more savvy, usually richer, investors to get out at higher prices.

It turns the stock markets into gigantic “pump and dump” schemes where the unsophisticated investors who listen to Fox and other shills pump the market up.

That’s just irresponsible.

Quandaries with currency

Conceptually I like the idea of reducing the number of currencies.

Separate currencies create an opportunity for currency traders to make money off others for doing nothing.

They create the opportunity for banks to hose us for 4% in each direction when exchanging money in what is for the bank an entirely risk free transaction.

Because of the necessity of trading currencies to buy things in other places, separate currencies should reduce economic interaction between states by driving up transaction costs right down to the consumer level.

There is also the issue that while currency trades are around 20% of the total trade of currency, they are given 100% weight in determining the market value, even where that leads to valuations that are demonstrably inaccurate.

Over the past 30 years Canada has been robbed of hundreds of billions of dollars, possibly more, because Canadian currency has been artificially lowered against the US dollar.

How do you know it was artificially low?

Keeping it relatively simple, if the currencies were correctly valued, it would not be cheaper because of exchange to go to another country for a product. It might be cheaper for other reasons, but not exchange.

If the American dollar were valued at $1.50 Canadian, if that were a fair valuation then a toaster that cost $60 Canadian in Canada would cost $40 American in the US. You wouldn’t get any benefit from going over the border, you’d just pay for gas.

Having separate currencies leads to unconscionable manipulations whereby wealthy people make enormous amounts of money for acts that contribute nothing to society. If wealthy people do something that moves society along, I’m all for them getting paid to do that. But if the situation is parasitic and we are just hemoraging more cash to the wealthy I’ve got a problem with that.

Having a unified currency creates another set of problems. Economic promiscuity has hazards akin to sexual promiscuity. If a partner is diseased or gets in trouble you may find that the relationship is more entangled and less free, and a lot less fun, than you had thought.

One of the core principles in managing anything is that the group or individual with responsibility for making a decision or solving a problem has to have the authority to solve the problem as well. If not they are set up for failure.

If no nation in the Union has control over monetary policy that is a major handicap in solving economic problems.

I do not think that it is possible for the EU to get out of the present crisis without printing money. The EU will fail if it does not do this.

However, they have in the EU constitution a foolish and improvident provision that the EU cannot print money to pay for debts.

While I can understand why some would have been worried about the potential for abuse in the event of a crisis like the present one, it does not look wise in retrospect to have prohibited the only remedy.

Better to have included terms allowing a member to leave the Union in the event that a major policy initiative, such as printing more currency to fix a debt problem, were not approved.

Europe

The EU should be including insurers of Greek debt in talks. They pay 20 to 30 % up front before default as contractual consideration for extinguishing liability in the event of default and the whole situation becomes far more manageable. But apparently they aren’t at the table.

Forcing the banks to write off and recapitalize without a default, disentitling them from insurance for the loss, is grossly unfair.

Also, it would put a glut of expensive assets on the market and anybody negotiating to buy assets from them will know they have no bargaining position because they have to sell.

In a situation like that they would be lucky to get the required $140 billion from selling $280 billion in assets.

If they are so weak, can they take a hit like that?

And the net effect is that while everybody else is suffering, the rich folks that can afford to buy up assets will get a gift in 12 figures that they have done nothing to earn.

That looks like the real motivation behind the whole business.

It is called recapitalization when it will in fact be a firesale of an enormous amount of assets, decapitalization might be a better word for it.