Why Crony Capitalism Will Be Hard To Uproot: Interview Of David Stockman

David Stockman was elected to Congress at age 29 back in 1976; he was an avid student of Austrian economics and supported a gold-backed money system and a balanced budget. He later joined the Reagan administration as Budget Chief, where he watched in awe as the Reagan administration quickly became the most profligate spenders in the history of the United States.
After leaving the Reagan Cabinet, he worked at the well-known investment house Salomon Brothers, and later co-founded the Blackstone Group alongside legendary hedge-fund manager Steve Schwarzmann.
In his most recent book, The Great Deformation: The Corruption of Capitalism in America, Stockman systematically repudiates and dismantles the myths surrounding the Fed’s supposed past successes at helping the US economy avoid major breakdowns, going all the way back to the crash of ’29. Instead, as he explains, ‘Programs born out of desperation or idealism 75 years ago have ended up as fiscal time bombs like Social Security or as captive fiefdoms of one crony capitalist syndicate or another… Policies undertaken in the name of public good inexorably become captured by special interests and crony capitalists.’
The most important lesson I took from the book and the interview? Remember that there has never been a time of such profound debt saturation, coupled with intense crony capitalism, as today. No one has ever been here to tell how it turns out. We truly are in an unprecedented era…
David, can you explain how the ‘Fed put’ works on the stock markets and bond markets? How exactly does it translate into artificially higher stock prices and lower interest rates?
The Fed injects massive amounts of liquidity into Wall Street through the dealer system – that is, the 21 authorized treasury-bond dealers. The liquidity comes in the form of new credits to their bank accounts supplied by the Fed in return for the governments bonds, notes and bills, and even the GSE (Government-sponsored entity) obligations that it buys from them. The credit that the Fed supplies to the dealers is manufactured out of thin air; therefore it expands total credits and liquidity in the system. The dealers use it to buy other types of securities – stocks, bonds, derivatives positions and so forth.
Historically, the purpose of the Fed’s open-market intervention in this form was to encourage the banking system to extend credit to the business and household sectors, thereby stimulating economic growth, as predicated by the Keynesian model. That was always a one-time parlor trick, however, because with each cycle of easing leverage ratios in the business and household sectors were ratcheted steadily higher. Household debt ratios, for example, went from 80 percent of wage and salary income prior to 1975 to 220 percent by 2007.
The problem today is that we have reached ‘peak debt.’ The household sector has $13.3 trillion of debts1, even after the modest post- crisis deleveraging; the ratio is still sky-high at 180 percent of wage and salary income.

This post was published at David Stockmans Contra Corner on November 24, 2014.

U.S. Senate Tries Public Shaming of New York Fed President Dudley

Last Friday, the Senate Subcommittee on Financial Institutions and Consumer Protection, chaired by Sherrod Brown, effectively put William Dudley, President of the Federal Reserve Bank of New York, in stocks in the village square and engaged in a rather brilliant style of public shaming. With each well-formed question posed by the panel, Dudley’s jaded leadership of a hubristic regulator came into ever sharper focus.
There were a number of elephants in the room during the lengthy session that were only briefly touched upon but deserve greater scrutiny by the press. First, Congress knew that the New York Fed was a failed, crony regulator during the lead up to the financial collapse in 2008, but it granted it an even greater supervisory role under the Dodd-Frank financial reform legislation in 2010. This Congress has also failed to engage in public shaming of President Obama for brazenly ignoring the Dodd-Frank’s statutory mandate that calls for him to appoint, subject to Senate confirmation, a Vice Chairman for Supervision at the Federal Reserve Board of Governors, who could have shaped and monitored a more credible policing role for the New York Fed.
Section 1108 of Dodd-Frank requires: ‘The Vice Chairman for Supervision shall develop policy recommendations for the Board regarding supervision and regulation of depository institution holding companies and other financial firms supervised by the Board, and shall oversee the supervision and regulation of such firms.’ President Obama was required to nominate this individual once the Dodd-Frank Wall Street Reform and Consumer Protection Act became effective; that was July 21, 2010 – more than four years ago. The President has simply ignored this provision of the law – no doubt to the extreme satisfaction of Wall Street.
The final elephant is that as a result of giving a failed regulator enhanced power and failing to appoint a person to a leadership role in supervision, the U. S. Senate has effectively become Wall Street’s cop on the beat, doing the job the New York Fed’s cronyism prevents it from doing.
The last point was buttressed by the fact that simultaneous with this hearing, Senator Carl Levin’s Permanent Subcommittee on Investigations was holding its second day of hearings on how Wall Street, under the nose of the New York Fed, has massively and secretly gobbled up a huge swath of the nation’s physical commodities, like oil and aluminum, creating cost spikes for the consumer and industrial users while also placing huge trading bets on commodity prices.

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Hey, Monsanto! Were Anniston and Nitro just conspiracy theories too?

Hey there, Monsanto Man! You like to paint those who are against you, your toxic sludge and what it is doing to our health and the planet as conspiracy theorists without a leg to stand on, while you paint your products as safe and beneficial to the environment.
Isn’t that exactly what you did in Anniston, Alabama, which is now a superfund site due to PCB contamination caused by you that you said was perfectly safe, and in Nitro, West Virginia, where people were poisoned with your Dioxin? You were ordered to pay on both of those catastrophes, weren’t you?
Yet, you still insist, even with numerous lawsuits in your checkered past, to flagrantly declare that your products are safe, once again. You have never once admitted blame nor accepted responsibility for your actions unless forced to by a court with a judge that for some insane reason, you have not managed to ‘influence.’
Let’s just take a little trip in the Wayback machine…
Anniston, Alabama and PCBs
On the west side of Anniston, the poor side of Anniston, the people ate dirt. They called it ‘Alabama clay’ and cooked it for extra flavor. They also grew berries in their gardens, raised hogs in their back yards, caught bass in the murky streams where their children swam and played and were baptized. They didn’t know their dirt and yards and bass and kids – along with the acrid air they breathed – were all contaminated with chemicals. They didn’t know they lived in one of the most polluted patches of America.

This post was published at FarmWars on Nov. 19, 2014.

The Falcon Can No Longer Hear the Falconer

We in the center that cannot hold can only watch as things fall apart.
In so many ways, the falcon can no longer hear the falconer. The phrase is drawn from William Butler Yeats’ poem, The Second Coming:
Turning and turning in the widening gyre The falcon cannot hear the falconer; Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world, The blood-dimmed tide is loosed, and everywhere The ceremony of innocence is drowned; The best lack all conviction, while the worst Are full of passionate intensity.
The falcon can no longer hear the falconer describes our disintegrating era well.
The politicos can no longer hear the people they supposedly serve.
Concentrated wealth no longer heeds any falconer; it is free to exploit its power in the market and the halls of government.
Unconstrained by an inner falconer of integrity, many seek to game the system to maximize their private gain by any means available.
Market manipulators, equally unconstrained, ceaselessly rig markets for their private gain and the benefit of their cronies.

This post was published at Charles Hugh Smith on WEDNESDAY, NOVEMBER 19, 2014.

Stockman And Stiglitz On Crony Capitalism: Agreements And Disagreements.

The role of government in the economy has been a major public policy issue for more than two centuries. Critics of capitalism, at least since Karl Marx, have argued that the system is skewed to benefit the political and economic elite at the expense of the masses: the proletariat over the bourgeoisie, as Marx put it, or the 1 percent over the 99 percent, as the Occupy Movement that began in 2011 put it.
Two recent books have looked at these issues, one from the vantage point of the political left and the other from the political right. Joseph Stiglitz, a Nobel laureate economist and frequent commentator on the political left, discusses the way the system is skewed to support the 1 percent over the 99 percent in his book The Price of Inequality (2012), while conservative writer and former Michigan congressman and budget director in the Reagan administration David Stockman addresses these same issues from the political right in The Great Deformsation (2013). Considering their political leanings, it is worth emphasizing how much their books have in common when describing the causes of the major economic and political problems they perceive in the United States.
Both Stiglitz and Stockman argue that corruption of the U. S. political system is damaging both the economic system and democracy. This article documents the commonality of ideas in their two books while recognizing the significant differences in their policy recommendations.

This post was published at David Stockmans Contra Corner on November 17, 2014.

The How and Why Behind Obama’s Mysterious Rise to the Presidency

How does a man get elected President after serving less than one full term as a U. S. Senator? Does being a community activist/antagonist qualify one for the highest office in the land? Were the Soviet defectors correct in that Obama is the manifestation of a multi-generational plot to bring America to her knees? It is easy to comprehend how and why Putin would want to destroy America. But is Obama is his accomplice in this mission which could imperil all of us?
Former FBI Weatherman Task Force supervisor, Max Noel, noted that the FBI utilized a CARL test when it conducted background checks on various suspects. The acronym CARL stands for Character, Associates, Reputation, and Loyalty is used to assess candidates fitness to hold the highest office in the country. On each of these four points of power, Obama fails and fails miserably. Like many FBI law enforcementagents and officials, Noel was alarmed by the fact that someone like Barack Obama could capture the presidency. For some unexplained reason, Obama was never vetted before he became a candidate for the presidency by the FBI. This is an unacceptable result of our national security system and is wholly suggestive of internal plot to allow the installation of a blatantly communist advocate into the highest political position in America.
Soviet Defectors Warn of Deception and the Emergence of a Manchurian Candidate Did you really think Alger Hiss would be the last communist traitor to serve in a high level US governmental position?
Through the testimony of high-ranking Soviet defectors, it can clearly be established that the Russians have been engaged in a multi-generational plot to destroy the United States from within and from without. Domestically, the Russian communists are in the midst of completing a coup d’tat, with the help their communist stooge, Barack Obama. In the following paragraphs, the verbatim statements of high ranking Soviet defectors are offered as proof of these claims. The first three defectors tell how the Soviets are setting the table for America’s demise. Stunningly, the fourth defector warns our country of a Manchurian candidate type of leadership whose job it will be to hand over a weakened America to the Russians (see Part Two).
Today, many people have been in a position to now vet the President after Obama’s first six years in office and observed his ‘fundamental transformation of America’. This particular series will continue to connect the dots of the secretive and nefarious communist background of Barack Hussein Obama.

This post was published at The Common Sense Show on November 12, 2014.

SP 500 and NDX Futures Daily Price – Audit or End the Fed

“Politics is the loom that weaves and spins the fabric of our democratic social cohesion. The politics of democracy is the social blanket that we all willingly come together under, huddled awkwardly, for our national identity. The interwoven threads of multi-media, technology, financial, and shared social myths bind this political blanket into our national identity as a democratic republic.
When the democratic political process has been stealthy co-opted over many years by financialization, which seamlessly connects the financial industry and the government, we become members of a fascist form of state (inverted totalitarianism), without collectively knowing it yet.”
Joe, the Angry Hawaiian
The financial system in its existing form is excessively arbitrary and non-transparent.
An external standard provides a flywheel, which prevents the expansion of the money supply at the discretion of a central authority that also has the power to monetize debt and set interest rates, within some longer term limitations.
In its worst form, short of an overt tyranny, the central banking power has the ability to create money at will, and distribute as they see fit, to their cronies, for whom they are also a powerful friend and regulator governed by a self-defined class that moves freely between government and the financial industry.
This is the precise reason why President Andrew Jackson vetoed the Second Bank of the United States. The Banks speculated in the goods of the nation, keeping the profits, but using the power of their Central Bank to shift the losses to the public.

This post was published at Jesses Crossroads Cafe on 10 November 2014.

Obama Has No Friends

Obama has no friends in Washington, other than perhaps a few of his imported Chicago cronies. He has no close relationships with any elected officials. He is a loner, a man out for himself.
In my book Flimflam Man it was predicted that the Democrats who tolerated him would turn against him once they realized the damage he had inflicted on their cohorts and the Democrat Party. In the wake of the obvious recent election debacle, it appears as though Democrats have turned, if not yet openly at least off the record. Alex Griswold reports that elected Democrats are no longer keeping their dislike for the President to themselves and feel just as negatively about Obama as Republicans:
Legendary Washington Post reporter and editor Bob Woodward said on a ‘Face the Nation’ panel that when he speaks to Senate Democrats about Obama they are ‘on fire,’ and just as loud in the criticism of the president as Republicans are publicly.

This post was published at Economic Noise on NOVEMBER 9, 2014.

‘Islamic State Suffers Setbacks’ – Really?

A Case of Wishful Thinking? A recent AP headline breathlessly informs us that ISIS is finally being pushed back. It is reportedly suffering setbacks in Iraq and Syria. Hurrah, the good guys are finally winning! A few excerpts:
‘For a force that has built its reputation on an aura of momentum and invincibility, the Islamic State group is now dealing with a series of military setbacks in Iraq and a prolonged stalemate in the small Syrian border town of Kobani.
Gone are the days when IS was able to seize territory in both countries with relative ease. Its newfound problems, including a loss of oil revenue, raise questions about the extent to which it will be able to continue recruiting fighters who want to be with a winner.
‘ISIS has run a very effective psychological campaign to intimidate its rivals and attract support and recruits,’ said Faysal Itani, a resident fellow at the Atlantic Council, using an acronym for the extremists. But now, he said, the need to maintain its reputation is limiting the group’s options.
This is particularly true in Kobani, where a pre-emptive IS withdrawal in the face of U. S.-led bombings from the sky and ethnic Kurdish fighters on the ground could prove too costly.
‘They have invested a lot in this battle, and people are noticing. They will soon start asking what’s going on?’ said Ayed, a Turkey-based Syrian activist who travels back and forth to the group’s stronghold in the Syrian city of Raqqa. He declined to give his full name.
The prolonged fighting in Kobani is also distracting IS from more strategically important areas in Syria and Iraq where the militant extremists are already stretched on multiple fronts.
[…]
Syrian and Kurdish activists estimate nearly 600 Islamic State fighters have been killed – its heaviest losses since taking over large parts of Syria and Iraq in a summer blitz.
Kurdish residents say the group appears to be struggling with personnel, bringing in inexperienced fighters and new recruits to reinforce the town. These include members of the IS police force known as Hisba, reassigned from nearby towns and cities, such as Raqqa and Manbij, under the group’s control.
‘Many Hisba members have left Raqqa in the past two weeks, telling people they were headed to Kobani,’ Ayed said. They are not fighters.’
Kobani residents say recent U. S. airstrikes targeting IS in Kobani have inflicted heavy damage. ‘Their bodies are left for days rotting in the street without anyone picking them up,’ said Farhad Shami, a Kobani-based activist.

This post was published at Acting-Man on November 7, 2014.

Crony Capitalism Tribute: Mafia Dons vs. Politicians; Who Really Won the Election?

Who Really Won the Election?
If you think Republicans won the recent mid-term election you are mistaken. PolicyMic has One Chart that Shows Who Won.
Most Expensive Senate Races

Money Won the Election!
The Center for Responsive Politics projects the 2014 mid-term election will cost roughly $3.67 billion.
When all is said and done, Team Red (all Republican candidates, parties, committees and conservative outside groups) will spend $1.75 billion on this election. Team Blue (all Democratic candidates, parties, committees and liberal outside groups) will spend a total of $1.64 billion. [Outside groups account for the rest.]
Election Cost Estimate…

This post was published at Global Economic Analysis on November 07, 2014.

The U.S. Veteran Fighting ISIS in Syria is Obviously a Propaganda Shill

Last month I reported on a member of a Dutch biker gang who went to the Middle East to fight against ISIS. Truth be told, there are numerous foreign volunteers who are heading towards Iraq and Syria from all over the world, and the U. S. is no exception. Recently, Radio Free Europe interviewed a United States Army veteran Jordan Matson, who left his life in Wisconsin to help the Kurds in their fight against ISIS.
‘For over a year, people were being slaughtered by ISIS,’ the 28-year-old Sturtevant, Wisconsin, native told RFE/RL’s Radio Free Iraq (RFI), using another acronym for IS.
‘Anyone who didn’t conform to their way of life could either convert, be killed, or get driven off their land. So when Mosul fell and IS drove all the Christians and minorities from the town or killed them, I thought that enough was enough and I decided to come here to fight,’ Matson said via Skype.
For two months, Matson has fought in northeastern Syria alongside the Kurdish People’s Protection Units (YPG). He said he decided to join the Kurdish militia after searching the Internet for a way to fight IS.
‘I found that the YPG was the only force in the area that would let Christians and Muslims live in peace together so I decided to join them,’ he said.
Personally, I think it’s admirable that someone would volunteer their time and skills to put down those vile thugs. Many of us have seen the footage of their atrocities and read the grisly news reports of their exploits. No sane person would doubt that ISIS is a scourge against Christians and Muslims alike, and that they must be stopped if we want even any kind of peace for the Middle East.

This post was published at The Daily Sheeple on November 5th, 2014.

US Struggles to Keep Asia in Dark Age

US-funded newspapers promote US-funded NGOs in their efforts to halt infrastructure projects that would reduce flooding, produce clean, renewable energy, and provide jobs and development for millions.
‘The Irrawaddy,’ which claims to be ‘a leading source of reliable news, information, and analysis on Burma/Myanmar and the Southeast Asian region,’ has doggedly covered efforts by so-called ‘activists’ to prevent the construction of dams all across Southeast Asia – from Myanmar (still called by its British imperial nomenclature ‘Burma’ by the Western media), across Thailand, and in Laos.
Its most recent article, ‘Thai Power Firm’s Business Tactics ‘Use Burma’s Weak Laws’,’ is a typical representation of these efforts. It reports that:
One of the chief financiers of hydroelectric dams planned on Burma’s Salween River is accused of investing in countries where there is ‘oppression and limited transparency’ in order to achieve its objectives.
Having been restricted in its activities at home, the Electricity Generating Authority of Thailand (EGAT) wants to use Burma and Laos as proxy suppliers of electricity via environmentally damaging river dams, the US-based NGO International Rivers told The Irrawaddy.
Dams are undoubtedly disruptive to the surrounding, existing environment and surely governments and special interests regularly sidestep their responsibility to ensure dam construction results in equitable outcomes for surrounding human populations as well as wildlife. However, to oppose their construction entirely is a regressive, politically motivated agenda peddled by some of the most sociopolitically and environmentally destructive special interests on Earth.
To understand this, one must understand what both The Irrawaddy and International Rivers have in common, and specifically why their agenda has become entwined in the battle against real development across all of Southeast Asia.

This post was published at The Daily Sheeple on New Eastern Outlook / November 5th, 2014.

More Executive Orders on the Way: Republicans Take Control of the Senate

The American people showed their discontent at the polls yesterday by voting for the Republicans to take control of the Senate. The GOP also strengthened their hold on the House of Representatives and will be in control of both chambers of Congress for the first time since 2006.
Obama now has two choices during the final two years of his leadership:
Issue Executive orders that require no approval from Congress. Seek bipartisan support for his plans. Many people have no doubt of which choice he will make.
What you have to ask yourself is will it make a difference? The vast majority of those that seek to rule us are from white collar backgrounds and most of them worked in for-profit organizations prior to going into politics. Over half of these people are millionaires. (source)
We are deluded if we think that these men and women will not vote with their/their cronies business interests in mind and therein lies the problem. The gap between rich and poor, the haves and have-nots widens year on year. The rich get richer and the rest of us get squeezed more and more.

This post was published at The Daily Sheeple on November 5th, 2014.

1000s Of Veterans Busted For Massive Benefits Fraud

When work is punished and grift is not, is it any surprise that, as The Washington Times reports, nearly60,000 triple dipping Veterans picked up $3.5 billion in benefits (collecting their military retirement pay; and disability benefits from both the Veterans Administration and Social Security too). The arrangement is legal, but since everyone else is abusing the system, from crony banks to deadbeat dads to squatting slummers, it was only a matter of time before even veterans decided to dip, then dip again and dip some more. Sen. Tom Coburn, noted it was “hard to understand,” but perhaps the hardest thing to understand is why it took veterans so long to realize we live in a world without consequences.
As The Washington Times reports, tens of thousands of veterans collect their military retirement pay and disability benefits from the Veterans Administration and disability checks from Social Security too, according to a new report from the Government Accountability Office. All told, nearly 60,000 triple dippers collected $3.5 billion in benefits.
The arrangement is legal, but it raises questions about the generosity of the American safety net system at a time when disability programs are already under severe financial stress. “This report shows that, like other government programs, there is little coordination between these overlapping benefits, which increase cost[s] to taxpayers,” said Sen. Tom Coburn, the Oklahoma Republican who requested the GAO report. “We should fulfill our promises to the men and women who serve, but we need to streamline these duplicative programs.”

This post was published at Zero Hedge on 11/01/2014.

Pepe Escobar: The Caliph fit to join OPEC

Islamic State leader Caliph Ibrahim – aka Abu Bakr al-Baghdadi – never ceases to amaze us – and most of all his powerful petrodollar-stuffed backers. The Caliph is for all practical purposes now an oil major worth of membership of the Organization of the Petroleum Exporting Countries (OPEC). His takfiri/mercenary goons – in theory – have for some time been extracting, refining, shipping and/or smuggling and clinching juicy deals involving vast quantities of oil, reaping profits of roughly US$2 million a day.
The Caliph's oil prices are to die (be beheaded?) for; after all, he's implementing the same low-price strategy concocted by the people he wants to dethrone in Mecca, the House of Saud. The caliphate's GDP across "Syraq" has only one way to go: up.
And oh, the irony Top customers for The Caliph's cheap oil happen to be "Sultan" Recep Tayyip Erdogan's Earthly paradise, aka Turkey – a North Atlantic Treaty Organization ally – and that King "Playstation" Abdullah II ibn al-Hussein's domain impersonating a country, aka Jordan.
Meanwhile, the awesome, immensely sophisticated military apparatus/intel agency acronym fest deployed by "free" U.S./NATO somehow is simply unable to register/intercept this racket.

This post was published at Asia Times