I suppose some words of introduction are in order. Around the end of 2014, I conceived the idea of compiling a chronological history of how the USA economy had actually been built, highlighting the role of government in nurturing and promoting science and technology in industry, agriculture, and transportation. This would, of course, directly repudiate the right-wing myths of heroic entrepreneurs as "wealth creators" in a "free market" liberated from the deadening hand of government. Read more about HAWB 1870s - American producer class hero Peter Cooper - How America Was Built
Yves Smith and Bill Black have a post this morning describing the potential problems with the Brown/Vitter bill. There's a lot of detail and I won't try to summarize it, but there are two points I wanted to highlight.
The first is the concept of tight coupling. Basically, a bunch of extremely interconnected small institutions can pose as much systemic risk as a handful of behemoths, so a reform that turns the latter into the former is esentially a cosmetic one. The second is the concept of systemically dangerous institutions, or SDIs. SDIs are institutions that are large enough on their own to trigger a cascade of failures if they themselves fail.
So there are two characteristics to be concerned with here: tight coupling and dangerous size. Why not tweak the nomenclature a bit to include both of those? We could call these institutions Systemically Tight and Dangerous, or STDs. That seems a bit more colorful and descriptive than SDIs, don't you think?
If it catches on, we could even end up with the bonus fun of seeing legislators try to come up with a bill title that's an acronym for penicillin. Read more about Join the fight against STDs!
Cross-posted from Real Economics.
WalMart executives are freaking out over lousy sales, according to this article in Business Insider. After a disastrous January, one WalMart exec wrote in an email that February sales so far are a "total disaster," according to a Bloomberg news story.
“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, WalMart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.”
I attended a local government meeting earlier this month in order to keep up with the latest on fracking in our town. Something else interesting happened as well. The meeting began with a budget review. Budget reviews are long and drawn out affairs even when they're not, if you know what I mean. Fifteen minutes of going through line items, projected numbers, shortfalls, and so on can seem very long indeed if you aren't turned on by bookkeeping.
That's a shame, because those kinds of dry, eye glazing exercises are where the real action is at from a policy perspective. As our trustees went through the numbers, one item in particular jumped out at me. That is not because it was the biggest number, but the easiest to understand. The secretary's review included a big, fat zero for funds that had formerly come from the estate tax. It was eliminated entirely for 2010, which had meant less funding for our town. Read more about Quantifying the impact of the Republican agenda
Cross posted from Real Economics.
In response to President Obama’s rather inept explanation that nobody can build a successful business outside the supportive legal and physical environment created and funded by all the rest of us citizens of the republic, Mitt Romney declared that, “I’m convinced [the President] wants Americans to be ashamed of success.” Read more about American Revolutionaries were "ashamed of success"
Cross-posted from Real Economics
Lambert points to an important post at Naked Capitalism focusing on the disastrous results of two Congressional primaries in which progressive candidates were defeated by large margins, Why is the left slice of Democrats getting crushed? Reinforcing Jon Larson's link, that most Americans do not feel there is an economic recovery, the latest study by Emmanuel Saez shows that income inequality is now far worse than it was under George Bush. Read more about Obama failure on political economy impacts primary results
I’m reading Tom McNamee’s succulent, savory and savvy book on Alice Waters. It’s called “Alice Waters and Chez Panisse: The Romantic, Impractical, Often Eccentric, Ultimately Brilliant Making of a Food Revolution.” Berkeley, California in the 1970s is certainly trippy. Read more about Food Fight
At one point I found a web site that documented how every $1 invested in food stamps generated $1.60 in economic activity. Sadly, I did not bookmark it so can't find it. But one of the things that liberals have failed to do is document how social investment stimulates the economy.
A friend of mine, an active Democrat, used to complain about all the Hispanics who came into county offices to apply for welfare. She would have been less resentful if she understood how money that goes into their pockets comes right back to the rest of us and how cuts to anti-poverty and income maintenance programs comes out of all our pockets and destablizes the entire economy. Read more about Social investment
So the Republicans are prepared to repudiate the government's debts around May 16th. I think this is a fine idea, and one we should all emulate. Hooray for Judeo-Christian law! I knew the GOP efforts at biblical rule would eventually bear fruit! Read more about GOP declares 2012 a year of Jubilee. Stop paying your bills on May 16th!
The quick summary is that the German equivalent of our Supreme Court has ruled against Deutsche Bank in a crucial case related to the ongoing financial collapse. DB is the largest German bank, and is also a prime dealer for the U.S. Federal Reserve, a recipient of bailout funds from U.S. authorities, and just as nasty a predator as J.P. Morgan Chase or Goldman Sachs. Speigel Online reports: Read more about Banksters Lose BIG Case in Germany
No Associated Press content was harmed in the writing of this post
There appears to be a yawning chasm between what is happening in Egypt and elite opinions in DC. Consider this exchange between Chris Matthews and NBC News chief foreign affairs correspondent Richard Engel: Read more about The economic aspect of Egypt's protests
Doug Henwood's latest issue of "Left Business Observer" is out. (Subscription is $22 a year for 11 issues.) Henwood wrote the visionary book "Wall Street" in 1997 predicting this mess we are in now. Henwood reminds us that in "All the King's Men", Willie Stark is urged not to speak so wonkish and instead just say that "he's gonna soak the fat boys." Read more about "Soak the Fat Boys"