TheCenterLane.com

© 2008 – 2017 John T. Burke, Jr.

Suspicious Trail Of Death

Comments Off on Suspicious Trail Of Death

As I pointed out on June 16, I often enjoy a good conspiracy theory.  That’s just one of the reasons why I wrote a posting back on January 28, 2010 entitled, “The Conspiracy Against Conspiracy Theories”.

The Internet provides us with innumerable sources of conspiracy theories on a vast array of subjects.  A good number of people disregard all of them, as a result of a belief that any conspiracy theory is of dubious veracity.  Others look for revealing signs of a fictitious narrative.  One such indicator becomes obvious when a conspiracy story twists and turns until it eventually finds its way to the Protocols of the Elders of Zion.  Purveyors of those stories are responsible for the anti-Semitic stigma, which the term “conspiracy theory” frequently evokes.

The latest conspiracy theory to catch my attention arises from the Deepwater Horizon oil rig disaster.  On July 22, 2010 – three months after that tragic event – I wrote a piece concerning how BP had begun a campaign of signing-up as many potential expert witnesses as could be found, not only to testify on BP’s behalf in administrative and judicial proceedings – but, more importantly – to buy their silence.  Litigation attorneys often refer to this tactic as, “buying experts off the street”.  As you can see, I have been predisposed to assume that there are likely to be more than a few conspiracies and cover-ups resulting from the Deepwater Horizon blowout.  I concluded that essay with this remark about a gentleman named Matthew Simmons:

On July 21, Bloomberg News televised an interview with Matthew Simmons, founder of the Ocean Energy Institute.  Among the subjects included in the conversation was the topic of BP’s confidentiality agreements.  If what Mr. Simmons said is correct, BP’s legal defense efforts will become futile once the public realizes “we have now killed the Gulf of Mexico”.  At least on that one point, the cretins at BP are probably not the only individuals who are hoping that Mr. Simmons is wrong.

Within a few short weeks of that posting, Matthew Simmons was found dead in his hot tub, having suffered an apparent heart attack.  I immediately became suspicious   . . .

More recently, I came across this posting at a conspiracy-oriented website called The Intel Hub.  That item was based on the investigation conducted by a group called the Real Costal Warriors, who have been concerned about the fact that since the Deepwater Horizon event occurred, nine experts, critics and whistleblowers have died under mysterious circumstances.  The Intel Hub informed us that the suspicious death toll has now included a tenth individual:

George Thomas Wainwright, a BP ROV pilot was supposedly killed in a freak shark attack in Australia.

The avid outdoorsman and Texas A&M graduate was a marine systems engineer involved with capping the Macondo well after last year’s BP oil spill in the Gulf of Mexico.

Wainwright – whose body was recovered by the college friends he was boating with – is the third man killed by a great white in the state in two months.

The aforementioned Matthew Simmons was included in Real Costal Warriors’ list of nine individuals who are either “dead, missing or jailed”.  One of the unfortunate nine – Anthony Nicholas Tremonte – is still alive, although he was jailed after “child porn” was allegedly found on his computer.  A similar “child porn” bust was made against another member of this list – Dr. Thomas B. Manton – who was murdered in prison.  Here is the list as it appears on the Intel Hub website:

April 2, 2011 – Tucker Mendoza, gulf truth activist, still recovering, along with his niece.  Shot four times through his front door, niece hit twice.  Anyone with information regarding this shooting incident should call St. John the Baptist Parish Detectives at 985-359-8769 or Crimestoppers at 504-822-1111.

February 17, 2011 – LSU scientist Gregory Stone, 54 – Died of Unknown Illness.  Stone was an oft-quoted expert concerning the damage the leaked oil might cause to the coast.

January 26, 2011 – Anthony Nicholas Tremonte, age 31 – Mississippi Department of Marine Resources officer, from Ocean Springs arrested on child porn charge.

January 19, 2011 – Dr. Thomas B. Manton, former President and CEO of the International Oil Spill Control Corporation – imprisonment and subsequent murder while jailed.

December 31, 2010 – John P. Wheeler III, a former Pentagon official and presidential aide and a defense consultant and expert on chemical and biological weapons – was beaten to death in an assault, body was discovered in a Wilmington landfill.

November 23, 2010 – James Patrick Black, an incident commander for BP’s Gulf of Mexico oil spill response team, died Tuesday night near Destin, Florida in a small plane crash.

November 15, 2010 – Chitra Chaunhan, age 33, worked in the USF Center for Biological Defense and Global Health Infectious Disease Research – Found dead in an apparent suicide by cyanide at a Temple Terrace hotel.  She leaves behind a husband and a young child.

November, 2010 – MIA Status – Dr. Geoffrey Gardner of Lakeland, FL – Swan expert who “ran into legal trouble over an expired prescription license has closed his practice” — Was investigating unexplained bird deaths near Sarasota abruptly and immediately closed his practice, and apparently his investigation into the deaths of swans in Sarasota, suspected to have been impacted by the BP Oil Disaster.  No one has heard or spoken with him since. Watch this news report covering his investigation before his disappearance:

http://www.youtube.com/watch?v=sqbx2TnbYlc&

October 6, 2010 – Roger Grooters, age 66, was hit by a truck as he passed through Panama City, Florida.  Mr. Grooters had been knocked down and killed close to the end of a 3,200-mile trans-America charity ride to raise awareness about the Gulf Coast oil disaster. He began his cross-country bike ride in Oceanside, California, on September 10th.  Grooters’s family and friends will cycle the final stretch of the journey from the Pacific to the Atlantic in his honour, raising cash to support Gulf Coast families.

August 9, 2010 – Senator Ted Stevens of Alaska, 86, the longest-serving Republican senator in history, was among nine people on board when the 1957 DeHavilland DHC-3 Otter, crashed into a brush- and rock-covered mountainside Monday afternoon about 17 miles north of the southwest Alaska fishing town of Dillingham, federal officials said.  Stevens was the recipient of a whistleblower’s communication relative to the BP Oil Disaster blow-out preventer, and a conspiracy of secrecy to hide the facts from the public.

“You and your fellow Committee members may wish to require BP to explain what action was ultimately instituted to cease the practice of falsifying BOP tests at BP Prudhoe drilling rigs.  It was a cost saving but dangerous practice, again endangering the BP workforce, until I exposed it to Senator Ted Stevens, the EPA, and the Alaska Oil and Gas Conservation Commission.”  The cause of the crash is still an OPEN investigation by the NTSB (http://www.ntsb.gov/ntsb/GenPDF.asp?id=ANC10MA068&rpt=p)

August 13, 2010 – Matthew Simmons, age 67 – Simmons’ body was found Sunday night in his hot tub, investigators said.  An autopsy by the state medical examiner’s office concluded Monday that he died from accidental drowning with heart disease as a contributing factor – “It was painful as can be” to be only insider willing to speak out against the “officials” during the BP Oil Disaster in the Gulf of Mexico.

April 6, 2010 – Scientist Joseph Morrissey, age 46 – cell biologist and college professor, a near-native Floridian who chose to return to South Florida after studying at elite universities – was fatally shot during what police say was a home invasion robbery.

Obviously, the possibility exists that none of these incidents resulted from the involvement of these individuals in the Deepwater Horizon controversy.  In fact, there is no real connection described, which could remotely connect the death of John P. Wheeler III to Deepwater Horizon.  As for the death of George Thomas Wainwright, are we to believe that a Great White shark was trained to attack a particular individual on command?  There is an implicit suggestion that a shark attack was not the true cause of death, without any facts asserted which could bring that cause of death into question.  The number of victims is apparently being exaggerated here because, as that number increases, it seems less likely that we are looking at random coincidences.

The environmental disaster in the Gulf of Corexit presents enough suspicious circumstances and cover-ups whether or not any of these ten tragedies may have been causally connected to some aspect of the event.  Nevertheless, it’s an intriguing conspiracy theory and I’m going to keep it on my radar until it is satisfactorily debunked.


 

wordpress stats

The Wrong Playbook

Comments Off on The Wrong Playbook

President Obama is still getting it wrong.  Nevertheless, we keep hearing that he is such a clever politician.  Count me among those who believe that the Republicans are setting Obama up for failure and a loss to whatever goofball happens to win the GOP Presidential nomination in 2012 – solely because of a deteriorating economy.  Obama had the chance to really save the economy and “right the ship”.  When he had the opportunity to confront the greatest economic crisis since the Great Depression, President Obama violated Rahm Emanuel’s infamous doctrine, “You never want a serious crisis to go to waste”.  The new President immediately made a point of squandering the opportunity to overcome that crisis.  I voiced my frustration about this on October 7, 2010:

The trouble began immediately after President Obama assumed office.  I wasn’t the only one pulling out my hair in February of 2009, when our new President decided to follow the advice of Larry Summers and “Turbo” Tim Geithner.  That decision resulted in a breach of Obama’s now-infamous campaign promise of “no more trickle-down economics”.  Obama decided to do more for the zombie banks of Wall Street and less for Main Street – by sparing the banks from temporary receivership (also referred to as “temporary nationalization”) while spending less on financial stimulus.  Obama ignored the 50 economists surveyed by Bloomberg News, who warned that an $800 billion stimulus package would be inadequate.  At the Calculated Risk website, Bill McBride lamented Obama’s strident posturing in an interview conducted by Terry Moran of ABC News, when the President actually laughed off the idea of implementing the so-called “Swedish solution” of putting those insolvent banks through temporary receivership.

In September of 2009, I discussed a fantastic report by Australian economist Steve Keen, who explained how the “money multiplier” myth, fed to Obama by the very people who caused the financial crisis, was the wrong paradigm to be starting from in attempting to save the economy.  The Australian professor (Steve Keen) was right and Team Obama was wrong.  In analyzing Australia’s approach to the financial crisis, economist Joseph Stiglitz made this observation on August 5, 2010:

Kevin Rudd, who was prime minister when the crisis struck, put in place one of the best-designed Keynesian stimulus packages of any country in the world.  He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon.  So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place.

Rudd’s stimulus worked:  Australia had the shortest and shallowest of recessions of the advanced industrial countries.

On October 6, 2010, Michael Heath of Bloomberg BusinessWeek provided the latest chapter in the story of how America did it wrong while Australia did it right:

Australian Employers Added 49,500 Workers in September

Australian employers in September added the most workers in eight months, driving the country’s currency toward a record and bolstering the case for the central bank to resume raising interest rates.

The number of people employed rose 49,500 from August, the seventh straight gain, the statistics bureau said in Sydney today.  The figure was more than double the median estimate of a 20,000 increase in a Bloomberg News survey of 25 economists.  The jobless rate held at 5.1 percent.

Meanwhile, America’s jobless rate has been hovering around 9 percent and the Federal Reserve found it necessary to print-up another $600 billion for a controversial second round of quantitative easing.  If that $600 billion had been used for the 2009 economic stimulus (and if the stimulus program had been more infrastructure-oriented) we would probably have enjoyed a result closer to that experienced by Australia.  Instead, President Obama chose to follow Japan’s strategy of perpetual bank bailouts (by way of the Fed’s “zero interest rate policy” or ZIRP and multiple rounds of quantitative easing), sending America’s economy into our own “lost decade”.

The only member of the Clinton administration who deserves Obama’s ear is being ignored.  Bill Clinton’s Secretary of Labor, Robert Reich, has been repeatedly emphasizing that President Obama is making a huge mistake by attempting to follow the Clinton playbook:

Many of President Obama’s current aides worked for Clinton and vividly recall Clinton’s own midterm shellacking in 1994 and his re-election two years later – and they think the president should follow Clinton’s script. Obama should distance himself from congressional Democrats, embrace deficit reduction and seek guidance from big business.  They assume that because triangulation worked for Clinton, it will work for Obama.

They’re wrong.  Clinton’s shift to the right didn’t win him re-election in 1996. He was re-elected because of the strength of the economic recovery.

By the spring of 1995, the American economy already had bounced back, averaging 200,000 new jobs per month.  By early 1996, it was roaring – creating 434,000 new jobs in February alone.

Obama’s 2011 reality has us losing nearly 400,000 jobs per month.  Nevertheless, there is this misguided belief that the “wealth effect” caused by inflated stock prices and the current asset bubble will somehow make the Clinton strategy relevant.  It won’t.  Instead, President Obama will adopt a strategy of “austerity lite”, which will send America into a second recession dip and alienate voters just in time for the 2012 elections.  Professor Reich recently warned of this:

House Majority Leader Eric Cantor recently stated the Republican view succinctly:  “Less government spending equals more private sector jobs.”

In the past I’ve often wondered whether they’re knaves or fools.  Now I’m sure.  Republicans wouldn’t mind a double-dip recession between now and Election Day 2012.

They figure it’s the one sure way to unseat Obama.  They know that when the economy is heading downward, voters always fire the boss.  Call them knaves.

What about the Democrats?  Most know how fragile the economy is but they’re afraid to say it because the White House wants to paint a more positive picture.

And most of them are afraid of calling for what must be done because it runs so counter to the dominant deficit-cutting theme in our nation’s capital that they fear being marginalized.  So they’re reduced to mumbling “don’t cut so much.”  Call them fools.

If inviting a double-dip recession weren’t dumb enough – how about a second financial crisis?  Just add more systemic risk and presto! The banks won’t have any problems because the Fed and the Treasury will provide another round of bailouts.  Edward Harrison of Credit Writedowns recently wrote an essay focused on Treasury Secretary Geithner’s belief that we need big banks to be even bigger.

Even if the Republicans nominate a Presidential candidate who espouses a strategy of simply relying on Jesus to extinguish fires at offshore oil rigs and nuclear reactors – Obama will still lose.  May God help us!


wordpress stats


A Bad Week For Rupert Murdoch

Comments Off on A Bad Week For Rupert Murdoch

We all know how this awful week began.  For Rupert Murdoch, one of his prized investments — Sarah Palin — had become the subject of heated debate.  Murdoch’s News Corp publishes her ghost-written books and Palin works for News Corp’s Fox News as a contributor.  While a team of doctors in Tucson heroically scrambled to save the life of Representative Gabrielle Giffords, a team of spin doctors at Fox News scrambled to save the political life of Sarah Palin.  At this point, I defer to an excellent piece written by Glynnis MacNicol of The Business Insider:

It is clear that Palin spent the last few days testing the waters and leaving the heavy lifting of the defending her to the folks at Fox News, most notably Glenn Beck.

As Ms. MacNicol explained, Palin returned to her Facebook page on January 12:

In equally typical fashion, Palin offered little introspection into her role in the political dialogue of the past year and laid the blame directly at the feet of the media, whom she accused of “blood libel.”

As MacNicol and many other commentators pointed out, this choice of words exemplified yet another classic Palin mistake.  Palin’s gaffe drew criticism from the Anti-Defamation League and it gave her critics yet another opportunity to emphasize that Palin has been in over her head with her attempts to establish a national leadership identity.  The Hill quoted what Representative James Clyburn had to say about Palin’s latest misstep:

“You know, Sarah Palin just can’t seem to get it, on any front. I think she’s an attractive person, she is articulate,” Clyburn said on the Bill Press radio show. “But I think intellectually, she seems not to be able to understand what’s going on here.”

While Rupert Murdoch’s investment in Sarah Palin was obviously deteriorating and becoming an embarrassment for his Fox News organization, things were headed in a more catastrophic direction in his Australian homeland.  The intense flooding that had been ongoing for the past several weeks was being attributed to climate change.  A report from Reuters began with this statement:

Climate change has likely intensified the monsoon rains that have triggered record floods in Australia’s Queensland state, scientists said on Wednesday, with several months of heavy rain and storms still to come.

Although Murdoch now personally admits that climate change poses a serious environmental threat, his News Corp subsidiaries have an established track record of denying that any such threat exists.

An article from the Treehugger website provided details about how badly conditions had deteriorated in Queensland:

When 75% of Queensland is disaster declared due to flooding, that is a huge area, roughly equivalent to two Texas’s or the entirety of South Africa.  On the 31st of December Reuters was saying flood water was “covering an area bigger than France and Germany combined, inundating 22 towns and stranding 200,000 people.”  This is a continually unfolding natural disaster, of which the financial bill alone was projected to reach $5 billion AUD, and that was before the flash flooding of the past day or so.

*   *   *

Australia is a rich, industrialised ‘First World’ country.  But it’s third most populous state, Queensland, is currently coping with floods which have already decimated food crops, livestock, road and rail infrastructure, mining and so on.  The impacts of which will flow on (pardon the pun) to effect most every Australian. Already some particular fruits have all but disappeared from commercial markets.

If all that weren’t bad enough, what must have been the most chilling news for Rupert Murdoch came from Julian Assange of Wikileaks.  Ian Burrell of The Independent provided this report:

A year that has begun badly for Rupert Murdoch grew a little worse yesterday after the founder of WikiLeaks, Julian Assange, claimed to be in possession of secret documents damaging to the media mogul and his News Corp empire.

Mr Assange told John Pilger in the New Statesman he had withheld a cache of confidential US government cables and files relating to Mr Murdoch’s business as “insurance”.  He has claimed that his life is in danger if he is extradited to Sweden to face allegations of sexual assault.

*   *   *

Mr Assange indicated that he had paperwork which could be hurtful to News Corp.  “There are 504 US embassy cables on one broadcasting organisation and there are cables on Murdoch and News Corp.”

Assange does lots of talking about documents he is holding as “insurance”.  Nevertheless, many commentators have mentioned the possibility all this boasting could amount to nothing more than a bluffing strategy.

In addition to discussing the Wikileaks threat, the Independent article provided us with the perspective of a former Murdoch associate on the possibility that Rupert might not be too happy with the way things are going at Fox News:

In a further broadside yesterday, one of Mr Murdoch’s former henchmen, Andrew Neil, publicly questioned whether the world’s most powerful media figure retained his grip over his organisation.

*   *   *

“My own view is [Fox] is out of control,” Neil told Richard Bacon yesterday on BBC Radio 5 Live.  “I think Rupert Murdoch has lost control of it. I know from sources he’s not happy with a lot that appears on it and I think he’s lost over the Glenn Becks and the O’Reillys,” said Mr Neil.

“[Murdoch] is uncomfortable with Glenn Beck and various other positions they take and some of the things they say.”  Neil, who fell out with Mr Murdoch in the early Nineties, claimed he had “very good sources at the heart of News Corp”.

If there is any truth to Andrew Neil’s revelations, it will be very interesting to see if Mr. Murdoch makes any changes at Fox News, due to his reported concerns.  Either way, 2011 could turn out to be a very important year for Rupert Murdoch.


wordpress visitor


Maria Cantwell For President

Comments Off on Maria Cantwell For President

I was going to hold off on this and give President Obama the benefit of a doubt – at least for a few months.  Nevertheless, after reading the magnificent piece by Barry Ritholtz, entitled:  “The Tragedy of the Obama Administration”, I decided that it was time to start discussing leadership alternatives for the next Presidential term.

On October 30, the Associated Press published the results of a poll it conducted with Knowledge Networks.  Forty-seven percent of the Democrats surveyed expressed the opinion that Obama should be challenged for the 2012 Democratic Presidential nomination.  In the wake of the mid-term election massacre, I expect that more Democrats will be anxious to find a new standard-bearer for their party in 2012.  The AP article concerning the AP-KN poll, mentioned the theory that the public’s opinion of Obama could change if the economy improves.  Unfortunately, most American consumers will not observe any significant improvement in the economy during the next two years.  There is a greater likelihood that the Chicago Cubs will win next year’s World Series.

We currently find ourselves bombarded with a wide spectrum of opinions, which purport to explain what the results of the 2010 elections really mean.  The most obvious conclusion to be drawn from this event is that the voters resent being taken for chumps.  Obama’s supporters were promised change they could believe in by a President and a party that sold its soul to the Wall Street megabanks at the cost of America’s future economic health.  When he had the opportunity to do so in early 2009, Obama refused to put those too-big-to-fail, zombie banks through temporary receivership.  As a result, we are now approaching a situation which – according to financial risk management expert Chris Whalen – will necessitate another round of bank bailouts.  When President Obama had the opportunity and the public support (not to mention Democratic control over both houses of Congress) to enact an adequate stimulus program to save the economy from a decade(s) – long, Japanese-style recession, he refused to so.  If an extra $600 billion had been added to the $787 billion in 2009 (as part of a better-thought-out, infrastructure-based stimulus program) we would be experiencing significant economic growth and a recovering job market right now.  Australia keeps reminding us of this.  (Oops!  Australia just did it again!)  Instead, America finds itself in a situation wherein the Fed is now appropriating that $600 billion toward another round of quantitative easing, which will serve no other purpose than to push investors into the stock market.  According to economist Andy Xie, those stock investors will have an unpleasant experience when Chairman Bernanke’s latest asset bubble pops in 2012.

While many Senate Democrats (along with operatives from the Treasury Department) were busy removing all of the teeth from the financial reform bill, Maria Cantwell was fighting those efforts as one of the few advocates for the American taxpayers.  Back on May 19, Arthur Delaney and Ryan Grim of The Huffington Post described how Senator Cantwell stood up to the efforts of Harry Reid to use cloture to push the financial reform bill to a vote before any further amendments could have been added to strengthen the bill.  Notice how “the usual suspects” – Reid, Chuck Schumer and “Countrywide Chris” Dodd tried to close in on Cantwell and force her capitulation to the will of the kleptocracy:

There were some unusually Johnsonian moments of wrangling on the floor during the nearly hour-long vote.  Reid pressed his case hard on Snowe, the lone holdout vote present, with Bob Corker and Mitch McConnell at her side.  After finding Brown, he put his arm around him and shook his head, then found Cantwell seated alone at the opposite end of the floor.  He and New York’s Chuck Schumer encircled her, Reid leaning over her with his right arm on the back of her chair and Schumer leaning in with his left hand on her desk.  Cantwell stared straight ahead, not looking at the men even as she spoke.  Schumer called in Chris Dodd, who was unable to sway her.  Feingold hadn’t stuck around.  Cantwell, according to a spokesman, wanted a guarantee on an amendment that would fix a gaping hole in the derivatives section of the bill, which requires the trades to be cleared, but applies no penalty to trades that aren’t, making Blanche Lincoln’s reform package little better than a list of suggestions.

*   *   *

“I don’t think it’s a good idea to cut off good consumer amendments because of cloture,” said Cantwell on Tuesday night.

Senator Cantwell has proven herself worthy of our trust.  Her nomination as the 2012 Democratic Presidential candidate will revive the excitement and voter enthusiasm witnessed during the 2008 campaign.  On the other hand, if President Obama decides to seek a second term and wins the nomination, we will likely find a greater enthusiasm gap than the example of November 2.  As a result, by January of 2013 we could have a new administration in the White House, espousing what economist Nouriel Roubini describes as “the economic equivalent of creationism”.

Here’s to a bright future!


wordpress visitor

We Took The Wrong Turn

Comments Off on We Took The Wrong Turn

October 7, 2010

The ugly truth has raised its head once again.  We did it wrong and Australia did it right.  It was just over a year ago – on September 21, 2009 – when I wrote a piece entitled, “The Broken Promise”.  I concluded that posting with this statement:

If only Mr. Obama had stuck with his campaign promise of “no more trickle-down economics”, we wouldn’t have so many people wishing they lived in Australia.

I focused that piece on a fantastic report by Australian economist Steve Keen, who explained how the “money multiplier” myth, fed to Obama by the very people who caused the financial crisis, was the wrong paradigm to be starting from in attempting to save the economy.

The trouble began immediately after President Obama assumed office.  I wasn’t the only one pulling out my hair in February of 2009, when our new President decided to follow the advice of Larry Summers and “Turbo” Tim Geithner.  That decision resulted in a breach of Obama’s now-infamous campaign promise of “no more trickle-down economics”.  Obama decided to do more for the zombie banks of Wall Street and less for Main Street – by sparing the banks from temporary receivership (also referred to as “temporary nationalization”) while spending less on financial stimulus.  Obama ignored the 50 economists surveyed by Bloomberg News, who warned that an $800 billion stimulus package would be inadequate.  At the Calculated Risk website, Bill McBride lamented Obama’s strident posturing in an interview conducted by Terry Moran of ABC News, when the President actually laughed off the idea of implementing the so-called “Swedish solution” of putting those insolvent banks through temporary receivership.

With the passing of time, it has become painfully obvious that President Obama took the country down the wrong path.  The Australian professor (Steve Keen) was right and Team Obama was wrong.  Economist Joseph Stiglitz made this observation on August 5, 2010:

Kevin Rudd, who was prime minister when the crisis struck, put in place one of the best-designed Keynesian stimulus packages of any country in the world.  He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon.  So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place.

Rudd’s stimulus worked:  Australia had the shortest and shallowest of recessions of the advanced industrial countries.

Fast-forward to October 6, 2010.  Michael Heath of Bloomberg BusinessWeek provided the latest chapter in the story of how America did it wrong while Australia did it right:

Australian Employers Added 49,500 Jobs in September

Australian employers in September added the most workers in eight months, driving the country’s currency toward a record and bolstering the case for the central bank to resume raising interest rates.

The number of people employed rose 49,500 from August, the seventh straight gain, the statistics bureau said in Sydney today.  The figure was more than double the median estimate of a 20,000 increase in a Bloomberg News survey of 25 economists.  The jobless rate held at 5.1 percent.

Meanwhile — back in the States — on October 6, ADP released its National Employment Report for September, 2010.  It should come as no surprise that our fate is 180 degrees away from that of Australia:  Private sector employment in the U.S. decreased by 39,000 from August to September on a seasonally adjusted basis, according to the ADP report.   Beyond that, October 6 brought us a gloomy forecast from Jan Hatzius, chief U.S. economist for the ever-popular Goldman Sachs Group.  Wes Goodman of Bloomberg News quoted Hatzius as predicting that the United States’ economy will be “fairly bad” or “very bad” over the next six to nine months:

“We see two main scenarios,” analysts led by Jan Hatzius, the New York-based chief U.S. economist at the company, wrote in an e-mail to clients.  “A fairly bad one in which the economy grows at a 1 1/2 percent to 2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession.”

Aren’t we lucky!  How wise of President Obama to rely on Larry Summers to the exclusion of most other economists!

Charles Ferguson, director of the new documentary film, Inside Job, recently offered this analysis of the milieu that facilitated the opportunity for Larry Summers to inflict his painful legacy upon us:

Then, after the 2008 financial crisis and its consequent recession, Summers was placed in charge of coordinating U.S. economic policy, deftly marginalizing others who challenged him.  Under the stewardship of Summers, Geithner, and Bernanke, the Obama administration adopted policies as favorable toward the financial sector as those of the Clinton and Bush administrations — quite a feat.  Never once has Summers publicly apologized or admitted any responsibility for causing the crisis.  And now Harvard is welcoming him back.

Summers is unique but not alone.  By now we are all familiar with the role of lobbying and campaign contributions, and with the revolving door between industry and government.  What few Americans realize is that the revolving door is now a three-way intersection.  Summers’ career is the result of an extraordinary and underappreciated scandal in American society:  the convergence of academic economics, Wall Street, and political power.

*     *     *

Now, however, as the national recovery is faltering, Summers is being eased out while Harvard is welcoming him back.  How will the academic world receive him?  The simple answer:  Better than he deserves.

Australia is looking better than ever  —  especially when you consider that their spring season is just beginning right now     .   .   .




Lack Of Stimulation

Comments Off on Lack Of Stimulation

September 9, 2010

You don’t have to look very far to find a rabid, hostile reaction to President Obama’s proposed $50 billion transportation infrastructure program.  After all – it’s an election year.  I was quite surprised when I read this paragraph from a BusinessWeek report about the proposal:

For companies that do the unglamorous work of pouring cement, crushing stones, and hauling earth, President Barack Obama’s $50 billion proposal outlined on Sept. 6 to rebuild U.S. roads, railways, and runways is welcome relief amid unrelenting economic gloom.  If approved by Congress (an uncertain proposition in an election year) Obama’s plan would pick up the slack when most of the highway stimulus funds under the $814 billion American Recovery and Reinvestment Act is expected to be spent next year, says Mike Betts, an analyst with London-based Jefferies.

Stop and think about that for a moment.  The phrase I wish to bring to your attention is:

.  .  .   most of the highway stimulus funds under the $814 billion American Recovery and Reinvestment Act is expected to be spent next year    .  .  .

The first question that came to mind was:  Why the hell wasn’t it spent last year?  We’ve been reading about how the effects of the “Obama stimulus bill” (a/k/a  the American Recovery and Reinvestment Act) have already stopped boosting the economy.  How much more of that money has been sitting on the sidelines?  Beyond that, why didn’t the American Recovery and Reinvestment Act provide more funding for infrastructure?

The proposed transportation infrastructure program will cost approximately the same as the B-2 Stealth Bomber program, which produced 21 bombers at an average cost of $2.1 billion per aircraft in 1997 dollars.

Since July of last year, I have been among those arguing that the $787 billion economic stimulus package was inadequate, after reading about a Bloomberg survey of economists, which supported that conclusion in February of 2009.  In early 2009, there was a greater sense of urgency about the state of the economy and a stronger political will to enact a more significant stimulus.  Unfortunately, President Obama was not up to the task of pushing a larger bill through.  As a result, the President is now making piecemeal stimulus efforts, such as the $50-billion infrastructure proposal.  The tragedy of not getting it right the first time seemed more unfortunate after I read a recent posting by Barry Ritholtz at his blog, The Big Picture.  Here is what Mr. Ritholtz had to say:

Yesterday on XM Sirius, we discussed Infrastructure.

One of the callers was a civil engineer who suggested we take a look at the US Infrastructure Report Card (infrastructurereportcard.org), which grades the US on a variety of factors.  The 2009 Grades include: Aviation (D), Bridges (C), Dams (D), Drinking Water (D-), Energy (D+), Hazardous Waste (D), Inland Waterways (D-), Levees (D-), Public Parks and Recreation (C-), Rail (C-), Roads(D-), Schools (D), Solid Waste (C+), Transit (D), and Wastewater (D-).

Overall, America’s Infrastructure GPA was graded a “D.”  To get to an “A” requires a 5 year infrastructure investment of $2.2 Trillion dollars.  Hence, you can understand if I am underwhelmed by the latest $50B proposal.

Each individual state is also graded;  NY’s is after the jump.

After reading about the Infrastructure Report Card, I couldn’t help but wonder how our economy would have benefited from a $2.2 trillion infrastructure program rather than the $850 billion stimulus program enacted in 2009.  Consider what economist Joseph Stiglitz had to say about how the global financial crisis was affecting Australia in August of 2010:

Kevin Rudd, who was prime minister when the crisis struck, put in place one of the best-designed Keynesian stimulus packages of any country in the world.  He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon. So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place.

Rudd’s stimulus worked: Australia had the shortest and shallowest of recessions of the advanced industrial countries.

There’s a right way of doing economic stimulus and a wrong way of implementing such a program.  Unfortunately, America did it the wrong way.





href=”http://statcounter.com/wordpress.org/”
target=”_blank”>wordpress visitor


Not Getting It Done

Comments Off on Not Getting It Done

August 9, 2010

Are the Democrats trying to lose their majorities in both the Senate and the House in November?  Their two biggest accomplishments, the healthcare “reform” bill and the financial “reform” bill haven’t really impressed the electorate.  According to a Gallup Poll, voter reaction to the passage of the “Affordable Healthcare Act” is 49 percent contending that the bill is a “good thing” as opposed to 46 percent who believe it is a “bad thing”, with 5 percent undecided.  Criticism of the “Wall Street Reform and Consumer Protection Act of 2010” has been widespread, as I have previously discussed here, here and here.  The latest critique of the bill came from Professor Thomas F. Cooley, of the Stern School of Business at NYU.  His Forbes article entitled, “The Politics Of Regulatory Reform”, was based on this theme:

The awareness of how close we came to paralyzing the financial system created an opportunity to do something truly significant to make the system safer and more in tune with the needs of our economy.  Sadly, because all things in Washington are political, we fumbled the ball.

Rahm Emanuel’s infamous doctrine, “You never want a serious crisis to go to waste” is apparently being disregarded by Rahm Emanuel and company at The White House.  Of course, the entire economic catastrophe has provided the Obama administration with a boatload of crises – most of which have already gone to waste.  For example, consider this fiasco-in-progress:  The “small business” sector plays such an important role in keeping Americans employed, a bill to facilitate lending to small businesses has been sponsored by Senator Mary Landrieu (D-Louisiana).  An August 7 report by Sharon Bernstein of the Los Angeles Times provided this update on the status of the measure:

The small business loan assistance ran into trouble in the Senate when members from both parties began attaching amendments to support their favored causes.

The ineffective efforts of Senate Democrats are unfairly souring public opinion on their more unified counterparts in the House.  In attempt to redeem the image of Congressional Dems, House Speaker Nancy Pelosi scheduled a special session of Congress for Tuesday, August 10, (an interruption of their August recess) to pass a $26-billion bill to avert public employee layoffs.

With the passing of time, it has become more obvious that President Obama’s biggest mistake since taking office was his weak leadership in promoting the economic stimulus effort.  Many commentators have expressed the opinion that Christina Romer’s resignation as chair of the President’s Council of Economic Advisors was based on her frustration with the under-funded stimulus program.

I recently wrote an “I told you so” piece, referencing my July, 2009 prediction that it would eventually become necessary for President Obama to introduce a second stimulus bill because the $787 billion proposal would prove inadequate.  At his blog, liberal economist Paul Krugman similarly reminded readers of his prediction about the consequences for failing to pass an effective stimulus bill:

So here’s the picture that scares me:  It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up.  Mr. Obama finally concedes that a bigger stimulus is needed.

But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts.  And as a result, the recession rages on, unchecked.

The reality has turned out even worse than Krugman’s prediction because we are now approaching September 2010 – an election year – and the unemployment rate is being understated at 9.5 percent.  The conflation Krugman discussed has manifested itself in the narrative of the Tea Party movement.  In September of 2009, I discussed why Obama should have been listening to Australian economist Steve Keen, who – by that point – was saying basically the same thing:

So giving the stimulus to the debtors is a more potent way of reducing the impact of a credit crunch — the opposite of the advice given to Obama by his neoclassical advisers.

Economist Joseph Stiglitz recently provided us with this update about how the global financial crisis is affecting Australia in August of 2010:

Kevin Rudd, who was prime minister when the crisis struck, put in place one of the best-designed Keynesian stimulus packages of any country in the world.  He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon.  So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place.

Rudd’s stimulus worked:  Australia had the shortest and shallowest of recessions of the advanced industrial countries.

Meanwhile, President Obama and the Democrats have decided to utilize a mid-term campaign strategy of assessing all of the blame for our current financial chaos on President George W. Bush.  Criticism of this approach has been voiced by people outside of the Republican camp.  Frank Rich of The New York Times lamented the lack of message control exercised by the Democrats and their ill-advised focus on the Bush era:

But rather than wait for miracles or pray that Bushphobia will save the day, Democrats might instead start playing the hand they’ve been dealt.  Elections, the cliché goes, are about the future, not the past.  At the very least they’re about the present.

At this point in American history, it’s becoming more obvious that the two-party system has served no other purpose than to perpetuate the careers of blundering grafters.  The voting public must accept the reality that the only way it will be honestly and effectively represented in Washington is by independent candidates.  The laws that keep those independents off the ballots must be changed.




More Damned Lies Than You Can Count

Comments Off on More Damned Lies Than You Can Count

March 15, 2010

Thanks to the great work of Anton Valukas, as court-appointed bankruptcy examiner investigating the collapse of Lehman Brothers, people are finally beginning to realize how significant a role fraud plays on Wall Street.  It turned out that the Enron scandal wasn’t the once-in-a-lifetime event people thought it was.  Accounting fraud occurs on a regular basis, as does fraudulent stock price manipulation.  The 2200-page report prepared by Valukas and his team at Jenner & Block has everyone talking.  It’s about time.

Other lies are getting more exposure as well.  President Obama justified the bank bailouts with the rationale that giving the money to the banks creates a “money multiplier” effect because banks can loan out 8-10 dollars for every bailout dollar they get, giving the economy more bang for the bailout buck.  As I pointed out on September 21, Australian economist Steve Keen published a fantastic report from his website, explaining how the “money multiplier” myth, fed to Obama by the very people who helped cause the crisis, was the wrong paradigm to be starting from in attempting to save the economy.  Here’s some of what Professor Keen had to say:

He justified giving the money to the lenders, rather than to the debtors, on the basis of “the multiplier effect” from bank lending:

the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.  (page 3 of the speech)

This argument comes straight out of the neoclassical economics textbook.  Fortunately, due to the clear manner in which Obama enunciates it, the flaw in this textbook argument is vividly apparent in his speech.

This “multiplier effect” will only work if American families and businesses are willing to take on yet more debt:  “a dollar of capital in a bank can actually result in eight or ten dollars of loans”.

So the only way the roughly US$1 trillion of money that the Federal Reserve has injected into the banks will result in additional spending is if American families and businesses take out another US$8-10 trillion in loans.

*  *  *

If the money multiplier was going to “ride to the rescue”, private debt would need to rise from its current level of US$41.5 trillion to about US$50 trillion, and this ratio would rise to about 375% — more than twice the level that ushered in the Great Depression.

This is a rescue?  It’s a “hair of the dog” cure:  having booze for breakfast to overcome the feelings of a hangover from last night’s binge.  It is the road to debt alcoholism, not the road to teetotalism and recovery.

Fortunately, it’s a “cure” that is also highly unlikely to work, because the model of money creation that Obama’s economic advisers have sold him was shown to be empirically false over three decades ago.

Now that Australia’s economy is beginning to recover, they have already found it necessary to begin raising interest rates.  As I pointed out last September:

If only Mr. Obama had stuck with his campaign promise of “no more trickle-down economics”, we wouldn’t have so many people wishing they lived in Australia.

Michael Shedlock (“Mish”) recently referred to Professor Keen’s debunking of the money multiplier myth in a fantastic essay:

However, conventional wisdom regarding the money multiplier is wrong.  Australian economist Steve Keen notes that in a debt based society, expansion of credit comes first and reserves come later.

Indeed, this is easy to conceptualize:  Banks lent more than they should have, and those loans are going bad at a phenomenal rate.  In response, the Fed has engaged in a huge swap-o-rama party with various banks (swapping treasuries for collateral of dubious value) in addition to turning on the printing presses.

This was done so that banks would remain “well capitalized”. The reality is those excess reserves are a mirage.  Banks need those reserves for credit losses coming down the pike, as unemployment rises, foreclosures mount, and credit card defaults soar.

Banks are not well capitalized, they are insolvent, unwilling and unable to lend.

Blogger George Washington recently wrote an extensive, thought-provoking piece about public banking and other potential alternatives to resolve the economic crisis, which appeared at the Naked Capitalism website.  The essay began with a discussion of Steve Keen’s work in exposing the “money multiplier” as a sham.

Speaking of shams, former Labor Secretary Robert Reich recently wrote a great essay entitled, “The Sham Recovery”.  Reich has exposed the propagandists touting the imaginary economic recovery in his unique, clear style:

Business cheerleaders naturally want to emphasize the positive.  They assume the economy runs on optimism and that if average consumers think the economy is getting better, they’ll empty their wallets more readily and — presto! — the economy will get better.  The cheerleaders fail to understand that regardless of how people feel, they won’t spend if they don’t have the money.

It’s always nice when a big lie gets exposed.   It’s even better that we are now learning that the true cause of the financial crisis was plain, old sleaze.



wordpress visitor


The Broken Promise

Comments Off on The Broken Promise

September 21, 2009

We expect those politicians aiming for re-election, to make a point of keeping their campaign promises.  Many elected officials break those promises and manage to win another term anyway.  That fact might explain the reasoning used by so many pols who decide to go the latter route  —  they believe they can get away with it.  Nevertheless, many leaders who break their campaign promises often face crushing defeat on the next Election Day.  A good example of this situation arose during the Presidential campaign of George H.W. Bush, who assured America:  “Read my lips:  No new taxes!” in his acceptance speech (written by Peggy Noonan) at the 1988 Republican National Convention.  Although he didn’t enact any new taxes during his sole term in office, he also promised the voters that he would not raise existing taxes after telling everyone to read his lips.  When he broke that promise after becoming President, he was confronted with the “read my lips” quote by everyone from Pat Buchanan to Bill Clinton.

Back on July 15, 2008 and throughout the Presidential campaign, Barack Obama promised the voters that if he were elected, there would be “no more trickle-down economics”.  Nevertheless, his administration’s continuing bailouts of the banking sector have become the worst examples of trickle-down economics in American history — not just because of their massive size and scope, but because they will probably fail to achieve their intended result.  Although the Treasury Department is starting to “come clean” to Congressional Oversight chair Elizabeth Warren, we can’t even be sure about the amount of money infused into the financial sector by one means or another because of the lack of transparency and accountability at the Federal Reserve.  (I seem to remember the word “transparency” being used by Candidate Obama.)  Although we are all well-aware of the $750 billion TARP slush fund that benefited the banks to some degree, speculation as to the amount given (or “loaned”) to the banks by the Federal Reserve runs from $2 trillion to as high as $6 trillion.  So far, the Fed has managed to thwart efforts by some news organizations to learn the ugly truth.  As Pat Choate reported for The Huffington Post:

Bloomberg News filed a federal lawsuit in November 2008 in the U.S. District Court, Southern District of New York (Manhattan) challenging that stonewalling and won the case.  Chief U.S. District Judge Loretta Preska on August 24 ruled that the Fed had “improperly withheld agency records” giving it a week to disclose daily reports on its loans to banks and other financial institutions.

Three days later, Federal Reserve lawyers asked the courts for a delay so that they could make an expedited appeal of her decision.  Several major banks, operating through an organization named “The Clearing House,” filed a supporting brief with the appeals court, claiming that the Federal Reserve had provided its members emergency funds under an agreement not to identify the recipients or the loan terms.

The Clearing House brief described its members as, “[T]he most important participants in the international banking and payments systems and among the world’s largest intermediaries in interbank funds transfers.”  They include ABN Amro Bank, N.V. (Dutch), Bank of America, The Bank of New York Mellon, Citibank, Deutsche Bank Trust (Germany), JP MorganChase Bank, UBS (Switzerland), and Wells Fargo.

*   *   *

Why are the Fed and the banks fighting so hard to keep the loan details secret?  Congress and taxpayers cannot know until they have the information the Federal Reserve is keeping from them, but several plausible explanations exist.

One is that the Fed has taken a great deal of worthless collateral and is propping up failed companies and banks.  A second is that the information will make the issue of paying out huge Wall Street bonuses in 2009 politically radioactive, particularly if it turns out the payments are dependent on these federal loans.

Finally, the Federal Reserve probably does not want that information to be part of the forthcoming Senate hearings on the re-confirmation of Ben Bernanke, current Chairman of the Federal Reserve.

President Obama’s failure to keep his campaign promise of “no more trickle-down economics” is rooted in his decision to rely on the very same individuals who caused the financial crisis — to somehow cure the nation’s economic ills.  These people (Larry Summers, “Turbo” Tim Geithner and Ben Bernanke) have convinced Mr. Obama that “trickle-down economics” (i.e. bailing out the banks, rather than distressed businesses or the taxpayers themselves) would be the best solution.

On Saturday, Australian economist Steve Keen published a fantastic report from his website, explaining how the “money multiplier” myth, fed to Obama by the very people who caused the crisis, was the wrong paradigm to be starting from in attempting to save the economy.  Here’s some of what Professor Keen had to say:

While economic outsiders like myself, Michael Hudson, Niall Ferguson and Nassim Taleb argue that the only way to restart the economic engine is to clear it of debt, the government response, has been to attempt to replace the now defunct private debt economic turbocharger with a public one.

In the immediate term, the stupendous size of the stimulus has worked, so that debt in total is still boosting aggregate demand.  But what will happen when the government stops turbocharging the economy, and waits anxiously for the private system to once again splutter into life?

I am afraid that all it will do is splutter.

This is especially so since, following the advice of neoclassical economists, Obama has got not a bang but a whimper out of the many bucks he has thrown at the financial system.

In explaining his recovery program in April, PresidentObama noted that:

“there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks – ‘where’s our bailout?,’ they ask”.

He justified giving the money to the lenders, rather than to the debtors, on the basis of  “the multiplier effect” from bank lending:

the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth. (page 3 of the speech)

This argument comes straight out of the neoclassical economics textbook.  Fortunately, due to the clear manner in which Obama enunciates it, the flaw in this textbook argument is vividly apparent in his speech.

This “multiplier effect” will only work if American families and businesses are willing to take on yet more debt:  “a dollar of capital in a bank can actually result in eight or ten dollars of loans”.

So the only way the roughly US$1 trillion of money that the Federal Reserve has injected into the banks will result in additional spending is if American families and businesses take out another US$8-10 trillion in loans.

*   *   *

If the money multiplier was going to “ride to the rescue”, private debt would need to rise from its current level of US$41.5 trillion to about US$50 trillion, and this ratio would rise to about 375% — more than twice the level that ushered in the Great Depression.

This is a rescue?  It’s a “hair of the dog” cure:  having booze for breakfast to overcome the feelings of a hangover from last night’s binge.  It is the road to debt alcoholism, not the road to teetotalism and recovery.

Fortunately, it’s a “cure” that is also highly unlikely to work, because the model of money creation that Obama’s economic advisers have sold him was shown to be empirically false over three decades ago.

*    *    *

I’ve recently developed a genuinely monetary, credit-driven model of the economy, and one of its first insights is that Obama has been sold a pup on the right way to stimulate the economy:  he would have got far more bang for his buck by giving the stimulus to the debtors rather than the creditors.

*    *    *

The model shows that you get far more “bang for your buck” by giving the money to firms, rather than banks.  Unemployment falls in both case below the level that would have applied in the absence of the stimulus, but the reduction in unemployment is far greater when the firms get the stimulus, not the banks: unemployment peaks at over 18 percent without the stimulus, just over 13 percent with the stimulus going to the banks, but under11 percent with the stimulus being given to the firms.

*    *    *

So giving the stimulus to the debtors is a more potent way of reducing the impact of a credit crunch — the opposite of the advice given to Obama by his neoclassical advisers.

This could also be one reason that the Australian experience has been better than the USA’s:  the stimulus in Australia has emphasized funding the public rather than the banks (and the model shows the same impact from giving money to the workers as from giving it to the firms — and for the same reason, that workers have to spend, so that the money injected into the economy circulates more rapidly.

*    *    *

Obama has been sold a pup by neoclassical economics:  not only did neoclassical theory help cause the crisis, by championing the growth of private debt and the asset bubbles it financed; it also is undermining efforts to reduce the severity of the crisis.

This is unfortunately the good news:  the bad news is that this model only considers an economy undergoing a “credit crunch”, and not also one suffering from a serious debt overhang that only a direct reduction in debt can tackle.  That is our actual problem, and while a stimulus will work for awhile, the drag from debt-deleveraging is still present.  The economy will therefore lapse back into recession soon after the stimulus is removed.

You can be sure that if we head into a “double-dip” recession as Professor Keen expects, the President will never hear the end of it.  If only Mr. Obama had stuck with his campaign promise of “no more trickle-down economics”, we wouldn’t have so many people wishing they lived in Australia.



wordpress visitor