The Financial Question

“It remained clear, however, that unresolved questions about the
inherited financial system might well make a sudden and unexpected
reappearance if, at any time in the second half of the twentieth
century, shifts in world trade and the cost of imported materials place
severe forms of competitive pressure on the American economy and on the
international monetary system. At such a moment the cultural
consolidation fashioned in the Gilded Age would undergo its first
sustained re-evaluation, as the "financial question" once again intruded
into the nation's politics and issues of Populism again penetrated the
American consciousness.” - Lawrence Goodwyn, “The Populist Moment”

I have to say for entertainment value, there's not much greater than our
political and financial elite discussing the value of the dollar. Throw
in the goldbugs and it's high camp vaudeville. Americans pride
themselves on not knowing anything about the financial system, and, it
would also seem, they very much enjoy being pillaged by Wall Street and
their elected officials in the name of financial stability. Over the
last couple years, financial stability as was known in the last three
decades or maybe even the last seven decades has become a little shaky.
In response, Chairman Bernanke bet the buck, which has led to increasing
speculation on the dollar's future.

Just as most Americans know nothing about how their financial system
works, most who work on Wall Street know nothing about currency, except
that when any given currency is in play, there's plenty of money to be
made. And if you can get the dollar in play -- yahoo! Currency has no
intrinsic value. At its foundation, all money is a faith based system,
which does indeed leave it open to existential crises. However, while
having no intrinsic value, currencies represent some sort of value, and
the dollar represents the global economic system as it presently operates.

Today, the dollar's value is derived from the United States being a
fifth of the global economy, and despite the deindustrialization of the
past several decades remains the largest manufacturer on the planet. But
it gets even better, the dollar represents the last half-century's
experiment of corporate globalization. It is the world's reserve
currency first and foremost because the American military provides the
order, such that it is, that allows the system to function. This is what
gives value to the dollar. So, the next time you see an financial
analyst talking about the dollar going down, it means all those things
are going down with it, and most importantly for our global financial
elite, that means most of them too.

Now, don't misunderstand, there are so many structural problems to the
present global economic order, that an existential crisis on the dollar
might well come at any time. For example, problems with oil supplies
could immediately upset the dollar applecart, but that would bring
everyone else with it. My main point here is if the dollar were to
collapse, most of the people you hear talking about how to profit on the
dollar's demise would be flushed away with it. Such currency shifts
being so blithely bandied about are the stuff of major historical drama.
It took two world wars to dislodge the British pound from its global
position.

The question to ask our financial gurus would be in collapsed dollar
world, what would take it's place. The Renminbi? There's no country on
the planet more reliant on a strong dollar. The Euro? Well, let's see
them kick out the American military first. Or maybe for a little
nostalgia we could go back to the pound? Unfortunately, a top heavy
financial industry, depleting oil and gas reserves, and inbred German
royalty as a tourist attraction are not the things of a strong economy.
A basket of currencies? Well that makes the most sense, much more
difficult to implement than to say, and it would take decades.

Right now, the world is stuck with the dollar. The United States could
strengthen the dollar by cutting our oil consumption, consuming less on
whole, producing a little more, and bring the troops home from Iraq,
Afghanistan, Japan, Germany, Italy... go down the list. At the moment,
none of these things seem forthcoming from our political leadership or
the American people. So, my fellow Americans, in these existential times
for the dollar, follow the advise of Uncle Walt on Tinkerbell, "If you
believe, clap your hands; don't let the dollar die."

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the commons not so tragic

Yesterday, the Nobel committee gave their economics
prize to a "political scientist." Phew, now economics is no science and
there is absolutely no such thing as political science or political
scientists. The only people who have the audacity to call themselves
political scientists are tenured professors. Science as politics, well,
that's a whole other matter, just ask Galileo

If you had the misfortune to be involved in American politics during the 1980s, one
notion was promoted endlessly as an excuse for greater mega-corporate
control. It was the idea of the "tragedy of the commons," which if you
dig deeply at all into it, is a refutation of the idea of any social
ordering outside markets, that is, a refutation of much of human
history, welcome to the science of economics. My response to all the
free marketeers, who would tell me about the
"tragedy of the commons" was quite simple, "I always thought
the tragedy of the commons was the fence." That always ended the
conversation. Unfortunately, it didn't end the idea of the tragedy of
the commons, which was used as conclusive science for all sorts of
privatization and profit making policy endeavors.

So, it was interesting that yesterday the Nobel committee on economics
recognized the tragedy of commons isn't quite all it's been promoted.
The NYT article states (tx
tiffiniy), the Nobel judges said, 'economic science' should extend
beyond market theory and into actual behavior." Now, that's just funny,
a noble cause for any science don't you think We need to rethink
political economy at very fundamental levels.

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Nobel awards those working on shortcomings of "marketplace efficiencies"

Elinor Olstrom won the nobel prize (first woman to win nobel economics prize) for her work showing that communities are able to manage community properties better than expected -- government and private management are not the only answers. I wrote in an earlier post that we as a society should be working on the most optimized, comprehensive, answers to any issue, however nuanced, complicated, large, new that answer may be. I helped to co-found a website called Open Congress, which I believe helps to pave the way for a community-managed political process by making information, organizing tools, transparent and usable -- only if we can change who gets engaged can we all understand the way to solve problems.

This excerpt from the NYTimes article on the economics prize is very relevant to our shared work and ideas at ANWF:

“Economics has been too isolated and these awards today are a sign of the greater enlightenment going around. We were too stuck on efficient markets and it was derailing our thinking.”

The prize committee, in making the awards, seemed to be influenced by the credit crisis and the severe recession that in the minds of many mainstream economists has highlighted the shortcomings of a unregulated marketplace, in which “economic actors,” left to their own devices, will act in their own self-interests and in doing so, will enhance everyone’s well-being.

The committee, in effect, said that theory was too simplistic and ignored the unstated relationships and behaviors that develop among companies that are competitors but find ways to resolve common problems. “Both scholars have greatly enhanced our understanding of non-market institutions” other than government, the committee said.

“Basically there is a common understanding that develops even among competitors when they are dealing with each other,” Mr. Shiller said, adding “when people make business contact, even competitors, they can’t anticipate everything, so an element of trust comes in.”

A prominent anti-corruption activist, Lessig recently wrote against the naked transparency movement. I agree with him that there shouldn't be a push for transparency as an end. It's obvious to organizing tool makers that transparency is a prerequisite to changing the way the system engages the public sphere - Lessig advocates for greater reform measures coupled with transparency. I am definitely for that. Strict work on campaign contributions though concentrates on reforming the political system without making assumptions about the actual mechanics of the political system and how the mechanics themselves affect the public sphere. His article is not against public participation, but strict work on campaign contributions does not address the issue of public participation. He's saying, "hey start working on campaign contributions directly"- to mobilize people on that issue, there needs to be more education to get people mad. Transparency is a part of that education and he needs it if he wants to inspire people to do something. He writes,

"But if the transparency movement could be tied to this movement for reform--if every step for more transparency were attended by a reform that would disabuse us of the illusion that this technology is just a big simple blessing, and set out to make transparency both good and harmless--then its consequence could be salutary and constructive. When transparency and democracy are considered in this way, we may even permit ourselves to imagine a way out of this cycle of cynicism....As with ProPublica or nonprofit newspapers, or a "cultural flat-rate," or a compulsory license to compensate for file-sharing, proposals for public funding can thus be understood as a response to an unavoidable pathology of the technology--its pathological transparency--that increasingly rules our lives and our institutions. Without this response--with the ideal of naked transparency alone--our democracy, like the music industry and print journalism generally, is doomed. The Web will show us every possible influence. The most cynical will be the most salient. Limited attention span will assure that the most salient is the most stable. Unwarranted conclusions will be drawn, careers will be destroyed, alienation will grow. No doubt we will rally to the periodic romantic promising change (such as Barack Obama), but nothing will change. D.C. will become as D.C. is becoming: a place filled with souls animated by--as Robert Kaiser put it recently in his fine book So Damn Much Money--a "familiar American yearning: to get rich."'

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Accounting, Infinity, and the $

As far as economists go, I like Willem Buiter. Can't quite put my finger on it, but every now and then he gets to the root of the matter, and whenever anyone gets to the root of the matter in economics, you pretty much collapse all the theory that has been built on top of it. That's good and healthy for all concerned, except the
economic church and its priesthood.

The real root of all economics is accounting, because if you don't have
good numbers, it doesn't matter how fancy or elegant your equations.
This is a theme I've been harping on in regards to our banks. Buiter's piece
today(tx Yves S) is an excellent read on the topic. Now, one of the
great problems with the Soviet Union and other centrally planned states
is that fairly quickly accounting became useless, as everyone began
lying about numbers. Buiter writes,

Janos Kornai described at length, in Economics of Shortage,
his classic work on the internal contradiction of central planning, how
soft budget constraints became a defining feature of a centrally
planned economy and were central to its astonishing inefficiency and
eventual downfall.

The old communist regimes used to rail against "bourgeois" standards.
Well, our banking system's numbers today are so far from any reality,
we might call it "red accounting." Now there's a double entendre! This
is a great problem for both our financial system and our society. The
more our banks' books move toward infinity, the more valueless they are.

Speaking of valuelessness, we come to the dollar, which despite all
hype, is in less trouble than reported. Understand, everything comes
down with the dollar. So, if the dollar is going to have a cataclysmic
collapse, it will be the least of things you need to worry about. The
FT reports a number of Asian countries stepped in today to uphold the dollar's
value. Why? Because they have to. The whole corporate globalization
system of the past half-century is built on a strong dollar. But hey,
talking about the dollar puts it in play, and fuck the real economy,
when the dollar's in play there's plenty of money to be made by Wall
Street.

Currency shifts, such as have been talked about in recent days, quickly
move from the realm of finance and economics to the realm of history,
and as we all know, there is no history in economics, certainly not in
neo-liberal free marketeerism. The idea that our global financial
system, such that it is, can in any way conduct an orderly decline in
the dollar, isn't free market thinking, it's pure fantasy. The WSJ has
a good piece taking a more realistic view on the dollar issue.

Now, that all said, the dollar is going to have lose its role as global
reserve currency. But that means we and the rest of the world are going
to have to do things much differently than we do now, and our
economists have not a clue as to what that is.

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Freedom For All

Lately, I have been taking a step back from all the news in healthcare reform, financial industry reform, etc. because instead of getting frustrated by small details, turns, and a lot of talking, I've decided to take it all in instead. To me that means I've been trying to only point people to important, bigger ideas/changes/phenomena that mean something rather than a lot of hearsay or tit or tat -- I still watch all the details, I just relate to it differently.

In regards to my new attitude to news, I do think we can all contribute more meaningful perspectives to the raging debate. Joe Costello, who is one of the biggest advocates of democratic conversations I know, is a great example of someone who has added important perspective to the DC-style of being political. He writes every few days to a list of people and with his permission, I'll post his writings here.

The way the healthcare debate is framed in the media, between friends, and across party lines is either big government is bad for economic freedom or people should come before profit. I don't see any real possibility for dialogue given these basic beliefs are just that, beliefs. These beliefs help to more generally push the country as a whole to the left or to the right based on which argument is better executed, better shrouded, better taken up by its activists. I play that game often and generally this is the political ballet we participate in and have seen before us for decades. But, it's really a sickening game of intellectual competition around what makes good organizing. I still care about the most strategically and exciting of organizing ideas and tactics that can actually beat the Fox News machine, but this kind of thinking is still stuck at tactics.

The free market ideologues and economic thought for the past 50 years have claimed that the free market solves our world's problems -- because people are motivated by making a buck people will design the most efficient, most relevant, most ingenious problem solving products to make that buck; the most popular products are popular because people buy the best product on the market for their needs. So, if you take healthcare, the claim is that private corporations have come up with the best insurance plans thus far that work to solve our country's healthcare needs. Yet, looking at the healthcare system as a whole, it's obvious there are lots of problems that are going unsolved by the free market. For those who can not afford healthcare, there is no market remedy because the corporate-market system does not find it the most profitable to cover the poor. Taken at a whole, the free corporate-market system suggests that only those who have enough money can be a part of the solution. My point is that blind faith in the free markets do not solve problems as a whole. It's clear that free markets only solve singular problems - corporate insurance plans have provided ample care for millions of people and have not provided adequate or any care for millions of others (78% of people who go bankrupt from healthcare costs start off with healthcare insurance, 15,000 people die because they have no insurance). We need to take this moment and every moment after this to think about what the best system for healthcare for all is and how to provide for the pitfalls -- think it all through, plan it out, think about it some more and implement in reasonable steps. Private insurance seems to have a role in this kind of overhaul.

Now, to solve problems as a whole, we need to look at the problem as a whole -- this is common sense. Yet, we as a country have not believed that every so often, when things start getting old, we should take a step back and look at the whole of a problem and do a complete assessment and revamp. It's common sense but we haven't extended this common sense to the way we think free markets, economies, healthcare, roads, education, should be addressed and reformed. We instead succumb to the idea that a piece-meal approach is efficient and sufficient because we have believed the world is too big and only the laissez faire attitude makes sense for solving such large problems -- the free market approach is a piece-meal approach and that's that. Does the piece-meal approach constitute an address of grievances -- NO. And yet, who can we trust to take a step back, take a bird's eye view of our healthcare and truly attack in a general way problems like, for example, my full-time employee brother and sister-in-law are made poorer by a requirement to buy private insurance with the effect that their family is broken up and they had to send their son away to Arkansas where his grandmother can care for him?

We need someone we can trust to look over stuff with the best of intentions in an academic or scientific way.

The kind of transparent analysis and problem solving that we need must start with a basic goal of solving problems for an entire society; it must operate for the sake of advancing a real freedom to live, eat, breath, produce, build things, and the real exercise of the mind for everyone. Otherwise, we're not tackling a problem, we're creating a consumer culture.

And there are solutions to be had -- if you have seriously done any reading on what has worked for many more people than for a few, you know there are steps we can take towards making things better for progressively more people. For example, see below, we should not be okay with a system that puts more money in the hands of bankers at the expense of lower wages, higher debt, lost jobs, etc. But, again, you must read, research and learn to see what constitutes a real solution and what does not.

So, if corporations' sole mission is to make profit while providing, reliable, safe, tested, and useful products to its consumers, we can't trust them. There are segments of the population they just can't provide for without ripping off or creating an agreement of lifetime debt. And if you asked them or looked at their track record, profit has informed every business decision they make (mostly).

Government is a body or process that was set up to operate for the sake of its people and progress, all people, all progress. Government has promised to be good and care for all its people towards greater freedom, but as the millions of disenfranchised and nonbelievers prove, it has not. Government as we know it has also operated for profit - our representatives pass policies that make them the most in campaign contributions.

I must say I am not for a piece-meal approach to solving problems -- I don't believe in the idea of complete freedom of the individual as a way to solve the world's problems because those who are advantaged soon find ways to oppress and exploit the rest, making it so that at some point individuals have a taller than 6 feet hurdle to overcome. I believe in the individual-public participation in fixing systems with a process for taking a step back and moving forward with the best ideas. I believe in open systems, collaborative processes, meritocratic competition, research, science, dialogue, education, and leaders that can implement the ideas of a society.

Either we become a collective culture with checks and balances and humanitarian leaders or we turn government into a completely transparent, open, administrative entity that posts academic/objective councils to oversee and implement the best ideas. Government need not be what has become common. Instead, I would like to see a transparent system of governance that leaves everything open to participation from the public as a way to keep government in check and to hold government accountable to account for and bust the overwhelmingly powerful and corrupt in the system. But here government means the public assisted by administrators and governance means only what is needed to bring greater humanity to our society so that those who pass through it come out better than when they came and those who do not, find themselves having to relearn the way they operate their business.

What are the real ideals of freedom?

To have freedom in this world, people need basic utilities and it has only been through collective action that they were brought to us. Basic public utilities create freedom and they are education, roads, healthcare, safety nets, freely-flowing capital, and a market that is competitive and has low barriers to entry.

So, what do we need to do to our failing economic system? Now's the time to look at how we have approached money in the past 40 years. Now that we had an economic crisis of great proportion, one many never imagined could be possible, we can look back at what we as a society have thought of as "getting rich and a good economy".

As Professor Michael Hudson lays out, here is our former psyche:

As an example of their warped thinking, consider an attractively priced home. Would you rather own 100% of a home free of all debt with a market value of 100,000 euros if free of debt – or, would you rather own 60% of the same home at an inflated market price valued at 250,000 euros? In the second scenario you would have 50,000 euros of “surplus wealth” (60% x 250,000 = 150,000 euros, compared to 100,000 in the first example). People across the globe have been convinced that the second scenario represents “wealth creation.” What is overlooked is that the higher-priced home carries interest charges on its higher market price. This charge would amount to 6,000 euros a year, or 500 euros a month, at 6% interest. The same property is worth more, but includes a much larger debt overhead – income for the financial sector
....

For them, a free market was one free of debt – especially foreign debt. In The Wealth of Nations (especially Book V, chapter 3), Smith warned against creditors becoming “free” enough to disable the ability of governments to protect citizens from creditors...The tacit assumption is not that bankers’ exorbitant greed is achieved at the expense of the economy at large, but that the financial sector’s prosperity is a precondition for the economy to grow. ..Every economist who has looked at the mathematics of compound interest has pointed out that in the end, debts cannot be paid. Every rate of interest can be viewed in terms of the time that it takes for a debt to double. At 5%, a debt doubles in 14½ years; at 7 percent, in 10 years; at 10 percent, in 7 years. As early as 2000 BC in Babylonia, scribal accountants were trained to calculate how loans principal doubled in five years at the then-current equivalent of 20% annually (1/60th per month for 60 months). “How long does it take a debt to multiply 64 times?” a student exercise asked. The answer is, 30 years – 6 doubling times.

Most societies throughout history have sought to provide credit legally in ways that do not permit creditor oligarchies to emerge. Today’s creditor advocates are at war with the spirit of this idea. And in taking this position, they reject the thrust of the Enlightenment’s anti-usury laws, classical political economy’s distinction between productive and sterile investment, the St. Simonian attempt at financial reform, and the Progressive Era’s attempt to mobilize national credit to fund productive industrial investment rather than being extractive, benefiting only the few. The classical idea of economic freedom itself was formulated as the antithesis to feudal-epoch finance. And the ideal of freedom from predatory finance is what is being threatened today, as if society has forgotten how long and hard the reform struggle has been.

The fight to end debt bondage and debtors prisons took many centuries to achieve its humanitarian objective. Handel’s Messiah is a staple of the Christmas and Easter season celebrating the life and teachings of Jesus Christ. What has been forgotten is the context in which Handel arranged the first performance of this oratorio in Dublin, on April 13, 1742. It was a charity concert for the benefit “of the Prisoners in several Gaols, and for the Support of Mercer’s Hospital in Stephen Street, and of the Charitable Infirmary on the Inn's Quay.” Enough money was raised to free a hundred and forty two prisoners. The oratorio’s text accordingly contained references to “breaking bonds asunder” and “casting away yokes,” recalling the early Christian belief that the Messiah’s reign would bring liberty (Hebrew deror or debt cancellation) and release (Greek aphesis) from debt bondage. The “redeemer” was literally the redeemer from debt.

The point is that people deserve to receive the fruits of their labor. This means bringing prices in line with actual labor-costs of production and reducing the financialization of our entire society. More must be said on this....

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Deflation, Keynes, the Planet, and the $

Well as the inflation/deflation debate rages and central banks begin to
raise interest rates, you could get a good view of what an extended
term of deflation would mean by checking out the excellent new Coen
brothers' film A Serious Man. The movie's protagonist meets
a continuing series of ever greater tragedies feeding on themselves and
sending him into an extended downward spiral. This is what happens with
deflation, it feeds on itself, and over time economic activity remains
stagnant or spirals
downward.

One component of deflation can be unemployment, as people formerly
employed no longer create demand. Today, the NYT reports the Obama
administration wants to "fix the safety net," is "thinking through all
additional potential strategies for accelerating job creation," and
finally, "but officials emphasized that a decision was still far off
and that in any event the effort would not add up to a second economic
stimulus package, only an extension of the first."

Now, there certainly needs to be continued government spending, most
importantly to keep a floor intact that both people and the American
society do not fall through. However, government stimulus will at best
be only marginally effective until we fix our insolvent banking system.
Chris Whalen has another excellent
piece on our banks and until these issues are addressed there will
be no sustained economic recovery. The bank bondholders need to take
losses. Mr. Whalen suggests should we start the bid at 70 cents on the
dollar.

More importantly, I'd like to point out other problems with many of the
calls for greater stimulus. The American economy needs to change and
the more money dumped into it through the entrenched crony interests of
DC will put us further behind. 2009 DC is not 1939 DC. Just advocating
spending more money is detrimental, not helpful. The fact is, on a
planetary level, the American economy as currently constructed is
unsustainable. In America, we must in fact shrink production,
consumption, and services, and contrary to industrial economic
doctrine, in so doing, we might all very well live better lives. The
celebrants of Keynes at this point would do much better spending less
effort embracing his thinking of the 1930s and instead celebrate
Keynes' smashing of his day's economic orthodoxy, which is what we are
in desperate need of today.

Finally, every day there's more and more interest on the dollar, whose
demise at this point is greatly exaggerated. The Independent has a
piece claiming that a cabal of oil producers, Chinese, and
Europeans are conspiring against the king. Fine, we could use a little
regicide, but don't underestimate the problems of implementation. Much
talk on the dollar fails to take into account the real value of the
dollar  -- the dollar =3D globalization. The last half century of
corporate globalization has been predominately an American enterprise.
The American military provides the order, such that is, allowing this
system to function. A cataclysmic drop in the dollar would impact much
of the rest of the world to as great a degree as it would the US. It is
both agreeable and necessary for the dollar to lose its role as global
reserve currency, but do not in anyway underestimate what that
encompasses.

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FDR's Economic Bill of Rights in Our Time - Meeting Tonight in Cleveland

It has been our hope for some time that FDR's Economic Bill of Rights can wake up the American people to the basic decencies we each deserve, and need for there to be real hope for greater activity, opportunity, progress, and human creativity. Back in the spring, Donny had the idea and we planned to have the bill of rights be a collaboratively editable document that we can edit together to reflect the present time and circumstances. Look it over, see if you think we need to do any changing:

FDR's Economic Bill of Rights

We're glad Michael Moore has brought this document up in his recent film "Capitalism: A Love Story" -- it is a piece of work that speaks to the finest of human endeavours - a proposal to find truth and happiness in bringing about the most basic of human dignities for everyone.

We would like to propose that this document become a basis for organizing. You can think about passing this document out and soliciting feedback.

The American Friends Service Committee of Cleveland, Ohio is having a discussion tonight about Michael Moore's movie and secure economies full of opportunities for all. Tonight, 7:30.

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The obstacle is language

By now you heard Ken Lewis of Bank of America is resigning. A notable proposal from England - turn England's post offices into community banks as a way to save their post offices and serve their neighborhoods.

Today, I heard on the radio an interview with education reformist, E.D. Hirsch. His new book happens to pertain to bank reform. Hirsch shows that the difference between those on the top, people who vote, people who rise in their jobs, those with better pay and everyone else is that the haves have a better command of language. They can talk about politics, so they're more likely to vote. The answer to our bank reform ills and lack of engagement can be overcome if we can help each other be better articulators and thinkers. The populists helped educate each other so that each person really owned the issues, owned their democracy, and lived and breath their civic freedoms. Just as much as we need better language education in our schools, group slike ANWF must engage people through language and promote through forums, etc. We have attempted to do so in the past and we only just covered a small corner of a really large territory. Do we do more? The challenge is that we need to find ways to teach each other to think about corporate politics in order to engage in it and for once defeat a political system that promotes the prosperity of a few in the name of democracy.

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Schumer gets 15% of Wall St contributions

Politico lays out where Wall St's campaign money goes. Our political system is broken and we need a new way to deal with putting people in office. And we'll take baby steps there.

"Wall Street has showered nearly $11 million on the Senate since the beginning of the year, and more than 15 percent of it has gone to a single senator: Democrat Chuck Schumer of New York."

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REFORM ROUNDUP

Some measures to address too-big-to-fail, the central policy platform of ANWF - the G20 summit of economic leaders in Pittsburgh today and tomorrow will be urged to deal with capital reserves, meaning the big banks need to hold back (in reserves) more of the money they put out to gamble with as an insurance for safer activity. Would be good. Let's see what Obama does -- more and more groups are calling for movement on TBTF -- let's keep pushing in our own circles.

Geithner has now said he will pursue reforming TBTF, requiring higher capital reserves. "“It is very important that these institutions that matter, whose future could threaten the economy as a whole, are subject to higher constraints on leverage in the future, more conservative cushions of capital and liquidity, so that they can absorb losses they face when they make big mistakes,” said Mr Geithner."

From James Kwak at Baseline Scenario, a great explanation on what Bank of America has been given through bailouts and loans from the Fed, how much they are legally supposed to give back, and whether or not we should be infuriated.

Since people are getting angry about overdraft fees, banks are deciding to limit how often they charge people an overdraft fee. Usually people can't opt out of their overdraft program and are charged multiple times throughout the day for each $1 and up purchase. Corporations are weasley as in this example where they will just find a more discrete way to charge you the same. Wash Post here.

Steve Perstein as WPost has an article titled, "A New Bubble Of the Fed's Creation". It's worth reading if you have time to understand how things work. He says,

"Less encouraging is what's happening on Wall Street. It turns out that all those bold and necessary steps by the Federal Reserve to prevent the financial system from collapsing wound up creating so much liquidity that it has now spawned another financial bubble... As it was printing all that money, the Fed was also lowering the interest rate at which banks borrow from the Fed and each other, to pretty close to zero. What didn't change was the interest rate banks charged everyone else. As a result, "spreads" between what banks pay for money and what they charge are near record highs."

The basic idea is that the Fed offered some 1.45 trillion to help move bonds that originated from Fannie/Frediie which were bought up by investors and the same banks that failed last year aand resold. The 1.45 trillion was simply printed up. These are the ingredients of a bubble.

A few good quotes from Prof. Hudson, via Randy and Val:

1. "The financial oligarchy's idea of "regulation" is to make sure that deregulators are installed in the key positions and given only a minimal skeleton staff and little funding."

2. "This pretence for excluding government from meaningful regulation is that finance is so technical that only someone from the financial "industry" is capable of regulating it. To add insult to injury, the additional counter-intuitive claim is made that a hallmark of democracy is to make the central bank "independent" of elected government. In reality, of course, that is just the opposite of democracy. Finance is the crux of the economic system. If it is not regulated democratically in the public interest, then it is "free" to be captured by special interests. So this becomes the oligarchic definition of "market freedom."

3. "The danger is that governments will let the financial sector determine how "regulation" will be applied. Special interests seek to make money from the economy, and the financial sector does this in an extractive way. That is its marketing plan. Finance today is acting in a way that de-industrializes economies, not builds them up. The "plan" is austerity for labor, industry and all sectors outside of finance, as in the IMF programs imposed on hapless Third World debtor countries. The experience of Iceland, Latvia and other "financialized" economies should be examined as object lessons, if only because they top the World Bank's ranking of countries in terms of the "ease of doing business."

Good article on the effects of pay caps -- what do pay caps get us? There are some reform measures that matter a lot and some that matter a little less. Here's one proposed layout:

"The administration has it wrong. It wasn't reckless schemes and excessive risk that sunk banks and Wall Street; it was excessive leverage. And thanks to cheap money and twisty regulations, risk was extremely undervalued. Banks owned huge portfolios of real-estate loans and mortgages specifically because they, and regulators, didn't think they were taking much risk at all."

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