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Race to the Bottom

April 27, 2010

If a nation expects to be ignorant and free in a state of civilization, it expects what never was and never will be.

If the children are untaught, their ignorance and vices will in future life cost us much dearer in their consequences than it would have done in their correction by a good education.

– quotes by Thomas Jefferson

If zombie Jefferson were to rise from Monticello today there is no doubt that he’d immediately begin clamoring for “Brains!”.

As a nation we have fallen far short of Jefferson’s vision of an informed democracy populated by an educated citizenry. What with all the brown people who need killing and oligarch pockets that need lining we haven’t made education a priority for quite some time.

And it shows. Despite being the wealthiest country in the world the US consistently lags far behind other nations in educating its populace and nearly a century after the Scopes monkey trial we are still debating whether the world is 6,000 years old or not, we can’t decide whether human beings are responsible for the changing global climate even as tons of toxic effluvia belch out of smokestacks and exhaust pipes on a daily basis causing glaciers and icecaps to disappear and one species after another to blink out of existence, we have news anchors expressing surprise that a place as cold as Iceland could harbor a volcano, we have snake oil salesmen telling people they can afford a half million dollar home even though they don’t have a job.

The problem isn’t so much that a few charlatans say these things, it’s that far, far too many people actually believe them. I have a standing offer with a math teacher friend of mine to explain to her class why they need to learn math (or any other subject for that matter) even if they don’t expect to use it much later in life. What I’d tell them is that if you aren’t educated enough to understand certain concepts, those who do understand them will most assuredly take advantage of that ignorance to screw you eight ways til Sunday and you’ll never even see it coming. If we are going to fix all the problems facing this nation and this planet it is imperative that first we have a critical mass of enough bright people who know how to go about it. Unfortunately that doesn’t look like it’s going to happen any time soon.

Recently I went to a local city council meeting where the annual school budget was presented and like the vast majority of states and municipalities these days there somehow just isn’t enough money to provide everything necessary for a decent education. Now in Maine, a statute was passed a a generation ago requiring the state to fund 55% of all K-12 education. But the state didn’t. The voters passed a referendum in 2004 telling the state to do what it had promised. But still the state doesn’t. At the meeting I attended the superintendent showed that in the last three years the state funded less than 10% of costs and when the Federal government kicked in some funds the state simply cut what they had planned to provide by an equal amount. So my town will be cutting teaching positions and looking to further consolidate schools because the only other option is to raise property taxes and people who actually work for a living are pretty well strapped right now.

How did we get into such a predicament in what is supposedly the wealthiest nation the world has ever seen? The problem is that most people aren’t wealthy because even as productivity continues to rise along with GDP, wages have stagnated for decades as those at the top keep the lion’s share for themselves. Currently 47% don’t make enough to have to pay any Federal taxes. And yet those who are wealthy don’t chip into to the community till either. Incredibly wealthy individuals have seen round after round of tax cuts in recent years while the businesses they run extort communities for state and local tax breaks and then use accounting gimmicks and loopholes to escape paying any Federal taxes whatsoever. And that’s exactly how the oligarchs would like to keep things.

Now as that last link mentions, the people of Finland and other Scandinavian countries pay a much higher share of their incomes in taxes and are still the happiest in the world. Haven’t heard of any Finns flying small aircraft into their government tax offices lately. Of course, Finland is also just about the smartest nation in the world even though their children start formal schooling later and spend less time in the classroom once they do start. Because the Finns spend money on their educational system.

The Finnish philosophy with education is that everyone has something to contribute and those who struggle in certain subjects should not be left behind.

A tactic used in virtually every lesson is the provision of an additional teacher who helps those who struggle in a particular subject. But the pupils are all kept in the same classroom, regardless of their ability in that particular subject.


Teaching is a prestigious career in Finland. Teachers are highly valued and teaching standards are high.

Here’s more on the Finnish system

…there are no poor and no wealthy schools, each school educates children at the same per pupil rate.


In Finland, there are 20 universities which are owned and largely funded by the Finnish government. University studies are available to all students though students are selected based on the results of entrance exams. Most importantly, theses schools are free to students.

In addition, in Finland, another set of higher education institutions called polytechnics is available, again for free.

And when you truly believe that everyone regardless of their abilities has something to contribute you can do things like the following –

While “the U.S. holds teachers accountable for teaching” in Finland “they hold the students accountable for learning.”

But wait! Maybe there’s hope for the US. Because Barry and his Education Secretary Arne Duncan have a (largely untouted – so you know it must be good) plan! It’s called Race to the Top and like most plans offered by the government these days it sort of smells OK until you start looking at the details. Like Arne Duncan for one. W’s former Secretary of Education thinks Arne is just peachy since so many of his policies echo the Bush disaster of No Child Left Behind.

The reform proposed by the Democratic Party, echoed by Obama, and practiced for the last 8 years by Arne Duncan as CEO (yes, CEO) of Chicago Public Schools include: a neoliberal, market-based approach to improving the education system, including the outsourcing and privatizing of public schools; militarization; and a severely narrowed curriculum.

More about what Arne has been up to here and in this excellent article worth reading in its entirety.

“But wait”, you might say. “At least Obama’s plan is giving much needed funding to schools across the country”. Well, “giving” would be a bit too strong of a word because the first lesson Barry wants to teach the young ones is about how capitalism works and there will be no simple handing out of funds to those most in need in order to create a more equitable system. Our children must learn from a young age that there are winners and there are losers so as the government’s own website says, schools will have to compete for funding causing a mad scramble for a piece of the mere $4.35 billion being made available. And if the teachers who often have to pay out of their own pockets for their students’ school supplies don’t like the onus being placed upon them to secure funding, well, screw ’em and blame those greedy, selfish, children-hating teachers unions . So if your teacher is unable to win Barry and Arne’s Big Race, you can take solace in the fact that the world needs ditch diggers too. And I hear it pays almost as well as teaching.

Obama and the Democrats continue to regale us with hope for a better future, promises of change that is just around the corner, and other assorted happy talk. But their actions only further solidify the status quo that has us all on a race to the bottom and the only happiness most of us are likely to find is that which comes from wallowing in the blissful state of ignorance.

It’s either that or move to Finland. I’m told they have lutefisk that is to die for except you won’t have to because they have universal health care there too.

57 Comments leave one →
  1. cometman permalink*
    April 27, 2010 2:12 pm

    If we truly had an educated nation I wouldn’t have to read things like the following from the front page of a major metropolitan newspaper – Debate stalls on Wall St. overhaul. The article doesn’t even come close to explaining things properly and the author doesn’t seem to know what the hell they are talking about. A few examples which annoyed me to no end.

    The 57-to-41 vote — three shy of the number that Senate rules say are needed to end the filibuster and proceed — is a setback for Democrats who have been pushing for the biggest overhaul of financial regulations since the Great Depression.

    Might be nice to explain how Reid and the Democrats have made it so easy for the republicans to filibuster, but that isn’t even my biggest beef. The biggest overhaul since the Depression?!?!?! Really?!?!?! No, it most certainly is not, as many many knowledgeable people from within the financial industry have explained, but hey that’s what Barry and the Dems want people to think so might as well keep up the stenography and parrot the government line without bothering to mention any specifics or the proposed reforms that have already been removed due to pressure from lobbyists. I can think of a few different overhauls which did a lot more to change the financial system, just in the wrong direction. Like this one which repealed the Glass Steagall Act and caused this fucking mess. Or the changes that took the ability to regulate derivatives away from Brooksley Born.

    And WTF is this?????

    Senator Ben Nelson of Nebraska was the only Democrat to join Republicans in voting against it; he offered no reason, but earlier in the day had raised questions about language in the legislation concerning a complex financial product called derivatives.

    A product called derivatives? Wrong. Derivatives is not a product, there are many different types of derivatives used as financial instruments with varying degrees of usefulness and risk. But I guess it was too much to ask to have somebody with even a passing understanding of what they were talking about to write the article. The entire piece is just “He said she said” bullshit and if you didn’t already know a lot about this subject you wouldn’t learn a damn thing from reading the article.

    And one other thing I didn’t include in the main post. The articles about Finland both mention that the Finns have a much more homogeneous population than the US and since all the students already speak the same language it may make it easier for them to learn and succeed. That line of argument strikes me as just a wee bit racist. There are plenty of homogeneous school districts in this country including most of those in the very white state of Maine. And yet somehow Maine and other areas without as many of those pesky immigrants are not churning out a batch of young Einsteins.

  2. cometman permalink*
    April 27, 2010 2:18 pm

    Did somebody wake up Cthulu?

    Check out this astronomy pic of the day although in this case it isn’t an astronomical object but a representation of sound waves coming from deep in the ocean. They are calling it The Bloop.

    Fox’s hunch is that the sound nicknamed Bloop is the most likely to come from some sort of animal, because its signature is a rapid variation in frequency similar to that of sounds known to be made by marine beasts. There’s one crucial difference, however: in 1997 Bloop was detected by sensors up to 4800 kilometres apart. That means it must be far louder than any whale noise, or any other animal noise for that matter. Is it even remotely possible that some creature bigger than any whale is lurking in the ocean depths? Or, perhaps more likely, something that is much more efficient at making sound?

    In my mind, the suggestion of huge ocean creatures raises a vision of giant squid. There are no confirmed sightings of giant squid in the wild, though dead ones have washed up on beaches, and whales sometimes bear telltale sucker-shaped scars. “We don’t have a clue whether they make noise or not,” says Fox.

    Phil Lobel, a marine biologist at Boston University, agrees that Bloop is likely to be biological in origin but he’s not keen on the squid idea. “Cephalopods have no gas-filled sac, so they have no way to make that type of noise. Though you can never rule anything out completely, I doubt it.” Lobel thinks the sound is louder than any other whale noise, because I’ve heard presentations about whale song detected at that distance and farther.

    • Stemella permalink*
      April 27, 2010 5:06 pm

      Humboldt fart, the bloop is. That’s my story and I’m stickin with it. ;P

  3. cometman permalink*
    April 27, 2010 2:20 pm

    While I definitely wouldn’t call this a benefit, ice that’s melting for the first time in thousands of years is making archaeology a little easier in northern areas.

    • Stemella permalink*
      April 27, 2010 5:08 pm

      Oil exploration too. I’d rather the ice, oil and remains stay put for the long run.

  4. artemis54 permalink
    April 27, 2010 3:18 pm

    Before the imbecility of NCLBehind, WA’s schools’ worst affliction seemed to be that they were always in the grip of some idiotic theory. We just narrowly escaped this “whole reading” or “whole text” theory, as stupid as it gets and adopted by WA about the time CA – a great exporter of idiotic theories – realized it had fucked up a generation of kids and dumped it. As near as I could ever understand – no one bothers to try to explain it – the kids were supposed to absorb whole pages at a time, words and syllables be damned.

    I also think college is pushed way too much. We need alternatives like apprenticeships.

    • cometman permalink*
      April 28, 2010 8:26 am

      I liked how the Finns emphasized the polytech schools. From what I understand other European countries have similar programs. If you want to get into a university you have to pass some fairly tough exams but there is the trade school option too which doesn’t seem to have the negative stigma it does in the US where the vo-tech kids are often looked down upon. Some sort of apprenticeship or polytech school program or a combination of both would be great. Too many colleges have been dumbed down anyway in this country just so kids can say they got a college degree. Never really understood why you need to go to college in the first place for things like a degree in hotel administration to name just one example. Seems like something that could be learned just fine on the job or as an apprentice.

      • cometman permalink*
        April 28, 2010 10:17 am

        Good article about one Vo-Tech school and how its employees are treated which speaks to the notion I mentioned above- Exploiting Low-Paid Workers at a Vo-Tech School.

        A major problem with the JOC/Vo-Tech system is its unwieldy structure and a perceived, although not open, bias against vocational-technical training. Board members and the public say they support the concept of vocational and technical training programs in high school, but the reality is that some don’t necessarily believe that Vo-Tech education is parallel to that of the other public schools.

      • Stemella permalink*
        April 29, 2010 6:54 am

        Germany, several other European countries and Japan have polytech/gymnasium style education system. Wikipededia has a decent description of the system and the countries that employ it here

        The equivalent here would be college prep schools, which are generally employed by the ruling class to keep their class ruling. There are exceptions thanks to scholarships. That is one of the pitfalls of the gymnasium style system, is that it reinforces class boundaries. I’ve read that the pressure can be so intense to get into the higher levels in a place like Japan that seppuku has often been the result of failure. That trend has probably changed over time, but I’d have to look it up to know.

        There also used to be more polytech style high schools here in the US, but with so little manufacturing done here anymore I imagine that they’ve fallen by the wayside. Community colleges have taken over that role today with training in auto mechanics, hospitality industry, mid level tech careers etc

        • cometman permalink*
          April 29, 2010 7:47 am

          This is another situation where it would probably help to live in those countries to understand how the system really works. The only one I’m even vaguely familiar with is the Greek system which is similar to other European countries. You have to pass exams to get into the higher education system and if you don’t pass you go the vo-tech/polytech route. My understanding is that it’s a merit based system but like anywhere if your parents have the right connections exceptions are probably made. The main thing is that in many of these countries the higher education is free and the elementary education is funded a lot more equitably.

          I’m not sure what to make of the community college system we have here. It does provide much needed education and training in certain subjects at a fairly reasonable cost. However community college can also be a rehash of things that students should have already learned in high school. I guess I’d rather students learn all the basics in public high school for free rather than having to pay to learn them again later.

  5. Stemella permalink*
    April 27, 2010 5:31 pm

    Great post and very timely. So many states are slashing and burning their education budgets right now due to tax shortfalls. What used to be a great public school system in this country has been pummeled. The dumbing down of America is now fait accompli.

    The Finnish system (and what I know of the students of the Danish, Swedish and Norwegian systems) sounds like the ideal. It is what all kids should have, ultimately.

    A long time ago my then partner and I spent an all nighter on a ferry from York to Stockholm with a couple from Finland, drinking vodka, playing music and discussing politics. Sammy and Tonja the Finns. They both spoke multiple languages and knew all about American history, economics and geography. Pretty impressive for 18 and 19 year olds.

    The thing that bothers me the most about all this defunding, depublicification and defuncting of the American educational system is that at this point it seems intentional more than consequential. It’s like they don’t want the future generations to know what they’ve lost. It is so much easier to control the masses when they chew their cud and don’t ask questions.

  6. Stemella permalink*
    April 27, 2010 5:37 pm

    So, I think I’ve overdosed on the Squid today.
    Many flip flop flings hit squid face.
    Many laughs at all the shittyness proclaimed.
    Much disgust at it all, all the same.

    Time for a nice coldie to ease the pain. :)

  7. cometman permalink*
    April 28, 2010 8:29 am

    Encouraging news – Cape Wind project expected to finally get the go ahead.

  8. cometman permalink*
    April 28, 2010 8:46 am

    Arizona is quickly turning into a pariah state for its recently passed anti-immigration laws.

    Mexicois warning its citizens about traveling there, the mayor of San Francisco has barred city workers from traveling there, and the CA Senate leader is urging Ahnuld to break California’s state contracts with AZ.

    Richly deserved. I hope the whole state clears out until only sherriff Joe Appaio is left wondering where the hell everybody went as he cornholes himself with his own nightstick.

    • artemis54 permalink
      April 28, 2010 8:53 am


      Pottymouth! You’re worse than senator Levin.

      I read somewhere they’ve already lost six conventions.

      • cometman permalink*
        April 28, 2010 9:23 am

        Ha! And you were absolutely right yesterday about Jon Stewart not having to do much editing for the Levin invective extravaganza. Here’s the clip from last night in case anyone missed it.

        Maybe he reads cephaloblog too since he even threw in some cracks about the Ukranian parliament ;)

    • Stemella permalink*
      April 29, 2010 7:01 am

      Predictably, now several other Republican strong hold states, like Utah and Texas are looking to propose similar legislation.

      I could see this evolving into a new civil war if it does become a regional, not only a single state, phenomenon.

      Again, will Obama and his Dept of Justice do anything about this or will they give a few sound bites and look the other way as people suffer great injustice? I predict he’ll let this situation fester and address it in any meaningful way after it is far, far too late.

  9. cometman permalink*
    April 28, 2010 9:45 am

    So just as expected the financial “reform” debate is turning out pretty much the same as the health care “reform” debate – lots of bluster from both parties which leave the public largely uninformed about what is really going on.

    This report from People for the American Way was somewhat better than the Globe article I linked to in the first comment above, but not by much. In a nutshell the report tells us that the republicans are lying with their claims about the proposed reform – well duh. But it does a terrible terrible job of letting people know whether the reform will actually do any good or not, seems to contradict itself on a pretty major point, and fails to mention the good proposals which have already been stripped die to lobbyist pressure.

    Some unconvincingly suggested that Republicans were opposing the Senate reform bill because it wasn’t tough enough on Wall Street. A centerpiece of these obstructionist strategies has been repeating over and over again a brazen lie that the reform legislation before Congress would put taxpayers on the hook for “endless” bailouts. The bill would in fact do the opposite.

    Yes, the republicans are being disingenuous and they do want to protect the banks. But it is a huuuuuge stretch to say the bill will “in fact do the opposite” of institutionalizing bailouts.

    We take no position on whether the $4 trillion cap is too big or too small, or whether the authority itself should or should not be granted. But there’s nothing in the bill that requires that banks get this loan money at any point in time, a fact that may well be lost on viewers of the ad.

    If you can’t take a position, then you really can’t say whether these proposed measures will reduce the need for future bailouts or not. And in fact, they admit as much in the conclusion.

    With the Bailout Lie failing, it seems more likely that reform legislation will make it through the Senate and ultimately to the White House for the president’s signature, and the lobbying by the financial industry and others to influence the final makeup of the bill will undoubtedly be intense. Until the final bill is in place it’s impossible to say who all the winners and losers will be – but it’s clear that the Luntz-McConnell Bailout Lie is one of the losers.

    So, although they are claiming it for all the wrong reasons, the republicans may be correct that this reform does not go nearly far enough. There are plenty of non-republicans who are saying the same thing for the correct reasons and it would be nice if articles like these would reference those people.

    This nonsense about whether any legislation will or will not prevent future bailouts has got to stop. because again, the only thing Congress needs to do to prevent any future bailouts is nothing. Simply let them fail.

    The claim that these proposals will create a mechanism for winding down the banks if they fail is also nonsense since these banks do business internationally, not just in this country. Everything I’ve read on this subject suggests there is no way for the US to wind down huge institutions with international connections.

    The only way to make future systemic meltdowns less likely is to break up the big banks with a new Glass Steagall Act, make the ones who are actually insolvent admit it, and allow them to go under. But that is not being proposed at all by the president or in Congress.

    • cometman permalink*
      April 28, 2010 10:20 am

      Matt Taibbi has some similar thoughts.

  10. cometman permalink*
    April 28, 2010 10:36 am

    Couple of similarly themed articles related to the main post about how the rich not paying their fair share is what is causing budget shortfalls and cuts in services all over the country.
    Lottery Economy


    It’s Time for . . . Liberation Lotto!

    That second one makes the point much better than I did:

    Today’s New York Times finds the grey lady engaged in her usual gnashing of teeth and rending of garments over The Deficit, in this case, that of the State of New York which it describes as “alarming.”

    The sum occasioning the state of near panic? $9.2 billion.

    Oddly, in the previous week, the Times business section reported on the bonus pool to be distributed among Goldman-Sachs employees.

    The sum in question: $14 billion.

    It does not take a genius to recognize that the problem and the solution are in very close proximity to one another — separated, as it were, by only a few pages of newsprint.

  11. cometman permalink*
    April 28, 2010 11:06 am

    More encouraging news – Ecuadoran President Confirms Deal to Leave Oil Under Yasuni Park.

    President Raphael Correa now has approved an agreement to leave Ecuador’s largest oil reserves, amounting to some 900 million barrels, underground in Yasuni National Park in exchange for more than $3 billion.

    Under the unprecedented agreement, known as the Yasuni-ITT Initiative, the government of Ecuador will refrain from exploiting the Ishpingo-Tambococha-Tiputini oil field within the Amazon rainforest park, which scientists have determined to be the most biodiverse area in all of South America.

    Not sure exactly how encouraged to be just yet because this deal involves some sort of carbon credits.

    To “keep this place” free of oil development, Ecuador will issue Yasuni Guarantee Certificates to contributors to the Initiative, as a guarantee that an estimated 900 million barrels of oil, worth US$6 billion will remain in the ground for an indefinite time period.

    The value of the certificates will be a multiple of the metric tons of avoided carbon dioxide emissions.

    “This is a negotiable instrument that does not earn interest and does not have an expiration or maturity date, since the guarantee is in perpetuity and will be redeemed only in the event that the Ecuadorian government decides to start the oil exploration and production within the ITT fields,” the government of Ecuador says on its website.

    It’s unclear to me whether these credits are only paid out if Ecuador decides to drill sometime in the future or if the recipients can use them on an open market which would allow some other forest to be cleared instead.

    Anybody else know ?

    • artemis54 permalink
      April 28, 2010 12:27 pm

      You’re going to have to dig through half a dozen UN sites to find out, which is a nightmare.

      I don’t, right off. The plan has gone through a dozen iterations in the last couple years.

  12. cometman permalink*
    April 28, 2010 12:02 pm

    Even more encouraging news – India to stop tiger tourism in attempt to prevent species extinction.

    Again I’m not sure exactly how encouraged to be. On one hand I’m glad to see that India has decided that species should be preserved for their own sake and not just for whatever economic benefit they can provide. On the other hand, having fewer people around keeping an eye on the tigers could make it easier for poachers. Overall though it sounds pretty good. Hopefully numbers will rebound.

    • artemis54 permalink
      April 28, 2010 12:11 pm

      Pardon my skepticism, but the Indian government has demonstrated over and over again that it is completely full of shit. They have lied about this one too many times to deserve the benefit of the doubt. Half those tiger reserves probably don’t have any tigers left in them at all – whenever an outside group counts them it comes up with far fewer than govt estimates, in several cases zero – and banning tourism will help to hide the fact.

      • cometman permalink*
        April 28, 2010 12:23 pm

        Thanks for the input. I’m skeptical too whether it will be a success or not. The article does mention that a lot of the reserves have very few or zero tigers in them. I’d like to think that India had a contingency plan in place in the event that populations decline even further with these new measures. From what I’ve seen you write about this subject though, they probably don’t.

  13. cometman permalink*
    April 28, 2010 12:07 pm

    Couple of interesting posts that make me wonder if someone will finally look into the practice of naked short selling.

    Bruce Kasting suggests that Josh Binrbaum may have slipped up when he disclosed what companies the Goldies were shorting.

    One aspect of the collapse of 2008 was how destructive capital markets had become. The shorts pushed equities down so fast that managements and regulators lost control. The shorts were clearly predators. For me it was the shorts that destroyed the equity values. It was a near daily event.

    My questions on this is (A) How much of this did Goldman do? (B) How much did the rest of the market do? (C) Did this exceptional demand for short interest in financial stocks accelerate the collapse of Bear, Lehman and all the others?

    One of the commenters there mentions that its not the regular shorts but the naked shorts that are the problem. Krasting links in the comments to this zerohedge post which discusses the same topic.

    As Bruce Krasting disclosed yesterday, Goldman’s Josh Birnbaum “slipped” when disclosing the firm’s prop equity positions, in listing the companies his firm was actively shorting. We hope none of these were naked shorts as that would not reinforce the case of prudent risk management by Goldman’s discount window-accessible hedge fund (in other words, the entire firm).

  14. cometman permalink*
    April 28, 2010 12:13 pm

    And here’s one of the best arguments yet for breaking up the banks by hoisting them on their own petard – Why Dismantling Too Big To Fail Firms Makes Economic Sense.

    The financial industry is always arguing that they make markets better able to allocate resources efficiently and get capital where it is most needed for the benefit of everyone. We’ve seen plenty of evidence that under the current system this argument is complete bullshit and the author suggests using it against the banks to bust them up.

    Economists have joined the debate about the merits of requiring the downsizing of too big to fail (”TBTF”) financial firms. However, these debates have almost been devoid of theoretically based economic arguments.

    Some economic analysts have argued that the TBTF institutions have captured and will manipulate the relevant regulatory and political structures to their advantage. This a political argument and economists as economists do not have any greater insight into the political dimension of issues than Joe and Mary Sixpack. Other economists have decried the TBTF institutions and their contribution to a further skewing of the distributions of income and wealth. Again, economists as economists have no greater insight in to issues of economic fairness than the next person.

    With the exception of citing moral hazard incentives to greater risk taking, economists speaking as economists have been virtually silent about the fact that TBTF (and wanted-to-be-TBTF) firms were the center of a process of designing, underwriting, and issuing a variety of structured capital market products that contributed not only to redistributions of wealth in their favor, but (and more importantly to economists as economists) also contributed to the misallocation of resources on a massive scale. And the efficient allocation of resources is the sine qua non of economics.

    This post outlines one line of economic reasoning that leads to the conclusion that TBTF financial firms should be dismantled on the grounds that the highly concentrated financial sector can give rise to informational asymmetries, the mispricing of risk and the misallocation of capital and other resources.

  15. cometman permalink*
    April 28, 2010 12:37 pm

    Ha! Zerohedge rips Barney a new one for his hypocrisy.

    The video they included was quite good. Frank claims there simply can’t be a bubble from building homes that are occupied. What Frank failed to take into consideration is that a lot of the homes that were built are NOT permanently occupied at all but were built not out of necessity but as investments. Can’t put my finger on it right now, but I read an article not too long ago that stated that about half of all homes in Maine and Vermont are second homes with no permanent residents. I imagine the situation is similar in other places where homes were overbuilt for no apparent reason except to be used as fodder to make more CDOs.

  16. cometman permalink*
    April 28, 2010 12:44 pm

    Bernie sponsors an amendment to audit the Fed. He already has four republican co-sponsors so there is really no excuse for this not to pass. Well, except for the hypocritical slatterns within the Democratic party.

    If Democrats in the Senate back the measure, it would have at least 63 votes, but Banking Committee Chairman Chris Dodd (D-Conn.) is opposed and has argued against a broad audit.

    Definitely one to keep a close eye on. If this doesn’t pass the Dems should give up any pretense that they’re even trying for “reform”.

    • Stemella permalink*
      April 29, 2010 7:44 am

      I won’t hold my breath, on this amendment, or on meaningfully dealing with too big to fail.

      These things are like single payer or the public option, something taken off the table at the start but a concept dangled out there to appease those needing to be duped.

      The number of bankster lobbyists in DC right now are quite telling of the likely outcome

  17. Stemella permalink*
    April 29, 2010 6:33 am

    In a race against time it turns out that Deepshit is deeper in shit than the “experts” estimated.

    BP Oil Well Leaking Five Times Faster Than Estimated

    A damaged BP Plc oil well in the Gulf of Mexico is leaking as many as 5,000 barrels of crude a day, five times more than previously estimated, the U.S. Coast Guard said.


    The explosion and sinking of the Deepwater Horizon drilling rig about 130 miles (210 kilometers) southeast of New Orleans last week caused a slick that had drifted within 16 miles of the coast, according to a Coast Guard map released after a press conference yesterday. The spill is about 600 miles in circumference, the Coast Guard said. That’s about twice the land area of Maryland.

    So far it doesn’t seem that <O is adequately addressing this crisis, other than, you know, saying drill baby drill offshore somemore baby. Will he mirror the Bush behavior we saw with Katrina as the oil moves ever closer to fragile coastal and estuarine habitats?

    Meanwhile, the US Coast Guard is going to try to control burn the stuff. Yeah, good luck with that.

    3-U.S. Coast Guard sets oil slick ablaze

    • cometman permalink*
      April 29, 2010 8:07 am

      Cursing, bile, and invective are about the only things that come to mind when I read about this story. Rrrrrrrrrrrrrrrrrrrrr.

    • artemis54 permalink
      April 29, 2010 10:23 am

      Given the right conditions, which won’t prevail most of the time, the burn may work pretty well. I noted over at the deli that Obama talked last week about the Cuyahoga fire as a spur to doing something about the environment and this week we are hoping we can set fire to the Gulf as a way of forestalling far worse things.

      Talk about your new normal.

  18. Stemella permalink*
    April 29, 2010 7:15 am

    <O has appointed Janet Yellen, another keep interest rates low inflation dove like helicopter Ben, to be Vice Chair of the Fed.

    • cometman permalink*
      April 29, 2010 7:53 am

      Well at least she hasn’t worked for Goldman Sachs. Perhaps <O has started to read the tea leaves ;)

  19. Stemella permalink*
    April 29, 2010 7:38 am

    More on the futility of the US’s imperial wars

    Pakistan Taliban militants ‘reappear’ in Swat valley

    Taliban militants have resumed targeted killings of local leaders in Pakistan’s troubled Swat valley, officials have told the BBC.

    Pakistan’s army declared the Swat valley free of militants after carrying out an anti-Taliban operation in 2009.

    Whack a mole, whack whack. Same as it ever was.

    • cometman permalink*
      April 29, 2010 8:01 am

      Greenwald had a good post about the US whack a mole strategy a couple days ago – War propaganda from Afghanistan.

  20. artemis54 permalink
    April 29, 2010 8:36 am

    Cool cool video of the April 4 Baja quake rocking the Devil’s Hole and the pupfish too.

    btw, while you are attending the netroots convention at Circus Circus or wherever it is you can slip over to Mandalay Bay and talk someone into letting you see the Devil’s Hole Desert Pupfish colony there. It’s the doomsday pod, established five years ago or so and still breeding successfully according to the shark reef aquarium at MB.

  21. cometman permalink*
    April 29, 2010 9:39 am

    It’s becoming increasing clear why the prospect of a small country like Greece defaulting on its debt is considered such a huge risk and is making headlines all around the world – it isn’t simply that Greece won’t be able to pay its debts, it’s that by defaulting it will expose the fact that banks all around the world are insolvent. So the bankers would much rather impose austerity measures on nations all around the world than have the banking system exposed as a fraud and face restructuring itself. The status quo has been extremely profitable for them after all.

    That in a nutshell is the answer to the rhetorical questions found at this ZH post.

    First we have governments bailing out banks (and auto companies and mortgage providers), homeowner debtors, and now we have governments bailing out governments. When does someone finally say — enough is enough!
    Look, Greece is not going to “fail”. They are going to default. There will be a debt restructuring. And there will be some recovery. Bondholders will take a haircut — why shouldn’t they? Why should Angela Merkel care if German banks own Greek bonds? Greece has been in default in its recent 200-year history almost half the time. So has most of Latin America come to think of it. What about Russia?

    Washington’s blog hammers the point home – No Wonder the Eurozone is Imploding. Lots of good links and detail there but he sums it up succinctly:

    There wouldn’t be a crisis among nations if banks’ toxic gambling debts hadn’t been assumed by the world’s central banks.

    Another good post here which indicates a possible solution – forcing the banks to write down their debts, although they are calling it PSI or “private sector involvement”. I just don’t think it’s going to happen though (at least not without a battle of epic scope) because forcing them to write down debts that will never be repaid will show that they are insolvent. Here’s a link to the whole FT article the last author quotes from and here’s one bit he left out:

    What started out as a public finance issue is quickly turning into a banking problem too; and, what started out as a Greek issue has become a full-blown crisis for Europe.

    My guess is the banks thought they could slough off their debt onto governments and when governments started facing default the banks would be asked to come in and fix the situation. Problem is that their past deeds that created the problem have now been exposed and they can’t get away with the same scam anymore. Trust has evaporated. It’s going to be difficult for any government to get any more bailouts through without massive unrest which threatens the governments offering another round of handouts.

    So here’s what the banks are trying to do instead to make it look like they actually have some money.

    Mr Skene says that surveys show the usual investors in major rallies – pension funds, hedge funds and retail investors – have not been net buyers of equities. He says the most likely explanation for this anomaly in the biggest stock market rally since the 1930s is that large investment banks are the anxious buyers.

    “Their buying would appear to be for one of two reasons. First, because they think the authorities will prevail in their (so far unsuccessful) efforts to inflate their way out of debt liquidation. Or, second, because they are too big to fail and so can afford to take a huge gamble that enough buying will convince others to rush in and buy their inventory of risk assets at even higher prices.

    “Huge economic slack in most developed nations and falling money supplies in the two biggest currency areas indicate government efforts to inflate will continue to be unsuccessful, so reason number one is bearish for risk assets; number two is catastrophic.”

    We can either swallow the bitter pill and break up the banks now, take the losses, and work to create a more stable system not based on ever-increasing debt, or sit back and wait for the next gigantic collapse to occur. Rather than admit that the emperor has no clothes it sure appears that the oligarchs are simply going to try the whole deckchair/Titanic thing and opt for the second option.

    • artemis54 permalink
      April 29, 2010 10:14 am


      btw, when does someone ask the question, “What if we simply repudiate the debt?” A little part of the answer is that you won’t get credit any more. But that kind of credit, or usury, you didn’t need.

  22. artemis54 permalink
    April 29, 2010 10:18 am

    New post at the Deli includes video of the first water leg of the Get Out Migration. Just even this causal video manages to document the destruction wrought on bottom life.

  23. cometman permalink*
    April 29, 2010 10:23 am

    Couple of links about the continuing imperial overreach of the US government.

    ACLU to Obama: ‘Entire World is Not a War Zone’


    The <O DOJ has subpoenaed a NYT reporter. This time it’s the guy who wrote the story on the Bushies’ illegal wiretapping program. Scott Horton has more. Looks like the DOJ has put their best man on the job!

    The case is being handled by William Welch II, the former head of the Justice Department’s Public Integrity Section, who was forced to step down after managing a series of botched high-profile prosecutions, including those of former Alaska Senator Ted Stevens and former Alabama Governor Don Siegelman. Welch was cited for contempt of court by Judge Emmet Sullivan in connection with the Stevens case, after it became apparent that prosecutors had suppressed exculpatory evidence and had engaged in other misconduct. Sullivan later directed a criminal inquiry into the prosecution’s handling of the case. The Justice Department then reassigned Welch to handle a series of high-profile national-security cases, most prominently including one against a whistleblower at the National Security Agency.

    Of all the things <O has done which I strongly disagree with, going after whistleblowers while letting the perpetrators of illegal actions in high places go free is the most chilling.

  24. cometman permalink*
    April 29, 2010 11:58 am

    Couple of good ones on the financial meltdown.

    William Greider goes meat ant on Larry the Cane Toad


    Andrew Cockburn on the chances that the provision Blanche Lincoln is attempting to insert into any reform legislation to piss off Timmeh and save her own hide will ever become law – The Prospects for Real Financial Reform Remain Remote .

    For a few days this week it looked as if the senate Democrats could afford to pose as the flails of Wall Street while the Republicans obligingly blocked debate on the reform bill. Now that the Republicans have abandoned that strategy, we can assume that Blanche’s provision will be taken into a back room and quietly smothered in the interests of bipartisanship.

  25. artemis54 permalink
    April 30, 2010 7:22 am

    Okay, this one you have to see.

    The Get Out Migration stops in Campbell to return some property to the Marine Harvest fish farming company: Atlantic salmon that escaped from its pens and were caught by a local fisherman.

    • cometman permalink*
      April 30, 2010 7:52 am

      That was great! Next time I hope they throw them through the damn windows.

      And I must have missed something in the last few videos. These farms have Atlantic salmon in them?!?!?!?!?!? What the hell is wrong with these people?

      • artemis54 permalink
        April 30, 2010 8:05 am

        Oh. Yeah that is part of the problem. There are just so many things wrong, starting with the lice, I guess that part gets passed by.

        When these well fed fish escape, and sometimes they do in large numbers, they eat smolt coming out of BC rivers. It is a little like turning a few hundred healthy cats loose in a bird sanctuary. There is a tendency for Canada’s ignorant denialists – and there are plenty – to say “fish is fish, what’s the difference?” Of course, the salmon that don’t return to the Fraser are not replaced by these fish, whose young might or might not return to the area of the pens.

      • artemis54 permalink
        April 30, 2010 8:07 am

        Another thing that might not be clear: in Norway, these farms are subject to and honor much more stringent requirements than they do here. Ottawa has effectively given them a waiver from all the rules that apply to everyone else.

        • cometman permalink*
          April 30, 2010 8:49 am

          That’s the thing – I do believe that fish farms can be done properly. The polytrophic aquaculture I’ve mentioned before seems promising. But when one model that may have been developed with good intentions proves to be not as good as originally thought, they just keep on doing it anyway because it might cause profits to sink temporarily if they stop.

          And of course it isn’t just with fish farms that this happens. See: the oil industry, the derivatives trade, corn subsidies, etc, etc, etc ,etc.

          • artemis54 permalink
            April 30, 2010 8:57 am

            Sure. Closed containment. Or do them on land. There are several ways to segregate and keep the wild smolt from all this exposure. But since it would cost a couple nickels, the response is to instead deny the science, replicated now hundreds of times in Chile, Scotland, everywhere.

  26. artemis54 permalink
    April 30, 2010 8:43 am

    English texts of final documents from the World People’s Conference on Climate Change and the Rights of Mother Earth in Cochabamba are available here:

    1. The Universal Declaration of the Rights of Mother Earth; 2. Shared Visions document; 3. Document of the Working Group on Agriculture and Food Sovereignty; 4. Document of the Working Group on Climate Debt; 5. Document of the Working Group on Climate Finance; 6. Indigenous Peoples’ Declaration; 7. International Tribunal of Climate and Environmental Justice working group; NEW: 8. Dangers of the carbon market; NEW: 9. Working Group No. 10 on the Kyoto Protocol and greenhouse gas emissions reduction; NEW: 10. Working Group 13: Intercultural dialogue knowledge sharing, knowledge and technology. [More will be posted as they become available.]

    • cometman permalink*
      April 30, 2010 10:28 am

      That’s a good start. Doubt the UN will ratify though so I hope these countries just do it on their own and enforce it.

  27. Stemella permalink*
    April 30, 2010 8:48 am

    Taibbi has a new Goldman article up at RS

    The Feds vs. Goldman

    He summarizes the Goldman response to the civil suit thusly

    So within the space of a few days, Goldman issued three different explanations, which progressed from (a) we absolutely, positively didn’t do it, to (b) if we did do it, we didn’t make any money doing it, and finally on to (c) if somebody did it, it was only that French cat Tourre, and here’s his head if you want it. These guys couldn’t find the truth if it was sitting in their lap playing the ukulele, and that’s the basic problem that the entire financial-services sector – an industry that requires trust and confidence to thrive – is struggling to overcome.

    and gives a little much earned “toldyaso” to his critics here:

    Just under a year ago, when we published “The Great American Bubble Machine” [RS 1082/1083], accusing Goldman of betting against its clients at the end of the housing boom, virtually the entire smugtocracy of sneering Wall Street cognoscenti scoffed at the notion that the Street’s leading investment bank could be guilty of such a thing. Attracting particular derision were the comments of one of my sources, a prominent hedge-fund chief, who said that when Goldman shorted the subprime-mortgage market at the same time it was selling subprime-backed products to its customers, the bait-and-switch maneuver constituted “the heart of securities fraud.”

    CNBC’s house blowhard, Charlie Gasparino, laughed at the “securities fraud” line, saying, “Try proving that one.” The Atlantic’s online Randian cyber-shill, Megan McArdle, said Rolling Stone had “absurdly” accused Goldman of committing a crime, arguing that “Goldman’s customers for CDOs are not little grannies who think a bond coupon is what you use to buy denture glue.” Former Wall Street Journal reporter Heidi Moore hilariously pointed out that Goldman wasn’t the only one betting against the housing market, citing the short-selling success of – you guessed it – John Paulson as evidence that Goldman shouldn’t be singled out.

    The truth is that what Goldman is alleged to have done in this SEC case is even worse than what all these assholes laughed at us for talking about last year.

    As of yesterday, Goldman may now be under investigation in a Federal case too, and neener neener, it is a sell sell sell

    Goldman drags financials lower

    May the money gush from their jugular blood funnels and hurt these fuckers where it counts to them most

    • artemis54 permalink
      April 30, 2010 9:00 am

      He’s earned his I toldyaso. Even Ben Stein backs him now.

    • cometman permalink*
      April 30, 2010 11:01 am

      Since nobody is in any big hurry to fix the huge problems with the industry, I wonder how long it will be before the naked short sellers smell blood and take Goldman down like they did with Lehman. Of course the naked shorts who went after Lehman may have very well worked for Goldman in the first place.

  28. Stemella permalink*
    April 30, 2010 8:51 am

    Interesting discussion of the Role of Government over at Baseline Scenario

    • cometman permalink*
      April 30, 2010 10:42 am

      Very good article. <O didn’t bother to educate people on the necessity of running deficits to create an economic stimulus because that’s a Keynesian idea and Barry has his ears filled with Friedmanite Chicago school bullshit.

  29. cometman permalink*
    April 30, 2010 9:04 am

    New post coming up shortly!

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