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By jdb, November 11, 2009

I don’t mean to advocate blind acceptance of the situation. Only a calm objectivity. If you’ve got a patient on the table and his guts are spilling on the floor, it’s not the time to think about curing the underlying disease or giving him lessons in nutrition. You’ve got to sew him up so he doesn’t die. That’s the priority.

When the Bush administration first approached the financial crisis, they were going to buy the bad assets – but I think it was too late for that. What they ended up doing was swallowing a bitter ideological pill and just giving the banks some money. That scares the hell out of me, not because I think they were rewarding their friends for being dipshits or whatever, but because the money that wasn’t used to acquire banks that were basically dead outright was needed as operating capital. It got them through Christmas, and hopefully through the bottom of the financial markets. What that says to me is that those banks were weeks away from complete collapse.

So I think the bailout was 100 percent necessary, and nothing would get done in terms of reform if it hadn’t happened. You can’t re-engineer jack shit if you’re broke, and a good chunk of the third world is one hundred percent dependent on those banks being solvent. Famine, anyone? The entire world is intertwined with those banks. I don’t think I’m overstating the case when I say that, given how interdependent and ‘globalized’ we are now, if there is deep depression in this country, then there are parts of the world that would experience famine and plague. I say do whatever we have to do. I don’t care whose fault it is, all hands on deck! There is a hole in the boat and we can worry about shouting matches later. It might not be the boat I want to be in but that doesn’t mean I want it to sink.

Without the bailout money, Wachovia would have gone under, and let me tell you it would have cost a lot more to fix that one! All that FDIC insured money, you see. I don’t give a piss about some fat cats bonus, it’s a drop in the bucket, and if you have to prime an engine to keep it going so be it. I’d rather have a different engine but that’s the kind of thing you have to build first then put in, especially if you need the thing to work.

Speaking of engines, I think the ‘bailout’ of the auto industry is necessary even though it preserves the status quo – a drawback that people are rightly upset about – because right now our industrial capacity is only half used, and if the gov. didn’t step in and buy big chunks of it, it wouldn’t be there later. If our transport network even hiccups we’re pretty much screwed. Even if other nations were able to buy a lot of it up, I’m not sure that’s a good spot to be in. I think it’s for the same reason we subsidize grain and basic foods – and other countries do as well. You don’t want to get into a situation where you have to import all of your food.

But I digress. Now that patient, the economy, is stabilized, it’s time to set up a program for healing. Unfortunately, I think there are some people in Congress who are far more aware what the situation calls for then we are, and they are playing politics and fueling populist anger in order to grab for their lost power – regardless of what is best for the country. I think this is more than gauche, this is dangerous. Because they are opposing the kind of regulation that will keep the system they are attached to from failing completely in the future.

I’d like to see regulations that make it more profitable for banks to be smaller, help small banks out, that prise apart consumer and investment banks more permanantly this time so Republicans can’t mess it up. I’d like to see a new international currency system that limits trading. Maybe an international standard for Alex Jones to get an ulcer about. Hopefully 10 or 12 years down the road we can have a more sustainable system, more able to withstand shock. Over time, it could be reshaped and no one has to shoot anyone else or go hungry.

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By jdb, October 12, 2009

Random things I wrote responding to the following, instead of just talking to the screen:

http://www.pbs.org/moyers/journal/10092009/watch.html

The framework for the financial crisis was created by members of Congress who worked tirelessly to deregulate the financial industry, not a president or treasury secretary. That is the legal framework in which the bailout happened and the government has to follow the law like everyone else. Now that the worst of the crisis is over, it’s time to demand that Congress pass appropriate regulations. The progressive House is no problem, but Wall Street still holds a lot of sway with the conservatives in the Senate.

I’m actaully Ok with the treasurer ‘being on the phone’ literally or metaphorically with the financial industry every day – becuase they are the people who finance the government and the entire economy – from health care to transportation to college loans. Does that mean the president dances when they say so? I imagine the relationship between banks and government is as complex as it’s always been so I’m reluctant to take the populist view. The legal framework under which Wall Street operates is created in Congress and honestly if it weren’t for the Republicans in the Senate this would all be ancient history.

The reason that the fat cats got to keep their bonuses etc., is becuase the white house found out it would be illegal to make those demands, they would have lost a court case (probably in the Supreme Court) and it would have taken years for the whole thing to go through. Much easier to suffer the hue and cry of the populace and address the issue in the regualtion legislation, which both houses of Congress are supposed to start on after Health Care – Moyer’s programs are always a little bit ahead of the Congressional schedule. What I hope is that when the legislation starts to work it’s way out of committee things like this help to build momentum behind regulation.

To Moyers and his distinguished guests, how has the opportunity for reform passed? What does this fellow who participates in economic policy at the global level have to gain from spreading FUD? What is his idea for real reform? Do you really think that fanning this populist fire is going to help the Democratic agenda in any way, left, right, or indifferent?

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By jdb, September 19, 2009

A long essay, but very much worth the time -

http://www.themonthly.com.au/monthly-essays-kevin-rudd-global-financial-crisis–1421?page=0%2C0

“Others have argued that we are seeing a more fundamental regime change: the third in postwar history, st…arting with the Keynesian model, from the 1940s to the ’70s; the neo-liberal ascendancy, from 1978 to 2008; followed by a new regime, which is currently being shaped. Perhaps this new regime will come to be called ‘social capitalism’ or ‘social-democratic capitalism’, or simply the term ‘social democracy’ itself. Whatever the nomenclature, the concept is clear: a system of open markets, unambiguously regulated by an activist state, and one in which the state intervenes to reduce the greater inequalities that competitive markets will inevitably generate.”

My own opinion is that the anti-communist ideologues finally took full control in the last few decades, did their little victory dance, implemented their extreme philosophy, failed miserably, and now it’s time to force a real paradigm shift towards pragmatism. 

It occurs to me that the administration of FDR was largely a hegelian synthesis of capitalism and communism, maybe we are seeing that finally take hold after the extremes (stalinism and neostalinism on the one hand, and Republican free market extremism on the other) have borne no fruit.

If Hegel’s model holds true and proves useful in the future, what will be the antithesis to this?

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By jdb, March 25, 2009

Apparently the internet ad market is taking a dive again. The same thing happened the last time the economy tanked, and the question of how to pay for all the stuff on the net has returned.  There is plenty of debate over the reasons, as people in business usually do when they percieve their gravy train coming to an end.  Maybe it’s  just the economy, some flaw in the model, or maybe, if you work on wall street, it’s not really happening at all.

The problem may not be as complex as people think it is. Net advertising works pretty much in the same way as real world advertising – people absorb new information if it’s relevant, or it reinforces a decision they already made and gets them closer to making the deal. But, because the audience isn’t ‘captive’, advertisers won’t pay out as much for impressions (which is why the Googles of the world are obsessed with free content, becuase there’s just not enough money in their model to pay for content.)

There are advantages to offset that major drawback though, such as the ability of free sites to target ads to each user based on information from their searches, messages and social networls, though that only works for some products that tend to do well on the internet anyway like music and books. Ford is still going to want to catch as many of the same viewers as possible for one huge campaign featuring it’s new model in the best possible light. And, on a side note, how much overt invasion of privacy are people willing to experience on a day to day basis? One of the selling points for the web has always been the illusion of anonymity – if that goes, will the internet audience adapt?

So we’re left with the standard, tried and true ad model that we’ve had since the advent of mass media. It might just work out in the long run. As the teens who are watching less TV every year grow up, companies might be willing to pay more for ads. For the time an individual spends surfing or shopping online, he is actually fairly captive, butt in seat, all hyperbole aside, and ads should work on the same principles that newspaper ads do, if not TV ads.

I think TV style ads will most likely stay on TV, as TV and movies are a more ‘family’ activity. Nobody really huddles around the computer with uncle Seth and the kids, and nobody has a party on the weekend to watch ESPN.com. In that respect, the interent as a medium could have a dip in recreational use when people hit the family demographic, just like music does now. So those multimillion dollar ads for family sedans will stay where they are for the foreseeable future.

The internet will get the cheap stuff – the classifieds, the stuff targeted to a locality, the shopping coupons. It will also get it’s share of ads disguised as entertainment, made by ‘media consultants’ who love to give you a virtual handshake. The ‘free’ interent is essentailly a subsistence medium, as we see every time the economy dips. The free sites will have to be full of invasive technologies, obnoxious moving ads, embedded salespeople, and spammers (whether official or not). In order to avoid the curse of the ‘value’ sites, the sites with the quality content and superior user experience might have no choice but to charge for it.

That old bugbear remains – users have historically rejected fee based services – a lot of people got burned very badly with fee based models in the early days of the web. Back then, given the novelty value of the internet, nobody cared if what they were looking at was good or not, true or not, all that stuff just being there for free was enough. And they could always get ‘real’ information from some more reliable source. Maybe now people want that ‘traditional’ reliablity from the world wide web. Only time will tell.

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By jdb, February 19, 2009

So now we have a stimulus package. I guess the benchmarks for success will be a) gdp stabilization and growth b) ditto the stock market and c) extension of consumer credit – with a timeframe of about two years, from what the sec. of the treasury indicated the other day when he was speaking to IIRC the senate finance committee. The real question is whether the ecomony is sustainable in the long run.

On a related note, the bank bailout seems necessary to me – if for no other reason than we know what happens if the banks fail! The fact that money was just handed to the banks is what frightens me – not for the reasons it bothers most people, the public perception is that it was just a handout to rich people, but I wonder, was that money to cover operating expenses for the quarter, so the banks didn’t close down altogether? A sobering thought. If nothing else, we need to rebuild the firewall that used to exist between the real economy and the investment economy.

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By jdb, December 11, 2008

Grrrremlin

Whats not cool about a subcompact hatchback with a v8? I mean, fuck. Come on.

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By jdb, September 17, 2008

http://news.yahoo.com/s/ap/20080917/ap_on_bi_ge/aig

Well, since it’s a company owned by the people now, we should be getting car insurance, life insurance and financial services cheaply. As a bonus, we now own about twenty percent of the People’s Insurance Company of China.

Come to think of it, now that Fannie Mae is owned by the people, we should be getting some very favorable mortgage rates. At the very least Fannie Mae needs to resume it’s original mandate. Which does NOT include variable rate mortgages. 

I am, however, refraining from holding my freaking breath.

Can we sieze control of a major health carrier please?

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By jdb, September 17, 2008

Corporations need to be better than people for the same reason that governments and churches need to be better than people. They have power over people. To date, the only way we’ve come up with to get them to behave is to use democratic government against them – to thrust one bugbear up against another.

Unfortunately, the US is quickly losing it’s window to balance the real power of multinational corporations, the time when we still have the huge buying power that we can use as leverage to force reform is passing. In a situation of scarcity like ours is becoming, the obvious solution, pardon my french, is to sieze the means of production. De-industrialized as we are, that’s not necessarily a viable option. What good does it do to sieze the Taco Bell?

The 20th century showed us that skilled labor could unite and force change. We’re not in that country now, the means to equality for the common man is further away than ever. The US might re-industrialize only when a) the fed has allowed the dollar to fall to the point to where our goods are competitive and b) wages and legal protections for industrial labor have fallen to a level that might encourage ‘insourcing’. Of course, at that point, it doesn’t do us much good, does it?