Tiny Tim

"Given the currency dumping situation, he did what few others in his position would do: stand up to China and accuse them on dumping in person."

-SS

...and the US subsidizing agriculture? Not dumping?

Methinks, such thinking is subliminal, more of a motivating force than a rational process.

And you know there are women that look at the bulge in a man's wallet.

"All the aides in the world wouldn't make any difference. It's an impossible task."

It's a fool's errand.

At least Obama found the right man.

With labor and land prices in a perpetual free-fall we should be investing our capital not stimulating our credit.

As Schumpeter reminded us many times, Credit is the creation of purchasing power and the demon of economic equilibrium.

The stock market will break apart into mini-stockmarkets that are regionally or locally based and secured by renewable energy and real estate. Many unaffiliated mini-stockmarkets, as opposed to one Monopolistic Stock Market, would compete against one another, which should theoretically, based on greater competition, help stabilize land rent and energy inflation (Is there any other kind?).

At the end of the day, local residents through their retirement and savings will own stock and receive dividends from their mini-stockmarkets, which also increases local trade and employment opportunities.

I know its just a theory, but it is a starting point.

The utility and rent dividends will provide a current dividend to investors, which also stabilizes inflation. Leon Walrus described such dividend as a "Desired Cash Balance".

P.S. The last chapter called "The Business Cycle" in The Theory of Economic Development is a mind-boggling read right now.

Posted by: Methinks | Mar 9, 2009 7:22:29 PM





Given the currency dumping situation, he did what few others in his position would do: stand up to China and accuse them on dumping in person.

Sam,

I actually burst out laughing when I thought of looking at Bernie "with desire".

Bernie is very very sick. Turns out the extent of the losses are much much lower than what he confessed to. That guy is such a psycho that I don't think his thinking is anywhere near as rational as you think.

A similar thing can be said for Madoff.

See! I am an important man.

I command resources (have lots of money) and people.


I am important to others.


Men will look to me for decisions.


Women will look at me with desire.


See how important I am?

-

There's not much you can do with a house of cards; wait for it to collapse or knock it over.

Yes Methinks, Bravo! As I said above Evan Bayh is stereotypical in asserting that they are "moving forward aggressively" blah blah blah. Evan is, like our pres., a pretty boy who can speak eloquently while selling basic freedom down the river. Like Thomas Sowell said in a recent column, talk can be very expensive when people, en masse, are persuaded to act in ways that are counter to economic and personal freedom. Sowell cites Hitler of an example of how expensive talk can become. Sowell has rationally persuaded me to be very careful about using the phrase: "talk is cheap."

And they MUST do SOMEthing. That's what superheros do!

The "logic" of government.

"Something must be done. This is something, so we must do it."

Vat vee need is da strrrrrrrrrrrong hand!

I'll give him respect for being able to tame China.

Huh?

Madeoff was in pure survival mode when he committed these so-called crimes.... Madeoff was limited by fed regulations in the types of investments he could make. Given these limitations, he could not fairly meet the return expectations of his investors. Therefore, since Madeoff was barred from pursuing those investment options which he normally would have exercised but-for prohibitory federal regulation, Madeoff had to–absolutely had to – turn towards a so-called Ponzi scheme. I might add that but-for the down-turn in the economy..., Madeoff’s so-called Ponzi scheme would have continued, with happy investors, and continuing solid investment returns.

Frank,

No. No. No. No. NO.

Madoff was not prevented from exercising a trading strategy. If he was, he should have given the money back to his investors. Period.

No amount of regulation prevents the manager from being honest with his investors. The manager sets investor expectations by estimating an expected return and it is his responsibility to inform investors if his expectations change. If new regulation prevents him from trading his strategy, then it is the manager's job to inform investors and/or to switch strategies to another suitable strategy as per the operating agreement.

All such arrangements are subject to operating agreements which outline mutual responsibilities and the activities which the manager may or may not perform. NEVER have I seen an operating agreement which allows old investors to be paid off with the funds of new investors while no trades take place. Never mind the regulators. Bernie was in violation of his contract with his investors.

Regulations can be blamed for a great many things. Bernie Madoff's ponzi scheme is not one of them.

Hi!

Timothy Geithner





I'll give him respect for being able to tame China. That's something that hasn't been done legitmately in ages from the US.

Geithner could do some good by announcing a predictable nondestructive long term government policy that investors could rely on when estimating investment risk.

But since that is not in the cards, I think government paralysis may be our best option. We should probably look favorably upon Geithner's ineffectiveness.

Frank wrote:

"Madeoff had to–absolutely had to – turn towards a so-called Ponzi scheme"

Or else? The notion that there were no alternative actions available, "absolutely" NONE, is generally false, and particularly odd in this context.

Bill, my free market viewpoint is absolutist, that is for sure.

That you think my opinions mere sarcasm perhaps reveals that deep down you disagree with purist free market principles. I am fully committed to the idea that individuals, when left to themselves, and when operating solely in self-interest, create the best possible human society. Period. If you would make certain exceptions, let me warn you: Once you make exceptions, you put yourself on a slippery slope down to socialism and from there, down you'll go to the absolute bottom pit of communism.

CRC -- you hit the nail right on th head, and I say to you and your views: Amen, brother.

Frank: Your not so clever sarcasm is becoming tiresome.

Look, politicians (and their employees) are, at their core, narcissists. They NEED the admiration and praise that comes from being superheroes. They crave power (and crises) for this purpose, to "prove" their heroic nature.

Obama is only the latest (and perhaps the most grandiose) in this line and those around him feed on the grand, heroic mission they must accomplish to save the country...even the WORLD from collapse.

In the vein of superhero-dom...they have an evil arch nemesis (well a few I suppose)...Bush and the Republicans ("the problems we inherited"), free-market capitalism, et al.

And they MUST do SOMEthing. That's what superheros do!

This all fits into the grand and dominant themes of crisis, urgency, collapse, tragedy...and, ultimately...RESCUE of the "damsel in distress" (the country and its people) by the true and noble superheros.

Sadly, Obama's (and his administration's) "kryptonite" is Kenyesianism but it is wrapped in the lead of superficial sensibility, reasoning, plausibility and Nobel laureate-ism, so he can't see it to stay away from it until it is too late and it weakens and kills him (and perhaps us too).

The Government Bailout IS the Problem

02/29/09 - Angry-Economist by Russ Nelson

The economy is bad because no one can predict the future with a big government elephant stomping around. The elephant can't solve the problem, and it scares away the elves who can solve the problem. The elves are small, but they are smart and there are a lot of them. The economist Paul Krugman has spun a theory for recovery. Will he bet on its success?

[edited]
The problem here is simple: credit is scarce because nobody wants to lend and nobody wants to buy. The Federal Government is threatening to borrow and spend a TRILLION dollars.

If you are bank, would you loan money if you knew that an A-grade customer was going to be spending a TRILLION dollars soon? Of course not. Even if they choose not to get their loan from you, the price of lending is going to go up. It must go up when a TRILLION dollar buyer is showing up. So nobody is lending now.

Geithner told his friend: “We live for this kind of emergency. This is when we feel most important, most needed as a central banker, regulator. It’s the crises that make our jobs worthwhile.”

See! I am an important man.

I command resources and people.


I am important to others.


Men will look to me for decisions.


Women will look at me with desire.

See how important I am?

Well then Sam, what do you think about Bernie? Do you think that when Bernie made off with mega millions it was about survival?

Are you serious?

I was thinking of the rest of us after climate change regulations, etc. are placed on us.

I've thought about the deer wandering the woods and the price of food skyrocketing, keeping chickens in the yard for eggs to barter, etc.

Are you worrying more about Madoff than your own future?

Sure Madoff is/was motivated, at root, by the survival/reproductive urge, just like the rest of us. He just happened to be in a circumstance and situation that tempted him to go for a big score, and he was obviously unconstrained by moral principles, as is typical of the political class in general.

That's one shortcoming of law, there has to be a fair assurance of getting caught for it to work.

How many criminals think about getting caught at the time they commit their crimes?

I appreciate what Michael Smith has attempted, and I'm always tempted to provide links, too.

I spent the weekend with most of my state's Republican legislators. Overall, I guess I'd have to give them a B+ grade. But several, even one with an aspiration to the governorship, have very weak financial and economic fundamentals. They view themselves as having to act heroically in our behalf. That is, they must choose how best to achieve our future proserity by defining the state's economic goals in terms of what products we should be developing for future markets...Green tech. So, not just Keynes. But a complete ignorance of David Ricardo.

I remember the Business school guys that "had to" take macro. And I enjoyed being a TA. It was my opportunity to give these guys a sense that the future would be more than golf and customer service. In the future, you're going to have to make a choice.

Given these limitations, he could not fairly meet the return expectations of his investors.

Why was he setting unrealistic expectations? He could have not taken the money from those with unrealistic expectations.

"Madeoff’s so-called Ponzi scheme would have continued, with happy investors, and continuing solid investment returns."

What investments? Ponzi schemes don't make investments.

Madeoff was in pure survival mode when he committed these so-called crimes (whether any economic activity should be criminalized, except when physical violence is involved, is a topic for another post). Madeoff was limited by fed regulations in the types of investments he could make. Given these limitations, he could not fairly meet the return expectations of his investors. Therefore, since Madeoff was barred from pursuing those investment options which he normally would have exercised but-for prohibitory federal regulation, Madeoff had to–absolutely had to – turn towards a so-called Ponzi scheme. I might add that but-for the down-turn in the economy (again caused by meddling feds), Madeoff’s so-called Ponzi scheme would have continued, with happy investors, and continuing solid investment returns.

What's so hard to understand about this?

Michael Smith,

"...what they are "moving aggressively" to do is to prevent the resolution of the problem."

Exactly. Those being "saved" are not too big to fail, but rather, too politically connected to fail.

Well then Sam, what do you think about Bernie? Do you think that when Bernie made off with mega millions it was about survival?

Are you serious?

I might agree with Sam, but when Bernie made off with mega millions it was hardly about survival (so I disagree with Frank that poor Bernie was "forced" to defraud investors).

I wasn't addressing the past.

"It's a flight from reality -- and straight over a cliff."

Well said M. Smith

Look it took 8 years for this mess to be created, and it will take time to resolve it; but "remain calm" because as Congressman Evan Bayh said on a talk show this weekend: "we are moving aggressively" to resolve them.

Yes, I've heard the same argument. But, in fact, what they are "moving aggressively" to do is to prevent the resolution of the problem. That’s the whole point of the bailouts and the so-called “stimulus” bill.

Bailouts simply guarantee that the sick entities will stay in business and come back for more bailouts in the near future. I believe Citigroup has now been bailed out three times. AIG has already come back for more bailout money. And GM will be asking for more in the near future.

And the "stimulus" bill is nothing less than an attempt to keep the American people spending at levels they cannot afford and cannot sustain.

It's a flight from reality -- and straight over a cliff.

I might agree with Sam, but when Bernie made off with mega millions it was hardly about survival (so I disagree with Frank that poor Bernie was "forced" to defraud investors).

There was a much different take on Tiny Tim and his role in the entire crisis in the latest edition of Bloomberg Markets. You can read it here:

http://www.bloomberg.com/news/marketsmag/mm_040...>

Here is the very sickening, money quote:

'When Justin Rudelson, his former classmate at Dartmouth College, asked him how he was holding up, Geithner told his friend: “We live for this kind of emergency. This is when we feel most important, most needed as a central banker, regulator. It’s the crises that make our jobs worthwhile.” '

When the means of survival are made illegal, everyone will become criminals.

If the govt would just stop interfering with private industry, the self-interest of market participants would result in adequate self-regulation. Madeoff and these other businesspeople were literally forced into their actions by govt oversight and regulation. This type of quasi-communism as practiced by the SEC and other "regulatory" agencies is what is driving people to malfeasence.

The other talking point that the Obamatons are employing is that:

Look it took 8 years for this mess to be created, and it will take time to resolve it; but "remain calm" because as Congressman Evan Bayh said on a talk show this weekend: "we are moving aggressively" to resolve them.

When a politician tells you he/she is "moving aggressively" to put wide-ranging economic policies in place that transfer property control from the private to the public sector, again, as Sowell (and the history of the USSR)would teach:large assertions of governmental control over capital definitely, and significantly "reduce the chances" that economic wealth will grow rather than shrink.

Well, I see the links I posted are not working. So here are the two addresses:

http://georgereisman.com/blog/2009/02/economic-recovery-requires-capital.html

http://georgereisman.com/blog/2009/02/economic-recovery-requires-capital_22.html

Citigroup, General Motors, American International Group -- these are all wounds to the economic body, bleeding and wasting capital. A bailout is a decision to use the taxpayer’s money as a transfusion so the wound can remain open and the bleeding can continue. Bankruptcy is a decision to cut off the blood supply so the wound can be closed and the bleeding stopped.

Comrade Geithner, however, cannot grasp this. Evidently, he has consumed too much of comrade Keynes’s tonic. Or else his boss has simply told him that the votes of the employees of those firms are too important to risk losing.




For a more rational analysis of our economic problem and what needs to be done to solve it, I highly recommend this two-part article by George Reisman:

Part I

Part II

John Keating, former PM of Australia, doesn't think much of Geithner's performance during the Asian crisis of the 90s, and apparently, neither does much of Asia.

http://www.smh.com.au/opinion/obamas-economic-saviour-savaged-as-keating-lets-rip-20090306-8rk7.html?page=1

I guess we might as well face it, we live in a world ruled by the poltical class, and they are rapidly reforming it in their own screwed up image. I guess our best bet will be to learn political skills and land a nice secure "job" somewhere in the ever widening system.

I saw a 14 year old kid on Fox news this morning. Already a well trained politician, he had all the talking points and gestures down cold. It was horrifying, but this is the future.

From the Old Grey Lady turned Yellow Bircage Liner article:

"To some extent, Mr. Geithner’s staff problems stem from his own failure to pay more than $32,000 in self-employment taxes. That slip-up not only embarrassed the Obama administration, which had prided itself on nominating people with unassailable backgrounds."

How in the he-e two sticks can anybody write

the last sentence with a straight face? Obama is making his first appointments and the landscape: Richardson, Daschle, Geinthner and that now forgotten "chief performance officer" are emblematic of an administration that poor vetted and investigated nominees. This is what's wrong with these guys; how can you pride yourself on something YOU ARE DOING POORLY FOR THE FIRST TIME?

You think that idiot Letterman will start doing a recurrent spot on "great moments in Presidential nonimating" anytime soon.

Thomas Sowell has an example in his book "Basic Economics" (3rd ed. pp. 375-76) that illustrates that this has all happened before in the former Soviet Union:

The powerful incentives created by a profit-and-loss economy depend on the profits being private property. . . .Soviet economists Shmelev and Popov pointed out and lamented the adverse effects of this [governmental control of capital] on incentives:

'. . . Once again we are taking away from those who work well in order to keep afloat those who do nothing. How can we possibly talk about independence, initiative, rewards for efficiency, quality, and technical progress?'"

Sowell continues: "Of course, the country's leaders could continue to talk about such things, but destroying the incentives which exist under property rights meant that there was a reduced chance of achieving these goals."

And as history shows clearly, the Soviet's did not achieve the goals of independence, initiative, . . . and technical progress;" the "Evil Empire" lies on history's ash heap. (And for those of you who never learned to "connect the dots", Ronald Reagan was right.)

Today we have a president who arguably speaks as eloquently as Reagan, but whose policies and ideology are 180 degrees different from those of Reagan on an array of key issues. Obama is to Reagan as matter is to anti-matter. There was a discussion of this on a televised panel this weekend. The panelist (who I can't identify as I was in the kitchen cooking something with my back to the TV) was making the case that Obama was exactly "an anti-Reagan" president. His point was that Obama, unlike Reagan, was arguing that American is not really as good as the average American thinks it is. Obama, unlike Reagan, goes about broadly preaching that the government needs to fix this, that, and the other thing and that only the government can do it (Reagan famously talked about the government BEING the problem in case after case, NOT the solution).

I was going to conclude with: "Talk is cheap." But as Sowell argues persuasively in a recent editorial on the Town Hall site, "talk is expensive," as all of us whose 401ks have plummeted in reaction to drivel being spewed, albeit eloquently, by Obama and the Obamatons in his Cabinet. Another bit of evidence that "talk is expensive" [this time to the leftists in Congress writ large] is the push by some Congressional Democrats to re-instate the "fairness doctrine" to "balance the playing field" in the area of talk radio.

Back on point, the NYT article states: "he and a skeleton crew of unofficial senior advisers have been racing to make decisions that will shape the future of the banking, insurance, housing and automobile industries." The lesson that Sowell (and the lesson of the history of the USSR)would teach those with sense to listen is that large assertions of governmental control over capital definitely, and significantly "reduce(s) the chances" that economic wealth will grow rather than shrink.

I wonder how long it will take Mr. Geithner to feel like Sisyphus?

Running the economy is hard work. I can't believe the guy is expected to do it by himself. ;-)

Methinks - it's not that. With the Marxists they can't really justify why central planning will work. All the know is they hate the free market. It's evil and must be done away with at any cost.

You have to love journalists. The implication is that if there are just enough central planners, central planning would work. Like, if he had a staff of 50 or 60, they'd have the whole thing sewn up already.

You mean Timothy Giethner the President of the Fed Res Bank of New York from November 17, 2003 – January 26, 2009, yeah he is brand new to the crisis - end sarcasm.

Some will read this and feel warm and comforted and some will get a sick sinking feeling in the pit of their stomachs.

It's amazing that the exact same piece of news will do diametrically opposite things to people who (ostensibly) have the same goals and desires.