Jim's Blog

Wrong, that is in that he failed to appreciate his own his immense genius, and wrong in that he failed to appreciate that the progressive left wing account of economics was ever more staggeringly true than he thought it was:

According to him, he was wrong to think that:

highly leveraged banks had control over their risks. With people like Stanley Fischer and Robert Rubin in the office of the president of Citigroup, with all of the industry’s experience at quantitative analysis, with all the knowledge of economic history that the large investment and commercial banks of the United States had, that their bosses understood the importance of walking the trading floor, of understanding what their underlings were doing, of managing risk institution by institution. I thought that they were pretty good at doing that.

Funny about that. What those not under the thumb of Cathedral, such as the Israeli Central Bank and the Chinese seem to think is that he was wrong about was to imagine that the state could direct great barrels of mortgage money deadbeat borrowers with any prospect of the money being paid back.

According to him, he was wrong to think that:

that the Federal Reserve had the power and the will to stabilize the growth path of nominal GDP.

that no advanced country government with as frayed a safety net as America would tolerate 10% unemployment. In Germany and France with their lavish safety nets it was possible to run an economy for 10 years with 10% unemployment without political crisis. But I did not think that was possible in the United States.

Which is a roundabout way of saying he was not wrong to think that the government could cure unemployment by printing lots of money and spending it, and the fact that it has printed vast amounts of money and spent it, causing only inflation and not restoring employment, is proof that the government is not spending enough money. The treatment, he tells us, is just fine, just needs to applied more vigorously.

And he was also wrong to think that other economists were as smart as he was:

I did not think that there were any economists who would look at a 10% shortfall of nominal GDP relative to its trend growth path and say that the government is being too stimulative.

It seems that all these other silly economists were so silly that they accurately predicted what the results of the governments policy would be – stagflation.

Official government inflation is still near zero, but the inflation people see when they do their shopping is quite shocking.

Ireland has started to issue its own Euros, or rather counterfeit its own Euros, since it has no legal authority to issue Euros – not that anyone worries about legal authority these days.

If any one country of Europe can get away with issuing Euros, then the political benefit is captured by the one country issuing Euros, while the inflationary effect is experience by all of Europe.  This guarantees over issue of Euros.

The proposed cure for this problem is more central authority, a United States of Europe – but there was already central authority to stop people from issuing their own Euros.  Irish issue of Euros is illegal, but the European Central Bank lacks the balls to say so, and forming a United States Of Europe would not give the European central bank a testosterone infusion.

The two most powerful democratically elected people in Europe, Ms. Merkel and Mr. Sarkozy, have, under pressure from their voters, prescribed a solution:  The Deauville pact.

The Deauville pact if implemented would mean that Greece and Ireland would  go broke.  Irishmen would go the ATM, attempt to withdraw cash from their bank accounts, and no cash would come out.  Pensions and doles issued by the Irish and Greek governments would bounce – that is to say, solvent banks would turn them down, and while insolvent banks would cheerfully accept them, the insolvent banks would be unable to give cash for them.

The European Central Bank is, however, reluctant to go along with this plan.  But if they are reluctant to stop people spending Euros they do not have, or unable to stop people spending Euros they do not have, Euros will, in the end, be worthless.

The more solvent countries of Europe could save themselves from this shipwreck by issuing their own currencies – franks and marks.  Of course, that would be easier if they actually were solvent.  That Europe is drifting into a system that makes financial collapse unavoidable is more of a symptom than a cause.  Genuinely solvent nations would unhesitatingly cut the wastrels off without a penny, to teach them thrift, which is what the the Deauville pact proposed.  The problem is that every bureaucrat fears that if one government goes broke, people will doubt the next.  Big spending governments fear to let bigger spending governments go broke, lest their own solvency be doubted.

The Deauville pact was more the politicians of France and Germany assuring each other and the voters that they were indeed solvent and could act in the macho manner that solvent enterprises can act, than it was any real intent to act.

Mc Cain is horrified when a bunch of progressive lawyers demand that banks have their paperwork in order before foreclosing. He does not realize that he has implicitly conceded everything that matters to those progressive lawyers.

He complains that this will have a detrimental effect on the availability of credit:

this action could have a catastrophic impact on home values and mortgage lending …

… lenders are discouraged from offering mortgages except to the most affluent and credit-worthy buyers.

Surely, after recent events, lenders should not be offering mortgages except to the most affluent and credit-worthy buyers.

The problem is not that a bunch of lefty liberal lawyers demand that banks have their paperwork in order. The problem is that the government intervened to make mortgages easily available any deadbeat, and that this necessitated taking a few short cuts with the paperwork, indeed necessitated taking a lot of quite drastic shortcuts with the paperwork.

And now the government is demanding both that mortgages continue to be easily available to any drunken unemployed deadbeat wetback, and that the banks keep their paperwork in order.

The remedy is not that the government should refrain from demanding clear, simple, straightforward and accurate paperwork before foreclosure. The remedy is that the government refrain from demanding that mortgages continue to be easily available to any drunken unemployed broke deadbeat wetback,

Two down for the price of one!

I should have seen that he was a lefty from the fact he made no effort to escape.  A rightist assassin would have attempted to cover his own ass.

He seems to have been an antisemite of Jewish descent – classic left wing crazy.

Right wing rhetoric probably contributed.  The left’s self hating identity crisis certainly contributed.  But the root cause of rising tensions is the approaching Cloward–Piven crisis.

The root cause of the approaching Cloward–Piven crisis is that the government has purchased itself a left wing electorate, which electorate daily gets more expensive, and purchased left wing unity, which daily gets more expensive.  A shakeout approaches.  During that shakeout, some part of the left will be thrown overboard.  The Cloward Piven strategy is that there will be a violent self coup in which that part of the left which is deemed insufficiently left wing will be thrown overboard – thus as little of the left as possible will be thrown overboard.

I would, of course, prefer a solution in which the established left was purged from government and quasi governmental institutions in the way that Germany was denazified.  Check the resumes sent to every institution that is governmental or government backed.  If some substantial proportion of the resumes give left wing credentials, then the institution should be suspected of being government sponsored leftism.  If hiring practices favor those with left wing credentials, as for example the Department of Education, the Department of Energy, the NEA, the State Department, and so on and so forth, then the institution is a government sponsored leftist wing organization.  The organization should be abolished, and membership of that organization should be treated the way membership of a Nazi organization was treated in postwar Germany.

The British government is trying something moderate, something in the middle between these revolutionary extremes, muddling through.  It does not appear to be working, though early days yet, to soon to tell what the outcome will be.

To avoid or resolve the Cloward Piven crisis by normal constitutional and democratic means is going to look at least a little bit like the revolutionary de-leftification strategy I outlined above, modeled on de-nazification, for the basic problem is that a left wing electorate, and left wing unity, costs too much.  Even the ultra leftist Cloward–Piven strategy, of resolving the crisis with a left wing self coup, has a little bit of de-leftification in it.   After the Cloward–Piven self coup, some leftists who are at present the recipients of large amounts of government largess, are going to find themselves re-defined as rightists and cease being recipients of government largess.