Grunge Men, Obama Man, All the Men Together
Former Goldman Sachs executive Robert Hormats has been named by the Obama Administration to serve as Under Secretary of State for Economic, Energy and Agricultural Affairs.
Not only has Mr. Hormats worked for Goldman Sachs since 1982 rising there through the years ultimately to attain the title Vice Chairman of Goldman Sachs International and Managing Director of Goldman, Sachs & Co. but he is also a trustee of the Freedom House, whose associations include the extremist Right-wing Sarah Scaife Foundation; Peter Ackerman, also associated with Scaife's group; Project for the New American Century neo-conservative chickenhawk Kenneth Adelman (who endorsed then-Democratic presidential nominee Barack Obama in October of 2008); Diana Negroponte, wife of Reagan- and Bush-era denizen John Negroponte; and an assortment of other individuals of varying degrees of repute and ill-repute.
Hormats is also a trustee of the Economic Club of New York, on which trustee list can be found none other than the failed former President of the Federal Reserve Bank of New York, and now U.S. Treasury Secretary, Timothy Geithner.
Before his long stint at Goldman Sachs, during the Nixon presidency, Hormats was an economic adviser in the National Security Council, working successively under Henry Kissinger, Brent Scowcroft, and Zbigniew Brzezinski.
Aside from the eyebrows raised by the appointment of yet another Goldman Sachs alumnus influencing policy in the White House, Mr. Hormats joining the State Department has reinvigorated a relatively arcane scandal from the year 2000 involving the initial public offering of PetroChina, whose parent company, CNPC, was operating in the Sudan, which already had been listed by the U.S. State Department as a state sponsor of terrorism. Speaking to The Wall Street Journal at the time of the IPO, Hormats asserted, "Sudan should not be an issue because of extensive legal firewalls in place to ensure that IPO proceeds are used domestically in China." That turned out to be incorrect. A materially false or misleading statement made publicly about a company that is the subject of a registration statement (like an IPO) would normally be treated as a violation of the Securities Act of 1933 if such a statement were made by a party involved in the offering of securities; but unlike many brokers, promoters, company insiders, and others who have deliberately or inadvertently run afoul of rules promulgated by the Securities and Exchange Commission, Mr. Hormats was never prosecuted.
Robert Hormats joins a fair-sized list of Goldman Sachs employees who have joined the Obama Administration, with the latest before Hormats being Philip Murphy, nominated earlier in July to serve as U.S. Ambassador to Germany, who was not only in charge of Goldman Sachs' operations in Germany, but was also at one time a finance chairman for the Democratic National Committee.
Gary Gensler, now the head of the Commodity Futures Trading Commission, was formerly an insider at Goldman Sachs before joining Robert Rubin during the Clinton Administraton, where Mr. Gensler and his boss successfully spearheaded the deregulation of the credit derivatives swap market, with the help of Sen. Phil Gramm (R-TX) and then-Federal reserve Chairman Alan Greenspan.
Former Goldman Sachs lobbyist Mark Patterson is now Chief of Staff for Timothy Geithner.
Former Goldman Sachs executive Neel Kashkari was tapped last year by Bush Administration Treasury Secretary Henry Paulson to run the Troubled Asset Relief Program (TARP). Kashkari's official (and officious) title is Interim Assistant Secretary for Financial Stability, where he remains under the Obama Administration, despite the "Interim" nature of his appointment made in the waning days of the President whose indisputably incompetent people and policies led to the financial meltdown from which the world's financial markets and economies are still struggling to recover.
Goldman Sachs, through its bundling of employees' donations, contributed $994,795 to the Obama campaign in the 2008 election cycle, making it one of the largest identifiable sources of donations to the man who was to become President of the United States and who, in that position, would then ensure that his financial benefactors were amply represented in his Administration, notwithstanding the palpable and justified scorn in which Goldman Sachs is held by those who do not benefit from its largesse, but instead must bear the burden of paying the incomprehensible cost of its grotesque, incompetent, irresponsible greed.
Misleading CNN.com Headline Denigrates Secretary of State
Clicking on the link for the article, this is the story presented:
The title of the article clarifies that it is North Korea making fun of Secretary of State Clinton. Below is the comment I posted to the CNN.com article, expressing my continuing disappointment with the "news" service's journalistic misbehavior, about which I have previously written.
This gives the impression that the story is about widespread derision of the U.S. Secretary of State in foreign countries; but as it turns out, the title of the article, itself, at the link is this: "North Korea: Clinton 'funny lady, by no means intelligent'." The rogue, internationally isolated regime in Pyongyang making fun of a high U.S. official does not, in any way, shape, or form, merit that front-page title.
Really, CNN? Are you that hard-up to stir more Right-wing animosity? Denigrating Hillary Clinton using a misleading headline is the realm of FOX News, and on my Websites I have been documenting your descent into that awful place into which journalism in general has debased itself. You just published a headline representing as a general foreign sentiment the propaganda of the North Korean government.
I have made screen captures of the front page and the article, itself. My readership will once again be infuriated by your outrageous departures from professionalism.
For your part, I trust that your misleading headline pleased your narrowing readership. Maybe it distracted them from the persistent annoyance of those silly, flashing, jerking, twitching ads you slap at the top of your "serious" Website's front page.
Yes, you're serious journalists, alright. Perhaps a merger with FOX News is in the offing. That would be a match made in Heaven.
Or someplace else, more likely.
At the time of the publication of this article at Dark Wraith Publishing online properties, CNN.com had not posted my comment, which is consistent with previous comments I have submitted that were never posted.
CNN.com describes itself as "the Web site of the Most Trusted Name in News." Readers must decide for themselves the extent to which that motto is yet further evidence of CNN's inability to deliver factual news.
Interview with a Grouchy Economist
Will vowed never again to be sick on a school day.
Moving on from that story about the terrible state of modern English education (which will play a minor role in what is to come, below), a new instructor at one of the colleges where I teach apparently gave her students the assignment of interviewing a professor about an important topic in the news. That meant a class of maybe 18 students would be running around, trying to find some hapless sap willing to carve out the time to write out answers to a series of questions submitted by someone who might not have enough background in the subject area to pose questions that even make sense, and it would mean doing this in the last several weeks of the Summer Semester, the term when courses are twice as long each day so that a normal, 16-week semester can be compressed into eight weeks. It would also mean that the instructor who gave students such an assignment was going to be the subject of what in academia we diplomatically call a "conversation" with her division chairman. That conversation will be short: advise your teacher that, if she ever pulls a stunt like that again, your entire division will be denied access to the leftover doughnuts from the faculty senate meetings.
I have not spent a whole lot of time on campus the past couple of weeks; I have to gear up for the monster course load this Fall, a schedule that spans two schools and courses ranging from microeconomics, macroeconomics, and finance, clear through to a night course in transcription and proofreading. I keep my office hours, and that's it. That means the occasional student who is not in one of my summer classes is probably not going to catch up with me except by accident or by concerted effort to track me down.
Much to my dismay, several in that other teacher's class did. By last week, having been rebuffed by every other professor who was not particularly stupid, those students were desperate to find someone anyone who was an "expert" in an area of current news interest.
What was I supposed to do, tell kids to go away? I can't do that. My conscience doesn't bother me if the students can't find me; but if they catch me, my conscience pins me to the wall.
I agreed to be interviewed, but I stipulated that I did not care for giving answers that needed considerable background explanation that would be difficult to provide to an unprepared audience, and I made it clear that I reserved the right to publish the questions posed, along with my responses.
Below is the product of one of those interviews. The subject is unemployment. Readers should be forewarned that I took each question at its face value, trying not to read into the sometimes muddled grammar more than I had to. A phenomenon I have seen with increasing frequency is students who pound out text without even the slightest effort to look at what they have just slapped together. They print out what they have written and hand it in, send it out as e-mail, or otherwise publish it through their online communities; and they just don't care about the quality, comprehensibility, or readability of what they are presenting to others. I used to see this quite a bit among bloggers, but it seems to me that it is not quite as prevalent anymore, especially since many of the weaker bloggers have vanished and at least some of the survivors have become more aware of message quality as integral to the message being conveyed.
I should mention that the student who wrote the interview questions that follow has been in college for several years, and she has taken my course in microeconomics. She is somewhat accustomed to my sometimes sharp responses, and she probably knows that I will not allow for a simple answer without at least making mention of related issues. She also knows very well that I do not suffer fools: as I recall, she sat near the back of the class and took on the faint hint of a fetal position when I would start raging about the blazing stupidity of economic policies during the Bush era.
With all of that in mind, below is the product of her interview with me.
1) Is unemployment a big issue in U.S.A.? Why or why not?
- It is obviously a "big" issue because the mainstream media routinely report work force-related statistics, the most prominent being the monthly national unemployment rate and the bi-weekly number of net job losses. Another set of statistics being reported with some degree of regularity right now is the state unemployment rates.
While the importance of these statistics might be debated by conservatives and liberals, the numbers are a "big" issue because of two prevailing assumptions: first, that the national unemployment rate is a good measure of overall national economic vitality; and second, that a high national unemployment rate is an indicator of economic distress of citizens. To the first matter, the term "high unemployment rate" is relative: liberal economists have long held that there is a so-called "natural" unemployment rate, but we now understand that, even if there is some desirable level of unemployment, or some tendency of the unemployment rate to some long-term, equilibrium value, it might be dependent upon the era, and it might be a number we do not want to achieve until other numbers are in line with desired targets. To the second matter, economic misery translates at some point into political upheaval, as happens relatively peacefully from time to time in American history for example, in 1932, in 1980, and in 2008 and rather more violently in other places in the world from time to time.
2) How unemployment rate should be reduced (in your opinion)? Or what are the ways more jobs should be created? (because of the bankruptcy in businesses people are losing more jobs)
- Your question is too leading. Do not assume that I think the unemployment rate "should be reduced," at least not right away and not as a first priority; in fact, as painful as it is for people to be out of jobs right now, the longer the unemployment rate stays high, the longer we will postpone an inevitable, debilitated inflation spiral caused by years of outrageously malfeasant monetary policy conducted by the Federal Reserve, first in the later years of Alan Greenspan as Chairman, and then under the incompetent watch of Ben Bernanke and his fellow Federal Reserve Governors.
The Congress of the United States, with full support and encouragement by the Obama Administration, has authorized the expenditure of $787 billion in economic stimulus, much of it to the direct or indirect purpose of creating jobs. Fortunately, this recession is deep enough to make such otherwise ridiculously expansive fiscal policy stimulus actually work fairly slowly, which should lead to a controlled, slow decrease in the unemployment rate over the next three to five years. If the Federal Reserve can be brought back to conducting monetary policy responsibly, and if the Congress and the President can successfully move past their deficit spending binge, we might have a chance to move into an era of healthy job growth, while draining out the incomprehensible overhang of liquidity before it turns into a raging inferno of inflation.
In my judgment, will it work out that way? No. The Federal Reserve cannot be depoliticized, much less can it be brought back from utterly irresponsible monetary policy regimes. For its part, the Congress is not thinking about controlling the deficits; it is, instead, planning new, wildly out-of-control spending, while fantasizing that new taxes and tax structures, along with renewed, useless vows of spending control, will somehow make everything work out.
As for the President, he is an institutional center-right leader. Some of his people are the very individuals who had a hand in making our economy such a mess. Far worse, regardless of what he says, his actions belie a belief that we can somehow return to a set of status quo ante assumptions that, in reality, are no longer operational. The lasting legacy of the era of George W. Bush is that the extremists of the Republican Party, who long ago had expressed the desire to "change government as we know it," did so. They wrecked entire groups of solutions that were attainable from the Clinton years; yet, Mr. Obama and his Democratic allies just keep plowing ahead as if the Bush years and the degraded nation we now have from that time never happened.
Here's the reality. Keynesian policy relies upon a lag between economic recovery and the realization of wage gains by workers. The aggregate price level rising without contemporaneous increases in aggregate wages means workers will have to work harder and longer to cope with prices rising all around them. During the Bush Administration, this "sticky wages" effect extended from the factors of production we call "labor" and "human capital" over to another factor, the one we call "equity." The factors we call "land" and "physical capital" were left to benefit greatly (as were narrow channels of human capital we generally refer to as executive compensation). The lag between the strong economic expansion and significant wage gains during the Bush Administration was considerable: only by the period near the end of the last overall growth phase did labor experience anything remotely like real gains; and as for equity, the stock markets never did deliver broad-based, real (that is, inflation adjusted) gains before the crash.
3) Should jobless people get an extended aid? Why or why not? Is extended aid making those people lazier?
- Asking me, "Should jobless people get an extended aid?" is tantamount to asking me if we should feed starving children. Yes, of course we should expand the period of unemployment benefits in bad economic times, and we should contract that period when economic times are good. Whether or not it induces the moral hazard of making people "lazier" is irrelevant: if a working-class family has no income, the children in that family go hungry. Regardless of whether or not their parents are lazy, public policy must always be to the effect of maximizing the survival of children, making sure that they are healthy, and seeing to it that they understand that the government can be a beneficent force in their lives, so that when they grow up, they not only support the government, but insist upon a government at least as humane in that future time as it was when they were children in need.
That does not mean I support any and all government programs that give people incentives not to care for themselves and watch out for their own interests. This talk about government-funded, comprehensive health care is a case in point. I most certainly do not want my tax dollars paying for those who take inappropriate risks with their lifestyles, nor do I want to pay for goods and services sold by a medical-pharmaceutical industry that delivers dangerous, worthless, and over-blown products and procedures to gullible health care consumers. If the government is paying for everything, we rely upon that same government which has so massively, systematically failed us in the past to somehow, this time, do right on a permanent basis. If we are talking about life-saving and critical quality-of-life medical matters, and especially if we are talking about them for children, the elderly, and the truly poor, then I shall lead the parade for government-funded health care; but when I hear others promoting their own desire for health care consumption excess by hiding behind the needs of the genuinely needy, then I condemn it, and I condemn those who have the brazen gall to wave yet another bloody red shirt just so they can get something and make other people pay for it.
(On the topic of health care industry reform, I shall soon offer a small, pure, "market reform" proposal at which I know right now both liberals and conservatives will sneer derisively; but mark my word, if that idea were ever to get before Congress as proposed legislation, the medical-pharmaceutical industrial complex would see to it that the bill got killed like a sparrow being silenced by a nuclear bomb.)
4) Who is being more affected by decreasing unemployment rate: educated or non-educated?
- The unemployment rate is most certainly not "decreasing." I have no idea where you got that information, but it is wrong. The unemployment rate is increasing, and it is increasing for both the "uneducated" as well as the "educated." You have taken a microeconomics class, now, and you should know better than to classify workers as "uneducated" and "educated"; labor supply is far more nuanced than that. The purely unskilled labor market in this country is but one of many, each characterized by some greater or lesser degree of valuation based upon the degree of formal education, training, and/or on-the-job skills development and innate ability.
In virtually every one of the definable labor markets, unemployment is far higher right now than it has been historically. That having been said, though, myths abound about how recessions differentially impact these different labor markets. For one thing, unskilled labor generally has two advantages in recessions: first, basic services are always needed; second, low-skilled workers who exit the "official" labor force are more likely to have resources and/or lack of countervailing risk aversion to enter less formal, "gray" or "black" market work.
More educated people, while appearing to be better able to retain employment, too often face the phenomenon or "underemployment" (not getting enough work) or "misemployment" (working in jobs that do not utilize the most valuable of their skills). Remember that the U.S. Bureau of Labor Statistics counts a labor force participant as "employed" even if that individual worked only one hour during the reporting period; and the BLS makes no effort in its widely reported unemployment statistics to determine the extent to which a worker is utilizing the skills he or she has spent the most time developing to highest comparative advantage.
So, there they are: my answers to interview questions from a student who probably wanted short, easily digestible responses. Quite obviously, that is what I provided. If she and her instructor want the long answers, they'll have to take several of my courses, or they'll have to read several hundred articles I've written and published.
Either way, they will get a whole lot more than I can provide in a short interview that neither of them probably really wants to read; but, then again, that's the way it is with most people who avoid my lectures and my writings: they want answers, but they want nothing to do with the knowledge that leads to answers. Hence, they don't really want answers.
That, of course, is what makes you readers different from most people. You made it all the way through to the very end, in fact of yet another one of my articles.
The Dark Wraith is, once again, mighty annoyed that not everyone can be dismissed as incurious.
Obama Up, Obama Down
I am currently running a poll at Big Brass Blog, asking readers the following question: "Overall, what grade would you give Barack Obama for his performance to date as President of the United States?" You are invited and encouraged to participate in this unscientific, but perhaps revealing, survey of reader assessment of our President.
Click here to go to the poll.
The Teaching and Use of Economics
That project will take quite awhile to complete, and it will take some time for me to talk myself into starting. The best motivation is for me to read what others write on economics because this is what convinces me that I must set the record straight. To ramp myself up, I shall deal with relatively small matters I have seen addressed by others. Just today, I saw a reference to "the law of supply and demand." This and other myths and misunderstandings make the rounds on blogs and in the mainstream media with sufficient frequency that I actually repeat them to my economics and business classes to highlight the extent to which they, my students, are becoming separated through their learning from those around them who only think they know what they're talking about.
Concerning that "law of supply and demand," I am reminded of an incident from several years ago at a blog not far from here. A good friend of mine had posted the link to an article entitled, "Law of Supply & Demand Is Dead for Gold & Silver," by a fellow with an MBA (a bad sign to begin with) and a Master's degree in public policy. The writer of that story went into all manner of statements that were just patently incorrect, posing as he was to have knowledge of economics and finance way beyond his realm. The very title of his article, declaring as it did that a non-existence "law" is "dead," was a virtual sandwich-board sign that he was going to be sacrificing innocent electrons to the word processor god of nonsense. Any hope I might have had that reading his tripe was not a waste of ten minutes of my life was dashed when he made use of the word "bubble" in reference to commodities markets. For the time being, I have given up trying to deal with the conceptual vacuity of "bubble," which has become like the invocation of "Moloch" in the stupefyingly brain-dead "poetry" of the stupefyingly brain-dead "poet" Allen Ginsberg. The writer of the fairy tale article about the death of a non-existent thing in the gold and silver markets was not particularly cutting edge; but that word "bubble," especially in the context of how commodities markets actually work, is the mantric utterance of the thunderously uninformed, or in some cases it is the insider's o-so-revealing story line to make a few bucks telling silly stories to suckers who want simplistic explanations to make themselves feel smarter than they really want to work at being.
On the blog where my friend posted the link to the MBA guy's article, I wrote in comments that there was no such thing as a "law of supply and demand," a point I make emphatically in the early days of every microeconomics class I have taught for nearly three decades. I explained that there is a "Law of Supply" and a "Law of Demand," and I went on to make a summary statement of each of these, as I herewith shall:
The Law of Supply
As the price of a good or service increases, producers tend to provide a greater quantity of it to the market.
The Law of Demand
As the price of a good or service increases, consumers tend to want a lesser quantity of it.
The Law of Supply operates because, as the price of a good or service rises, the opportunity cost of using factors of production to make alternatives rises.
The Law of Demand principally operates because, as the price of a good or service rises, the price-relatives of substitutes fall, inducing consumers to move toward those alternatives that have become relatively cheaper.
The Law of Supply is captured graphically as an upward-sloping curve in quantity-price space, and the Law of Demand is captured graphically as a downward-sloping curve in quantity-price space.
(Each of these laws, by the way, has a rare but interesting exception.)
Okay, I laid out the Law of Supply and the Law of Demand as a quick primer on a basic topic in microeconomics, and I thought that would be the end of the matter there at that blog, but I was wrong. A Leftist commenter who had, with increasing frequency, been displaying the odd behavior of posting one comment right after another, came from out of nowhere and started using appallingly foul language to berate me, spewing howling nonsense from complete ignorance. He asserted something to the effect that there most certainly is a 'law of supply and demand' and he knew all about it. He went on to claim I had never written anything that was accurate about real-world economics, and he made some other blatantly false and appallingly hateful statements.
Because the owner of the blog chose not to make any public effort to deal with his verbally menacing behavior, I never wrote a comment there again. The blog belongs to her, of course, as she later declared in her own over-the-top, inappropriate response to a commenter who had dared to disagree in relatively mature language with the prevailing wisdom. When he noted her disproportionately nasty response, she told him that it was her blog, and she could do whatever she wanted there.
It seems that, when it comes to a small group of Leftists, private property is a thing of horror to be condemned until the private property belongs to a Leftist, at which point it becomes an altogether sacred site upon which anything goes, including decorum out the window.
Once again, there is no "law of supply and demand," although I have heard that mythical term used so often that it has become some kind of assumed thing, sort of like the legendary yeti.
Okay, I shall concede that stories about the abominable yeti are reinforced every time Dick Cheney shows up in public to talk, but that's not the same as saying the yeti, itself, exists only that reasonable facsimiles of it are available for hire as has-been political commentators.
Returning for one more example of out-sized tedium in overwrought statements about economics, the claim was made in comments to a recent post at Big Brass Blog that "macro and micro econ. people get the supply and demand part, but schools don't teach too much else."
This assertion is far from my experience, both in my own classrooms and from what I know of what happens in the overwhelming majority of classrooms in American colleges and universities where economics is taught.
First, supply and demand would be taught in microeconomics; macroeconomics also covers supply and demand, but the constructs are different in the study of economies at the large scale, which is why, in macroeconomics, we use the terms "aggregate supply" and "aggregate demand" to distinguish them from their respective counterparts in microeconomics.
Moreover, although economics textbooks vary to some extent in topical sequence, the scope is relatively consistent from one book to the next, and the syllabi in colleges and universities tend to follow the layout of the textbook being used, so a certain degree of uniformity exists across schools. The topics of "supply" and "demand" are respectively underlain by a considerable build-up: "demand" is part of the theory of the consumer, and "supply" is part of the theory of the firm. In neither aspect of a microeconomics course are the coverages of supply and demand ends, in and of themselves. Not even close. Eventually, the two parts of the market are brought together to show how the so-called "equilibrium price" and "market-clearing quantity" are established, and then some work is done in supply and demand dynamics so students will be able to predict, under relatively simple conditions, what happens to that equilibrium price and market-clearing quantity when supply and/or demand changes. All kinds of useful and interesting results can be obtained, and I have a somewhat proprietary method to make the mechanical part of the analysis a little easier so more time and energy can be spent looking at what the results actually indicate and what they mean for real-world kinds of applications.
In macroeconomics, the topical material is far more integrated than it is in microeconomics, at least if the course is constructed well, the way I do it. The material is conceptually deeper, with more historical references, and a necessary requirement that students hold together an arc of thinking that spans virtually the entire course. While I enjoy teaching many of the topics in microeconomics, it is in macroeconomics that I can see the students, toward the end of the course, compiling a comprehensive picture that deeply affects their thinking about economic life, politics, and their place in a world where vast forces far beyond their control are affecting them and have been since long before they were born.
I shall stipulate that I have seen both microeconomics and macroeconomics taught badly, and that usually happens when a Right-wing or Leftist professor cannot keep his or her own unsupported ideas from going wild in front of students who are unable to know that the material being taught is tainted or who are too afraid to complain. I had a personal experience with a Right-winger who was teaching such unconscionably wrong material that his students were completely incapable of taking any other economics courses after he had finished with them. The situation was outrageous, and the very presence of such people in academia speaks to deep problems with the tenure system and modern methods of granting faculty appointments. One day, I shall write in scathing, personal terms of this mess. Fortunately, most professors are good, and I can state without qualification that most professors who have strong ideological tendencies Right or Left will nevertheless deliver a good course with considerable objectivity. At the same time, I have no problem (as my students will verify) declaring that I am the best teacher ever.
Self-promotion is cheaper than major media ad space.
An extraordinary amount of material is taught in microeconomics and macroeconomics; in fact, I tell my students right up front that economics principles courses are among the hardest courses they will take, certainly at the introductory level. They believe me within only a few class periods. Even though my failure/dropout rates are very low compared to those of most other teachers (and I am one of the toughest testers and graders I know), my drop/fail rate still hovers around 20 to 25 percent.
Beyond the classroom, I have published numerous articles on microeconomics and macroeconomics, including a killer, four-part series entitled, "The Economics of Wreckage." I hold in great esteem the clutch of long-time readers here at Dark Wraith Publishing online properties who have plowed through some of my more intensely analytical writings, a list of which can be found in my post, "The Echo of Now." As I tell my own classroom students, I do not expect anyone to thoroughly, deeply, comprehensively understand the principles of economics in one pass or even several. The understanding is not so much a process as it is a demanding trial. Much like any science or art, mastery is not something that just arrives at people's unconscious behest because they believe they know what they're doing or because they think they have insights from "wisdom and experience," although both are deeply important contributors to bringing the subject matter of any discipline to life outside the classroom and the textbook. This is tangentially related to the modern myth among early learners and the general public that the "Internet" is the key to unlimited genius at the touch of a button. Only slowly do students in good colleges come to realize that the online world they have known is nothing more than a child's wading pool compared to the vast ocean of content that flows from professors, from books, and from the deep resources, some fee-based, in databases like Lexis/Nexis, the Standard & Poor's Reports, Business Elite, Shadow Government Statistics, FRED (Federal Reserve Economic Data), and thousands of other incomprehensibly vast lodes of data and information. Once students see the ocean and lose their fear of its impenetrable scope, the incredibly limited value of Google and Wikipedia, so overused by those who think knowledge is push-button easy, becomes apparent.
I do what I can, and I encourage the same in my students. "Thinking outside the box" is utterly useless without a deep, thorough knowledge of what, exactly, is inside that box. Shed light there, and quite a few myths will disappear about what it is that we have spent centuries developing, teaching, questioning, revising, and expanding. I have no intention of allowing the fields of my wide academic training, business experience, and years in teaching to be further eroded by either iconoclasts or institutional shills. I am old enough to be intensely bored by the wild 'n crazy crowd that thinks anything goes, and I am marginalized more than enough to be enraged by a corporatized, authoritarian system of governance that has penetrated society down to the very core of how people frame their concepts of personal, intellectual, and political freedom.
I am, on the other hand, not old enough to give up. I offer free subscription on Apple iTunes to entire courses in microeconomics, macroeconomics, and other courses I teach. These are podcasts of live, classroom lectures, and my subscriber base is not just my own students. People from all over the world listen, and the very fact that they would do something like that speaks to a heartening value at least some people hold: that information is insufficient without knowledge, and knowledge is insufficient without understanding.
At the end of the day, even understanding is insufficient if it fails to elicit within the learner at least a modicum of wisdom. That last step, I cannot provide. Many attain high degrees, great honors, and wide recognition, yet stop somewhere along the path from accepting raw data into their minds to distilling that data down to information and then processing it into knowledge. Others can make the journey without the need for those high degrees, great honors, and wide recognition. In any event, wisdom does not come without the prior journey. Most unfortunately, genuine wisdom will never be particularly valued, not in a society where ignorance is considered a viable voice, polemics a call to action, and wisdom a matter of opinion.
That does not mean the alternative in disciplined thinking backed by committed, on-going learning is dead.
Not, at least, until the Right-wingers and the Leftists who want teachers and practitioners like me to shut up get the guts to make their dream of a world of ignoramuses just like them come true.
The Dark Wraith has spoken.
Sarah Palin has announced that she will resign as Governor of the State of Alaska, effective July 26.
She did not explain exactly why she is resigning, although she repeated her recent complaints about her family being the butt of jokes, mentioning that her son Trig, who has Down's Syndrome, was "mocked and ridiculed by some mean-spirited adults recently."
Setting aside her newly found concerns for family members, speculation about why she intends to step down centers on the possibility that she wants to run for President in 2012, given her slightly veiled claim earlier this week that she could beat President Barack Obama in a race for the White House.
Albeit less likely, another possible reason she is resigning is that she has become aware of adverse information about her that will soon become public. Rumors persist about whether it is she or her daughter Bristol who is the biological mother of Trig, and scandals around allegations of personal intervention in legal matters involving family members caused considerable dismay even among members of her own party in the Alaska legislature. Furthermore, aids to Senator John McCain continue to let fly quite a few stories about her ignorance, her obstinacy, and her lack of self-control in spending campaign funds while she was the GOP nominee's running mate.
So, what's the real reason Palin's resignin'?
Only time will tell, but you betcha that the soon-to-be-former governor has her eye on the White House; and if the Republican Party has the common sense to slam the door on her aspirations, she could very well keep her ambition alive by other means, as I cautioned months ago in my November 2, 2008, article, "Sarah Palin, All on Her Own."
In the months ahead, if Ms. Palin does, indeed, plan to keep her burgeoning ego fed by the public limelight, she can be assured that she will have an ample and continuing supply of excuses to trot out her special, transparently disingenuous brand of manufactured outrage, if from no other source, then certainly from here, where she will get all the respect those who are pridefully ignorant, pompously hypocritical, and unintentionally ludicrous deserve.
Righteous Wrath of an Analyst Who Got It Right
I have brought my writing to bear on this subject before, but I really do need to hit the point right on the head, dispensing with formalistic niceties. I am just plain weary of the "journalists," important media-approved "analysts," and mainstream politicians who spend their time looking around for this or that mendacious bad person, evil firm, or other greedy entity for the root cause of the fiasco that has befallen our financial institutions. It seems that everyone who is respectable avoids like the Plague looking at the failure of the institution in plain sight, the Federal Reserve, where an appalling, systematic, multi-year malfeasance lay at the heart of the whole disaster.
The Federal Reserve failed to control the money supply aggregate M3, and when its failure began to pulse like a flashing red beacon, the Federal Reserve had the unbelievable gall to simply stop publishing the information about the out-of-control aggregate. By not maintaining control of M3, a highly illiquid form of money, it gave banks and other financial institutions all the incentive in the world to construct derivative instruments by which that illiquid form of money could be used to generate more liquid capital.
It's like owning a house when you're cash-strapped. The house is "money," but you can't use it to buy groceries; but what you can do is use that house as collateral to borrow cash-money so you can make bets and engage in other risky behaviors that do generate cash.
It was, is, and always will be the Federal Reserve's principal duty to maintain a stable growth of the money supply, and part of the reason for this is so that distorted incentives do not arise in the financial system where market power is sufficient to both seek and discover prices for financial instruments.
To some extent, the Federal Reserve's custodial role is very similar to the job of parents in ensuring that distorted incentives do not overwhelm decision-making processes of their children. The world has all kinds of bad things to offer, and it has all kinds of ways by which those bad things can infect the thinking of rational entities who want what's best for themselves without regard to larger, longer-term consequences for either themselves or the bigger world that will have to pay the price for their errors.
Yes, of course Goldman-Sachs is a greedy entity. That's what motivates business enterprise, and no amount of shaming, "ethics" training, or preaching from the Bible is going to change either the nature of the firm or the nature of the people who comprise an enterprise. It is our public institutions (in a secular society) that have the responsibility to circumscribe our worst and to foster an environment in which our worst does not become our best choice.
The Federal Reserve failed, and it failed massively, both during the tenure of Ben Bernanke and before him during the last years of Alan Greenspan, who became a spiteful manipulator of monetary policy against Bill Clinton and then a shill for lies about the need for massive tax cuts under George W. Bush.
And now, let me go on the attack against President Barack Obama.
I have written time and time again against this man. He is, at best, a center-right authoritarian, and his judgment regarding appointments to high offices is nothing short of outrageous. He is not choosing the best; he is, instead, choosing institutional hacks and people of otherwise less-than-stellar minds and strengths. I could name his Education Secretary, Arne Duncan, as one of his worst-of-the-worst choices were it not for others who rank in the same league of outlandish incompetence, mendacity, and sheer inadequacy of qualifications and prior performance; but I shall for the purposes of this brief article focus upon Timothy Geithner, whom Obama appointed under no pressure whatsoever to do so as the Secretary of the Treasury.
This is the Timothy Geithner who was the President of the Federal Reserve Bank of New York, the so-called "Empire Bank," which has a permanent voting seat on the Federal Reserve Open Market Committee, which decides upon and then directs the execution of monetary policy, with the principal means of carrying out that monetary policy being via what are called "open market operations" carried out by the Domestic Trading Desk at the Federal Reserve District Bank in New York.
Beyond Geithner's intimate involvement in the utterly irresponsible monetary policy regime that allowed M3 to grow out of control, because the Reserve Banks are in charge of supervising all member banks of the Federal Reserve system in their respective districts, the Empire Bank was the regulatory point where control of the banks in New York was supposed to take place, and yet New York was the virtual epicenter of the "financial meltdown." This happened when Geithner was the President of the Reserve Bank that was supposed to have had an iron fist of regulatory control over those very banks. And the claim that the Reserve Banks do not have regulatory authority over some of the financial institutions that got in trouble is sheer nonsense: after Glass-Steagall was all but thrown in the trash a decade ago, the financial sector dispensed with all pretense that there was a wall separating banking from all manner of other financial services, yet the Fed could do nothing to regulate this integrated financial services industry? Sure. Right.
Did Geithner get fired?
Did Geithner go to prison?
Did Geithner get publicly humiliated and driven into the wilderness?
No, President Barack Obama appointed him Secretary of the Treasury of the United States of America.
And finally, a brief mention of Ben Bernanke.
For allowing M3 to roar out of control, thereby allowing the creation of the vast overhang of illiquid monetary assets that were used to back ridiculously risky bets by banks, did Ben Bernanke get charged with crimes of any kind?
Was Ben Bernanke fired from his job for staggering malfeasance that will ultimately cost the American economy and its taxpayers more than $60 trillion? (You read that right: $60 trillion. Do a search using the keyword term "notional value.")
Has Ben Bernanke even been called before a grand jury?
Has President Barack Obama made any signal whatsoever that he will not tolerate this kind of stunning malfeasance in the government of which he is now the undisputed chief executive officer?
The answer to every single one of the above questions is a resounding, "No."
I am not interested in hearing about Goldman-Sachs or Bank of America or Lehman Brothers or Merrill Lynch or any other bad, greedy firm, not until someone tells me why it is that the greed of private enterprise is to be condemned when the incompetence of duly authorized public enforcers of proper behavior was so profound that greed in its destructive form could go as far as it did, for as long as it did, to the extraordinary detriment of the macroeconomy as it did.
Do not talk to me about how bad the kids are when no one wants to give me anything but blank looks about the trailer trash parents who were singularly, unambiguously responsible for seeing to it that their little snots didn't tear up the town.
I do apologize for being so blunt; but life is short, and no one else seems to have the guts to lay it out.
"No one could possibly have imagined..."?
I did. So did a few other analysts. We were marginalized; we were ignored; and the disaster happened.
Ignore us now, and the aftermath will be no better.