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Archive for January 13th, 2012
Habituating to Contraction
January 13th, 2012 | 
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The Savior State has pulled out all the stops to prop up the Status Quo. Its gargantuan borrowing and spending have fixed nothing. Contraction is replacing expansion as the new normal.
For the past 67 years, Americans have been conditioned to expect expansion and more of everything:more income, more stuff, more opportunity, more benefits, more medical care, more government entitlements, and so on.
As a result, Americans have habituated to permanent expansion.The concept that contraction–less of everything–is the new normal simply doesn’t register; it is rejected, denied, or decried as a great tragedy. The notion that it is simply reality does not compute with a populace habituated to permanent “growth” that is at worst interrupted by brief recessions.
U.S. politicians have learned that Soaring Rhetoric (TM)about “morning in America,” “the New Frontier,” “hope” and other ritualistic appeals to permanent expansion win elections, while accurate descriptions of reality lose elections.
The voting public’s demand for “permanent good news” promising permanent expansion has spawned a feedback loop of officially sanctioned manipulated statistics and media spin (a.k.a. propaganda) that expands with every administration, even as the real economy visibly weakens. Though the Obama Administration has perfected the techniques of presenting “permanent good news,” the divergence of the real economy and the official “story” that “we’ve returned to permanent expansion” is widening.
The real story is the “expansion” has cost the taxpayers trillions of dollars in new debt and trillions of dollars of backstops, shadow purchases and money-printing by the Federal Reserve.Roughly speaking, $6 trillion in additional Federal borrowing has been blown to simply keep the Status Quo from imploding, and around $13 trillion in guarantees, backstops, asset purchases, and losses made good have been issued to keep the Status Quo’s financial sector afloat and in charge.
By any credible, unmanipulated measure, for example, the number of people with fulltime employment or household income, the economy has yet to recover to 2007 levels.
This reality must be denied, both by the power-obsessed politicos who fear the truth like vampires fear garlic-garlanded crosses, and by voters who fear a reduction in their personal share of the swag.
Humans habituate quickly to a wide range of conditions and expectations, but once they’ve settled into the new habitat, they are resistant to new conditions. Needless to say, humans prefer a future in which there will be more of everything over one with less of everything, as permanent expansion means there will be few if any troublesome cost-benefit analyses, hard choices or painful triage, and little need to adjust to new realities.
Changing conditioning is difficult and often arduous.
Americans have been conditioned for three generations to expect the Savior State to “do something” during downturns to “make it right.”The idea that systemic problems are now beyond the reach of the Federal government does not compute; there must be something the government can do to “fix” everything.
This notion that the Central State is effectively omniscient and all-powerful is central to the belief system of Americans now. The concept that the government cannot fix the problem, or that government central-planning has made the problem worse, is anathema to everyone conditioned to believe government intervention will “save the day.”
The basic reality is the Federal government has already pulled out all the stops in the past four years to “make the economy recover,” and all its unprecedented actions have accomplished is to maintain the Status Quo via unsustainably gargantuan borrowing, spending and backstopping.
If we scrape away the rhetoric and bogus statistics, at heart the current fantasy that the U.S. has “decoupled” from the global economy and will remain an island of “permanent prosperity” in a sea of recession boils down to this belief: the Federal government “won’t let us stay in recession.” In other words, it’s within the power of the Central State to make good every loss, guarantee every debt, maintain the Empire, solve every geopolitical challenge and find technological or military solutions to potential energy shortages. All we need is the “will” to force the government to use its essentially unlimited power to “fix everything.”
A people conditioned to this expectation will have great difficulty accepting that their government has already done everything possible, and that these stupendous debt-based expenditures are simply not sustainable going forward. Some problems are not fixable by more government intervention; indeed, government intervention in the marketplace is like insulin: the system begins to lose sensitivity to Central State manipulation and intervention.
2012 is looking like the year that the American public will have to face up to the fact that the Central State’s massive efforts to “fix the economy” have failed, and that Central State support of the Status Quo cannot fix what’s broken.
We will have to habituate to contraction, and the belief in a god-like Savior State with unlimited powers and money will fade as the economy’s systemic illnesses–extreme concentrations of power and wealth, corruption, financial leverage, excessive debt and so on–reassert themselves.
All that has happened for four long years is systemic problems were papered over to benefit the Status Quo. Everything that is broken awaits real repair.
Charles Hugh Smith – Of Two Minds
Washington State Proposes Foreclosure Bill With Teeth!
23 (ii) A declaration by the beneficiary made under the penalty of perjury stating that the beneficiary is the actual holder of the promissory note or other obligation secured by the deed of trust shall be sufficient proof as required under this subsection. A violation of this subsection (7)(a)(ii) is a class C felony as provided in RCW 28 9A.20.020 and 9A.20.021.
Bingo. If this bill becomes law and you file a document foreclosing in Washington State claiming to be the beneficiary of a given mortgage and really aren’t, because, for instance, the trust never had the actual mortgage tendered into it, you go to prison.
It’s about damn time.
The bill is SB6199 and if you live in Washington State you can find your State Reps here: http://apps.leg.wa.gov/DistrictFinder/Default.aspx
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Posted in Banks, Corruption, Crime, Criminals, Economic Crisis, Economy, Financial System, Foreclosuregate, Foreclosures, Fraud, Government, Legal, legislation, Property Rights | 
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Lawrence Lessig: On America’s Lost Ability to Govern, Legalized Corruption, our Broken Republic, and How to Approach Fixing It
Harvard Law Professor Lawrence Lessig expounds on what has become of this Republic. There is much more to this presentation than what is contained in the selected notes below. Please watch/listen to it in its entirety (embedded below).
There are a thousand hacking at the branches of evil, to one who is striking at the roots. Henry David Thoreau, 1846
On American Greatness: There is a feeling today among Americans that we might not make it. The feeling of inevitability of American greatness is gone… that we have becomeBritain orRome orGreece. A generation ago, Reagan rallied the nation to deny a similar charge by Jimmy Carter. Reagan was right. But it is different today. Not that we as a people have lost anything of our potential. But we as a Republic have.
On America’s ability to govern: Our capacity for governing seems to have come to an end. The thing we were once most proud of, our Republic, is what we have learned to ignore. Government is an embarrassment. It has lost the capacity to make the most essential decisions. A ship that cannot be steered is a ship that will sink. This is a multiparty frustration. Left and right. As policies get systematically blocked, we must seek out the Thoreauvian root skill.
An example of how lobby money leads to bad law: Bill Clinton signed the Sonny Bono Copyright Term Extension Act in 1998, extending the term of existing copyrights by 20 years. Congress must have asked itself, “Did it advance the public good?” Copyrights are supposed to work by giving incentives to creating work. Incentives are prospective. Extending existing copyright terms does not produce additional work. The work had already been created. Milton Friedman said he would only join the brief (against the Act) if it had the term “no brainer” in it. Congress unanimously extended the term. There was more than $6m in lobby money from Disney and related companies. Public good be damned.
On the Wall Street Collapse: According to Simon Johnson and James Kwak, what explains the collapse is a perverse mix of too little government and too much government. Too little governmentt in the form of deregulation. In the 1990’s, financial innovators produced new financial instruments – namely derivatives. Those innovations were invisible to the market because a series of regulatory changes made it so that they did not have to satisfy standard exchange-based rules that had existed for decades: that they be traded on a public exchange; transparent; and subject to anti- fraud requirements. In the 1980’s, 98% of trades were subject to those New Deal rules. By 2008, 90% of trades were part of the shadow-banking economy.
Johnson & Kwak argue there was also too much government. Throughout the 90’s they sent a clear message that there was an implicit government guarantee. We socialized the risk and privatized the upside.What we got was the dumbest form of socialism in history. This is an insanely stupid way to set up financial markets.
On what transpired after the crisis hit in 2008: It gets worse after 2008. Wall Street still had the power to blackmail Congress into giving them a get out of jail free card. They managed to prevent change to the basic architecture that led to the instability that brought our economy over the cliff. We went from “Too Big to Fail” to “Too Bigger to Fail”, because of the “financial reform” that we have passed since 2008.
On why we are unable to regulate sensibly in this context: Since the 1990’s the fastest growing sector for campaign donations has been the financial sector. It all comes down to campaign contributions. Finance and insurance companies are the biggest donors. Money buys results in congress.
On what it means for Americans: No respectable liberal, conservative, or libertarian could defend these practices. These are abominations. The belief that we have a bought Congress erodes trust and participation. Recent polls indicate that ~9% of Americans have confidence in Congress.
On who Congress works for: The people are no longer the intended beneficiaries of government. And government is no longer dependent upon the people. Government is dependent upon their benefactors. They spend 30% to 70% of their time thinking about how to raise money. They become shape-shifters. They are constantly aware of what will bring in money. In 2010, 0.05% of Americans maxed out on campaign contributions. This is legalized corruption. It is a corruption of the dependence our framers intended. We have the wrong dependence inside the core of Congress.
Oh what constitutes a Republic: A Republic is a Representative Democracy. It is a democracy with a branch dependent on the people alone. We have lost that.
On what money does to the legislative process: One quoted study indicates that there is a vast discrepancy between what Congress does and what the vast majority of the population desires. Congress consistently does what the wealthiest desire.
On what we need now: Public funding of campaigns.
On why public funding of campaigns is so difficult to achieve: The problem is that Capitol Hill has become a farm league for K Street. Members and staffers and bureaucrats have a long-term view of eventually becoming lobbyists. It is a system where everybody depends on the current corrupt system surviving. Congress is not going to legislate against the system they have an interest in sustaining.
On what the alternative is: We must find ways to get around the cancer at the center of our government. Ordinary means are not appropriate. We need active, engaged politics. We must reclaim governing away from the professional politicians. It may not be possible.
On how to proceed: We must find common ground. We must become Thoreauvian root strikers. We must have courage.
Link to Lawrence Lessig’s book: Republic, Lost: How Money Corrupts Congress – and a Plan to Stop It
Link to original post at Blip.tv: Republic, Lost
Posted in Banks, Corruption, Criminals, Crony Capitalism, Cronyism, Debt, Economic Crisis, Economy, Financial System, Fraud, Government, Money, Redistribution of Wealth, Too Big To Fail, United States |
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