“One day, we will have to stand before the God of history. And we will talk in terms of things we've done. And its seems to me that I can hear the God of history saying, 'That was not enough. For I was hungry, and you fed me not. I was naked, and you clothed me not. I was devoid of a decent sanitary house to live in, and you provided no shelter for me. And consequently, you cannot enter the kingdom of greatness.'" Martin Luther King
Showing posts with label credibility trap. Show all posts
Showing posts with label credibility trap. Show all posts
"A good parson once said that where mystery begins, religion ends. Cannot I say, as truly at least, of human laws, that where mystery begins, justice ends?"
Edmund Burke
"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"
PBS Frontine, The Warning
"The suspicions that the system is rigged in favor of the largest banks and their elites, so they play by their own set of rules to the disfavor of the taxpayers who funded their bailout, are true. It really happened. These suspicions are valid.”
Neil Barofsky, TARP Inspector General
"After dinner, Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule: they don’t criticize other insiders."
Elizabeth Warren
Welcome, fun-seekers, to a new week, romping through our empire's great markets of freedom for all, and an ever-expanding series of financial asset bubbles and moral hazards since the mid 1990's.
But fear not, it is surely different this time. All the finest people tell you so.
Today the financial channels were busy presenting the thoughts of the financial elites who were attending the annual Milk'em Conference in Beverly Hills. Most of that they had to say was self-serving nonsense, but that is essentially what they are paid the big bucks to do.
Stocks were showing a bit of strength today, until Benjamin Netanyahu, the PM of Israel, delivered a national address bombshell saying that he had literally tons of proof that Iran had based its nuclear arms deal on a pack of lies. Trumpolini, who presumably had been given a 'heads up' on this, was quick to add, 'see just like I said.'
And so geopolitical risk tumbled back into the markets, at least for the moment. Stocks slumped and gold and silver took back part of the jamjob they had been undergoing from the open in honor of an FOMC/NFP week.
I think it is reasonable to take a highly skeptical stance on quite a few things that we are told these days. The scolding voice of the very important media poobah may say, 'You little upstart, how dare you question our faithful public servants?'
You dare not question them, and they dare not allow it, because they have so much to hide.
To be caught lying used to be a career-ending behaviour among the privileged, but now it seems to be the rule, almost a right of passage. Lying has no consequences. Indeed, it is de rigueur, almost expected, of a public figure. How else could their fellows trust them to be complacent, to do the corrupt thing?
And these days cleverness is passe— the more blatant the lie the better, especially if it is punctuated with some vulgar personal insult to show that you mean business, and are not to be trifled with.
But publicly telling the liars that they are liars is considered highly impolite, and 'not unifying.' Any outsider who dares to tell the elite that they are full of it will provoke alarmed reproaches from their colleagues in the established and the privileged.
After all, the elite are caught in a terrible credibility trap, and the least amount of truth telling sounds like a gunshot in the room. Our established thought leaders in the media will not continue to be insiders, with access to power and big paychecks, if they openly question or allow impertinent questions to be asked of their fellow insiders.
This uneven distribution of power and lack of moral principles is going to end badly. It always does. And that fear of the consequences of justice is shamelessly deployed to cause reform to lose its nerve. Do you recall the arguments that were made to justify the last financial bailout?
Let justice be done, though the heavens may fall. Life will go on.
That will not be the heavens falling, but those who elevate themselves, as if they were our angels, but inside have the very hearts of devils. And the scales of justice will at long last be rebalanced.
I find it a disturbing trend that the corporate media continues to attack alternatives to their attempts to manufacture consent, lumping them all together as 'extremists.' That is a smear tactic, and it is being used to defend the corporate narrative from questioning.
Was this intentional fear-mongering, or just their usual sloppy reporting? I don't think they care one way or another. And this appears to be a trend among the corporate media mouthpieces.
But at any event, this is a truly disgraceful example of 'journalism' and upholding freedom of the press.
And it fits all too well with the DNC establishment's lawsuit against Wikileaks for daring to engage in journalism. If the Democratic bosses are so concerned about how they lost the last election they should sue themselves for being almost shockingly out of touch with their base and the electorate.
These are fine examples of the credibility trap in action. And if unchecked it lends itself to paranoia and retributive persecution against any and all dissent.
"The perpetrators were scholars, doctors, nurses, justice officials, the police and the health and workers’ administration.
The victims were poor, desperate, rebellious or in need of help. They came from psychiatric clinics and childrens hospitals, from old age homes and welfare institutions, from military hospitals and internment camps.
The number of victims is huge, the number of offenders who were sentenced, small."
Commemorative Tablet, Tiergartenstraße 4, Berlin
"But as Solomon said, wisdom enters not into a malicious mind, and science without conscience is but the ruin of the soul."
François Rabelais
"The inability to identify with others was unquestionably the most important psychological condition for the fact that something like Auschwitz could have occurred in the midst of more or less civilized and innocent people.
What is called 'fellow traveling' (collaboration) was primarily business interest: one pursues one’s own advantage before all else and, simply not to endanger oneself, does not talk too much. That is a general law of the status quo."
Theodor Adorno
"The U.S. has the most dysfunctional healthcare system in the industrial world, has about twice the per capita costs, and some of the worst outcomes."
Noam Chomsky
"The system continues unchanged since what dominates are the dynamics of an economy and a finance that are lacking in ethics. It is no longer man who commands, but money, money, cash commands. Men and women are sacrificed to the idols of profit and consumption...In this way people are thrown aside as if they were trash."
Francis I
Power and money have been the two great corrupting influences on mankind throughout history. We are not immune to this, although we like to think that we are just that much different, and better.
Competency without conscience is especially pernicious in the professional classes, which can come to consider themselves above the conventional restraints suitable only for the common people.
They thereby become more vulnerable to pride, and privileged judgement, and greed made virulent by indifference, and all the evils that thereby follow.
"There is no cause to worry. The high tide of prosperity will continue."
Andrew W. Mellon, Secretary of the Treasury, September 1929
"This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
R. W. McNeal, New York Herald Tribune, October 30, 1929
“If there was a day of the week I could skip it would be Monday. Clients had too much time to think and worry over a long weekend and by Monday they were often riddled with fear and anxiety.”
Stan Turner
“The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.”
John Kenneth Galbraith, The Great Crash of 1929
Stocks were able to nearly hold their ground with modest losses into the European close.
They were rattled by the rather poor Non-Farm Payrolls Report, but especially by the escalating war of words over trade between the US and China. Trumpolini could not resist answering the Chinese braggadocio about victory with another $100 Billion in tariffs.
About 1 PM the selling began to gain some momentum, and there was strong selling across a variety of companies that set some deeper lows. The Wall Street wiseguys love to hold the market up until Europe and Asia go home.
Despite the large and broader losses there was still little actual panic in the markets although Treasuries and gold did catch somewhat of a safe haven bid. Take a look at the modest increase in the VIX. Traders just do not believe that the market is going to go off the rails and are still looking to buy dips.
Right now the SP 500 futures are in a broad 'trading range' with energetic swings between 2580 up to around 2680. It may be noteworthy that it is around the 2580 level that the SP 500 had gone parabolic in the second leg of the Trump election rally.
There is a similar situation in the NDX futures, with the index vacillating broadly between 6400 to somewhere around 6650. Again it may be noteworthy that it was around 6400 that the index went parabolic in the post Trump election bull rally.
This is where it went from 'bull rally' to 'self-inflating bubble.'
I would suggest that the risk of a 'crash' is not great unless these lower bounds are broken, and panic selling sets in. Then we might see an NDX heading down to the old gap around 5460, with a similar target in the SP 500 of 2470. That would make for a solid market break and correction.
But, and this is the heart of the matter, there would need to be a decisive break lower out of this speculative range, accompanied by higher volumes and safe haven buying in Treasuries and gold.
For gold a panic breakout above 1370 would bring on 1400, which if broken would target 1470. And we of course would see a much higher spike in the VIX.
I do not think that a 'crash' is probable at this time unless 'something happens.' But we are in a rather unstable market, made so by the bubble facilitating and abetting actions of the usual suspects.
I came into today holding gold and triple short ETFs. I did take down those short trades in the last hour. As for gold, I remain persuaded by the charts that it is coiling for a breakout that may become memorable. It is pretty messy when a long running commodity price fixing pool falls apart.
The problem with stocks is that it is a market that has lost its bearings between real world values and prices driven by easy money and a willful mispricing of risk. No doubt this is the result of years of corruption and deceit across many levels and will not be fixed easily. This is because of the credibility trap, and the addiction to interventions and exceptions to justice introducing ever greater levels of moral hazard into the system.
Keep your heads down, don't be afraid to exercise your knees a bit in prayer, and remember what is truly important— those things that are most valued in God's economy, and not that of men.
And you probably will not hear it on the mainstream media.
The professional ruling class cannot accept responsibility for their many failures, and hypocrisies, and compromises with duty, and abuses of privilege because they are craven careerists in a corrupted system, caught up in a credibility trap. Their motto should be 'go along to get along, though the heavens may fall.'
Remarkable times when the truth is being told by comedians, and not the unintentional kind in politics and the media.
Is Trump being harried by the 'deep state' and the political establishment with Russiagate? It sure looks that way. Alhough some of it is self-inflicted. And bear in mind that I am no Trump supporter, or Hillary either for that matter.
The proof of the hysterical phoniness of this New McCarthyism is that these same efforts and overstated smears are also turned, almost effortlessly, against Bernie Sanders and Jill Stein, often in the same breath by the same courtiers to power and money. What do these three have in common? Not so much except all of them are political 'outsiders.'
We have been allowing our emotions and tribal loyalties to cause us to fall for all this manipulation. Have we, at the end of all of this, no shame? No dignity, or love of the truth to prompt us to rise above our own short term self-interests?
Force and fraud. And as the fraud wears thin and deteriorates, the use of force will increase.
"A credibility trap is when the regulatory, political and/or informational functions of a society have been so compromised by a long term, generalcorruption that they cannot address any meaningful reform without implicating, at least incidentally, themselves. The status quo has at least tolerated the corruption and fraud, if not profited directly from it, and most likely continues to do so. The power brokers have become susceptible to various forms of blackmail. And so a failed policy is sustained long after it is seen to have failed, because admitting failure is not an option for those who hold positions of advantage and power."
Jesse
"One of the primary characteristics of narcissists is their exaggerated sense of entitlement. It's hardly surprising then that so many politicians somehow think they deserve to game the system. After all, from their self-interested perspective, isn't that what the system is for? In their heavily self-biased opinion, if they want something, by rights it should be their's. So, nothing if not opportunistic, they take from public and private coffers alike whatever they think they can get away with. And given their grandiose sense of self, they're inclined to believe they can get away with most anything."
Leon F. Seltzer
"Representative institutions no longer represent voters. Instead, they have been short-circuited, steadily corrupted by an institutionalized system of bribery that renders them responsive to powerful interest groups whose constituencies are the major corporations and wealthiest Americans. The courts, in turn, when they are not increasingly handmaidens of corporate power, are consistently deferential to the claims of national security."
Sheldon Wolin, Inverted Totalitarianism
"The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform."
Simon Johnson, The Quiet Coup
"On Wall Street he and a few others—how many?— three hundred, four hundred, five hundred?—had become precisely that— Masters of the Universe."
Tom Wolfe, Bonfire of the Vanities
The pain of remaining human— when the increase in wickedness unleashes the age old enemy, and makes the love of most grow cold.
How does the status quo deal with an erosion of confidence in their actions in the late stage of a cycle of looting and abuse, caught as they may be in a credibility trap?
This is the point where we seem to be, when the facade of benevolent justice starts slipping away, and the looting and self-dealing becomes all too visible, on brazen display in scandal after scandal, special privileges and bailouts, and historic inequality.
And if there is an erosion of confidence, it surely cannot be due to anything that the best among us have done. They are wise and benevolent, heavily burdened by the task of guiding the public.
So there must be some foreign enemy or internal dissidents, actively trying to cause people to lose confidence in their rule.
When you run out of credible answers, one solution is to stop people from asking the questions. An offer of the bullet or the bribeis often effective for those with significant profiles and platforms. It is being used now more than you may know. The pressure on the well-informed to be silent is presently palpable. The quiet sacrifice of many people of conscience is under-appreciated.
A broader and more general use of censorship is sufficient for the rest. Concentration of mainstream media ownership in a few powerful hands is soon followed by increased and unilateral censorship powers over the wider variety of remaining independent sources.
There is a case to be made for restricting certain types of public speech, especially that which incites the public to violent prejudice. But that case must be narrow, highly transparent, and exceptional and infrequent. Unfortunately in times of general corruption measured restraint becomes abusive, widely and secretly used to silence any form of truth-telling and dissent from the established narratives and powers.
And it should be noted that in the cases of the most extreme examples of hate speech in history, their power was not in their eloquence, or the powerful logic of their arguments, of which they had neither. If we look at them now their language is crude and their ideas vulgar, false, and repugnant..
No, their power was that no one was able to speak out freely against them, to dissent from their obvious misstatements and errors, that were repeated endlessly without anyone who could effectively stand against them. And the people followed those lies into the abyss.
The Intercept First France, Now Brazil Plan to Empower the Government to Censor the Internet
By Glenn Greenwald
Yesterday afternoon, the official Twitter account of Brazil’s Federal Police (its FBI equivalent) posted an extraordinary announcement. The bureaucratically nonchalant tone it used belied its significance. The tweet, at its core, purports to vest in the federal police and the federal government that oversees it the power to regulate, control and outright censor political content on the internet that is assessed to be “false,” and to “punish” those who disseminate it. The new power would cover both social media posts and entire websites devoted to politics...
Tellingly, these police officials vow that they will proceed to implement the censorship program even if no new law is enacted. They insist that no new laws are necessary by pointing to a pre-internet censorship law enacted in 1983 – during the time Brazil was ruled by a brutal military dictatorship that severely limited free expression and routinely imprisoned dissidents...
The move to obtain new censorship authority over the internet by Brazilian police officials would be disturbing enough standing alone given Brazil’s status as the world’s fifth most populous country and second-largest in the hemisphere. But that Brazil’s announcement closely follows very similar efforts unveiled last week by French President Emmanuel Macron strongly suggests a trend in which government are now exploiting concerns over “Fake News” to justify state control over the internet...
Beyond having one’s political content forcibly suppressed by the state, disseminators of “Fake News” could face fines of many millions of dollars. Given Macron’s legislature majority, “there is little doubt about its ability to pass,” the Atlantic reports.
Both Brazil and France cited the same purported justification for obtaining censorship powers over the internet: namely, the dangers posed by alleged Russian interference in the 2016 U.S. election. But no matter how significant one views Russian involvement in the U.S. election, it is extremely difficult to see how – beyond rank fear-mongering – that could justify these types of draconian censorship powers by Brasília and Paris...
So for those who are comfortable with the current French leader overseeing a censorship program in conjunction with courts to censor “Fake News” from the internet, do you trust the Trump administration to make those determinations? Do you trust Marine Le Pen?...
Given the growth of intolerance, a surprisingly large segment of the public will not only tolerate, but may welcome censorship. They wish to escape the pain of thinking, of being human. They wish to smash all the mirrors that reflect their growing inhumanity.
"It seems that under the overwhelming impact of rising power, humans are deprived of their inner independence and, more or less consciously, have given up establishing an autonomous position toward the emerging circumstances.
The fact that the foolish person is often stubborn must not blind us to the fact that he is not independent. In conversation with him, one virtually feels that one is dealing not at all with him as a person, but with slogans, catchwords, and the like that have taken possession of him.
He is under a spell, blinded, misused, and abused in his very being. Having thus become a mindless tool, the foolish person will also be capable of any evil and at the same time incapable of seeing that it is evil. This is where the danger of diabolical misuse lurks, for it is this that can once and for all destroy human beings.”
Dietrich Bonhoeffer
“A true opium of the people is a belief in nothingness after death— the huge solace of thinking that for our betrayals, greed, cowardice, and murders that we are not going to be judged.”
Here is the two part continuation of the interviews on the Real News Network between Paul Jay and Thomas Frank.
Frank has the Clintons nailed, and continues to reiterate the high points of how they led the Democratic Party into an historic betrayal of their base, the working people. For money and power.
However, he is far, far too kind, almost to the point of what can be called a willful bias, to Barack Obama.
I am sorry, but can it be more obvious that Obama was a bait-and-switch brand for the oligarch class?
He seems to come back to a more realistic assessment in the second segment. But he just cannot bring himself to draw the conclusion that Obama was not some hapless dupe, a victim of circumstance, but knew exactly what he was doing, and early on had made his choice of what or whom to serve.
It is very hard to assess motives to a series of actions. Was it due to the bullet or the bribe? Was it a foregone conclusion from the very first? But at some point the circumstantial and particular evidence can become overwhelming.
He’s afraid of what happened to Martin Luther King Jr. And I know from a good friend who was there when it happened, that at a small dinner with progressive supporters – after these progressive supporters were banging on Obama before the election, 'Why don’t you do the things we thought you stood for?' Obama turned sharply and said, “Don’t you remember what happened to Martin Luther King Jr.?” That’s a quote, and that’s a very revealing quote.
Ray McGovern
The Democrats love to blame those diabolically crafty Republicans, the evil and omnipresent Russians, the weakness of virtue in the face of implacable darkness.
But for a variety of reasons, the liberal intelligentsia cannot bring themselves to accept the fact that our first 'black president,' articulate, well-educated, and charismatic, for whatever reasons, quickly became a willing tool of the moneyed interests. Paul Jay flat out says, 'Obama is too sacred to touch.'
And the 800 pound gorilla in the room, who is incredibly never mentioned, who was a phenomenon in the presidential primaries, is Bernie Sanders. They did manage a passing nod to Elizabeth Warren, however. Paul Jay kept trying to bring the conversation back to Obamas ongoing role in crushing the Sanders progressive wing of the Democrats, but Frank cannot help but run away from it, back to the more comfortable areas of liberal outrage like W.
There seems to be a lot of that going around, however. The supporters of Trump are buying into his populist mystique, even in the face of overwhelming evidence that he is a long time friend of big money, albeit a much clumsier deceiver and liar.
Ah the wonderful ironies of the credibility trap.
And how easy it is to see the hypocrisy and expedient rationalizations of the other guys. Which is why we must examine our own souls first before we would seek to harshly criticize another.
Don't get me wrong. I find both Thomas Frank and Paul Jay to be absolutely spellbinding, and much more intelligent and articulate than myself. It is just what, a comfort, to see that even the professionals and highly talented have the same human foibles as ourselves.
Where will all this end, this tragic overreach by the rich and the powerful? History and human nature both suggest that the truth cannot be admitted, and then faced and overcome, until one hits bottom.
I have embedded episode 7 here. You can click on the link below this to go to the RAI site for episode 8 and presumably an episode 9 when it appears.
“Once a government is committed to the principle of silencing the voice of opposition, it has only one way to go, and that is down the path of increasingly repressive measures, until it becomes a source of terror to all its citizens and creates a country where everyone lives in fear."
Harry Truman, Special Message to the Congress on the Internal Security of the United States, August 8, 1950
"We must dissent from the poverty of vision and the absence of moral leadership. We must dissent because America can do better, because America has no choice but to do better.”
Thurgood Marshall
The political and social establishment is ensnared, strangling within a credibility trap. It prevents them from truly confronting themselves and what they have done, and what they are still doing in the service of power and money.
It prevents them from addressing the problems, much less the needed reforms. It prompts them to act ineffectively and oddly, to the point that they obviously become a part of the problem and an impediment to progress.
The GOP seems almost beyond repair. The Democrats need to unravel the Clinton/Wall Street wing of the party which has its head buried deep in their party power structure like a big fat tick.
The Republicans need a 'twelve step' program for any kind of helpful change to have even the slightest chance.
The GOP tax bill is blatant corporate giveaway for the benefit of the one percent, and one of the more recent signs of their blindness caused by ideology in service to greed. They are not even bothering to excuse it anymore, except for the most naive of their supporters. They try to hide it by voting in secret on largely undiscussed bills with little debate. And as usual cover their perfidy with hypocritical slogans about freedom.
An even bigger disappointment because they have become content with failure, the DNC is purging itself of all progressive policies, dissent from the Wall Street status quo, with the Clintonistas trying to retain a tight grip on power— the power to keep losing elections unfortunately. But as long as they are pulling down fat consulting fees and favors from wealthy donors they seem to be content.
They cannot talk about real economic policy proposals for the benefit of their base. This would expose their hypocrisy and anger their real masters. All they have is negative campaigning about the other party, the 'lesser evil' proposition, and never ending fear tactics about Russia.
They too are serving their big money donors first and foremost, but at least have the modesty to cover themselves with the fig leaf of identity politics in addition to jingoism.
Both parties have come to resemble competing crime families, more so than representative political organizations.
There is another financial crisis coming, which will be fueled by the third artificial asset bubble since the GOP and the Clintons deregulated Wall Street, the financial sector, and the media, permitting the growth of powerful monopolies.
And there will be hell to pay. The problem is that they plan to stick the public with the tab, once again. That is why they wish to retain their control of the levers of power.
Don't believe it? Watch, and be amazed. They have no shame in the pursuit of power and money.
"The ruling elites, who grasp that the reigning ideology of global corporate capitalism and imperial expansion no longer has moral or intellectual credibility, have mounted a campaign to shut down the platforms given to their critics. The attacks within this campaign include blacklisting, censorship and slandering dissidents as foreign agents for Russia and purveyors of “fake news.”
No dominant class can long retain control when the credibility of the ideas that justify its existence evaporates. It is forced, at that point, to resort to crude forms of coercion, intimidation and censorship. This ideological collapse in the United States has transformed those of us who attack the corporate state into a potent threat, not because we reach large numbers of people, and certainly not because we spread Russian propaganda, but because the elites no longer have a plausible counterargument."
Chris Hedges, Silencing Dissent
This is the logical progression of the credibility trap.
When one has no credible counter-argument to facts and logically framed critiques, the resort is too often to ad hominem attacks, smearing, and suppression up to and including censorship.
This is the reaction of careerists and ideologues when there is a perceived power imbalance, that is, when they think that they can get away with it.
The Democratic Party is a good example of an ongoing organizational suicide.
They are internally focused, preoccupied with form but tone deaf and tactically inept, and so given over to cynicism that they can no longer communicate effectively with anyone outside of their own declining circles and enclaves.
They cannot change enough to grow and prosper without shedding the policies which have led them to a sweeping loss of public offices.
But such change would threaten the current leadership in the seats of power to which they jealously hold tight, not for the sake of long standing principles or the benefit of their constituent bases, but out of unabashed cynical self-interest and a commitment to personal enrichment
When the public once again clearly and loudly showed their desire for change, the Democratic leadership did their best to stifle and thwart it, and reaffirm their allegiance to the status quo and business as usual.
And even now they seem committed to a strategy of pivoting towards corporate wealth and high earning professionals, while offering an endless stream of hysteria and fear, wrapped with a bow of identity politics and phony sympathy.
Their brand is to be 'the lesser of two evils.'
After an electoral disaster they may have learned something, but they are willing to do nothing about it, remaining firmly in denial. Why? Because they hope that they can win by making the other guy fail more miserably than themselves without having to change their ways.
This is why a wave of populism is sweeping the EU bureaucrats aside.
A similar wave of populism is underway in the US.
The reasons for it are obvious: the abuse of the law and of power in the service of a 'fortunate' few in a self-selected class of meritsocrats and their anointed.
As the pigs proclaimed in Animal Farm, 'all animals are equal, but some are more equal than others.'
The credibility trap prevents the establishment and their enablers from discussing the core issues, and often even acknowledging that there is any problem.
Today's Yellen testimony and questioning before Congress was a nice example.
The Congress critters are craven except in a spirited defense of their own big money backers and sinecures, the general public and middle class be damned.
"These violent delights have violent ends.
And in their triumph die, like fire and powder..."
William Shakespeare, Romeo and Juliet
Credibility Trap: a condition that can afflict any organization in which self-interest, internal focus, and reliance on a self-appointed 'authority' of its top leadership grows to a point that precludes addressing certain chronic problems and points of failure that are impacting its organizational objectives.
An inner core of leaders comes to view their own interests and personal places in the power structure as superior to all other considerations. The key factor is when they develop an increasing reliance on authority and the control of organizational resources, rather than on performance and improvement as measured by external outcomes.
Stated differently, a credibility trap is what can happen overtime when an organization fails from the top down. Rather than being caught by the many checks and balances of management, the failure becomes self-perpetuating and self-reinforcing— institutionalized and systemic. It becomes ingrained into the 'DNA' of an organization's management in terms of style and priorities.
The core power structure becomes increasingly rigid, and meaningful change is viewed as undesirable, and even dangerous. However they may mask this reluctance to change by imposing largely counterproductive change on those below them with a proliferation of rules and organizational restructurings that are cosmetic rather than substantial.
The focus becomes process rather than production.
Ironically, as personal power and reward increases, a sense of personal responsibility and accountability diminishes. Therein we see the recent phenomenon of highly paid and powerful executives who, when their organization fails, blithely testify that they had no idea what was going on beneath their very noses.
Insiders begin to dictate an accepted view of things that is added to the rite of admittance into the power elite, along with certain forms of language and norms of behaviour. Any contrary evidence that is presented is ignored, and legitimate criticism even from within its own ranks is dismissed, ridiculed, and aggressively suppressed.
The increasingly debilitated leadership relies on the close, almost over-deliberate control of money and internal resources. Since they will not admit their own failures or shortcomings, they come to blame external factors and their own subordinates and suppliers.
If this tendency continues, this management myopia can become so profound that it eventually precludes even acknowledging that any problems exist, even in the face of a series of very public failures. This is the threshold of the credibility trap.
When the organization has gone beyond the point of effective internal reform and renewal, a 'hard stop' is often imposed by exterior forces, in a lack of resources and attention from beyond ithe leaderships direct organizational control. And then change will finally come in reform or a forced reorganization.
"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right."
"This whole 'red scare' thing has become so thoroughly ridiculous, so blatantly propagandist and overblown, so pervasively passed around by mainstream media outlets without serious investigation, so obviously picked up off a shelf in ad hoc convenience, and so completely hypocritical by the professional elite, that I am tempted to write it off and forget about it. But I should probably be deeply troubled for other reasons.
It is a sign of the establishment going further off the deep end, and further dropping its pretenses. It is a sign of a desperate elite that will say anything, do anything, and risk everything to control the narrative and protect itself.
We are descending into farce. Deeply dangerous farce."
Reader M. M.
This is a short video from Thomas Frank below. I have included two more short videos that are optional.
Every pundit who is grinding their axes about the various forces that unjustly took the election from Hillary needs to listen to this.
Thomas Frank is absolutely right. Everyone who had their eyes open could see this loss by the Democrats coming, or at the least a much closer race than expected. Donald Trump certainly saw it, and used it for his advantage.
And even now, the core political and entertainment establishment clearly is not accepting this, does not care in their cozy complacency.
A good part of this is because of the credibility trap, and their sense of entitled superiority.
If you don't believe this, watch the Democratic establishment mouthpiece channels like MSNBC almost any evening.
I hate to bother you with yet another posting on this subject, but the context of the situation shows that the message needs to be repeated, and driven home in order to penetrate the echo chamber of the Beltway Bubble.
The widely accepted attitude of the Wall Street Democrats was that the working middle class had 'no where else to go,' and so their interests could be sacrificed, time and again. They chose consciously to spend their energy in the pursuit of specialized big money interests.
And they were richly rewarded with huge sums of campaign donations, personal speaking 'repayments,' and sinecures during the out-of-office periods that the big money donors could provide.
The courtiers in the media and big money donors around the world are very put out that their claim checks for the spoils of a Hillary victory were invalidated. Their outrage and disappointment is remarkable, as if they have somehow been cheated of their due, their turn at the pig sty of public looting.
They blame racism, the Russians, sexism, Bernie bros, hackers, the 'deplorables' in a bit of an ironic twist on the Romney moment, the electoral college, and even the roots of democratic process itself.
They and their strategy failed. Spectacularly.
But they cannot fail, because they are so exceptional. And there is the work to return to the real world for them, in overcoming themselves and their selfish disappointment and cognitive dissonance.
I have been very clear that I was no supporter of Trump, and could not vote for him in good conscience under almost any circumstances I could imagine.
But like so many others I could not in good conscience comfortably pick the 'lesser of two evils' in this case, especially after the serial betrayals of the reforms, the reforms he promised and for which he was elected, that we had at the hands of Obama and his party. The nomination of Hillary was an 'in your face' gesture to the people by the worst of the embedded and outdated elements of a inwardly focused party in its decline.
The same and worse could be said of the Republicans, but that is another story. They just were not able to ruthlessly suppress their insurgents as had the DNC. And if you do not realize that they did so, then you are blinded by your ambitions and should step aside.
If anything, the antics of the DNC during these primaries showed that their callous disregard for the broader economic interests the people, and the hypocrisy which their self interests enabled, knew no bounds.
Think of the arrogance of their mindset— vote for our candidate because she is not good, but less bad than the other fellow, and once again you really have no other choice.
And they wonder why they were so soundly rejected.
The final refuge of the exceptionally arrogant is to dismiss those who have rejected them, and expect them to come crawling back, asking for another chance.
This is certainly preferable to admitting that they had the choice of the people and the winning candidate in their own ranks, and defeated him because they could, because it felt good to exercise power and influence once again, especially when it served their own selfish ambitions.
And in doing so, they defeated themselves.
But perhaps the people will not submit again, and choose whatever is offered, the less worse of a bad deal.
Perhaps the political class will have to eventually let go of their delusory arrogance, and face the work, and the pain, of remaking themselves into what they and their party had once represented: a real constructive and progressive choice, and not just another flavor of less abusive but equally audacious oligarchy.
For in truth, it is still just another form of arrogant oligarchy that serves itself, albeit under the fig leaf of a rationale of 'public service' in constructing a false moral high ground, that is an inch above the swamp.
And if they have the time for it, here are two more short videos that need to penetrate the collective consciousness of the party in order for meaningful progress to occur.
Tsar Nicholas II: I know what will make them happy. They're children, and they need a Tsar! They need tradition. Not this! They're the victims of agitators. A Duma would make them bewildered and discontented. And don't tell me about London and Berlin. God save us from the mess they're in!
Count Witte: I see. So they talk, pray, march, plead, petition and what do they get? Cossacks, prison, flogging, police, spies, and now, after today, they will be shot.
Is this God's will? Are these His methods? Make war on your own people? How long do you think they're going to stand there and let you shoot them? YOU ask ME who's responsible? YOU ask?
Tsar Nicholas II: The English have a parliament. Our British cousins gave their rights away. The Hapsburgs, and the Hoehenzollerns too. The Romanovs will not. What I was given, I will give my son.
"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich."
In the overnight action, prices have marked out where they will be going.
As for today, those powerful few who use public and private resources to twiddle the markets in the short term, and quite a few other data metrics as well, are giving their brethren who were caught offsides by last night's election a chance to square up and get ready. That's what they do.
They bought the SP 500 futures for stocks, and sold paper gold and silver for the metals.
And they wished to send all the rest of us a message— vote all you like, but we are still in control.
Being an insider means never having to say you are sorry, or mistaken. You do not have to, being a true ubermensch and a member of the right sort, from the right schools and with the right connections in the masterful power elite.
You cannot be wrong, ipso facto, because you rule by virtue a claim to a natural worthiness and superiority. To admit error is to deny yourself as you wish others to perceive you to be. And you become ever more deeply mired in frauds of every kind.
That is the credibility trap.
However, let us not mistake this bravado from the Wall Street globalisation project and the system of calculated inequality for what it really is.
They were wrong on the election, they are wrong on money, and they have been wrong on the economy for far too long.
They have been compounding their errors as they go, almost compulsively down a selfishly dangerous path, because it benefits them and their patrons financially, and they do not know what else to do without admitting that they were wrong.
We have seen worse, even in my short lifetime, and certainly in that of our parents and grandparents.
This is the point where you find your 'inner man,' to borrow a time worn phrase, and carry on because it is your obligation and your calling to do so.
And for those with a comedic or cynical bent, the next four years will most likely be a treasure trove of material on the borders of absurdity.
That is my take on this. And being just a man, with all that implies, I could be wrong.
"People are upset. They're angry at the system and they see Trump — not so much that they agree with him — but they see him as the human Molotov cocktail that they get to toss into the system like Brexit and blow it up, to send a message."
Michael Moore
"When Democrats sold out their own rank and file in the past it constituted betrayal, but at least it sometimes got them elected. Specifically, the strategy succeeded back in the 1990s when Republicans were market purists and working people truly had 'nowhere else to go'. As our modern Clintonists of 2016 move instinctively to dismiss the concerns of working people, however, they should keep this in mind: those people may have finally found somewhere else to go."
"We've seen the hubris. And now we're seeing the scandals."
David Gergen
This forecast from the NY Times is just one group's reading of the situation, and it is far too early to call the race, as America's own 'Brexit Moment', but the showing by Trump has to be casting a chill on the American political establishment.
And perhaps some doubt on the polling that has been appearing throughout this political season.
There are a few remaining states that will be absolutely pivotal to the forecasters, especially Wisconsin, Pennsylvania and Michigan.
If Wisconsin goes Republican for president, it will be for the first time in 32 years.
So let's see what happens. It still is too early to call.
If you want a laugh, tune in to MSNBC or CNN and listen to the shock and dismay amongst the commentators.
The credibility trap is on full display. Those who have been living in the echo chamber of the insular establishment seem to be getting a very cold slap in the face from reality.
I wonder if the Democratic insiders are capable of learning something from this one, especially with regard to the 'they have nowhere else to go' attitude towards their traditional base, before they threw them overboard from the free trade express, and adopted the 'one dollar, one vote' philosophy.
Or will it just be 'blame Wikileaks, blame the Russians, blame Bernie Sanders, and excoriate the voting public for their ignorance in failing to recognize our natural right to rule.'
As they have said several times tonight, 'The smart people were wrong again.' As opposed to the dopes who make up the rest of the country and need their guidance.
It is wonderful to see how the very serious people can look at this farce of a recovery, and still not get it. They are like British aristocrats stomping around their far flung colonies in days gone by saying, 'Why are the natives so angry? What do they want? What would they do without us?'
The Dow futures are down roughly 700 points.
Gold has rocketed higher to $1323, and silver is bumping its head against $19.
The Republican and Democrat insiders seem like two competing crime families, struggling for control of the spoils— like the Marranzanos and Lucianos, for example, in 1930s New York.
Or maybe Bill and Hillary are just a better educated, more fortunate, white collar version of Bonnie and Clyde. Someone certainly selected Bill for 'greatness' and quite a few breaks for a kid from Hot Springs early on. And Hillary wears her ambition like Lady Macbeth.
As for Trump, the outsider, in the end he may be less like Thomas Dewey than Dutch Schultz.
"They are also the grandees of our national media; the architects of our software; the designers of our streets; the high officials of our banking system; the authors of just about every plan to fix social security or fine-tune the Middle East with precision droning. They are, they think, not a class at all but rather the enlightened ones, the people who must be answered to but who need never explain themselves...
The dramatis personae of the liberal class are all present in this amazing body of work [Podesta emails]: financial innovators. High-achieving colleagues attempting to get jobs for their high-achieving children. Foundation executives doing fine and noble things. Prizes, of course, and high academic achievement.
Certain industries loom large and virtuous here. Hillary’s ingratiating speeches to Wall Street are well known of course, but what is remarkable is that, in the party of Jackson and Bryan and Roosevelt, smiling financiers now seem to stand on every corner, constantly proffering advice about this and that. In one now-famous email chain, for example, the reader can watch current US trade representative Michael Froman, writing from a Citibank email address in 2008, appear to name President Obama’s cabinet even before the great hope-and-change election was decided (incidentally, an important clue to understanding why that greatest of zombie banks was never put out of its misery)...
Hillary Clinton staffed her state department with investment bankers and then did speaking engagements for investment banks as soon as she was done at the state department. Of course she appears to think that any kind of bank reform should 'come from the industry itself'. And of course no elite bankers were ever prosecuted by the Obama administration.
Read these emails and you understand, with a start, that the people at the top tier of American life all know each other. They are all engaged in promoting one another’s careers, constantly.
Everything blurs into everything else in this world. The state department, the banks, Silicon Valley, the nonprofits, the 'Global CEO Advisory Firm' that appears to have solicited donations for the Clinton Foundation. Executives here go from foundation to government to thinktank to startup. There are honors. Venture capital. Foundation grants. Endowed chairs. Advanced degrees. For them the door revolves. The friends all succeed. They break every boundary.
But the One Big Boundary remains. Yes, it’s all supposed to be a meritocracy. But if you aren’t part of this happy, prosperous in-group – if you don’t have John Podesta’s email address – you’re out."
"Most of them became wealthy by being well connected and crooked. And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful. That’s what I have a problem with. And I think most people agree with me."
Charles Ferguson, Predator Nation
"Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want.
But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule: they don’t criticize other insiders."
Elizabeth Warren, A Fighting Chance
"Our plutocracy, whether the hedge fund managers in Greenwich, Connecticut, or the Internet moguls in Palo Alto, now lives like the British did in colonial India: ruling the place but not of it."
Mike Lofgren, The Deep State: The Fall of the Constitution and the Rise of a Shadow Government, 5 January 2016
It is correct to say that money velocity does not do anything. It does not do anything in the way that the speedometer on your car does not do anything. But it is an important measurement, a ratio of the amount of money being created and it relationship to productive, organic growth in the economy.
And it is well known that money velocity peaked in 1997, and has been in a steady decline since then. It is now at lows never seen before in the US economy. It, like the implications of the long term stagnation of median household income, remains largely unremarked, and if noticed, excused away as unimportant.
Tony is an expert on financial aspects of housing, among other things, and as you know I follow what he writes closely. He knows more about these things than anyone that I know. And he says what he means and means what he says, which is a sometimes neglected principle among mainstream economists these days.
But as I have a slightly different perspective on that period of time, I would take this a step further and draw a admittedly broader, less specialized conclusion. The article does not account for the massive tech bubble, which at the time was covered by the fig leaf of a 'new era internet economy,' giving it the name of the dot-com bubble, with which I happened to be intimately familiar.
Who can forget Chairman Greenspan's irrational exuberance speech which shanked the stock market in December of 1996.
Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past.
But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?
Alan Greenspan, The Challenge of Central Banking in a Democratic Society, 1996-12-05
As it turned out, Chairman Greenspan was blinded by ideology, as he himself admits years afterwards, never seeing a bubble that he didn't like. But his successors have followed the same sorry route of feeding the financiers to the detriment of the broader economy.
The problem was not the mortgage credit bubble per se, but rather the policy bias towards managing and regulating the economy itself, with an aggressive expansion of the money supply under Alan Greenspan (remember the Y2K scare) and Treasury Secretary Robert Rubin, along with bubbles in the usual suspects, in this case the financialization of housing and the tremendous bubble in the equity markets.
Do you recall the Time Magazine cover from 15 February 1999? The Committee To Save the World?
And how can we forget the Rubin doctrine of propping up the financial markets using the SP 500 futures before the fact, which he thought was cheaper than cleaning up the mess of a market crash after the fact. Remember The Working Group, aka The Plunge Protection Team, housed within the Exchange Stabilization Act, that came out of the scarring experience of the Crash of 1987, which itself was a precursor to the woes created by weakly regulated, artificially exotic financial instruments and mispriced risks?
A crisis is a very effective mechanism for enabling the abuse of power.
And let us not forget the overturning of Glass-Steagall in a decades long campaign richly underwritten by the Wall Street Banks, and the infamous Gramm-Leach-Bliley Financial Services Modernization Act of 1999.
In 1999, on signing Gramm-Leach-Bliley into law, Clinton said, 'This is a day we can celebrate as an American day' and that 'the Glass-Steagall law is no longer appropriate for the economy in which we live' and 'today what we are doing is modernizing the financial services industry, tearing down these antiquated laws and granting banks significant new authority' and 'This is a very good day for the United States.'
Columbia Journalism Review, Bill Clinton on Deregulation
One might say by way of analogy that Reagan made the nest, and Clinton laid the egg. But both Bush II and Obama have nurtured this chimera economy along. And we can have every expectation that the political establishment will continue to do so in the next presidency.
"It comes as a surprise to many people that, despite the fiasco at Citigroup and his role in causing the subprime mess, Rubin remains inside the circle at the White House. Nearly two decades after first migrating to Washington, he apparently is still calling the shots of U.S. financial and economic policy with the full support of President Barrack Obama.
Working through his favorite marionettes, Treasury Secretary Tim Geithner and Economic Policy Czar Larry Summers, most recently Rubin managed the defense of Wall Street following the great crisis. No matter what Secretary Geithner says or when he says it in public, you can be sure that those utterances have the full knowledge and approval of his handler Larry Summers and their common political owner and sponsor, Robert Rubin.
The causes for this are debatable and many, and I have considered it here many times as the credibility trap,
What we have now, an economy based on artificial support market resulting in a series of asset bubbles and crashes, with a growing inequality in income distribution. This is the natural outcome when a policy body decides to manage or 'stimulate' the economy by shoving freshly minted dollars top down through a weakly regulated, increasingly corrupt financial system whose outsized and largely unproductive profits act like a private tax on the real economy. It enriches a few, and enervates the productive working class.
This is why I have said that until there is financial and political reform, there will be no sustainable recovery. And the longer this continues, the more that the organic productivity of the economy will decline. And the more socially explosive the situation may become.
"Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population. Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy. These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.
If allowed to continue, this process will turn the United States into a declining, unfair society with an impoverished, angry, uneducated population under the control of a small, ultrawealthy elite. Such a society would be not only immoral but also eventually unstable, dangerously ripe for religious and political extremism.
Charles Ferguson, Predator Nation
I have little expectation now that reform will come from within. The power of the status quo is too great, and too prone to rewarding those who serve it, and silencing and impeding those who oppose it by progressive reform.
"'After dinner, 'Larry [Summers] leaned back in his chair and offered me some advice,' Ms. Warren writes. 'I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule: They don’t criticize other insiders.'
I had been warned."
Elizabeth Warren, A Fighting Chance
How can we have missed this element of self-serving preservation of the status quo so broadly on display in the run up to our recent presidential election?
'Stimulus' in itself is no panacea. It must be productive and targeted towards increasing aggregate demand within a healthy economy which distributes the rewards for productive efforts broadly amongst its participants.
Whether it is affordable housing, infrastructure project such as roads, bridges, and modern power grids, the general improvement of the environment, or the expansion and improvement of those basic elements of a culture than lend value to peoples' lives, any project which can be considered stimulative can and will be turned into an unproductive boondoggle by a corrupt financial and political system. They contaminate everything that they touch.
And so I continue to make the observation that significant financial and political reform are the sine qua non for a genuine economic recovery.
Doing more of the same may make no sense, may even seem neurotic. And if it seems to defy common sense, that is because it does.
But it has one very special thing going for it. It has been and still is richly rewarding to a small group of very powerful people, something which we have seen repeatedly throughout the developing world, and even in the gilded, boom and bust eras of this country before.
"The crash has laid bare many unpleasant truths about the United States...
Recovery will fail unless we break the financial oligarchy that is blocking essential reform."
Confounded Interest Dying Money Velocity Began in 1995 with Massive Mortgage Credit Expansion
M2 Money Velocity (GDP/M2 Money Stock) peaked back in Q3 of 1997. And it has mostly gone down hill from there. As of Q2 2016, M2 Money Velocity is at the lowest point in history.
Why?
One explanation for the decline in velocity is the decline in labor force participation since early 2000 when labor force participation peaked. Fewer people participating in the labor force (as a percentage of the population) makes it more and more difficult to maintain velocity since GDP is lower despite the expansion of money.
Why is labor force participation declining? First, our population is aging and more and more people are retiring. Second, more and more students decided to attend and/or stay in school given the lousy jobs market. Third, some people have just given up trying to find a job and would prefer to rely on the state for food, housing, healthcare, etc.
A closer look reveals some bad AND good news. Labor force participation for ages 25-54 has been declining since 2007 (but showing some improvement in 2016). On the other hand, LFP for ages 65 and above (many of whom were pushed back into the labor force as a result of the financial crisis and housing bubble burst) has been growing steadily since 2008.
Actually, the economic world turned before labor force participation peaked in early 2000 and M2 Money Velocity peaked in 1997.A key economic indicator, core personal consumption expenditures YoY, was above 4% in the early 1990s only to fall to around 2% around 1995 prompting the Clinton Administration to enact policies leading to a dramatic increase in mortgage credit (creating a credit bubble) as a stimulative measure. This was the Clinton National Homeownership Strategy: Partners in the American “Dream.” nhsdream2 That turned into a nightmare for millions of American families.
1995 was the beginning of the incredible housing credit bubble that catastrophically exploded in 2008.
Core personal consumption expenditures (cPCE) YoY sagged after 1989 and hit 2% by mid 1990s and has struggled to reach 2% on a consistent basis ever since. As a result, GDP has been compromised and the massive expansion of mortgage credit helped created a massive house price bubble which burst … and things have never been the same since.
And with the fall of the House of Usher cards, mortgage equity withdrawal has fallen as well (putting a damper on personal consumption expenditures.
Remember, housing is a consumption good (to serve as shelter), not a productive asset like a factory. Trying to create economic growth through housing is a poor choice. So much so that The Federal Reserve is left blowing asset bubbles instead of stimulating actual economic growth.
Let us pray for those whose hearts are hardened against His grace and loving kindness by greed, fear, and pride, and the seductive illusion and crushing isolation of evil.
We pray that we all may experience the three great gifts of our Lord's suffering and triumph: repentance, forgiveness, and thankfulness. And in so doing, may we obtain abundant life, and with it the peace that surpasses all understanding.
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