John Oliver on the US Payday Loans Industry

"Are there no prisons?"
"Plenty of prisons..."
"And the Union workhouses." demanded Scrooge. "Are they still in operation?"
"Both very busy, sir..."
"Those who are badly off must go there."
"Many can't go there; and many would rather die."
"If they would rather die," said Scrooge, "they had better do it, and decrease the surplus population."

Charles Dickens, A Christmas Carol


Usury is the practice of making unethical or immoral monetary loans intended to unfairly enrich the lender on the desperation or misfortune of others. (cf. unethically high drug charges promoted by patent protection).  A loan may be considered usurious because of excessive or abusive interest rates or other factors.  Someone who charges usury can be called an usurer, but the more common term in English is loan shark.

This video by John Oliver below discusses the payday loan industry in the US, which is remarkable even by today's lax moral standards when it comes to financial matters.

If not for the corruption of big money, outlandish fees from banks and usurious rates of interest from private financial companies could be stopped, and quickly.

Part of the problem is the attraction that some in the US have with the romantic notion of naturally good 'free markets' unencumbered by the means of protecting the weak and desperate from the stronger and unscrupulous.

People are not naturally good nor perfectly rational in all their affairs. And just because someone wears a suit and carries a pen and a high powered law firm instead of a gun does not mean that they are not a criminal in the truest sense of the word.

And the manner in which we are continually given corporations higher regard, more privileges, and more and more power over the individual is a sickness of our souls.  It is a portion of the worship of money and power above all else.

But Jesse, who is to say what the appropriate level of interest should be?

We have appointed regulators to do so, and there are certainly people more qualified as subject matter experts to do it.

But I would certainly tend to favor a Federal law that stipulates that no loan can charge more than 20 percent in annualized interest and fees in any 365 day period, or 1000 basis points over the Fed funds rate, whichever is higher, for any loan for any consumer loan as defined by the Consumer Protection Bureau.

And as for "States Rights" to do whatever they please, one could justify the minimal protection provided to the people among the various states under the Equal Protection Clause of the Constitution. If the corruption in a state authorized murder, slavery, child prostitution, drug addiction, mercy killings, sterilization, or torture, we would certainly not hesitate to assert the priority of the Bill of Rights for all citizens no matter where they lived.

Just because it is money that is involved does not mean that the injustice cannot be as serious an abuse to the public interest, to an individual or a family, even though one can assert that no one made them take the loan, or buy the drugs, or born handicapped, or fallen gravely ill. Public policy need to reflect the moral principles of a people at their most fundamental levels, or the government has no legitimate claim to be founded of, by, or for the people.

We Are Still In a Financial Crime Wave

In his recent column The Opposite of Stagflation Paul Krugman says that:

"One of the truly amazing (and disheartening) things about the Great Recession and its aftermath has been the continuing insistence of many economists that it’s somehow a supply-side slump, driven by the evils of Obamacare or something. This tends to come from people who view stagflation in the 1970s as having permanently refuted all things Keynes.

So I guess it’s worth pointing out repeatedly that the recent slump shows all the hallmarks of a demand-side shock; in particular, rising unemployment has been associated with falling inflation — the opposite of stagflation."

So I guess its also worth pointing out that the opposite of stagflation is not economic stagnation with declining inflation, but steady growth with very modest inflation. But given it is Paul K. we'll grant that he is assuming inflation as a reference point in this.   And in focusing in on the model battles, he is saying that we are indeed seeing stagnation, but there is deflation as his form of the Keynes model would predict.  Huzzah!

 

I will put aside for now his assertion that we are seeing declining inflation.  I think it might be said we are seeing little inflation growth overall, but with inflation appearing in certain product segments and assets.  But this is, I believe, an artifact of the way in which the Fed is pursuing very significant, top down monetary stimulus in a system that is still distorted and corrupted by the financial sector and its moneyed interests.  A few at the top are taking the greatest part of the monetary growth, and their demand is not for common goods but for luxuries, and monopolies, and more financial assets.

And so Paul Krugman is triumphant, because he would then go on to say, as he often does, that all we have to do is pour massive stimulation in to the economy from the fiscal side, and the demand side of the economy would recover as consumers could use their wages to purchase more goods.  Problem solved. 

 

And its a good piece of intellectual land to stake out, because no matter what the actual outcome in the real world, Paul will be able to argue that he was right if there is a favorable outcome.  Or if not, then it would have been favorable except that the government did not provide enough stimulus.  I would be inclined to believe that even if stagflation does eventually show up, he will argue that it was some other anomaly that does not affect his model.  A model that is too narrowly focused, and yet with too many degrees of freedom, to be useful.  

 

This works for Paul because his focus is sufficiently narrow and circumscribed, which is the failure of most economic models to provide any actual benefit for the real world, and are unsuited for the purposes of making policy decisions except at the most advisory level.  It allows him to almost completely ignore the facts on the ground, what really happened to cause the financial crisis, and what forces exist to keep it stubbornly at work despite massive top down monetary stimulus by the Fed.  

 

But like the housing bubble, when reality throws an economist a curveball, I have no doubt he will search his many hundreds of columns and find that he mentioned it, once.  And I suppose he may have mentioned reform once or twice as well.

 

His heart may be closer to the solution than the Austerians, but his mind is still carrying water for a system of learning, a method of distributing the benefits of productivity, and a political mindset that is more of an impediment to progress that an aid to it.. This is what happens when a vibrant set of theories from an original mind like John Maynard Keynes suffer from the arteriosclerosis of political dogmatism.  And after all, economics is a disgraced profession.

 

It is the hallmark of what Chris Hedges has called 'the death of the liberal class,' and along with it, the death of its conscience and sacrifice of moral principles to expediency in the service of power.  Few better representatives of this than the Clintons and Obama, and their acolytes in the status quo.  But they are presented as the alternative to an opposing political point of view so base as to almost redefine hypocrisy and greed.

 

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

h/t Yves Smith, et al.

Mission Accomplished

"Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search out across the seas. The wealth of another region excites their greed; and if it is weak, their lust for power as well.

Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich.  Robbery, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."

Tacitus, Agricola

 

The Atlantic, The War Photo No One Would Publish

Gold Daily and Silver Weekly Charts - Argentina Chastised By Judge Griesa For Speaking Out

Gold has popped to over 1320 in the late hours, but found little footing there and succumbed to capping pressure that held it to the 1311 area for most of the day.

Silver managed to plant a foot over the 20 handle and keep it there into the close.

The gold contacts that have been stopped on the Comex represents a very healthy 490,000 ounces month-to-date. But as you can see from the warehouse report, the metals never seem to leave the warehouse of late. Which is a good thing, because almost half of the total gold available at these prices has been claimed. Those who want delivery of real gold go to Asia it appears.

After the bell a story broke that the New York US District Judge Griesa dressed down the Argentine government in their debt hearing today, and threatened to hold them in contempt of court.  The judge was appointed to the Court by Richard Nixon in 1972.

"The judge in Argentina's long-running debt battle with hedge funds threatened a contempt-of-court order on Friday if the nation does not stop issuing false statements about having made required debt payments.

At a hearing, U.S. District Judge Thomas Griesa told lawyers at Cleary Gottlieb, which represents Argentina, that the country has made several false, misleading statements after he ordered the nation to stop doing so last week...

Jonathan Blackman, an attorney for Argentina, said his firm was not involved with the drafting of legal notices that appeared in newspapers.

'Argentina is a state. The state takes positions and makes decisions. They are not necessarily legal positions. This is a statement of their position, for better or worse,' he said."

Reuters, US judge threatens contempt ruling in Argentina case

Argentina has taken their case to the World Court at the Hague as a issue of national sovereignty. The Hague has sought permission from the US to hear the case, asking if the US would accept their jurisdiction as a pre-requisite.

Joe Stiglitz has said that with Griesa's decision "America is throwing a bomb into the global economic system".

I seem to recall that during the Bush Administration the Executive Office sent a note to the Judiciary that they had overstepped their bounds in a sovereign bankruptcy case involving the seizure of assets and other actions that impinged on another nation's sovereignty.  The Presidency asserted that the setting and management of foreign policy rightfully belongs to the Executive Branch, and that the Judiciary had overstepped its bounds.

I doubt Obama, whom for better or worse can be seen as modern management type not strongly driven or bound by personal principles but rather by situational expediencies, would take any position that inconvenienced the moneyed interests.

But by having his DOJ signal their willingness to abide by the decision in the Hague, Obama and AG Holder might be able to accomplish the relief of this sticky international situation without overtly disrespecting the global aspirations of Wall Street. 

But the Obama doctrine for asserting Executive Office prerogatives seem to be directed at decreasing transparency and persecuting whistleblowers rather than annoying even the most egregious get-richer schemes of billionaires.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Bounce Off Support

Stocks caught a bounce off 'hopes' that there will be a resolution, or at least a significant reduction, in Ukraine driven geopolitical tensions.

Next week may tell the tale of this, based on a look at the charts.

Have a pleasant evening.

Greatness In a Dark Time

Some say that most of the time everyone wants to be great, because they have a natural desire for acceptance, recognition, and praise. Perhaps this is so.

And in a dark and pathological time this means that everyone wants to have power. Power becomes the standard of value, the coin of the realm in a deeply fallen world.  And in such a perverse world the only virtue is greed. 

So they who serve the world want to be tough guys, unafraid, quick and intemperate on the attack, harsh.  Yes that is the mark of power, of one of the formidable wielders of weapons. As if there can be any just weapon that we may take up on our own, that is not given to us by the Lord for His purpose.

If by some chance that person may also wish to serve God, then they may desire that they could take up the sword like an avenging angel, and smite those enemies of God, who are all too often those who merely annoy and offend them. This is because their idea of what it is to be a human being has been subtly poisoned by the times; in their brokenness they exalt themselves.

And all too often that feeling of offense simply becomes a blind hatred of 'the other.' The other may merely be the different, and interfering 'do-gooders' who try to help them, and finally all of the weak.  The will to power despises weakness.  Then they are no longer of God, but have given themselves over to the darkness.  And they fully become its creatures.  Those who take up the sword for their own purposes in God's name will die by it in a death without redemption.

This is a subtle but very effective snare, a sin wholly against the Spirit. We embrace the world and its values not in our love of it, but in our hatred of it as we see it. And so we grasp that same sword of power wielded by the forces of darkness in high places. And we use it as we will with intoxication, and are lost.

 

This is not service, or greatness, not as counted in God's economy. This is a willfulness and a destruction of the self that comes from sin, but that in its own insidious way may encompass many of the trappings of a religion: the ornaments of ritual, and symbols, and all the showiness, the noise and pomp of human office-- but always and remarkably devoid of God's love. 

 

We may love the services and outward manifestations as we prefer them, the old and familiar or the hip and modern or whatever our personal preference may be, but come to hate the very Church that gives them life and meaning.  We destroy our beloved because we will to possess, to compel, not to love.

 

Worldly power is a perversion of heavenly power in that it expresses itself in the ability not to create and fulfill life, but to diminish and destroy it. And it exults in what it thinks is its power over life, which is death. How much money, how much power is enough? The will to power is a pathological sickness, that becomes all consuming and insatiable.  And thereby in the excesses it anoints its angels of death.

Be on your guard always, and do not allow yourselves to be among those simple ones who will be taken in during the dark times, as the love of many grows cold. Stand firmly, but humbly, to the end. And you will have your greatness.

"Do you desire to be great? make yourselves little. There is a mysterious connexion between real advancement and self-abasement. If you minister to the humble and despised, if you feed the hungry, tend the sick, succour the distressed; if you bear with the froward, submit to insult, endure ingratitude, render good for evil, you are, as by a divine charm, getting power over the world and rising among the creatures. God has established this law. Thus He does His wonderful works.

His instruments are poor and despised; the world hardly knows their names, or not at all. They are busied about what the world thinks petty actions, and no one minds them. They are apparently set on no great works; nothing is seen to come of what they do: they seem to fail. Nay, even as regards religious objects which they themselves profess to desire, there is no natural and visible connexion between their doings and sufferings and these desirable ends; but there is an unseen connexion in the kingdom of God. They rise by falling...

Let this be the settled view of all who would promote Christ's cause upon earth. If we are true to ourselves, nothing can really thwart us. Our warfare is not with carnal weapons, but with heavenly. The world does not understand what our real power is, and where it lies. And until we put ourselves into its hands of our own act, it can do nothing against us. Till we leave off patience, meekness, purity, resignation, and peace, it can do nothing against that Truth which is our birthright, that Cause which is ours, as it has been the cause of all saints before us.

But let all who would labour for God in a dark time beware of any thing which ruffles, excites, and in any way withdraws them from the love of God and Christ, and simple obedience to Him...

Such is the rule of our warfare We advance by yielding; we rise by falling; we conquer by suffering; we persuade by silence; we become rich by bountifulness ; we inherit the earth through meekness; we gain comfort through mourning; we earn glory by penitence and prayer. Heaven and earth shall sooner fall than this rule be reversed; it is the law of Christ's kingdom, and nothing can reverse it but sin."

John Henry Newman

" ...if I can help somebody as I pass along, If I can cheer somebody with a word or song, if I can show somebody he's travelling wrong, then my living will not be in vain."

Martin Luther King

"Gentleness is everywhere in daily life, a sign that faith rules through ordinary things...

Even in a time of elephantine vanity and greed, one never has to look far to see the campfires of gentle people. Lacking any other purpose in life, it would be good enough to live for their sake."

Garrison Keillor