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What the new Jim Comey torture emails actually reveal
Just as they did with CIA reports on WMDs, Bush officials pressured DOJ lawyers to issue torture-authorizing memos.
Glenn Greenwald
Jun. 07, 2009 |
The New York Times was provided 3 extremely important internal Justice Department emails from April, 2005 (.pdf) -- all written by then-Deputy Attorney General Jim Comey -- which highlight how the Bush administration's torture techniques became legally authorized by Bush lawyers. As Marcy Wheeler documents, the leak to the NYT was clearly from someone eager to defend Bush officials by suggesting that Comey's emails prove that all DOJ lawyers --- even those opposed to torture on policy grounds -- agreed these techniques were legal, and the NYT reporters, Scott Shane and David Johnston, dutifully do the leakers' bidding by misleadingly depicting the Comey emails as vindication for Bush/Cheney (Headline: "U.S. Lawyers Agreed on the Legality of Brutal Tactic"; First Paragraph: "When Justice Department lawyers engaged in a sharp internal debate in 2005 over brutal interrogation techniques, even some who believed that using tough tactics was a serious mistake agreed on a basic point: the methods themselves were legal").
I defy anyone to read Comey's 3 emails and walk away with that conclusion. Marcy has detailed many of the reasons the NYT article is so misleading, so I want to focus on what the Comey emails actually demonstrate about what these DOJ torture memos really are. The primary argument against prosecutions for Bush officials who ordered torture is that DOJ lawyers told the White House that these tactics were legal, and White House officials therefore had the right to rely on those legal opinions. The premise is that White House officials inquired in good faith with the DOJ about what they could and could not do under the law, and only ordered those tactics which the DOJ lawyers told them were legal. As these Comey emails prove, that simply is not what happened.
The DOJ torture-authorizing memos are perfectly analogous to the CIA's pre-war intelligence reports about Iraq's WMDs. Bush officials justify their pre-war statements about WMDs by pointing to the CIA's reports -- as though those reports just magically appeared on their desks from the CIA -- when, as is well documented, Dick Cheney and friends were continuously pressuring and cajoling the CIA to give them those threat reports in order to supply bureaucratic justification for the attack on Iraq. That is exactly how the DOJ torture-authorizing memos came to be: Dick Cheney, David Addington and George Bush himself continuously exerted extreme pressure on DOJ lawyers to produce memos authorizing them to do what they wanted to do -- not because they were interested in knowing in good faith what the law did and did not allow, but because they wanted DOJ memos as cover -- legal immunity -- for the torture they had already ordered and were continuing to order. Though one won't find this in the NYT article, that is, far and away, the most important revelation from the Comey emails.
* * * * *
Just read the Comey emails for yourself -- they're not long -- and you'll see exactly how these DOJ torture memos were actually produced. The key excerpts tell the story as clearly as can be. Comey was vehemently opposed to a draft memo written by Acting OLC Chief Steven Bradbury -- ultimately dated May 10, 2005 (.pdf) -- that legally authorized the simultaneous, combined use of numerous "enhanced interrogation techniques" on detainees. This "combined techniques" memo was crucial because these were the tactics that had already been used on detainees, and -- after the prior OLC memos authorizing those tactics were withdrawn -- the White House was desperate for legal approval for what they had already done and what they wanted to do in the future.
Comey begins by noting that OLC lawyer Patrick Philbin had expressed numerous objections to the Bradbury memo -- all of which were being ignored in the rush to give the White House what it wanted:
Comey then noted that he, too, had "grave reservations" about the DOJ legal opinion:
Does that sound to you like there was unanimity in the DOJ about the legality of these methods?
As a result of his objections, Comey went to Attorney General Alberto Gonazles to urge that the memo not be approved, but Gonzales told him that he was under extreme pressure from Dick Cheney, David Addington, Harriet Miers -- and even Bush himself -- to get these memos issued:
Comey urged Gonzales to stop the approval of the "combined techniques" memo, warning it would "come back to haunt him":
The following day, Comey noted that the loyalty of DOJ lawyers lay with the White House, not with the Justice Department, and they were thus willing to comply with the demands of Cheney and Addington even at the expense of their duties as DOJ lawyers:
Most revealingly, Comey described exactly what was happening with this process: that the White House was demanding and pressuring the issuance of these memos, but that once the torture regime became public -- as Comey warned that it would -- White House officials would defend themselves by heaping the blame on Gonzales and other DOJ lawyers, deceitfully pretending that they were merely following in good faith DOJ advice about what was and was not legal:
Alluding to the extreme pressure that had previously been exerted by the White House on then-AG John Aschroft to legally authorize the illegal NSA spying program (the Ashcroft Hospital Drama), Comey lamented that even the minimal willingness of Ashcroft to defy White House pressure was completely lacking in the Gonzales-led DOJ and OLC -- meaning the White House was able to get legal authorization from the DOJ for whatever it wanted, regardless of whether it was actually legal:
This battle over these torture memos was occurring in preparation for a White House Principals Meeting -- to be attended by key Bush cabinet members -- to decide which interrogation tactics they would authorize. As Comey notes, White House officials knew full well that what they were authorizing and ordering were, in his words, "simply awful" -- as illustrated by the cowardly demand from Condoleezza Rice that the tactics they were to approve not be discussed in any detail at the meeting (click to enlarge):
Comey notes that there was a videotape of at least one of the interrogation sessions that would ensure that the full brutality of what they authorized would come to light -- but those videotapes, of course, were destroyed by the CIA in an act which even the 9/11 Commission co-Chairmen called "obstruction of justice."
Ultimately, Comey's pleas that Gonzales block approval of these tactics were ignored. Despite Gonzales' conveying Comey's arguments about how history would judge what they were doing, the White House Principals -- yet again -- approved all of the torture tactics in those memos:
* * * * *
It's worth noting that all of the officials involved in these events -- including Comey -- are right-wing ideologues appointed by George Bush. That's why they were appointed. The fact that Comey was willing to go along with approval of these tactics when used individually -- just as is true of his willingness to endorse a modified version of Bush's NSA warrantless eavesdropping program in the face of FISA -- hardly proves that there was a good-faith basis for the view that these individual tactics were legal.
But the real story here is obvious -- these DOJ memos authorizing torture were anything but the by-product of independent, good faith legal analysis. Instead, those memos -- just like the pre-war CIA reports about The Threat of Saddam -- were coerced by White House officials eager for bureaucratic cover for what they had already ordered. This was done precisely so that once this all became public, they could point to those memos and have the political and media establishment excuse what they did ("Oh, they only did what they DOJ told them was legal"'/"Oh, they were only reacting to CIA warnings about Saddam's weapons"). These DOJ memos, like the CIA reports, were all engineered by the White House to give cover to what they wanted to do; they were not the precipitating events that led to and justified those decisions. That is the critical point proven by the Comey emails, and it is completely obscured by the NYT article, which instead trumpets the opposite point ("Unanimity at DOJ that these tactics were legal") because that's the story their leaking sources wanted them to promote.
What's most ironic about what the NYT did here is that on the very same day this article appears, there is a column from the NYT Public Editor, Clark Hoyt, excoriating the paper for having published a deeply misleading front page story by Elizabeth Bumiller, that claimed that 1 out of 7 Guantanamo detainees returned to "jihad" once they are released. That happened because Bumiller followed the most common method of modern establishment reporting: she mindlessly repeated what her government sources told her to say. As Hoyt put it:
But the article on which he based that statement was seriously flawed and greatly overplayed. It demonstrated again the dangers when editors run with exclusive leaked material in politically charged circumstances and fail to push back skeptically. The lapse is especially unfortunate at The Times, given its history in covering the run-up to the Iraq war.
That is exactly what Shane and Johnston did with these Comey emails. Just as Bumiller did, they included some contrary facts buried deep in the article about Comey's objections, but the headline and the way the entire article was framed will create the impression -- as intended -- that there was unanimity among DOJ lawyers regarding the legality of the Bush interrogation program. Other journalists, too slothful to read the Comey emails themselves, will get the message and go forth and repeat it, and it will soon be conventional wisdom that "everyone" at the DOJ agreed these torture techniques were legal. Already this morning, here is George Stephanopolous' Twitter reaction to the NYT story:
Any rational and minimally well-informed person who actually read the Comey emails would walk away with the exact opposite point -- what is "stunning" was how extreme was the pressure from the White House to issue these memos and how compliant DOJ lawyers were to White House dictates. But that's how our media works: anonymous government officials tell them what to say; they write it down uncritically; and it then becomes conventional wisdom regardless of how false it is.
In the wake of Obama's speech yesterday, there are vast numbers of new converts who now support indefinite "preventive detention." It thus seems constructive to have as dispassionate and fact-based discussion as possible of the implications of "preventive detention" and Obama's related detention proposals (military commissions). I'll have a podcast discussion on this topic a little bit later today with the ACLU's Ben Wizner, which I'll add below, but until then, here are some facts and other points worth noting:
(1)What does "preventive detention" allow?
It's important to be clear about what "preventive detention" authorizes. It does not merely allow the U.S. Government to imprison people alleged to have committed Terrorist acts yet who are unable to be convicted in a civilian court proceeding. That class is merely a subset, perhaps a small subset, of who the Government can detain. Far more significant, "preventive detention" allows indefinite imprisonment not based on provencrimes or past violations of law, but of those deemed generally "dangerous" by the Government for various reasons (such as, as Obama put it yesterday, they "expressed their allegiance to Osama bin Laden" or "otherwise made it clear that they want to kill Americans"). That's what "preventive" means: imprisoning people because the Government claims they are likely to engage in violent acts in the future because they are alleged to be "combatants."
Once known, the details of the proposal could -- and likely will -- make this even more extreme by extending the "preventive detention" power beyond a handful of Guantanamo detainees to anyone, anywhere in the world, alleged to be a "combatant." After all, once you accept the rationale on which this proposal is based -- namely, that the U.S. Government must, in order to keep us safe, preventively detain "dangerous" people even when they can't prove they violated any laws -- there's no coherent reason whatsoever to limit that power to people already at Guantanamo, as opposed to indefinitely imprisoning with no trials all allegedly "dangerous" combatants, whether located in Pakistan, Thailand, Indonesia, Western countries and even the U.S.
(2) Are defenders of Obama's proposals being consistent?
During the Bush years, it was common for Democrats to try to convince conservatives to oppose Bush's executive power expansions by asking them: "Do you really want these powers to be exercised by Hillary Clinton or some liberal President?"
Following that logic, for any Democrat/progressive/liberal/Obama supporter who wants to defend Obama's proposal of "preventive detention," shouldn't you first ask yourself three simple questions:
(a) what would I have said if George Bush and Dick Cheney advocated a law vesting them with the power to preventively imprison people indefinitely and with no charges?;
(c) even if I'm comfortable with Obama having this new power because I trust him not to abuse it, am I comfortable with future Presidents -- including Republicans -- having the power of indefinite "preventive detention"?
(3)Questions for defenders of Obama's proposal:
There are many claims being made by defenders of Obama's proposals which seem quite contradictory and/or without any apparent basis, and I've been searching for a defender of those proposals to address these questions:
Bush supporters have long claimed -- and many Obama supporters are now insisting as well -- that there are hard-core terrorists who cannot be convicted in our civilian courts. For anyone making that claim, what is the basis for believing that? In the Bush era, the Government has repeatedly been able to convict alleged Al Qaeda and Taliban members in civilian courts, including several (Ali al-Marri, Jose Padilla, John Walker Lindh) who were tortured and others (Zacharais Moussaoui, Padilla) where evidence against them was obtained by extreme coercion. What convinced you to believe that genuine terrorists can't be convicted in our justice system?
For those asserting that there are dangerous people who have not yet been given any trial and who Obama can't possibly release, how do you know they are "dangerous" if they haven't been tried? Is the Government's accusation enough for you to assume it's true?
Above all: for those justifying Obama's use of military commissions by arguing that some terrorists can't be convicted in civilian courts because the evidence against them is "tainted" because it was obtained by Bush's torture, Obama himself claimed just yesterday that his military commissions also won't allow such evidence ("We will no longer permit the use of evidence -- as evidence statements that have been obtained using cruel, inhuman, or degrading interrogation methods"). How does our civilian court's refusal to consider evidence obtained by torture demonstrate the need for Obama's military commissions if, as Obama himself claims, Obama's military commissions also won't consider evidence obtained by torture?
Finally, don't virtually all progressives and Democrats argue that torture produces unreliable evidence? If it's really true (as Obama defenders claim) that the evidence we have against these detainees was obtained by torture and is therefore inadmissible in real courts, do you really think such unreliable evidence -- evidence we obtained by torture -- should be the basis for concluding that someone is so "dangerous" that they belong in prison indefinitely with no trial? If you don't trust evidence obtained by torture, why do you trust it to justify holding someone forever, with no trial, as "dangerous"?
(4)Do other countries have indefinite preventive detention?
Obama yesterday suggested that other countries have turned to "preventive detention" and that his proposal therefore isn't radical ("other countries have grappled with this question; now, so must we"). Is that true?
In June of last year, there was a tumultuous political debate in Britain that sheds ample light on this question. In the era of IRA bombings, the British Parliament passed a law allowing the Government to preventively detain terrorist suspects for 14 days -- and then either have to charge them or release them. In 2006, Prime Minister Tony Blair -- citing the London subway attacks and the need to "intervene early before a terrorist cell has the opportunity to achieve its goals" -- wanted to increase the preventive detention period to 90 days, but MPs from his own party and across the political spectrum overwhelmingly opposed this, and ultimately increased it only to 28 days.
In June of last year, Prime Minister Gordon Brown sought an expansion of this preventive detention authority to 42 days -- a mere two weeks more. Reacting to that extremely modest increase, a major political rebellion erupted, with large numbers of Brown's own Labour Party joining with Tories to vehemently oppose it as a major threat to liberty. Ultimately, Brown's 42-day scheme barely passed the House of Commons. As former Prime Minister John Major put it in opposing the expansion to 42 days:
It is hard to justify: pre-charge detention in Canada is 24 hours; South Africa, Germany, New Zealand and America 48 hours; Russia 5 days; and Turkey 7½ days.
By rather stark and extreme contrast, Obama is seeking preventive detention powers that are indefinite -- meaning without any end, potentially permanent. There's no time limit on the "preventive detention." Compare that power to the proposal that caused such a political storm in Britain and what these other governments are empowered to do. The suggestion that indefinite preventive detention without charges is some sort of common or traditional scheme is clearly false.
(5) Is this comparable to traditional POW detentions?
When Bush supporters used to justify Bush/Cheney detention policies by arguing that it's normal for "Prisoners of War" to be held without trials, that argument was deeply misleading. And it's no less misleading when made now by Obama supporters. That comparison is patently inappropriate for two reasons: (a) the circumstances of the apprehension, and (b) the fact that, by all accounts, this "war" will not be over for decades, if ever, which means -- unlike for traditional POWs, who are released once the war is over -- these prisoners are going to be in a cage not for a few years, but for decades, if not life.
Traditional "POWs" are ones picked up during an actual military battle, on a real battlefield, wearing a uniform, while engaged in fighting. The potential for error and abuse in deciding who was a "combatant" was thus minimal. By contrast, many of the people we accuse in the "war on terror" of being "combatants" aren't anywhere near a "battlefield," aren't part of any army, aren't wearing any uniforms, etc. Instead, many of them are picked up from their homes, at work, off the streets. In most cases, then, we thus have little more than the say-so of the U.S. Government that they are guilty, which is why actual judicial proceedings before imprisoning them is so much more vital than in the standard POW situation.
Anyone who doubts that should just look at how many Guantanamo detainees were accused of being "the worst of the worst" yet ended up being released because they did absolutely nothing wrong. Can anyone point to any traditional POW situation where so many people were falsely accused and where the risk of false accusations was so high? For obvious reasons, this is not and has never been a traditional POW detention scheme.
During the Bush era, that was a standard argument among Democrats, so why should that change now? Here is what Anne-Marie Slaughter -- now Obama's Director of Policy Planning for the State Department -- said about Bush's "POW" comparison on Fox News on November 21, 2001:
Military commissions have been around since the Revolutionary War. But they've always been used to try spies that we find behind enemy lines. It's normally a situation, you're on the battlefield, you find an enemy spy behind your lines. You can't ship them to national court, so you provide a kind of rough battlefield justice in a commission. You give them the best process you can, and then you execute the sentence on the spot, which generally means executing the defendant.
That's not this situation. It's not remotely like it.
As for duration, the U.S. government has repeatedly said that this "war" is so different from standard wars because it will last for decades, if not generations. Obama himself yesterday said that "unlike the Civil War or World War II, we can't count on a surrender ceremony to bring this journey to an end" and that we'll still be fighting this "war" "a year from now, five years from now, and -- in all probability -- 10 years from now." No rational person can compare POW detentions of a finite and usually short (2-5 years) duration to decades or life in a cage. That's why, yesterday, Law Professor Diane Marie Amann, in The New York Times, said this:
[Obama] signaled a plan by which [Guantanamo detainees] — and perhaps other detainees yet to be arrested? — could remain in custody forever without charge. There is no precedent in the American legal tradition for this kind of preventive detention. That is not quite right: precedents do exist, among them the Alien and Sedition Acts of 1798 and the Japanese internment of the 1940s, but they are widely seen as low points in America’s history under the Constitution.
There are many things that can be said about indefinitely imprisoning people with no charges who were not captured on any battlefield, but the claim that this is some sort of standard or well-established practice in American history is patently false.
(6)Is it "due process" when the Government can guarantee it always wins?
If you really think about the argument Obama made yesterday -- when he described the five categories of detainees and the procedures to which each will be subjected -- it becomes manifest just how profound a violation of Western conceptions of justice this is. What Obama is saying is this: we'll give real trials only to those detainees we know in advance we will convict. For those we don't think we can convict in a real court, we'll get convictions in the military commissions I'm creating. For those we can't convict even in my military commissions, we'll just imprison them anyway with no charges ("preventively detain" them).
Giving trials to people only when you know for sure, in advance, that you'll get convictions is not due process. Those are called "show trials." In a healthy system of justice, the Government gives everyoneit wants to imprison a trial and then imprisons only those whom it can convict. The process is constant (trials), and the outcome varies (convictions or acquittals).
Obama is saying the opposite: in his scheme, it is the outcome that is constant (everyone ends up imprisoned), while the process varies and is determined by the Government (trials for some; military commissions for others; indefinite detention for the rest). The Government picks and chooses which process you get in order to ensure that it always wins. A more warped "system of justice" is hard to imagine.
(7)Can we "be safe" by locking up all the Terrorists with no charges?
Obama stressed yesterday that the "preventive detention" system should be created only through an act of Congress with "a process of periodic review, so that any prolonged detention is carefully evaluated and justified." That's certainly better than what Bush did: namely, preventively detain people with no oversight and no Congressional authorization -- in violation of the law. But as we learned with the Military Commissions Act of 2006 and the Protect America Act of 2007, the mere fact that Congress approves of a radical policy may mean that it is no longer lawless but it doesn't make it justified. As Professor Amann put it: "no amount of procedures can justify deprivations that, because of their very nature violate the Constitution’s core guarantee of liberty." Dan Froomkin said that no matter how many procedures are created, that's "a dangerously extreme policy proposal."
Regarding Obama's "process" justification -- and regarding Obama's primary argument that we need to preventively detain allegedly dangerous people in order to keep us safe -- Digby said it best:
We are still in a "war" against a method of violence, which means there is no possible end and which means that the government can capture and imprison anyone they determine to be "the enemy" forever. The only thing that will change is where the prisoners are held and few little procedural tweaks to make it less capricious. (It's nice that some sort of official committee will meet once in a while to decide if the war is over or if the prisoner is finally too old to still be a "danger to Americans.")
There seems to be some misunderstanding about Guantanamo. Somehow people have gotten it into their heads is that it is nothing more than a symbol, which can be dealt with simply by closing the prison. That's just not true. Guantanamo is a symbol, true, but it's a symbol of a lawless, unconstitutional detention and interrogation system. Changing the venue doesn't solve the problem.
I know it's a mess, but the fact is that this isn't really that difficult, except in the usual beltway kabuki political sense. There are literally tens of thousands of potential terrorists all over the world who could theoretically harm America. We cannot protect ourselves from that possibility by keeping the handful we have in custody locked up forever, whether in Guantanamo or some Super Max prison in the US. It's patently absurd to obsess over these guys like it makes us even the slightest bit safer to have them under indefinite lock and key so they "can't kill Americans."
The mere fact that we are doing this makes us less safe because the complete lack of faith we show in our constitution and our justice systems is what fuels the idea that this country is weak and easily terrified. There is no such thing as a terrorist suspect who is too dangerous to be set free. They are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. There is not some finite number of terrorists we can kill or capture and then the "war" will be over and the babies will always be safe. This whole concept is nonsensical.
As I said yesterday, there were some positive aspects to Obama's speech. His resolve to close Guantanamo in the face of all the fear-mongering, like his release of the OLC memos, is commendable. But the fact that a Democratic President who ran on a platform of restoring America's standing and returning to our core principles is now advocating the creation of a new system of indefinite preventive detention -- something that is now sure to become a standard view of Democratic politicians and hordes of Obama supporters -- is by far the most consequential event yet in the formation of Obama's civil liberties policies.
"It’s possible but hard to imagine Barack Obama as the first President of the United States to introduce a preventive-detention law," Craig said. "Our presumption is that there is no need to create a whole new system. Our system is very capable."
"The first President of the United States to introduce a preventive-detention law" is how Obama's own White House Counsel described him. Technically speaking, that is a form of change, but probably not the type that many Obama voters expected.
UPDATE II: Ben Wizner of the ACLU's National Security Project is the lead lawyer in the Jeppesen case, which resulted in the recent rejection by the 9th Circuit Court of Appeals of the Bush/Obama state secrets argument, and also co-wrote (along with the ACLU's Jameel Jaffer) a superb article in Salon in December making the case against preventive detention. I spoke with him this morning for roughly 20 minutes regarding the detention policies proposed by Obama in yesterday's speech. It can be heard by clicking PLAY on the recorder below. A transcript will be posted shortly.
UPDATE III: Rachel Maddow was superb last night -- truly superb -- on the topic of Obama's preventive detention proposal:
UPDATE IV: The New Yorker's Amy Davidson compares Obama's detention proposal to the internment of Japanese-Americans during World War II (as did Professor Amann, quoted above). Hilzoy, of The Washington Monthly, writes: "If we don't have enough evidence to charge someone with a crime, we don't have enough evidence to hold them. Period" and "the power to detain people without filing criminal charges against them is a dictatorial power." Salon's Joan Walsh quotes the Center for Constitutional Rights' Vincent Warren as saying: "They’re creating, essentially, an American Gulag." The Philadelphia Inquirer's Will Bunch says of Obama's proposal: "What he's proposing is against one of this country's core principles" and "this is why people need to keep the pressure on Obama -- even those inclined to view his presidency favorably."
UPDATE V: The Atlantic's Marc Ambinder -- who is as close to the Obama White House as any journalist around -- makes an important point about Obama that I really wish more of his supporters would appreciate:
[Obama] was blunt [in his meeting with civil libertiarians]; the [military commissions] are a fait accompli, so the civil libertarians can either help Congress and the White House figure out the best way to protect the rights of the accused within the framework of that decision, or they can remain on the outside, as agitators. That's not meant to be pejorative; whereas the White House does not give a scintilla of attention to its right-wing critics, it does read, and will read, everything Glenn Greenwald writes. Obama, according to an administration official, finds this outside pressure healthy and useful.
Ambinder doesn't mean me personally or exclusively; he means people who are criticizing Obama not in order to harm him politically, but in order to pressure him to do better. It's not just the right, but the duty, of citizens to pressure and criticize political leaders when they adopt policies that one finds objectionable or destructive. Criticism of this sort is a vital check on political leaders -- a key way to impose accountability -- and Obama himself has said as much many times before.
It has nothing to do with personalities or allegiances. It doesn't matter if one "likes" or "trusts" Obama or thinks he's a good or bad person. That's all irrelevant. The only thing that matters is whether one thinks that the actions he's undertaking are helpful or harmful. If they're harmful, one should criticize them. Where, as here, they're very harmful and dangerous, one should criticize them loudly. Obama himself, according to Ambinder, "finds this outside pressure healthy and useful." And it is. It's not only healthy and useful but absolutely vital.
UPDATE VI: Bearing in mind what Obama repeatedly pledged to do while running, this headline from The New York Times this morning is rather extraordinary:
As Greg Craig put it: "hard to imagine Barack Obama as the first President of the United States to introduce a preventive-detention law."
TO BE NOTED: From Salon: "Top Senate Democrat: bankers "own" the U.S. CongressDick Durbin's confession ought to be major news, yet it won't be. Why not?
Glenn Greenwald
Apr. 30, 2009 |
Sen. Dick Durbin, on a local Chicago radio station this week, blurted out an obvious truth about Congress that, despite being blindingly obvious, is rarely spoken: "And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place." The blunt acknowledgment that the same banks that caused the financial crisis "own" the U.S. Congress -- according to one of that institution's most powerful members -- demonstrates just how extreme this institutional corruption is.
The ownership of the federal government by banks and other large corporations is effectuated in literally countless ways, none more effective than the endless and increasingly sleazy overlap between government and corporate officials. Here is just one random item this week announcing a couple of standard personnel moves:
Former Barney Frank staffer now top Goldman Sachs lobbyist
Goldman Sachs' new top lobbyist was recently the top staffer to Rep. Barney Frank, D-Mass., on the House Financial Services Committee chaired by Frank. Michael Paese, a registered lobbyist for the Securities Industries and Financial Markets Association since he left Frank's committee in September, will join Goldman as director of government affairs, a role held last year by former Tom Daschle intimate, Mark Patterson, now the chief of staff at the Treasury Department. This is not Paese's first swing through the Wall Street-Congress revolving door: he previously worked at JP Morgan and Mercantile Bankshares, and in between served as senior minority counsel at the Financial Services Committee.
So: Paese went from Chairman Frank's office to be the top lobbyist at Goldman, and shortly before that, Goldman dispatched Paese's predecessor, close Tom Daschle associate Mark Patterson, to be Chief of Staff to Treasury Secretary Tim Geithner, himself a protege of former Goldman CEO Robert Rubin and a virtually wholly owned subsidiary of the banking industry. That's all part of what Desmond Lachman -- American Enterprise Institute fellow, former chief emerging market strategist at Salomon Smith Barney and top IMF official (no socialist he) -- recently described as "Goldman Sachs's seeming lock on high-level U.S. Treasury jobs."
Meanwhile, the above-linked Huffington Post article which reported on Durbin's comments also notes Sen. Evan Bayh's previously-reported central role on behalf of the bankers in blocking legislation, hated by the banking industry, to allow bankruptcy judges to alter the terms of mortgages so that families can stay in their homes. Bayh is up for re-election in 2010, and here -- according to the indispensable Open Secrets site -- is Bayh's top donor:
Goldman is also the top donor to Bayh over the course of his Congressional career, during which Bayh has received more than $4 million from the finance, insurance and real estate sectors:
In a totally unrelated coincidence -- after the Government, as Matt Taibbi put it, enacted "a bailout program that has now figured three ways to funnel money to Goldman, Sachs"-- this is what happened earlier this month:
Goldman reports $1.8 billion profit
Goldman Sachs reported a much stronger-than-expected first-quarter profit Monday, bouncing back from its worst quarter as a public company. . . .
In reporting its results a day earlier than expected, New York-based Goldman said it earned $1.81 billion, or $3.39 a share, for the quarter ended March 31. Analysts surveyed by Thomson Financial were looking for a profit of $1.64 a share.
Goldman shares, which have surged more than 70% during the past month, continued rising late Monday, gaining about 4.7% for the day.
Nobody even tries to hide this any longer. The only way they could make it more blatant is if they hung a huge Goldman Sachs logo on the Capitol dome and then branded it onto the foreheads of leading members of Congress and executive branch officials.
Bayh's little "lobbyist problem" is considered by many to be what tanked his Vice Presidential aspirations. His wife Susan earns about $837,000 a year serving on seven corporate boards, among them Wellpoint, a health insurance company for which Bayh helped secure a $24.7 million dollar grant. She's on the board of ETrade, even as Bayh is on the Senate Finance Committee.
Bayh wants people to believe he's a "moderate" who sits in the "center."
Center of K Street, maybe.
Meanwhile, the only citizen protests relating to this mass robbery are driven by anger at the government for treating bankers too harshly and unfairly -- one of the most classic manifestations of what Taibbi, in a separate piece, so aptly calls the "peasant mentality":
After all, the reason the winger crowd can’t find a way to be coherently angry right now is because this country has no healthy avenues for genuine populist outrage. It never has. The setup always goes the other way: when the excesses of business interests and their political proteges in Washington leave the regular guy broke and screwed, the response is always for the lower and middle classes to split down the middle and find reasons to get pissed off not at their greedy bosses but at each other. That’s why even people like [Glenn] Beck’s audience, who I’d wager are mostly lower-income people, can’t imagine themselves protesting against the Wall Street barons who in actuality are the ones who fucked them over. . . .
Actual rich people can’t ever be the target. It’s a classic peasant mentality: going into fits of groveling and bowing whenever the master’s carriage rides by, then fuming against the Turks in Crimea or the Jews in the Pale or whoever after spending fifteen hard hours in the fields. You know you’re a peasant when you worship the very people who are right now, this minute, conning you and taking your shit. Whatever the master does, you’re on board. When you get frisky, he sticks a big cross in the middle of your village, and you spend the rest of your life praying to it with big googly eyes. Or he puts out newspapers full of innuendo about this or that faraway group and you immediately salute and rush off to join the hate squad. A good peasant is loyal, simpleminded, and full of misdirected anger. And that’s what we’ve got now, a lot of misdirected anger searching around for a non-target to mis-punish . . . can’t be mad at AIG, can’t be mad at Citi or Goldman Sachs. The real villains have to be the anti-AIG protesters! After all, those people earned those bonuses! If ever there was a textbook case of peasant thinking, it’s struggling middle-class Americans burned up in defense of taxpayer-funded bonuses to millionaires. It’s really weird stuff.
One might think it would be a big news story for the second most-powerful member of the U.S. Senate to baldly state that the Congress is "owned" by the bankers who spawned the financial crisis and continue to dictate the government's actions. But it won't be. The leading members of the media work for the very corporations that benefit most from this process. Establishment journalists are integral and well-rewarded members of the same system and thus cannot and will not see it as inherently corrupt (instead, as Newsweek's Evan Thomas said, their role, as "members of the ruling class," is to "prop up the existing order," "protect traditional institutions" and "safeguard the status quo").
That Congress is fully owned and controlled by a tiny sliver of narrow, oligarchical, deeply corrupted interests is simultaneously so obvious yet so demonized (only Unserious Shrill Fringe radicals, such as the IMF's former chief economist, use that sort of language) that even Durbin's explicit admission will be largely ignored. Even that extreme of a confession (Durbin elaborated on it with Ed Schultz last night) hardly causes a ripple.
* * * * * *
Here's Jane Hamsher, with Rachel Maddow, in February, assessing the motives of people like Evan Bayh and analyzing who owns and controls them (begins at the 3:00 minute mark):
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The success of drug decriminalization in Portugal
The new report on drug policy is available online now. Also: what will the Obama DOJ do today about still-secret torture memos?
Glenn Greenwald
Apr. 02, 2009 |
(updated below - Update II - Update III)
My report for the Cato Institute on the effects of full-scale drug decriminalization in Portugal -- the background for which I wrote about here -- is now available online. It can be read here, and the .pdf is here. I'll be at Cato tomorrow to present the report at noon, and the event can be watched live here. Drug policy is being more openly debated than ever before in the U.S. (Time 's Joe Klein just wrote a column advocating marijuana legalization), and the unambiguous success of Portugal's 2001 decriminalization -- which is what enabled the Portuguese Government to address their exploding drug problems in the 1990s and to achieve far better results than virtually every other Western country -- provides a compelling empirical basis for understanding the profound failures of the American approach.
I'm traveling today and it's unlikely I'll be able to write again, but today is the deadline for the Obama DOJ either to release 3 key, still-secret OLC torture memos or explain to the court why they refuse to do so. A report two weeks ago from Newsweek's Michael Isikoff (which quoted an anonymous Obama official as describing the memos as "ugly") claimed that Obama had disregarded the emphatic objections from ex-CIA Director Michael Hayden and others in the intelligence community and had decided to disclose the documents in full, but a New York Times article this week indicated that no decision has been made because of very adamant objections to disclosure from the likes of Obama counter-terrorism adviser John Brennan (whose pending appointment to be CIA Director, it's worth recalling, was opposed precisely because he was clearly an advocate for some of the worst CIA abuses of the Bush era).
I will have an interview with the ACLU's Jameel Jaffer, lead counsel in the ACLU's litigation to compel disclosure of these documents, as soon as the ACLU receives the response from the DOJ. As always, it's worth underscoring here that most of the work to compel disclosure of Bush-era secrets has been, and still is being, performed not by our establishment media or the Congress -- both of whose responsibility it is do so -- but by the ACLU and similar organizations using the power of FOIA requests and litigations to extract these secrets (it was the ACLU's lawsuit, for instance, which compelled the release of the 9 OLC memos last month which were so extreme and caused such furor).
Finally, as a reminder: I'll be on Bill Moyers' Journal tomorrow night, along with Democracy Now's Amy Goodman, talking about the establishment and independent media. Local listings are here.
UPDATE: I just learned from the ACLU that the Obama DOJ has requested yet another extension of the deadline to disclose these documents, indicating -- at the very least -- that they are not yet committed to disclosure and nothing will happen today. It remains to be seen how long their extension will be, but given how many extensions they've already sought and obtained, it is likely it will be a very short one. These OLC memos are probably the most vivid and inflammatory of all the DOJ torture-authorizing documents, and there is clearly concern in the Obama administration that their release with only further inflame the demands for investigations and prosecutions. Needless to say, that is not a legitimate basis for withholding critical government documents, particularly ones that purported to authorize blatant war crimes.
UPDATE II: I'll be on C-SPAN's Washington Journal tomorrow morning (Friday) from 8:00-8:45 a.m. The program is also streamed live online here, and the program will be archived on C-SPAN's site shortly thereafter.
UPDATE III: My segment on Washington Journal this morning, which I think was actually more substantive than most televisions discussions (the questions from the host and call-in audience were almost uninformly quite good), can be viewed here."
TO BE NOTED: From Salon: "Jim Webb's courage v. the "pragmatism" excuse for politiciansPolitical leaders have a far greater ability to change public opinion than they want people to believe they have.
Glenn Greenwald
Mar. 28, 2009 |
(updated below)
There are few things rarer than a major politician doing something that is genuinely courageous and principled, but Jim Webb's impassioned commitment to fundamental prison reform is exactly that. Webb's interest in the issue was prompted by his work as a journalist in 1984, when he wrote about an American citizen who was locked away in a Japanese prison for two years under extremely harsh conditions for nothing more than marijuana possession. After decades of mindless "tough-on-crime" hysteria, an increasingly irrational "drug war," and a sprawling, privatized prison state as brutal as it is counter-productive, America has easily surpassed Japan -- and virtually every other country in the world -- to become what Brown University Professor Glenn Loury recently described as a "a nation of jailers" whose "prison system has grown into a leviathan unmatched in human history."
What's most notable about Webb's decision to champion this cause is how honest his advocacy is. He isn't just attempting to chip away at the safe edges of America's oppressive prison state. His critique of what we're doing is fundamental, not incremental. And, most important of all, Webb is addressing head-on one of the principal causes of our insane imprisonment fixation: our aberrational insistence on criminalizing and imprisoning non-violent drug offenders (when we're not doing worse to them). That is an issue most politicians are petrified to get anywhere near, as evidenced just this week by Barack Obama's adolescent, condescending snickering when asked about marijuana legalization, in response to which Obama gave a dismissive answer that Andrew Sullivan accurately deemed "pathetic." Here are just a few excerpts from Webb's Senate floor speech this week (.pdf) on his new bill to create a Commission to study all aspects of prison reform:
Let's start with a premise that I don't think a lot of Americans are aware of. We have 5% of the world's population; we have 25% of the world's known prison population. We have an incarceration rate in the United States, the world's greatest democracy, that is five times as high as the average incarceration rate of the rest of the world. There are only two possibilities here: either we have the most evil people on earth living in the United States; or we are doing something dramatically wrong in terms of how we approach the issue of criminal justice. . . .
The elephant in the bedroom in many discussions on the criminal justice system is the sharp increase in drug incarceration over the past three decades. In 1980, we had 41,000 drug offenders in prison; today we have more than 500,000, an increase of 1,200%. The blue disks represent the numbers in 1980; the red disks represent the numbers in 2007 and a significant percentage of those incarcerated are for possession or nonviolent offenses stemming from drug addiction and those sorts of related behavioral issues. . . .
In many cases these issues involve people’s ability to have proper counsel and other issues, but there are stunning statistics with respect to drugs that we all must come to terms with. African-Americans are about 12% of our population; contrary to a lot of thought and rhetoric, their drug use rate in terms of frequent drug use rate is about the same as all other elements of our society, about 14%. But they end up being 37% of those arrested on drug charges, 59% of those convicted, and 74% of those sentenced to prison by the numbers that have been provided by us. . . .
Another piece of this issue that I hope we will address with this National Criminal Justice Commission is what happens inside our prisons. . . . We also have a situation in this country with respect to prison violence and sexual victimization that is off the charts and we must get our arms around this problem. We also have many people in our prisons who are among what are called the criminally ill, many suffering from hepatitis and HIV who are not getting the sorts of treatment they deserve.
Importantly, what are we going to do about drug policy - the whole area of drug policy in this country?
And how does that affect sentencing procedures and other alternatives that we might look at?
Webb added that "America's criminal justice system has deteriorated to the point that it is a national disgrace" and "we are locking up too many people who do not belong in jail."
It's hard to overstate how politically thankless, and risky, is Webb's pursuit of this issue -- both in general and particularly for Webb. Though there has been some evolution of public opinion on some drug policy issues, there is virtually no meaningful organized constituency for prison reform. To the contrary, leaving oneself vulnerable to accusations of being "soft on crime" has, for decades, been one of the most toxic vulnerabilities a politician can suffer (ask Michael Dukakis). Moreover, the privatized Prison State is a booming and highly profitable industry, with an army of lobbyists, donations, and other well-funded weapons for targeting candidates who threaten its interests.
Most notably, Webb is in the Senate not as an invulnerable, multi-term political institution from a safely blue state (he's not Ted Kennedy), but is the opposite: he's a first-term Senator from Virginia, one of the "toughest" "anti-crime" states in the country (it abolished parole in 1995 and is second only to Texas in the number of prisoners it executes), and Webb won election to the Senate by the narrowest of margins, thanks largely to George Allen's macaca-driven implosion. As Ezra Klein wrote, with understatement: "Lots of politicians make their name being anti-crime, which has come to mean pro-punishment. Few make their name being pro-prison reform."
For a Senator like Webb to spend his time trumpeting the evils of excessive prison rates, racial disparities in sentencing, the unjust effects of the Drug War, and disgustingly harsh conditions inside prisons is precisely the opposite of what every single political consultant would recommend that he do. There's just no plausible explanation for what Webb's actions other than the fact that he's engaged in the noblest and rarest of conduct: advocating a position and pursuing an outcome because he actually believes in it and believes that, with reasoned argument, he can convince his fellow citizens to see the validity of his cause. And he is doing this despite the fact that it potentially poses substantial risks to his political self-interest and offers almost no prospect for political reward. Webb is far from perfect -- he's cast some truly bad votes since being elected -- but, in this instance, not only his conduct but also his motives are highly commendable.
* * * * *
Webb's actions here underscore a broader point. Our political class has trained so many citizens not only to tolerate, but to endorse, cowardly behavior on the part of their political leaders. When politicians take bad positions, ones that are opposed by large numbers of their supporters, it is not only the politicians, but also huge numbers of their supporters, who step forward to offer excuses and justifications: well, they have to take that position because it's too politically risky not to; they have no choice and it's the smart thing to do. That's the excuse one heard for years as Democrats meekly acquiesced to or actively supported virtually every extremist Bush policy from the attack on Iraq to torture and warrantless eavesdropping; it's the excuse which even progressives offer for why their political leaders won't advocate for marriage equality or defense spending cuts; and it's the same excuse one hears now to justify virtually every Obama "disappointment."
Webb's commitment to this unpopular project demonstrates how false that excuse-making is -- just as it was proven false by Russ Feingold's singular, lonely, October, 2001 vote against the Patriot Act and Feingold's subsequent, early opposition to the then-popular Bush's assault on civil liberties, despite his representing the purple state of Wisconsin. Political leaders have the ability to change public opinion by engaging in leadership and persuasive advocacy. Any cowardly politician can take only those positions that reside safely within the majoritiarian consensus. Actual leaders, by definition, confront majoritarian views when they are misguided and seek to change them, and politicians have far more ability to affect and change public opinion than they want the public to believe they have.
The political class wants people to see them as helpless captives to immutable political realities so that they have a permanent, all-purpose excuse for whatever they do, so that they are always able to justify their position by appealing to so-called "political realities." But that excuse is grounded in a fundamentally false view of what political leaders are actually capable of doing in terms of shifting public opinion, as NYU Journalism Professor Jay Rosen explained when I interviewed him about his theories of how political consensus is maintained and manipulated:
GG: One of the points you make is that it's not just journalists who define what these spheres [of consensus, legitimate debate and deviance] encompass. You argue that politicians, political actors can change what's included in these spheres based on the positions that they take. And in some sense, you could even say that that's kind of what leadership is -- not just articulating what already is within the realm of consensus, which anyone can do, but taking ideas that are marginalized or within the sphere of deviance and bringing them into the sphere of legitimacy. How does that process work? How do political actors change those spheres?
JR: Well, that's exactly what leadership is. And I think it's crippling sometimes to our own sense of efficacy in politics and media, if we assume that the media has all of the power to frame the debate and decide what consensus is, and consign things to deviant status. That's not really true. That's true under conditions of political immobilization, leadership default, a rage for normalcy, but in ordinary political life, leaders, by talking about things, make them legitimate. Parties, by pushing for things, make them part of the sphere of debate. Important and visible people can question consensus, and all of a sudden expand it. These spheres are malleable; if the conversation of democracy is alive and if you make your leaders talk about things, it becomes valid to talk about them.
And I really do think there's a self-victimization that sometimes goes on, but to go back to the beginning of your question, there's something else going on, which is the ability to infect us with notions of what's realistic is one of the most potent powers press and political elites have. Whenever we make that kind of decision -- "well it's pragmatic, let's be realistic" -- what we're really doing is we're speculating about other Americans, our fellow citizens, and what they're likely to accept or what works on them or what stimuli they respond to. And that way of seeing other Americans, fellow citizens, is in fact something the media has taught us; that is one of the deepest lessons we've learned from the media even if we are skeptics of the MSM.
And one of the things I see on the left that really bothers me is the ease with which people skeptical of the media will talk about what the masses believe and how the masses will be led and moved in this way that shows me that the mass media tutors them on how to see their fellow citizens. And here the Internet again has at least some potential, because we don't have to guess what those other Americans think. We can encounter them ourselves, and thereby reshape our sense of what they think. I think every time people make that judgment about what's realistic, what they're really doing is they're imagining what the rest of the country would accept, and how other people think, and they get those ideas from the media.
We've been trained how we talk about our political leaders primarily by a media that worships political cynicism and can only understand the world through political game-playing. Thus, so many Americans have been taught to believe not only that politicians shouldn't have the obligation of leadership imposed on them -- i.e., to persuade the public of what is right -- but that it's actually smart and wise of them to avoid positions they believe in when doing so is politically risky.
People love now to assume the role of super-sophisticated political consultant rather than a citizen demanding actions from their representatives. Due to the prism of gamesmanship through which political pundits understand and discuss politics, many citizens have learned to talk about their political leaders as though they're political strategists advising their clients as to the politically shrewd steps that should be taken ("this law is awful and unjust and he was being craven by voting for it, but he was absolutely right to vote for it because the public wouldn't understand if he opposed it"), rather than as citizens demanding that their public servants do the right thing ("this law is awful and unjust and, for that reason alone, he should oppose it and show leadership by making the case to the public as to why it's awful and unjust").
It may be unrealistic to expect most politicians in most circumstances to do what Jim Webb is doing here (or what Russ Feingold did during Bush's first term). My guess is that Webb, having succeeded in numerous other endeavors outside of politics, is not desperate to cling to his political office, and he has thus calculated that he'd rather have six years in the Senate doing things he thinks are meaningful than stay there forever on the condition that he cowardly renounce any actual beliefs. It's probably true that most career politicians, possessed of few other talents or interests, are highly unlikely to think that way.
But the fact that cowardly actions from political leaders are inevitable is no reason to excuse or, worse, justify and even advocate that cowardice. In fact, the more citizens are willing to excuse and even urge political cowardice in the name of "realism" or "pragmatism" ("he was smart to take this bad, unjust position because Americans are too stupid or primitive for him to do otherwise and he needs to be re-elected"), the more common that behavior will be. Politicians and their various advisers, consultants and enablers will make all the excuses they can for why politicians do what they do and insist that public opinion constrains them to do otherwise. That excuse-making is their role, not the role of citizens. What ought to be demanded of political officials by citizens is precisely the type of leadership Webb is exhibiting here.
UPDATE: Two related points:
(1)John Cole attacks those who were angry about Obama's marijuana answer by arguing that it was unrealistic to expect Obama to say "yes" to the question. But as I told Cole in an email just now, I don't think anyone expected him to advocate legalization or was angry that he didn't. It was his mocking, childish snickering about the issue and his refusal to address it seriously (even if to explain why he didn't favor legalization) that prompted the objections. My email to Cole is here.
(2) An angry emailer chides me for calling Webb's proposal one of "prison reform," as that actually diminishes the scope of what Webb is doing, and says instead that Webb's proposal is really one to reform the entire criminal justice system. Prison reform is just one of several critical (and politically difficult) issues Webb is addressing. It's a fair point, as Webb's own website -- which describes his bill as one to "overhaul America's criminal justice system -- makes clear.
Email to John Cole
I don't think any expected Obama to say he favored legalization or was upset that he didn't.
I think most people were angry over his mocking, dismissive tone in answering -- especially the obnoxious suggestion that the only people who would care about the issue must be pot heads. The accusation that only drug addicts favor legalization has long been one of the primary impediments to serious discussions of the issue. I think people were disappointed that Obama, whose primary virtue (in my view) is a willingness to treat Americans like they can handle adult discussions, seemed to reinforce that stupidity.
You're right that Obama has never advocated legalization before. Actually, he's explicitly rejected it. But he has been much more nuanced in drug discussions -- talking about addiction as a health not a criminal problem, objecting to the crack/coke sentencing disparities, even hinting at decriminalization. This was the first time as President he was addressing drug policy questions -- and he did it in a way that he got to choose how he talked about it, since he brought up the question.
And instead of a serious discussion, he snickered with the crowd over the mere mention of pot and sarcastically dismissed the whole thing as unimportant. It was a wasted opportunity to address a very significant problem, and out of character for how he normally handles those things.
"In the most unsurprising revelation imaginable, two former Army Reserve Arab linguists for the National Security Agency have said that they routinely eavesdropped on — “and recorded and transcribed” — the private telephone calls of American citizens who had absolutely nothing to do with terrorism."
If people did not sometimes do silly things, nothing intelligent would ever get done.
Frazer's account of the magical and religious views of mankind is unsatisfactory; it makes these views look like errors.
Are you not really a behaviourist in disguise? Aren't you at bottom really saying that everything except human behaviour is a fiction?" — If I do speak of a fiction, then it is of a grammatical fiction
Could one imagine a stone's having consciousness? And if anyone can do so—why should that not merely prove that such image-mongery is of no interest to us?
An 'inner process' stands in need of outward criteria
For a large class of cases--though not for all--in which we employ the word "meaning" it can be defined thus: the meaning of a word is its use in the language.
What Copernicus really achieved was not the discovery of a true theory but of a fertile new point of view.
mathematics is a motley of techniques and proofs.
Everything that can be said, can be said clearly.
Whenever he does anything, this is before his mind. In a way, how are we to know whether to say he believes this will happen or not?
Asking him is not enough. He will probably say he has proof. But he has what you might call an unshakeable belief. It will show, not by reasoning or by appeal to ordinary grounds for belief, but rather by regulating for in all his life
I did not get my picture of the world by satisfying myself of its correctness; nor do I have it because I am satisfied of its correctness. No: it is the inherited background against which I distinguish between true and false.
All testing, all confirmation and disconfirmation of a hypothesis takes place already within a system. And this system is not a more or less arbitrary and doubtful point of departure for all our arguments; no it belongs to the essence of what we call an argument. The system is not so much the point of departure, as the element in which our arguments have their life.
What I hold fast to is not one proposition but a nest of propositions.
At the core of all well-founded belief, lies belief that is unfounded.
Knowledge is in the end based on acknowledgement.
At the end of reasons comes persuasion.
Nothing is so difficult as not deceiving oneself.
The way you use the word "God" does not show whom you mean — but, rather, what you mean.
One can mistrust one's own senses, but not one's own belief. If there were a verb meaning "to believe falsely," it would not have any significant first person, present indicative.
What has to be accepted, the given, is — so one could say — forms of life.
If a lion could talk, we could not understand him.
An entire mythology is stored within our language.
There are, indeed, things that cannot be put into words. They make themselves manifest. They are what is mystical.
Scepticism is not irrefutable, but obviously nonsensical, when it tries to raise doubts where no questions can be asked. For doubt can exist only where a question exists, a question only where an answer exists, and an answer only where something can be said.
The mystical is not how the world is, but that it is.
The subject does not belong to the world, but it is a limit of the world.
It is quite impossible for a proposition to state that it itself is true.
What do I know about God and the purpose of life? I know that this world exists. That I am placed in it like my eye in its visual field. That something about it is problematic, which we call its meaning. This meaning does not lie in it but outside of it. That life is the world. That my will penetrates the world. That my will is good or evil. Therefore that good and evil are somehow connected with the meaning of the world. The meaning of life, i.e. the meaning of the world, we can call God. And connect with this the comparison of God to a father. To pray is to think about the meaning of life.
Make sure that your religion is a matter between you and God only.
La Bête: Mon cœur est bon, mais je suis un monstre.
You can never plan the future by the past.
We must all obey the great law of change. It is the most powerful law of nature, and the means perhaps of its conservation.
Economy is a distributive virtue, and consists not in saving but selection. Parsimony requires no providence, no sagacity, no powers of combination, no comparison, no judgment.
A very great part of the mischiefs that vex the world arises from words.
It is the nature of all greatness not to be exact.
The march of the human mind is slow.
Liberty, too, must be limited in order to be possessed.
If any ask me what a free Government is, I answer, that, for any practical purpose, it is what the people think so, — and that they, and not I, are the natural, lawful, and competent judges of this matter.
A state without the means of some change is without the means of its conservation.
Better to be despised for too anxious apprehensions, than ruined by too confident a security.
Our patience will achieve more than our force.
Politics and the pulpit are terms that have little agreement.
All government, indeed every human benefit and enjoyment, every virtue, and every prudent act, is founded on compromise and barter we give and take; we remit some rights, that we may enjoy others
It is one of the finest problems in legislation, What the state ought to take upon itself to direct and what it ought to leave, with as little interference as possible, to individual discretion.
History is a preceptor of prudence, not of principles.
No rational man ever did govern himself, by abstractions and universals.
I always distinguish between a man's talkative and writative character.
A revolution will be the very last resource of the thinking and the good.
... all that wise men ever aim at is to keep things from coming to the worst. Those who expect perfect reformations, either deceive or are deceived miserably.
Man acts from motives relative to his interests; and not on metaphysical speculations.
Before men can transact any affair, they must have a common language to speak otherwise all is cross-purpose and confusion.
We owe an implicit reverence to all the institutions of our ancestors.
You may talk of the tyranny of Nero and Tiberius; but the real tyranny is the tyranny of your next-door neighbor... Public opinion is a permeating influence, and it exacts obedience to itself; it requires us to think other men's thoughts, to speak other men's words, to follow other men's habits.
It is good to be without vices, but it is not good to be without temptations.
Why should it not be the whole function of a word to denote many things?
It may justly be urged that, properly speaking, what alone has meaning is a sentence
We become obsessed with 'truth' when discussing statements, just as we become obsessed with 'freedom' when discussing conduct...Like freedom, truth is a bare minimum or an illusory ideal
Like 'real', 'free' is only used to rule out the suggestion of some or all of its recognized antitheses. As 'truth' is not a name of a characteristic of assertions, so 'freedom' is not a name for a characteristic of actions, but the name of a dimension in which actions are assessed.
[O]rdinary language is not the last word: in principle it can everywhere be supplemented and improved upon and superseded. Only remember, it is the first word.
...our common stock of words embodies all the distinctions men have found worth drawing, and the connections they have found worth marking, in the lifetime of many generations: these surely are likely to be more numerous, more sound, since they have stood up to the long test of survival of the fittest, and more subtle, at least in all ordinary and reasonable practical matters, than any that you or I are likely to think up in our armchair of an afternoon – the most favorite alternative method.
The situation in which I would properly be said to have evidence for the statement that some animal is a pig is that, for example, in which the beast itself is not actually on view, but I can see plenty of pig-like marks on the ground outside its retreat. If I find a few buckets of pig-food, that's a bit more evidence, and the noises and the smell may provide better evidence still. But if the animal then emerges and stands there plainly in view, there is no longer any question of collecting evidence; its coming into view doesn't provide me with more evidence that it's a pig, I can now just see that it is.
Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance—where, in short, we deal with genuinely insurable risks—the case for the state’s helping to organize a comprehensive system of social insurance is very strong.
"Adam Smith's Recommendations on Taxationby Nadia Weiner, Director of the Adam Smith Club of Sydney, Australia
Although Adam Smith is often quoted, the so-called "Father of Economics" has rarely been read, either by his detractors or his admirers. Consequently he is often misunderstood.
Smith, who made such a strong stand against the protectionist mercantile system of trade of his day, devoted over ONE THIRD of his masterpiece An Inquiry into the Nature and Causes of the Wealth of Nations, to discussing the subject of government revenue and the methods by which it may be best collected, including new taxes. This is not generally known.
When examining the different forms of taxation, Smith adheres to four maxims which a good tax should conform to:
1. "The subject of every State ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State."
2. "The tax each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, and the quantity to be paid, ought all to be clear and plain to the contributor, and to ever other person."
3. "Every tax ought to be levied at the time, or in the manner in which it is most likely to be convenient for the contributor to pay it."
4. "Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the public treasury of the State."
Bearing all these things in mind, there are two types of taxation which obtain Smith's recommendations: a tax on luxury consumables and a tax on ground-rents (the annual value of holding a piece of land).
On the subject of luxury consumables, he is adamant about the definiton of 'luxury' and of 'necessary.' By his definition, a 'necessary' may vary from place to place and from time to time. At the time of his writing, linen shirts, leather shoes and a minimum of food and shelter were definitely to be regarded as essential to a minumum decent standard of living. Taxes on salt, soap, etc., he harshly criticized as inequitably taking from the poorest elements of society. Taxes on luxuries, which were to include tobacco, he considered excellent in that no one is obliged to contribute to the tax: "Taxes upon luxuries have no tendency to raise the price of any other commodities except that of the commodities taxed ... Taxes upon luxuries are finally paid by the consumers of the commodities taxed, without any retribution."
More deserving of priase is the tax on ground-rents: "Both ground- rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land are, therefore, perhaps the species of revenue which can best bear to have a peculiar tax imposed upon them."
Excise, customs, taxes on profits, were, according to Smith, either expensive to collect, as in the case of excise, or disincentives to produce, as in the tax on profits. He reserves harsh words for taxes which occasion the invasion of privacy, and on the subject of excise he says: "To subject every private family to the odious visits and examination of the tax-gatherers ... would be altogether inconsistent with liberty."
The harshest condemnation of all, however, was for taxes upon labour: "In all cases, a direct tax upon the wages of labour must, in the long run, occasion both a greater reduction in the rent of land, and a greater rise in the price of manufactured goods, than would have followed from a proper assessment of a sum equal to the produce of the tax, [levied] partly upon the rent of land, and partly upon consumable comodities."
Getting Involved in Bitcoin
-
When bitcoin value skyrocketed in late 2013, everyone suddenly started
paying attention to this unusual currency. A large number of online
businesses alrea...
Corporate ETFs and Risk Appetite
-
Via Bloomberg : Bond ETFs Awash in Pain May Be Red Flag for Risk Appetite
(1) 2018-01-22 14:56:05.415 GMT By Dani Burger and Sid Verma (Bloomberg) —
U.S. c...
Whose Gold Is JP Morgan Dumping Now?
-
Author’s Note: This piece is unfinished, but the data presented here is
simply too important not to publish. They say phrasing allegations in the
form of...
The beginning of the end
-
borrowed wisdom is still wisdomGreetings readers!
After 10 years, I am going to stop blogging at aguanomics.
I am doing this because I have written quite ...
*Sigh* No Forest
-
In a move that should surprise no one, Canadian/Chinese forestry company
Sino-Forest filed for bankruptcy in Canada yesterday. The timing of the
filing sh...
Lahti
-
I am in Lahti, Finland, to give a talk at the Lahti Symphony's Sibelius
Festival. I've been wanting to visit since I encountered Osmo Vänskä's
revelatory B...
Change Is Good (Website Redesign)
-
Hey out there! Just a heads up to let you know that this blog has moved!
All this content has been migrated over to my primary website,
alexandragardner.ne...
Whether (and how) America can survive Trumpism
-
Georgetown Professor Thomas Zimmer joins us to talk about polarization and
extremism, and what insights American and world history provide as to
whether ...
The ideas of Liberal liberals
-
Nearly 30 years ago now I dropped out of a PhD exploring the communitarian
critique of liberalism. My interest in liberalism continued through
articles, ch...
Nine Chapters on the Semigroup Art
-
While Googling something or other, I came across Nine Chapters on the
Semigroup Art, which is a leisurely introduction to the theory of
semigroups. (While ...
Peston Picks is moving
-
[image: Cardboard Boxes on a trolley]
My blog is dead. Long live the new blog. Or to put it another way, my page
- and those of other BBC bloggers - is hav...
Moving on
-
Stephanomics is dead. Long live Stephanomics. Today's news is that this
blog is moving to a new home with a fresh format.
I know, change is hard, but the...
20 years later
-
I created this blog in September 2004 with no particular purpose other than
to write a bit about Latin America and foreign policy. I'm writing more at
Su...
Sad Puppies Delete Their Own Weblog Posts!
-
Brad Torgersen deletes his own weblog posts: **Rogers Cadenhead**: [Brad
Torgersen's 'Science Fiction Civil
War'](http://workbench.cadenhead.org/news/3742/...
FTX and an old blog post
-
A long time ago I wrote a blog post about rehypothecation with brokers. It
is - unsurprisingly - relevant again.
In some sense crypto provides fast-track...
Schäublenomics
-
The veteran German will be the most familiar face around the table as the
eurozone’s longest serving finance minister, having taken office in late
2009.
...
Rooting for Wuhan
-
This, with one key correction that you will notice in the second paragraph,
is the latest edition (mailed out Feb. 9) of my occasional e-mail
newsletter, w...
Some Links
-
(Don Boudreaux) TweetWriting in the Wall Street Journal, NYU physicist
Steven Koonin reports on how the Biden White House inadvertently told the
truth abou...
Inflation is not a virus, and it's not going up
-
Inflation is not like a virus that spreads through a population. A rising
price in one part of the economy cannot "infect" a price in another part of
the e...
Strategy, and a Mandelson 'Masterclass'
-
Being able to do strategy has something in common with being artistic,
mathematical, sporty, philosophical or a natural leader. Most people could
be made ...
Historic Chart of the Day
-
Based on today's Census Bureau report on April retail sales, consumer
spending at "*Food Services and Drinking Places*" (restaurants and bars,
see red li...
Michael Lewis breaks news from 2008
-
Michael Lewis, of Liar's Poker fame, has emerged as a leading writer of the
credit crisis and its aftermath. I wish there were 10 of him. And if only
one o...
Friday Feature: Gilmer's Learning Solutions
-
Thanks to Arkansas’s Education Freedom Accounts, families can choose
Gilmer’s Learning Solutions’ Christian microschool, created by a former
public school ...
Soros on Oil and Agriculture
-
From Bloomberg News:
George Soros’ $21 billion fund returned 8% last year, which is incredible
not only in light of the global crisis, but also given hi...
A Former Expat on China: Grim
-
1. LaoWhy86 on YouTube Spent the last few days catching up on my China
reading and viewing, mostly those articles and videos friends, clients and
readers w...
Adjust contrast of a pdf free
-
Closer to the eye of the shooter, this is because Preview is quite
literally applying a filter to each individual page of the PDF you are
saving. the proce...
It's really very simple
-
[Note: I am pushing this article live two days early because ZeroHedge
somehow managed to get a hold of it and post it before I did. Needless to
say, I do...
PLEASE READ: Website Update In Progress
-
Most readers know we've been hard at work behind the scenes rebuilding the
guts of the PeakProsperity.com website.
For a few months now, we've been sayin...
Drop list elements if
-
I am doing a simulation in R that generates a list of simulated data
objects and then simulates emergent behavior on them. Unfortunately, it
chokes on “dat...
What’s the best type of healthcare system?
-
If we’re going to improve our healthcare system, it’s worth looking closely
at the experiences of other rich democratic countries. There are two
principal ...
Long Live the Future
-
This is the last of more than a thousand columns published in the Express,
which began when Denis Jambart and Christophe Barbier, asked me to be one
of the...
Best Nu Skin ReDesign ageLoc Galvanic Body Spa
-
Nu Skin ReDesign ageLoc Galvanic Body Spa Is Cheap, But It Isn't Two-Penny
Product*Nu Skin ReDesign ageLoc Galvanic Body Spa* is the leading product
among ...
110. Great Expectations: The Implacable Externality
-
*I saw a sign in front of a shop the other day that read, "We will exceed
your expectations." So I walked in expecting them to exceed my
expectations. By t...
Creative Destruction in Small Business Bankruptcy
-
Two distantly related items caught my eye this morning, as both reinforce
the need for "creative destruction" as a response to all-too-common small
busines...
Goodbye to Credit Writedowns
-
Good morning everyone, I have some exciting — and also – sad news to tell
you today. First, I am going to Bloomberg as a Senior Editor. And I am
going to...
Crisis Talk is Moving!
-
Dear Crisis Talk readers, In an act of consolidation and collaboration,
Crisis Talk is merging with the World Bank's Private Sector Development
blog, where...
Morning News: December 3, 2024
-
Welcome to the Post-American New World Disorder Will Trump’s Dollar
Diplomacy Roil Global Trade? China Targets Critical Metals in Tit-for-Tat
Response to U...
Save pdf smaller size mac online
-
High image quality, bring your ideas to life save pdf smaller size mac
online beautiful presentations. and instantly got the shrunken file!
Although the de...
Maximize the Resale Value of Your Car
-
Filed under: Travel Industry, Did You Know
Did you know...
There are some easy things you can do to get more money for your used car,
with a little less ...
IEA World Congress 2021
-
A few words on the International Economics’ Association online World
Congress, July 2-6, on the theme “Equity, Sustainability and Prosperity in
a Fractured...
Inside Goldman’s ABACUS Trade
-
Today, in the Huffington Post, I posted a document that shows an earlier
incarnation of the ABACUS trade (although, not that different from the one
that ha...
calculated risk calls a bottom
-
with some qualifications, but a bottom call nevertheless. this is not to be
taken lightly. bill is the best working commentator on US housing markets,
and ...
The Inheritance of Molecular Machinery
-
It turns out mtDNA is inherited directly from the mother to its offspring,
and I just had the idea that perhaps the molecular machines responsible for
repl...
Options Action: OptionApps Top 5 for 2017-06-28
-
Options Action: OptionApps Top 5 for 2017-06-28 Academic Algorithms: ( Term
LT-ST Difference ) Ticker Stock Name Close Difference 1 CAMP
CALAMP CO...
Brainteasers From My Dad
-
When my sister and I were little, our Dad would challenge us with riddles
and word games. I mentioned three in my eulogy for Dad: 1. Imagine a
two-volume d...
The Dove at Peace
-
Leila Abu-Saba, 1962-2009 The Dove, Leila Abu-Saba, passed away on October
8, 2008 after a five-year battle with breast cancer. She leaves behind her
husba...
Adjust contrast of a pdf free
-
Closer to the eye of the shooter, this is because Preview is quite
literally applying a filter to each individual page of the PDF you are
saving. the proce...
Energy
-
With almost 600 coal plants shut down since 2010, we are racing towards
a grid reliability crisis of our own making. Millions of Americans are at
risk of e...
Wisconsin in Last Place for Start-up Activity
-
The Kauffman Foundation has just released its report on startup activity.
Wisconsin comes in last place in startup density. Figure 1: Source:
Kauffman Foun...
How to Believe in Free Speech
-
Almost all libertarians earnestly say, "I believe in free speech."
Normally, though, this goes way beyond the right to speak freely. Most
libertarians al...
New Growth Rate Cycle Date Determined for the U.S.
-
Today ECRI is announcing May 2016 as a new growth rate cycle trough date
for the U.S. Growth rate cycles are alternating periods of accelerating and
decele...
Quick update
-
I just logged in for the first time in ... five years. I am occasionally
thinking about restarting this blog, but blogging is not what it was, plus
current...
Back In Business
-
After six months offline, Economic Principals’ site has returned to life.
Betweentimes, EP has been appearing on Substack since March […]
Mind the Gap? Rethinking the Investor Gap Equation
-
Morningstar released the latest version of Mind the Gap, an annual piece
which shares with its readers analysis that "measures the costs of bad
timing".
I...
Every Pop-up Must Span a Gully
-
Every pop-up must span a gully. -- Duncan Birmingham
The gully I aim to span with my pop-ups is the imaginary separation between
the interior world of t...
Suspected rebel officers jailed in Ecuador
-
AFP QUITO — A judge ordered 14 police officers held in preventive detention
as court proceedings began against the alleged perpetrators of a rebellion
in E...
Record Job Openings Not As Impressive As It Sounds
-
I'm seeing a lot of headlines about a record high number of job openings.
While it's technically true that the number of job openings (as reported
in the...
Invitation to connect on LinkedIn
-
LinkedIn
Emre,
I'd like to add you to my professional network on LinkedIn.
- Emre
Emre Deliveli
Freelance Consultant & Economics Columnist at 'Self-Emp...
The Japanisation Of Europe
-
By now it should be clear that the monetary experiment currently being
carried out in Japan (known as “Abenomics”) is fundamentally different from
the kind...
The search for the best middle-class tax cut
-
Say you want to help struggling middle-class families by cutting their
taxes. Say you want to figure out an actually helpful plan to do that, and
not just ...
A Better Stablecoin on a Perp DEX
-
Creating a stablecoin position on a perp exchange is hard, but it should
be easy. It not only caters to demand, but it also adds liquidity to perp
marke...
Puzzle: Crack the Combination XI
-
The combination of a lock is four digits long and each digit is unique,
that is, each occurs only once in the combination. The following are some
incorrect...
Charmin quietly cuts roll size by 10%
-
Did they think we wouldn’t notice? New Charmin toilet paper rolls are 4″
wide. Historically toilet paper has been sold in rolls that are 4.5″ wide.
Did the...
The Flipping and Flopping Edition
-
Slate Money on President Obama’s flip-flop on the 529 college savings plan,
the FCC’s flip-flop on net neutrality, and Shake Shack’s flipping of
burgers bu...
Financial policy: Looking forward
-
Washington is turning its attention to the future, having put out most of
the financial fires. The crisis seems to be over, but questions remain
about how ...
Ceterum autem censeo Twiterinem esse delendam
-
The fresco is housed in a room that is small, but quite ornate. Four
corner-anchored medallions define the lower-than-expected ceiling's
borders. Though ...
Why Do Americans Still Hate Welfare?
-
"Welfare" remains a charged word in the American lexicon, even though it's
rarely talked about as a political issue any more. But why?
Jay Rock’s hearing
-
Friends of the blog, Vertrue and its subsidiary Adaptive Marketing, found
themselves the subject of a Senate Commerce Committee hearing yesterday
entitled,...
Live tweeting the Friday Night Dump
-
We are now offering a subset of our Pro data via Twitter. Find out more by
clicking here: https://premosocial.com/footnotedFND
Markets & Trump
-
Brouwer & Janachowski November 9, 2016 This Week: Markets settling down.
Probably less disruption than the headlines imply. As we write in the
morning se...
100 Positive News from 2023
-
Many bad things happened in 2023. You already know them. Many tragic events
were so terrible we will never forget them and we shouldn’t. You can easily
f...
Did You Know That Gary Weiss Speaks?
-
Yes, he does, or to put it another way, I do. My well-received speaking
engagements have spanned many topics, from media bias in the Middle East to
Ayn Ran...
Democratising public institutions: Reform needed!
-
If Bahamians got through the implementation of Value Added Tax, they can
get through anything. Thus the confidence I have in reforming our public
instituti...
Moving on
-
Moving on
Finally, at long last, I can tell you what I've been up to with finding a
new home for this blog. I've created a new, community-based science
b...
Paul Krugman on Food Economics
-
Paul Krugman doesn't typically write about food, so I was a little
surprised to see this. Still, I think he got most things right, at least
by my way of...
Dear Committee Members
-
Like many who spend their lives in the ivory tower, I enjoy academic
satires. That includes Richard Russo's novel *Straight Man*, the movie *Wonder
Boys...
Drop everything and go out to the Gaza border!
-
Drop everything and go out to the Gaza border!
We refuse the occupation of the strip, we refuse starvation!
The government of starvation and exterminati...
Book Summary: Why Nations Fail
-
Recently I read the book Why Nations Fail: The Origins of Power, Prosperity
and Poverty by Daron Acemoglu and James A. Robinson. Why nations fail is of
cou...
Cole-Frieman & Mallon 2025 Q2 Update
-
July 10, 2025 Clients, Friends, and Associates: As we close out the second
quarter of what has been an eventful year for the digital asset sector, we
would...
2016 as a ten-letter word
-
In the end of November, as it is the case every year since 2004, Oxford
Dictionaries revealed their choice for the word of the year. For 2016, they
settled...
Carrie Gracie
-
Campaign for Equal Pay I have noticed that individuals who make a
difference, often don’t set out with that intention. Usually, an event in
peoples’ lives ...
25 or 50 Next Week?
-
*Mid-week market update*: The combination of the Quarterly Census
Employment and Wages (QCEW) weakness and a soft PPI report has moved the
market to expect...
Speaking trip this April
-
I'm speaking at Libertycon in Tbilisi on April 20th, will probably either
go or come via London. Anyone interested in a talk? I'll probably be in
Europe ...
Einstein’s First Lecture in Britain
-
Tidying a few things up ahead of the start of term I discovered this old
clipping, yellowed with age, and decided to scan it before it disintegrates
entire...
Incentives Matter, Indeed
-
Friend Ennyman rights a great piece on the role of incentives, here's the
conclusion: "Whether it's meeting deadlines, forming good habits in our
children ...
Cash transfers in other countries
-
Here’s a Newsweek story about cash transfer programs in Brazil, South
Africa, and Mexico. A mostly favorable story, too. Of course there’s no
mention of th...
InfoVis vs. i|e
-
People have set out varying hopes and interpretations for the term
“Information Aesthetics,” and they mostly differ from what this
organization was creat...
China has much to teach us. John Roberts does not.
-
So, I don’t really write here any more. I write at drafts.interfluidity.com
instead. Please follow that feed or subscribe by e-mail. I do still offer
perio...
Byron Wien Announces “The Ten Surprises” for 2013
-
Byron Wien, Vice Chairman of Blackstone Advisory Partners, yesterday issued
his list of “The Ten Surprises for 2013″. This is the 28th year Byron has
given...
Residential Roofing Choices For Flat Roofs
-
There are a lot of different types of residential roofing material
available for residential units. Some are more common than others and some
are cheaper...
herbal untuk jantung dan darah tinggi yang ampuh
-
Apakah Anda tahu bahwa madu mampu memberikan M segala macam manfaat bagi kesehatan
manusia? Madu diakui mengingat bahwa zaman kuno sebagai obat, dan penggun...
Obama’s vague Buffett Rule a political ploy
-
A few thoughts on the economics and politics of President Obama’s
tax-the-rich “Buffett Rule” and new debt reduction “plan”: 1) What problem
does the Buffe...
This blog has moved
-
To a new blog-support vendor. You can read the latest posts by clicking
here. If you're a regular reader, thank you and please update your
favorites to the...
The Surface: I Came, I Saw, I Left
-
I went to the Microsoft store in Times Square yesterday to see for myself
the new Surface tablet with the spiffy keyboard, since nobody I know
actually ...
Financial Markets Will Move To Asia
-
Chicago, they invented the Soybean futures contracts. But now, China uses
more soybeans than ... *READ THE REST OF THE ARTICLE ON THE NEW WEBSITE:
JIM ROGE...
Is Deep Research deep? Is it research?
-
I’m working on a first draft of a book arguing against pro-natalism (more
precisely, that we shouldn’t be concerned about below-replacement
fertility). Tha...
A CryptoFiction
-
Here’s a micro-story I started with the Access Crypto Summit flash fiction
prompt in mind, left half done, and then belatedly finished off anyway,
because ...
Knowledge Problem archive 2002-2020
-
This is the archive of the Knowledge Problem blog, all 4,690 posts. The
search function will help you locate posts on the various topics Mike and I
wrote a...
Comment perdre du ventre ?
-
Une brioche, voici le nom que l’on donne au ventre lorsqu’il est un peu
trop rond. « On pourrait presque le pétrir avec les mains, un peu comme on
prépare ...
Multiplication of unlawful disjunctions
-
Charles B. writes: Apparently, birds are not considered wild animals by
law. Reference here, where apparently feeding them in parks in permitted
except if ...
-
*above: While Menzies was far from without fault, on many issues today's
Liberal Party would be unrecognizable for him. *
*Dr Tristan Ewins*
Much ...
Aspiring Rationalist Ritual Compendium
-
Published on September 13, 2025 4:09 AM GMT
*Posting this here in advance of Petrov Day.*
This is intended to be an archive of rationalist ritual material....
Let a Thousand New Green Deals Bloom
-
I write that “[a] decentralized ecological approach would recognize that
managing emissions is one part of a larger equation that includes the
natural carb...
12 September 2025 – today’s press releases
-
GDP: Govt must scrap their growth-crashing jobs tax Mandelson: Lib Dems
call for Parliament to vet next US Ambassador Lib Dems reveal rate of
agricultural,...
Clinton’s Lost Votes
-
https://www.facebook.com/rchusid/posts/2670987959585088 Establishment
Democrats love to blame third party voters for Clinton losing, but The New
York Times...
Awaiting my execution: A letter from Iran
-
BREAKING: Saman Naseem’s execution did not go ahead as originally scheduled
on the morning of Thursday 19 February. More information to come. Saman
remains...
Allan Meltzer's Life Work
-
The Hoover Press and the Mercatus Center have just released a new book on
Allan Meltzer's contributions to economics. The book is comprised of papers
th...
The Argentina Siren Song And Where Else It Is Sung
-
I’m back! After an extended leave of absence I’ve decided to start writing
again.
Let’s start with a story familiar to those that read MM in my first ter...
Do Higher Wages Mean Higher Standards of Living?
-
Editor's note: We have updated macroblog's location on our website,
although archival posts will remain at their original location. Readers who
use RSS sho...
The End
-
I started this blog back in 2008. What a ride it's been! Thanks to all who
took the time to interact with me -- I profited greatly from the
experience. And...
Downright intuitive and comical
-
I was on my hands and knees yesterday scrubbing a LOT of blood off a tennis
court. And yes, we won. Note to friends - my tennis is not that good, but,
I am...
AI Agents for Economic Research
-
The objective of this paper is to demystify AI agents – autonomous
LLM-based systems that plan, use tools, and execute multi-step research
tasks – and to...
Exhibition: Man's Inhumanity to Man
-
[ Meanwhile... in Guatemala - Mark Vallen. 1988. Pencil on paper 10" x 14".
On view at Man's Inhumanity to Man. Military death squads were responsible
for ...
Adjust contrast of a pdf free
-
Closer to the eye of the shooter, this is because Preview is quite
literally applying a filter to each individual page of the PDF you are
saving. the proce...
Recovering ancient voices from clay pots
-
MIT reports recovering voices from high-frame-rate video of a potato-chip
bag, extracting information from vibrational displacements as small as
1/100 of a...
Bond vigilantes call for “Day of Rates”
-
Flustered by the obstinate refusal of US interest rates to move up, bond
vigilantes are resorting to the revolutionary tactic *du jour*: Twitter!
In a thr...
My money-saving student days in the 1960s | Letter
-
Responding to an article on budgeting tips, *Robert Webb *recalls raising
money when a rag stunt went wrong
Your article (‘It more than halved my rent’: ...
Big D Has Your Rivalries Right Here
-
Editor's Note--Well that wasn't how we like it last week. 2-4. But this
week is rivalry week in the college where you throw out the records and
teams play ...
Environmentalists Are China's Useful Idiots
-
In his drive to achieve absolute power, Vladimir Lenin could count on
Western progressives and opportunist executives to serve as "useful
idiots." Today'...
Rebecca Wilder is moving to the EconoMonitors
-
I've decided to migrate News N Economics over to my new blog, The Wilder
View, on the Roubini EconoMonitors platform.
Really, I jumped at the opportunity t...
Monday Morning Readings
-
I've really been slacking on the posting lately. The must read:
July Economic Data Summary
Recommended:
Turning Dumpsters Into Swimming Pools
A Simple Expl...
Never trust a lawyer ...
-
... even when they're (supposed to be) on your side.
Ted Gioia has the breaking news:
*Authors win a big lawsuit against AI—but the judge says they may ...
We’ve moved to www.nudges.org. Come with us.
-
Nudges.wordpress.com has been a great home for the Nudge blog over the past
year and a half, but it’s time to move on. Where to? www.nudges.org. That’s
rig...
What to do?
-
by liberal japonicus from
https://everything.typepad.com/blog/2025/08/typepad-is-shutting-down.html
Typepad is shutting down August 27, 2025 We have made t...
Infrastructure roulette
-
In some respects it's reasonable to think about city council as being a
kind of club.
Everyone who owns property in Wellington is a member of the Welling...
PFM Blog announcement: we are moving!
-
iStock.com/tumsasedgars Posted by Teresa Curristine, Holger van Eden, and
Richard Allen DEAR PFM BLOG USERS – The PFM Blog will be transferring to a
brand ...
To Save America’s Cities, We Need to Let Them Fail
-
Downtown Los Angeles
America's flagship cities have become laboratory experiments for social
justice. Heavily controlled by political leaders who subscri...
Inside Bright Star
-
Read about Jane Campion's film Bright Star, chronicling the love affair
between John Keat and his neighbor Fanny Brawne, as well as the poems and
love lett...
COOPERATION IS PROFITABLE
-
part of my new - ELITE MANAGEMENT THEORY series
Personal interests are paramount – most important.
The smaller the cooperating group is the better it refle...
The Harsh Truth About India’s Godmen
-
Late last month, two Indian states and the national capital were upended by
rioting mobs protesting their spiritual leader’s conviction on two counts
of ...
The Bailout: By The Actual Numbers
-
by Paul Kiel
Quick, how many billions in the red are taxpayers on the bailout of GM?
AIG? Fannie and Freddie? Is it true that the government has reaped ...
America's attempted Quartet sophistry
-
This piece was originally published at the Middle East Channel. As
more information seeps out from the Quartet principals meeting held in
Washington ...
Check Out The New Quantifiable Edges!
-
Quantifiable Edges has undergone a complete site overhaul! Part of that
overhaul included moving the blog. New posts can be found at the address
below:
h...
Printable Bookmarks With Quotes
-
Creative Handmade Bookmarks Design With Quotes – Google Search with regard
to Printable Bookmarks With Quotes Printable Bookmarks With Quotes | Second
Star...
DOE CWG Report “Moot”?
-
Somewhat breaking news. A court filing (from 9/4) from DOE has noted that
the Climate Working Group has been disbanded (as of 9/3). This was done to
make...
Yet Another Bad Analysis of AI
-
In the past I've commented on bad discussions of thinking, intelligence,
brains, and computers, such as those by Gary N. Smith, Doug Hofstadter, Arthur
Gar...
The World Cup and Making Soccer Less Boring
-
It is World Cup time, a good time to reintroduce two posts I did one of the
last times we had the World Cup capture the imagination. One of them
suggests ...
Banking fraud - is dishonesty the new greed?
-
It has not been a good month for the financial industry: JPM's ever growing
CDS trading (and apparently mismarking) loss; PFG Best's appreciation for
Adobe...
Does Death Exist? New Theory Says ‘No’
-
Many of us fear death. We believe in death because we have been told we
will die. We associate ourselves with the body, and we know that bodies
die. But ...
When Do Consumer Boycotts Work?
-
Uber, Starbucks, Budweiser. These are just a few of the brands that have
faced consumer boycotts for taking supposedly political stances in the past
few ...
“Goodnight, and Good Luck”
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My February 2016 valedictory editorial note on the home page of Al Jazeera
America the day we closed down. Still proud of the work we did, and the way
we c...
Moved Over
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I’ve been blogging away over at my new blog at Next New Deal, come join me
over there! Here’s the new rss feed. I might post here once in a great
while, m...
Carolina Wolf: Carolina Wolves, #1
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All it takes is a spark of Grrrrl power to set the swamp on fire! Debra
Henry is living the meek librarian cliche, except for the teeny hint of
magic in h...
Prediction Markets and the Kelly Criterion, Part 5
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Perhaps the most famous proponent of the Kelly Criterion is Edward Thorp.
He founded the M.I.T. Blackjack Club, published various papers on gambling
and ...
The paradox of insular language
-
We often develop slang or codewords to keep the others from understanding
what we’re saying. Here’s an example (thanks BK) of the lengths that some
are goi...
Flash Commentary No, 1460b
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• Fundamentals Could Not Be Stronger for Gold and Silver, nor Weaker for
the U.S. Dollar and Stocks, Despite Fed or Market Nonsense to the Contrary
• There...
If something can't go on forever, it will stop
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This is my last post at/as Shock Minus Control. As I mentioned in my
December post, my youngest son (now 7 months) had a congenital heart defect
repaired a...
Goldman Sachs comes late to the game
-
The Financial Times ran a story Monday about Goldman Sachs becoming the
first big dealer to orient its business around electronic fixed-income
trading and ...
Whoop!
-
That is the sound of the gravitational waves hitting the LIGO detector. A
chirp. That is also the sound of the celebratory hurrah’s from the gravity
commun...
Quantum Information Supremacy
-
I’m thrilled that our paper entitled Demonstrating an unconditional
separation between quantum and classical information resources, based on a
collaboratio...
test
-
“Virtual worlds are going to be one of the first killer apps for
blockchains and perhaps the deepest users of them.” – Fred Ehrsam,
Co-Founder, Coinbase ...
Muni Madness
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"Investors are ignoring warning signs in the $2.8 trillion municipal-bond
market, raising the risk of a reckoning, according to some market
specialists. Nu...
The politics of the General Will in Thailand
-
Excerpts from Cultural policy as general will and social-order
protectionism: Thailand’s conservative double movement Michael K. Connors
International Jour...
Sometimes, it's right on front of your eyes ...
-
The authors of this piece have failed to apply Occam's Razor in
interpreting the central empirical finding.
https://www.aei.org/research-products/report...
The Fed: Independence vs. Accountability
-
Needing a break from the social sickness displayed so prominently in recent
days, I will distract myself with a post on economic policy, specifically,
Fede...
Thatcherism is dead: Thatcherism lives
-
Thatcherism is dead. It has ceased to be. It has expired and gone to meet
its maker. It has kicked the bucket, shuffled off this mortal coil and
joined the...
Bonds And Money
-
The US bond market is getting hammered lately as investors and traders
realize that (a) the economy is not collapsing and (b) the Fed will keep
rates hig...
Deepseek gets F+ in Econ
-
LLMs have trouble with this pretty-basic economics question:
Prompt: “*Is this factually accurate?*
*Positively correlated price-quantity pairs reveal th...
Announcement
-
So it is with some sadness that I have to announce that I’m going to be
leaving True/Slant. Starting in a few days I will be back blogging
exclusively at w...
Update: A Tax Compromise Offered in Illinois
-
Earlier this month I highlighted a potential tax compromise brewing in
Illinois. State senate Republicans and Democrats released a proposal to
increase I...
10 Seconds Into The Future
-
The low inflation and low interest rate environment that we experienced in
the last 20 years was only possible as inflation was exported away to low
cost p...
Issues Associated with the Current Election
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Picture Credit: derek visser (modified to exclude extraneous comments) ||
Trump and Harris are more similar than different. Both favor the rich, they
lie, ...
Help wanted: incrementalist systems builder
-
a.k.a Toolsmith a.k.a. Geek To help forecast a hot CE product in one of the
world’s largest retailers (located in Seattle). Apply within.
‘If she killed my girl she must die’
-
An Australian woman charged with poisoning her friend must be executed if
found guilty, says the victim’s father.
A Few Quick Announcements
-
By James As I wrote a couple of years ago, I don’t post here anymore. I
just have a couple of updates for people who subscribe and may be
interested in my ...
RTO Gets Serious: October 1
-
If ever a week was ripe for delaying your return to the office, it was
this one. Hurricane Idalia cleared out the weather up and down the coast,
brin...
Is my pessimism justified?
-
I'm increasingly pessimistic about prospects for meaningful reform in the
wake of the financial crisis, and feel that a repeat, quite possibly on an
even l...
The Years Of Writing Dangerously
-
Thirteen years ago, as I was starting to experiment with this blogging
thing, I wrote the following: [T]he speed with which an idea in your head
reaches th...
Occupy Wall Street - Marine vs 30 Cops
-
Speaking of the police. Here is a link to a video of a soldier - in uniform
- protesting the treatment of demonstrators by the police.
http://perezhilton....
England Expects (note on Dunkirk)
-
First of all, let nobody say Christopher Nolan lacks a sense of humor: for
the second time, he’s kept Tom Hardy under a voice-distorting face mask for
almo...
Uncle Warren Explains It All to You
-
[image: Time for Daddy’s little dividend]
*“Sure, sure.”*
— Sidney J. Mussburger, *The Hudsucker Proxy*
Apparently some doddering old fart in Omaha, Nebr...
Low Volume Melt Up
-
*FN:* On the way down there is volume. On the way up, there is less...
waaaay less (especially for this time of the year).
Can you say algos?
So what does...
Goodbye Scienceblogs
-
Goodbye Scienceblogs
NOTE: This blog has moved. The Frontal Cortex is now over here.
I've got some exciting news: Starting today, the Frontal Cortex will ...
US Continuing Jobless Claims Fall by 3.86M
-
Continuing Jobless Claims in the United States decreased significantly last
week to 21,052,000 from a record high of 24,912,000 in the previous week.
The n...
Penny Stock Research Sources
-
Penny Stock Research Sources Just because you don’t hear about penny
stocks every day on your daily news, doesn’t mean that the penny
stock market goes wit...
Hello world!
-
Welcome to WordPress. This is your first post. Edit or delete it, then
start writing!
The post Hello world! appeared first on My WordPress.
Moving Just A Click Away
-
Tomorrow I’ll be starting to blog at National Geographic Magazine, along
with Ed Yong, Virginia Hughes, and Brian Switek. All the archives of the
Loom (f...
The Market Ticker - The Pattern of The Market
-
*Looks awfully similar to 2008.*
*Rotation back and forth, with most of the gains coming in a handful of big
names with big stories -- but no earnings to...
Arguing with Children
-
The other day the New York Times ran an op-ed about Greta Thunberg, the
teenage environmental activist. The TL;DR is that activism, particularly
the activi...
The Oil Drum writers: Where are they now?
-
- Nate Hagens is at The Monkey Trap
- JoulesBurn (Brian Maschhoff) is at Picojoule
- Euan Mearns is at Energy Matters
- Heading Out (Dave...
Mom Has Stacked Dinner Party Roster
-
GOLDEN, CO—Their eyes widening in amazement as the 43-year-old rattled off
the names of heavy hitter after heavy hitter, impressed members of the
Dreesh...
An Autopsy of American Exceptionalism
-
I’m writing this in a Parisian cafe in the year 2050. I’m doing a reverse
Hemingway, trying to become a better writer as I get into my 70s while I [
… ]
This is the end
-
Ladies and gentlemen, this is the final post I will be publishing at The
Reformed Broker....
The post This is the end appeared first on The Reformed Brok...
narratives everywhere
-
As investment professionals, we are faced with stories big and small. We
should spend more time evaluating how we analyze and react to them.
Porsche’s Next Flagship Will Be an EV Crossover
-
Despite hardcore motorsport enthusiasts collectively proclaiming the 911 as
Porsche’s greatest model of all time, it’s presently being outsold by the
all...
Save pdf smaller size mac online
-
High image quality, bring your ideas to life save pdf smaller size mac
online beautiful presentations. and instantly got the shrunken file!
Although the de...
The Senator Vs. the C.I.A.
-
Last week, Senator Dianne Feinstein, the chair of the Senate Select
Committee on Intelligence, announced “grave concerns” that C.I.A. officers
had …
New Book: ESCAPING PATERNALISM
-
by Mario J. Rizzo and Glen Whitman Book description The burgeoning field of
behavioral economics has produced a new set of justifications for
paternalism. ...
Gaza: Journalism is a Capital Crime
-
The world is rightly outraged by Israel’s systematic extermination of much
of the Gaza press corps. Over 200
The post Gaza: Journalism is a Capital Crime...
Thomas Struth: Striving for the big picture
-
Review by Tim Connor
As a photography student at Kunstakademie *Düsseldorf* in the 1970s, Thomas
Struth learned to create big, highly detailed pictures wi...
Assorted on India
-
India’s growth in the 2000s: Four facts
The rupee: Frequently asked questions
Talk is cheap
Conclusion: there is precious little fundamental reason for...
Trading the Odds on Monday – June 15, 2009
-
Friday’s session looked like a playbook example concerning -form a
historical and statictical perspective- the most probable outcome based on
those setups ...
Notes on Chinese inflation
-
http://noelmaurer.typepad.com/aab/2010/01/i-have-your-chinese-consumer-price-inflation-right-here.html
I don’t see that much of a mystery. The primary way i...
Go On Till You Come to the End; Then Stop
-
Go On Till You Come to the End; Then Stop
ScienceBlogs is coming to an end. I don't know that there was ever a really
official announcement of this, but t...
Pakistan Update
-
This morning in Islamabad, UNHCR and other UN staff held a special ceremony
to pay homage to colleagues killed in the bombing of the Pearl Continental
Hote...
To Russia With Love
-
Conspiracy theories are dangerous things and should generally not be
believed. OTOH, if the most benign among the plausible interpretations is
not all th...
Ten Years Since the Biggest VIX Spike Ever
-
Ten years ago today, we witnessed that largest one-day VIX spike in the
nearly three decade history of the VIX. On that day, the VIX rallied from
a prior...
The Final Addiction
-
< A few statements from evolutionary biologists: “Immunization is also
making once-rare or non-existent genetic variants of pathogens more
prevalent …....
The US Treasury’s missed opportunity
-
The US Treasury recently published the first in a series of reports
designed to implement the seven core principles for regulating the US
financial system ...
We've Moved!
-
If you're reading this, it means you've been following the
http://georgewashington2.blogspot.com address. We switched over to
WordPress, and from now on...
-
This site remains available as an archive of my informal writings between
2007-2013. For those interested in current commentary, I now post a regular
weekl...
Trump Indictment # 4 - Georgia-Part One
-
Fulton County Georgia District Attorney Fani Willis spoke about the Georgia
Grand Jury Indictment issued yesterday. A review of the Indictment and my
thoug...
Save pdf smaller size mac online
-
High image quality, bring your ideas to life save pdf smaller size mac
online beautiful presentations. and instantly got the shrunken file!
Although the de...
Should losers from free trade be compensated?
-
It's been a while... far too long. Suffice to say that my day job has been
keeping me very busy this year and has made blogging difficult. I want to
rect...
Aging Might Not Be Inevitable
-
There are biological underpinnings to aging—and so researchers are
investigating cell manipulations, transfusions of young blood, and chemical
compounds th...
Good Chart Checklist
-
Note: this was prepared for my ECON 3403 students, and is a list of all of
the mistakes I commonly see in student charts. Please add your suggestions
for t...
Donald Trump’s Brand Takes a Haircut
-
The Donald Trump brand has been bruised so badly by the presidential
candidate’s controversial remarks on Mexican immigration that some
marketing and licen...
Please Use Zerohedge.org
-
As zerohedge.com is currently experiencing technical issues, please use the
following website for all the latest updates: www.zerohedge.org while we
resolv...
Politics=The art of the possible Political Theory=Theory of the good, just,etc. society. Political Economy=The art of the possible Economics=Theory of economic behavior
Political Parties are comprised of: 1) Policies 2) Interest Groups 3) Ideologies 4) Cultural views
Don's Hermeneutics: Like Rabbi Yishmael's Rules, Only Not
"Searle's Sagacity":
"If a person can't explain something simply, then they don't know what they're talking about. The only exception being Kant."
"Corollary to Searle's Sagacity":
"questions should be simple and comprehensible, and meant to elicit a simple explanation."
"Samuel Johnson's Dictum":
One thing about passing fifty years of age is that I now feel old enough to invoke what I call Samuel Johnson's Dictum. It is thus: If I invoke a view based on an author that I read in the past, and that view is not actually held by that author, I'm more than willing to claim the view as originating with me. The beauty of this Dictum is that it is self-referential. It is based upon my reading of Johnson and on Boswell, but I can't remember the actual references that led me to believe that Johnson believed something like this. In any case, I do.
"Burke's Principle":
Another of my motley list of nostrums is what I call Burke's Principle. Burke's Principle holds that there is a distinction between: 1) Political Theory: A theory of the perfect society, the good life, etc. Your general political philosophy. 2) Politics: The rather messy art of governing which involves dealing with what is possible on earth and compromising as the need arises.
"Burke's Rule": "All government, indeed every human benefit and enjoyment, every virtue, and every prudent act, is founded on compromise and barter. "
"Burke's Paradox": "Mere parsimony is not economy. Expense, and great expense, may be an essential part in true economy."
"Burke's Prescience":
"You can never plan the future by the past.
Letter to a Member of the National Assembly (1791)"
"Burke's Wisdom":
"A very great part of the mischiefs that vex the world arises from words.
Letter to Richard Burke"
"Bagehot's Principles":
1) If the Fed exists, it will be the Lender Of Last resort, and that has to be taken in to account in real world Political Economy. It should lend freely in a crisis to solvent banks.
2) The rules for LOLR( from here on down this includes any government guarantee ) intervention should be clear, public, and followed, otherwise Moral Hazard is ineffective. All guarantees must be explicit.
3) The terms must be onerous.
4) The LOLR should get something valuable in return.
Here are a few others:
5) The taxpayer's interests should come first.
6) Moral Hazard needs to be constantly applied by quickly liquidating problem banks in normal times.
7) Any entity receiving a guarantee will have to be supervised or regulated effectively, and violations should be quickly and severely punished.
8) There is no doubt that any entity receiving a LOLR guarantee will need to be more conservative in its practices in order to limit the liability of the taxpayer.
9) There should be a class of financial concerns that can act more freely, but they should not receive LOLR guarantees. They will be strictly supervised or regulated though, and are subject to laws against fraud, etc."
"Who can forget the end of "Planet of the Apes" when Charlton Heston, kneeling before the half-buried remains of the Statue of Liberty, slams his fists into the sand and cries, "You maniacs! You blew it up! Ah, damn you ... damn you all to hell!"
Now imagine the same scene, but with a half-buried Morgan Stanley building standing in for Miss Liberty and a time-traveling Walter Bagehot playing the lead and you've got the perfect Hollywood dramatization of the real-life tragedy that, with luck, is having its denouement on Wall Street.
Bagehot? The great Victorian man of letters, best remembered today as the second and most celebrated editor of the British magazine The Economist, wasn't exactly a hunk. But he certainly could have delivered those futile last lines with real conviction, for he was among the first to recognize the vast destructive potential of that newfangled weapon of Victorian finance: the modern central bank.
Bagehot first alerted readers to this potential and offered his suggestions for containing it in an article that appeared in The Economist after the great panic and credit crisis of 1866. That panic witnessed the spectacular collapse of Overend, Gurney & Co., which had long been Great Britain's premier investment house.
Bagehot understood that, during such panics, the Bank of England alone commanded the confidence needed to serve other financial firms as a "lender of last resort." But as Bagehot put it later in his book "Lombard Street: A Description of the Money Market" (1873), the bank's "faltering way" -- its arbitrary and inconsistent use of its unique lending powers -- tended only to make things worse.
"The public," Bagehot wrote, "is never sure what policy will be adopted at the most important moment: it is not sure what amount of advance will be made. ... And until we have on this point a clear understanding with the Bank of England, both our ability to avoid crises and our terror at crises will always be greater than they would otherwise be."
The ultimate source of trouble, Bagehot believed, was the very existence of the Bank of England and the special privileges it enjoyed. But because nothing save a revolution seemed likely to do away with the "Old Lady of Threadneedle Street," as it was called, Bagehot's preferred, practical solution was for the bank expressly to commit itself to lending freely during crises, though on good collateral only, and at "penalty" rates.
The restrictive provisions were supposed to limit aid to otherwise solvent firms panic had rendered illiquid.
Bagehot's recommendation has since become a sort of master precept of central banking -- albeit one that's mainly honored in the breach by central bankers.
To be fair to today's central bankers, there's never been much agreement on how to apply Bagehot's rule in practice. Just what do "good collateral" and "penalty rates" mean in times like these?
While no one might precisely be able to define good collateral -- and one can debate whether the rate at which banks offer to lend unsecured funds to other banks, known as the London Interbank Offered Rate, or LIBOR rate, plus 8 percent constitutes a "penalty" rate -- who even pretends that recent central bank lending has been based on good collateral?
But rescuing insolvent firms is the least of it. The real damage comes from the Treasury's utter lack of any consistent last-resort lending rule. The recently enacted financial institutions bailout bill does little to clarify this.
That's just the sort of thing that troubled Bagehot almost a century and a half ago, when central banks were still in their swaddling clothes. Yet central bankers and governments still don't get it, despite the lip service they pay to this great thinker from our past."
"The Unwisdom of Crowds Financial panics still require what Walter Bagehot prescribed--that practical men violate their own principles. by Christopher Caldwell 12/22/2008, Volume 014, Issue 14
Neither Barack Obama nor John McCain had much of value to say about the financial crisis as it raged through the headlines this fall. Rather than shred their campaign strategies, they played it safe, as most politicians would have. But in the name of justice we ought to recall that there was one candidate who did foresee our predicament with considerable accuracy when it still lay far in the future. Ron Paul, in almost every speech he made during the Republican primaries, spoke of bubbles, reckless credit growth, and the "unsustainability" of present policy. So why isn't there more demand for the common-sense solutions he put forward? Because common sense is not much use in a financial panic.
This was the great discovery of Walter Bagehot, the prolific 19th-century essayist and journalist, who was editor of the Economist from 1860 to 1877. (His name rhymes with gadget.) Ninety-nine percent of the time, common sense is a synonym for practicality. But in a serious banking crisis, doing the commonsensical thing--hunkering down and counting your pennies--has proved to be not practical at all. Bagehot's Lombard Street is an insider's look at the Bank of England, and at the principles on which political and financial leaders act when advanced economies come under pressure. Those principles are depressing in the extreme for anyone with an uncomplicated idea of how a democracy works. But they are effective. That is why, in the so-called Anglo-Saxon world, Bagehot's book still provides the bedrock of policy thinking during financial emergencies, including our present one.
Lombard Street was published in 1873, seven years after the sudden collapse of Overend, Gurney & Co., a bank that lost £11 million, spread panic among investors, sparked a run, and became "the model instance of all evil in business." The crisis made such a deep impression on British finance and government that the country did not have another bank run for 141 years--not until Northern Rock collapsed in the summer of 2007. (English investors must have longer memories than American ones. Most of our own noxious subprime mortgages were contracted, and the securities built on them concocted, after Enron became our own model instance of evil in 2001.) It was the Bank of England that took charge of averting panic, during the Overend, Gurney crisis and thereafter. It did so by injecting credit into the economy, by bailing people out. Bagehot approved of this. Many ordinary retailers could not pay their suppliers until they got the money for the things they sold. Without credit, they would be ruined, and the ruin would spread to those to whom they owed money. This was not a question of moral failing, it was just the way a modern economy worked.
But the modern economic system interacts with the modern political system--democracy--in a rather uncomfortable way. Indeed, at more than one juncture in Lombard Street, Bagehot framed the problem of booms and busts as part of the "increasingly democratic structure of English commerce." People in a democracy are most comfortable when their institutions do the same things that they would do as individuals. In a crisis, banks--like everyone else--reflexively hoard their money. But a central bank must do the opposite. It must lend freely.
This was the most basic affront to common sense that the Bank of England presented, but it was not the worst. The worst was that the bank could carry out its necessary duties as a lender of last resort only by breaking the law. The basis of the bank's operating procedure--and of its soundness--was the Bank Act of 1844. We would call it a regime of sound money. It included stringent caps on the ratio of notes issued to reserves held. These caps were hewed to when the economy was running smoothly. Yet at the time Bagehot was writing, a quarter century later, the law had already been suspended three times. Not just that. "No similar occasion has ever yet occurred," Bagehot wrote, "in which it has not been suspended." So the law on which the solvency of the British nation rested was ironclad, except when someone felt a need to break it.
Stranger still, never did the Bank of England acknowledge its duty as the lender of last resort. Some of its governors even denied that any such duty existed. Bagehot thought the bank should come clean about what it really was:
There should be a clear understanding between the Bank and the public that, since the Bank hold our ultimate banking reserve, they will recognise and act on the obligations which this implies--that they will replenish [the reserve] in time of foreign demand as fully, and lend it in times of internal panic as freely and readily, as plain principles of banking require.
But there was a reason for the central bankers' dissembling. If the bank ever acknowledged a duty to rescue banks by generous extensions of credit, it would create a form of moral hazard. Thomson Hankey, a Bank of England director whom Bagehot much admired (and to whom the financial writer James Grant devotes an admiring essay in his new book Mr. Market Miscalculates), called Bagehot's lender-of-last-resort views "the most mischievous doctrine ever broached in the monetary or banking world in this country."
In practice, Bagehot was right and Hankey was wrong. The bank was beyond question the lender of last resort. In principle, Hankey was right and Bagehot was wrong. Unless there was a real, credible threat that a bank would be allowed to fail, the guarantee of rescue would simply get priced into any financial bubble that developed, making things worse when the bubble popped. The situation required what we would now call "strategic ambiguity"--both Hankey's doctrine and Bagehot's practice, which contradicts it.
The situation today requires the same mix. Central banking is thus often a high-stakes game of chicken. And sometimes, when banks enter the game insufficiently scared, it will be played out to the end. It certainly was in September when the U.S. Treasury terrified the financial world by not coming to the rescue of Lehman Brothers. This was a catastrophe in terms of Bagehot's practice, but it will produce benefits in terms of Hankey's principle. It will discourage people from paying more than is reasonable for assets on the belief that they come equipped with an insurance policy (the promise of a central bank rescue) that has been underwritten by taxpayers. The Republicans who nearly derailed the Treasury's Troubled Assets Relief Program in September played a similar role.
A final problem is that there are limits to how accountable a central bank can be. Everyone is always hollering for clear rules and transparency. But a dirty secret of regulation is that it frequently influences conduct most effectively when it is capricious and opaque. Any regulatory system will reveal its vulnerabilities over long use. If it addresses economic problems in a predictable way, savvy investors will find a way to "game" that predictability. You can draw an analogy with antidepressant drugs. There is no permanent right match of medication for a depressive. Antidepressants work only until the mind (or is it the brain?) finds a way around them, at which point a new, unfamiliar drug must be substituted. In the same way, no matter how good the content of a regulatory regime, it must change periodically if big market players are to be kept from profiting off it.
As Bagehot outlined his system, he was conscious that the practical realities of banking required him to heap paradox upon paradox. There is a hint of both Andrew Jackson and Thomas Aquinas in the way he referred to central banking as an "unnatural" thing in its very conception. "The business of banking ought to be simple," he wrote. "If it is hard it is wrong." If it is hard, the banker is either delegating poorly or has entangled his institution in complex transactions where it has no business. According to Bagehot, "Adventure is the life of commerce, but caution, I had almost said timidity, is the life of banking."
Centralizing a society's cash reserves is complicated, reckless, and artificial:
A republic with many competitors of a size or sizes suitable to the business, is the constitution of every trade if left to itself, and of banking as much as any other. A monarchy in any trade is a sign of some anomalous advantage, and of some intervention from without. . . . The natural system of banking is that of many banks keeping their own cash reserve, with the penalty of failure before them if they neglect it.
In his ideas of company size, Bagehot harkened back to the 18th century rather than ahead to our own. To modern eyes, Bagehot is, as a factual matter, simply wrong. The natural tendency under free-market conditions is towards consolidation, and even monopoly. If you want small firms, you must protect them through government--whether this means Teddy Roosevelt-ian trust-busting, French-style subsidies to tobacconists, the EU's hounding of Microsoft, or the NIMBY anti-Wal-Mart campaigns aimed at preserving Mom-and-Pop stores. Bagehot sometimes contradicted himself on this point, noting also that "a large bank always tends to become larger, and a small one tends to become smaller," but his application of the word unnatural to a large central bank was frequent and must be taken as his settled view. It is curious that Bagehot, a contemporary of Marx, came to the opposite (and false) conclusion about how firms evolve.
Where Bagehot would agree with Marx is in his belief that there is something predictably destabilizing about modern economies. You don't need banks to have a precarious economy, or one liable to speculation--Bagehot noted that there were no banks, as we would understand them, in 1720, at the time of the South Sea Bubble and the Mississippi Scheme. But modern banking is precarious by design. "In exact proportion to the power of this system is its delicacy," he wrote. "I should hardly say too much if I said its danger." The power, delicacy, and danger all have the same source. In fact they are just different names for the same thing: leverage.
At the very opening of the book, Bagehot illustrates with exquisite simplicity how, at least in a boom economy, traders on margin can "harass and press upon, if they do not eradicate, the old capitalist." The old capitalist in question is the poor sap who believes all this stuff about neither-a-borrower-nor-a-lender-be and is foolish enough to be using his own cash:
If a merchant have £50,000 all his own, to gain 10 per cent on it he must make £5,000 a year, and must charge for his goods accordingly; but if another has only £10,000, and borrows £40,000 by discounts (no extreme instance in our modern trade), he has the same capital of £50,000 to use, and can sell much cheaper. If the rate at which he borrows be 5 per cent, he will have to pay £2,000 a year; and if, like the old trader, he make £5,000 a year, he will still, after paying his interest, obtain £3,000 a year, or 30 per cent, on his own £10,000. As most merchants are content with much less than 30 per cent, he will be able, if he wishes, to forego some of that profit, lower the price of the commodity, and drive the old-fashioned trader--the man who trades on his own capital--out of the market.
Later, Bagehot showed that this need for leverage is no different for those selling money than it is for those selling dry goods. The banker can no more choose not to lend than the merchant can choose not to borrow:
The bill-broker has, in one shape or other, to pay interest on every sixpence left with him, and that constant habit of giving interest has this grave consequence: the bill-broker cannot afford to keep much money unemployed. He has become a banker owing large sums which he may be called on to repay, but he cannot hold as much as an ordinary banker, or nearly as much, of such sums in cash, because the loss of interest would ruin him.
In finance, once you can have leverage, you must have leverage. Once you have some leverage, getting more of it than your competitors is a matter of survival. And when governments and central banks debate whether to loosen or tighten up money, they face a constant clamor from the financial world to permit more leverage still. That is why, even in democracies, the instruments of monetary policy tend to be kept far from the influence of voters, and even hidden from view. Otherwise, credit tends to spiral. Bubbles result.
Nothing could be more foolish than to assume that this process of spiraling speculation is unleashed by "greed," unless by greed you mean human nature. Credit spirals are a darker aspect of the world Adam Smith described in The Wealth of Nations and Bernard de Mandeville did in the Fable of the Bees. Just as society can be improved by the uncoordinated action of the selfishly motivated, an economy can collapse for reasons having nothing to do with anybody's cupidity.
We should be moral in the way we think about money, but a credit system tends to make a mess of moral accounting. Bagehot described London's financial district as "a sort of standing broker between quiet saving districts of the country and the active employing districts." Decent, puritanical Suffolk farmers want to put their money in a safe place; Lancashire entrepreneurs want money to put to work. Thanks to London bankers, both can follow their wishes and make a profit in the process. We have an idea that the Suffolk dairyman is the "moral" party here (he's saving) and the Lancashire speculator the "immoral" one (he's gambling). But, once a banking system intervenes, they are both gambling and they are both saving. In good times you are welcome to mouth the folkloric cliché that holds farmers to be better people than financiers. When depression looms, you had better realize that the rain falls on the just and the unjust.
Many Americans who have wound up underwater on their houses and maxed out on their credit cards are greedy, climbing, brand-intoxicated, materialistic shopaholics who thought the world owed them a living. But just as many of them are not. They are trapped, as surely as financial institutions are, in a system based on wild borrowing. Participation in this system is not exactly required, but it is not exactly optional, either. One's quality of life is determined not just by one's purchasing power but also by one's relative economicstanding. Chagrin at seeing one's neighbors get richer faster may be a sign of bad character, but do not for a minute assume there is nothing to feel chagrin about! When it comes to the very goods people deem most essential--the proper mate; the schooling of one's children; the size, location, elegance, and comfort of one's house--relative standing is more important than absolute wealth.
Those who kept their money in savings banks in the 1990s lost out to those who did things we are supposed to disapprove of, like "spending money they didn't have," borrowing profligately to invest in stocks and even bonds, which appreciated at an average of 15 percent a year over the decade. Among rich people, how one entered the present decade had more to do with how one had done in the stock market than with how one had done in the labor market. Is that just? Of course it's not! It's easy to see now. But while the boom was going on there was all sorts of rationalizing about why it was okay that the social hierarchy should be reordered through stock and housing speculation. One line of argument was that people who did not have a ton of money in stocks, as well as those who rented rather than bought the houses they lived in, were foolish. This line of argument peaked at the turn of the decade, when Americans elected a president who had argued that the public was foolish for not launching its retirement savings onto the open seas of the stock market.
Bagehot saw that a speculative mania eventually sweeps up everyone in its path. "Every great crisis reveals the excessive speculations of many houses which no one before suspected," he wrote, "and which commonly indeed had not begun or had not carried very far those speculations, till they were tempted by the daily rise of price and the surrounding fever." Avaricious people get hurt, but it is in the nature of crashes that they are not the ones who get hurt most. A tragic figure present in almost every historic account of speculation and collapse in history is the person who believed, year after year, that the boom was an illusion, and held himself aloof until, at the very last minute, whether out of self-doubt or deference to the opinions of his fellow man, he entered the fray and was (having bought at the top, rather than the bottom, of the market) wiped out. What a wicked irony! His punishment is as much for his long and wise forbearance as for his momentary weakness.
So the "cultural contradictions of capitalism" run deeper than we thought. The classic idea, as laid out in their different ways by the economist Joseph Schumpeter and the sociologist Daniel Bell, is that capitalism rewards diligence; diligence produces wealth; wealth begets idleness; and idleness undermines capitalism. But when, as now, push comes to shove, we can ask whether there is really anything particularly capitalist about the virtues of diligence and self-restraint. The real capitalist virtues appear to be optimism and luck. From a central-banking perspective, the cultural contradictions are not results of capitalism but elements of it.
The problem with central banking is that it reacts to a system that has been mismanaged by rewarding the managers. That is why objections to central banking, although they can come from the right (Ron Paul, Jim Bunning) or the left (Barney Frank, William Greider), tend to be populist. Bagehot was no populist. He was comfortable with the idea that what some people think should be more important than what other people think:
Almost all directors who bring special information labor under a suspicion of interest; they can only have acquired that information in present business, and such business may very possibly be affected for good or evil by the policy of the Bank. But you must not on this account seal up the Bank hermetically against living information.
Although he would surely fault Treasury Secretary Hank Paulson for many things, the criticism most often heard at present--that Paulson is too close to former colleagues on Wall Street, where he worked for years as CEO of Goldman Sachs--would strike Bagehot as misplaced.
Because it is on Wall Street, alas, that "the state of credit" is to be determined:
The state of credit at any particular time is a matter of fact only to be ascertained like other matters of fact; it can only be known by trial and inquiry. And in the same way, nothing but experience can tell us what amount of "reserve" will create a diffused confidence.
To be blunt, credit is successfully reestablished when financial elites say, "When." Credit is close to a synonym for the mood of the ruling class. To say an economy is based on credit is to say it is based on animal mysteries. Glamour, prestige, élan, sprezzatura, cutting a figure . . . that is what the economy is made of. It is a rather terrifying thought. Viewed as Bagehot viewed it, from the perspective of a central bank in a crisis, an advanced economy looks an awful lot like a primitive economy."
"Loyal readers, please take a moment to check out Gretchen Morgenson’s column this week. She’s taken a close look at the buyout of Bear Stearns organized by the Federal Reserve, and she has come to an intriguing conclusion: that the Fed not only wanted to prevent financial havoc - it also wanted to deter speculators who were betting on big banks to fail.
Adherents of the Walter Bagehot school of central banking - and I have been among them at times - have cried foul at the sight of big bailouts and the granting of emergency credit at low interest rates. The Bagehot argument is that emergencies that arise from the risks that banks have chosen to take should not be treated with overwhelming sympathy. Emergency credit should be offered, yes, but at rates that will make banks think twice about using the safety net again. That’s not the case this time around (neither in the United States nor in Britain, and probably not in Europe either by the time the folks in Brussels are finished), so the central banks may be telling financial institutions that they can take silly risks without fear of disaster.
But if Morgenson is right, there is a long-term purpose here, too: to reduce the winnings of those who bet on failure, and thus to reduce the incentives to bring that failure to pass. And let’s face it, the speculators aren’t operating in a vacuum; their bets can start to snowball with market sentiment, as they did against Lehman Brothers last week. Still, the Bagehot argument (often called moral hazard) is also a powerful one - which one do you agree with?"
"In his 1873 book “Lombard Street,” the closest thing to a user’s guide to central banking, Walter Bagehot criticized the Bank of England’s handling of earlier panics by responding “hesitatingly, reluctantly, and with misgiving.”
Federal Reserve Chairman Ben Bernanke, who has read his Bagehot and kept a copy in his Princeton office when he was a professor, responded to recent developments first by pumping money into the markets through the New York Fed’s open-market operations and then last week by easing the terms on loans to banks from the Fed’s discount window.
Bagehot (pictured at right) still makes for good reading at times like this.
“What is wanted and what is necessary to stop a panic is to diffuse the impression, that though money may be dear, still money is to be had. If people could be really convinced that they could have money if they wait a day or two, and that utter ruin is not coming, most likely they would cease to run in such a mad way for money. Either shut the Bank at once, and say it will not lend more than it commonly lends, or lend freely, boldly, and so that the public may feel you mean to go on lending. To lend a great deal, and yet not give the public confidence that you will lend sufficiently and effectually, is the worst of all policies; but it is the policy now pursued.”
Robert Feldman, Morgan Stanley’s chief economist for Japan, writes in a note today that it’s key to distinguish between internal discredit — private domestic lenders retreating — and external discredit, which Bagehot defined as a foreign drain on a bank’s money. (Bagehot’s solution to the problem of external discredit is to still lend freely but “at very high rates.”) That doesn’t apply in today’s floating rate system, Feldman says, and exchange rates don’t provide a good substitute, with the dollar’s drop against the yen suggesting we have external discredit while the strengthening against the euro saying we don’t.
Feldman writes: “My view is that the modern counterpart of ‘external discredit’ is moral hazard. The credit of the U.S. IS a problem, since no one knows how big the subprime and related housing market problems really are. Given how poorly banks know their clients, the ‘high rates’ part should come into play. There is no way to re-establish confidence unless those who have made loans to questionable borrowers pay a price for rash lending. Only then will markets regain confidence that risk is under control.
“The next stage of the credit problem — and whether it affects the real economy seriously — depend on eliminating the moral hazard,” Feldman says. “The faster the moral hazard in eliminated, the less impact on the real economy.”
Fed officials are acutely aware of the moral hazard, having resisted action for weeks to not be seen as bailing out risky investments. But they also don’t want a crisis to feed on itself. The Fed stressed its statement, in lowering the discount rate for banks, that it would accept “a broad range of collateral…including home mortgages and related assets.” The central bank sought to reassure a market that had been roiled by risky investments in subprime mortgages.
That’s how the Bank of England halted a panic in 1825, as Bagehot recounts: “A panic, in a word, is a species of neuralgia, and according to the rules of science you must not starve it. The holders of the cash reserve must be ready not only to keep it for their own liabilities, but to advance it most freely for the liabilities of others. They must lend to merchants, to minor bankers, to ‘this man and that man,’ whenever the security is good. In wild periods of alarm, one failure makes many, and the best way to prevent the derivative failures is to arrest the primary failure which causes them. The way in which the panic of 1825 was stopped by advancing money has been described in so broad and graphic a way that the passage has become classical. ‘We lent it,’ said Mr. Harman, on behalf of the Bank of England, ‘by every possible means and in modes we had never adopted before; we took in stock on security, we purchased Exchequer bills, we made advances on Exchequer bills, we not only discounted outright, but we made advances on the deposit of bills of exchange to an immense amount, in short, by every possible means consistent with the safety of the Bank, and we were not on some occasions over-nice. Seeing the dreadful state in which the public were, we rendered every assistance in our power.’ After a day or two of this treatment, the entire panic subsided, and the ‘City’ was quite calm.”
"Bagehot advocated in 1873 that a Lender of Last Resort in a crisis should lend at a penalty rate to solvent but illiquid banks that have adequate collateral. The doctrine has been criticised as having no place in our modern interbank market, but this is wrong. Bagehot’s prescription aims to eliminate the coordination problem of investors at the base of the crisis. It is still a useful guide for action when the interbank market stalls.1 It makes clear that discount-window lending to entities in need may be necessary in a crisis.
Bagehot's doctrine, however, is easy to state and hard to apply. It requires the central bank to distinguish between institutions that are insolvent and those that are merely illiquid. It also requires them to assess the collateral offered. Central banks, because of information limitations, are bound to make mistakes, losing face and money in the process. This doesn’t mean they should not try. Poor collateral versus massive liquidity
The collateral should be valued under “normal circumstances”, that is, in a situation where the coordination failure of investors does not occur. This involves a judgment call in which the central bank values the illiquid assets. A central bank that only takes high quality collateral will be safe, but will have to inject much more liquidity and/or set lower interest rates to stabilise the market. This may fuel future speculative behavior. Some of this may have happened in the Greenspan era, in the aftermath of the crisis in Russia and LTCM, and after the crash of the technological bubble. The ECB and the Federal Reserve have accepted now partially illiquid collateral that the market would not. This seems appropriate and releases pressure to lower interest rates to solve the problem, something that should be done only if there are signs of deterioration in the real economy. The problem is that central banks are extending the lender of last resort facility outside the realm of traditional banks to entities, like Bear Stearns, that they do not supervise and, therefore, over which they do not have first hand information. How does the Fed know whether Bear Stearns or other similar institutions are solvent? It seems that the Fed is not following Bagehot’s doctrine here.
Finally, if banks and investors are bailed out now, why should they be careful next time? This is the moral hazard problem: help to the market that is optimal once the crisis starts has perverse effects in the incentives of market players at the investment stage. The issue is that only when the moral hazard problem is moderate does it pay to eliminate completely the coordination failure of investors with central bank help. When the moral hazard problem is severe, a certain degree of coordination failure of investors - that is, allowing some crises - is optimal to maintain discipline when investing and, amending Bagehot, some barely solvent institutions should not be helped."
http://www.house.gov/jec/imf/blueprnt.htm
"This goal is not new. In fact, it underlay Walter Bagehot's (1873) classic policy prescriptions for domestic central banking: to lend freely at a penalty rate on good collateral. Bagehot argued an elastic and immediate supply of liquidity was essential to an effectively structured lender of last resort, and that appropriate loss sharing rules in the form of collateral requirements and penalty interest rates would discourage abuse of the safety net."
"By slashing interest rates too much in 2007-2008, the Fed has accentuated the foreign drain and thus made the alleviation of the domestic drain more difficult. Yet, despite this mistake, Bagehot would approve of other actions the Fed has taken to deal with the domestic drain by unblocking specific impacted domestic markets. These include (1) swapping Treasury bonds for less safe private bonds, (2) opening its discount window to shaky borrowers, and (3) maybe even rescuing Bear Sterns. He would also approve of the relaxation of capital constraints on Fannie Mae, Freddy Mac and so on, for mortgage lending. Yet these measures will be insufficient if the foreign drain continues.
To repeat Bagehot's Rule: "very large (domestic) loans at very high rates are the best remedy for the worst malady of the money market when a foreign drain is added to a domestic drain." The Fed, and the U.S. government more generally, have so far got it only half right."
"More than a century ago, a British economic journalist, Walter Bagehot, set out the classical principles for a central bank acting as lender of last resort: lend freely in a crisis at a penalty rate against collateral. Adapted to international lending, Bagehot's rule is the proper rule for a restructured, more effective IMF."
The market maker of last resort function can be fulfilled in two ways. First, the central bank can make outright purchases and sales of a wider range of securities than they currently do. Second, central banks can accept a wider range of securities as collateral in repos, and in collateralised loans and advances at the discount window than they currently do. Following Bagehot’s rule, the MMLR should buy these securities outright or accept them as collateral only on terms that would imply a stiff financial penalty to the owner.The central bank of course already applies a liquidity ‘haircut’ even to liquid instruments offered as collateral in repos or at the discount window.Because the MMLR would have to establish a buying price ‘in the dark’, that is, unaided by recent relevant market prices, and would inevitably take on much more credit risk than central banks have become accustomed to, the ‘haircuts’ should be severe – a financial version of ‘short back and sides’.
"Further crises in 1857 and 1866 prompted the debate between Bagehot and Thomson Hankey, a director and former governor of the Bank of England. Notwithstanding the Bank’s undoubted responsibility, as trustee of the nation’s reserve, to support the financial markets, Bagehot wrote: If we ask how the Bank of England has discharged this great responsibility, we shall be struck by three things: first, . . . the Bank has never by any corporate act or authorised utterance acknowledged the duty, and some of its directors deny it; second, (what is even more remarkable), no resolution of Parliament, no report of any Committee of Parliament (as far as I know), no remembered speech of a responsible statesman, has assigned or enforced that duty on the Bank; third (what is more remarkable still), the distinct teaching of our highest authorities has often been that no public duty of any kind is imposed on the Banking Department of the Bank; that, for banking purposes, it is only a joint stock bank like any other bank; that its managers should look only to the interest of the proprietors and their dividend; that they are to manage as the London and Westminster Bank or the Union Bank manages. (1873, 153–54) Although the Bank usually in the end supplied the market, its “faltering way” caused needless uncertainty and more severe panics than if it communicated clearly that it could be counted on (Bagehot 1873, 64). According to Bagehot, the rules— to lend freely at penalty rates on sound collateral—under which assistance would be provided should be stated also. The public is never sure what policy will be adopted at the most important moment: it is not sure what amount of advance will be made. The best palliative to a panic is a confidence in the adequate amount of the Bank reserve, and in the efficient use of that reserve. And until we have on this point a clear understanding with the Bank of England, both our liability to crises and our terror at crises will always be greater than they would otherwise be. (1873, 196–97)"
One which doesn't quite:
http://www.portfolio.com/views/blogs/market-movers/2008/05/13/bernanke-on-bagehot?rss=true "Bernanke on Bagehot
I doubt a week has gone by since last summer during which I haven't seen some pundit or other trot out Walter Bagehot's dictum that in the event of a credit crunch, the central bank should lend freely at a penalty rate. More often than not, this is contrasted with the actions of the Federal Reserve, which seems to be lending freely at very low interest rates.
Ben Bernanke, in a speech today, addressed this criticism directly:
What are the terms at which the central bank should lend freely? Bagehot argues that "these loans should only be made at a very high rate of interest". Some modern commentators have rationalized Bagehot's dictum to lend at a high or "penalty" rate as a way to mitigate moral hazard--that is, to help maintain incentives for private-sector banks to provide for adequate liquidity in advance of any crisis. I will return to the issue of moral hazard later. But it is worth pointing out briefly that, in fact, the risk of moral hazard did not appear to be Bagehot's principal motivation for recommending a high rate; rather, he saw it as a tool to dissuade unnecessary borrowing and thus to help protect the Bank of England's own finite store of liquid assets. Today, potential limitations on the central bank's lending capacity are not nearly so pressing an issue as in Bagehot's time, when the central bank's ability to provide liquidity was far more tenuous.
I'm no expert on Walter Bagehot, and in fact I admit I've never read Lombard Street. But I'll trust in Bernanke as an economic historian on this one, unless and until someone else makes a persuasive case that Bagehot's penalty rate really was designed to punish the feckless rather than just to preserve the Bank of England's limited liquidity."
"So, we have, what I will call "Grant's Graham For Investing":
1) Decent Size
2) Current Assets Exceed Liabilities By Two Times
3) 10 Continuous Years Of Profit
4) 20 Continuous Years Of Dividends
5) 10 Years Of Earnings Growth Exceeding 33%
6) Price To Earnings Ratio Less Than 15
7 ) Price To Book Ratio Less Than 1.5"
"Cake As Gift Theory":
Now, I feel similarly about government incentives. When Fannie and Freddie tempted investors, this led to the housing bubble. I think that I'm going to call this the Cake As Gift Theory. I hand you a cake assuming that you have the good sense to eat it over time, and you gorge yourself and eat it at one sitting and get sick. Clearly I'm responsible for this by handing you the cake. Give you a gift or incentive, clearly I must assume that it will cause you to be irrational.
"Spigot Theory":
One other pet theory I have about finance, besides Bagehot's Principle, is the Spigot Theory. I might rename it. It applies to the low rate of interest or the sloshing pool of money explanations for the current crisis. Turn the tap too far, then you can't stop the tub from overflowing, even if you're a human agent standing right next to the tub. I call this a mechanistic explanation as opposed to an explanation based on human agency.
"The Pragmatic Milton Friedman Principle":
The Pragmatic Milton Friedman Principle. Friedman introduced a concept called the Negative Income Tax. He proposed it saying that it was a pragmatic compromise between the Welfare State and a basic libertarian position.
"Hardy's Harangue": To Me:
"There is no scorn more profound, or on the whole more justifiable, than that of the men who make for the men who explain. Exposition, criticism, appreciation, is work for second-rate minds. "
"Titchmarsh's Two Truths":
1)"Perhaps we could regard numbers as a sort of medium of exchange, like money. Most people are really interested in the goods and services which the world offers, and to them money is only a symbol for these. But it is not a meaningless symbol. A system of barter, in which we do without money and merely exchange goods, would be very inconvenient, and practically impossible in a complicated society. So a system in which we reduce all mathematics to statements such as "I have more fingers than you have noses" would be too cumbrous to contemplate seriously. Numbers are symbols, and very useful and interesting ones. To mathematicians who work with them every day they acquire a reality at least equal to that of anything else. "
2) "The question what numbers are has been much debated by philosophers, and they do not seem to have reached any agreement about it. There is nothing particularly surprising or distressing about this. It has been said that mathematicians are happy only when they agree, and philosophers only when they disagree. Philosophic doubts about the nature of number have never prevented mathematicians from getting on with their calculations, or from agreeing when they have got the right answer. So perhaps the situation is satisfactory to all parties. "
"Thoreau's Truth":About Government: "I heartily accept the motto, "That government is best which governs least"; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe--"That government is best which governs not at all"; and when men are prepared for it, that will be the kind of government which they will have. Government is at best but an expedient; but most governments are usually, and all governments are sometimes, inexpedient."
"Will's Warning": Concerning The Use Of "Socialism": Hyperbole is not harmless; careless language bewitches the speaker's intelligence. And falsely shouting "socialism!" in a crowded theater such as Washington causes an epidemic of yawning.
"Kling's Principle":About Regulated Banks And Unregulated Financial Entities "The banks seem to find a way to take risks, and the unregulated folks seem to find a way to get guarantees."
"Janeway's Dictum": On Political Economy "Political economy is not a science, it's a clinical art, like medicine."
"Cowen's Creed": On Policies
"YOU CAN’T TURN BAD TO GOOD The good New Deal policies, like constructing a basic social safety net, made sense on their own terms and would have been desirable in the boom years of the 1920s as well. The bad policies made things worse. Today, that means we should restrict extraordinary measures to the financial sector as much as possible and resist the temptation to “do something” for its own sake."
"Hendry's Heartfelt":
"I antagonise people,' says Hugh Hendry. 'It's part of my skill set."
"Diebel's Dare:
"You can’t be forced out further on the yield curve than a perpetual.”
"Peston's Promise": Good Until ...
"And, as I've been pointing out for some time, we are being asked to provide life support to a swathe of the real economy, from steel makers to car manufacturers.
The Government will succumb and will lend taxpayers' money to non-financial companies.
In a way, there's no choice, because we'll be hobbled for years as an economy if our few remaining manufacturers and exporters are wiped out."
"Trader's Narrative's Due Diligence":
"The process of investigation undertaken by an party to gather material information on actual or potential risks involved in a financial transaction or relationship."
My Favorite Dish: A Ritz Salad Apples, grapefruit and potatoes in a mayonnaise sauce. Delicious!
Favorite Writer: Claud Langham
Best Philosophical Analysis Ever: "You would not enjoy Nietzsche, sir. He is fundamentally unsound."
The Quotes Above
W. Bagehot, R.W. Emerson, M. Proust, W.H. Auden, W. Bagehot, P.Levine
Read J.L. Austin "A Plea For Excuses" here:
http://www.ditext.com/austin/plea.html
Read " Reflections on the Revolution in France by Edmund Burke 1790" here:
Read Remarks by Governor Ben S. Bernanke Before the National Economists Club, Washington, D.C. November 21, 2002Deflation: Making Sure "It" Doesn't Happen Here"
You who live secure In your warm houses Who return at evening to find Hot food and friendly faces:
Consider whether this is a man, Who labours in the mud Who knows no peace Who fights for a crust of bread Who dies at a yes or a no. Consider whether this is a woman, Without hair or name With no more strength to remember Eyes empty and womb cold As a frog in winter.
Consider that this has been: I commend these words to you. Engrave them on your hearts When you are in your house, when you walk on your way, When you go to bed, when you rise. Repeat them to your children. Or may your house crumble, Disease render you powerless, Your offspring avert their faces from you.
Translated by Ruth Feldman And Brian Swann
For me, being a Jew means feeling the tragedy of yesterday as an inner oppression. On my left forearm I bear the Auschwitz number; it reads more briefly than the Pentateuch or the Talmud and yet provides more thorough information. It is also more binding than basic formulas of Jewish existence. If to myself and the world, including the religious and nationally minded Jews, who do not regard me as one of their own, I say: I am a Jew, then I mean by that those realities and possibilities that are summed up in the Auschwitz number.
– Jean Améry, At the Mind's Limits, p. 94
Style is not something applied. It is something that permeates. It is of the nature of that in which it is found, whether the poem, the manner of a god, the bearing of a man. It is not a dress. W. Stevens
Man can embody truth but he cannot know it. W.B. Yeats
Do you approve of violence, Miss Boon? Nor do I. It reeks of spontaneity C. Langham
J.L. Austin
'there is no simple and handy appendage of a word called "the meaning of the word (x)"'
...our common stock of words embodies all the distinctions men have found worth drawing, and the connections they have found worth marking, in the lifetime of many generations: these surely are likely to be more numerous, more sound, since they have stood up to the long test of survival of the fittest, and more subtle, at least in all ordinary and reasonable practical matters, than any that you or I are likely to think up in our armchair of an afternoon – the most favorite alternative method
L. Wittgenstein
94. But I did not get my picture of the world by satisfying myself of its correctness; nor do I have it because I am satisfied of its correctness. No: it is the inherited background against which I distinguish between true and false.
95. The propositions describing this world-picture might be part of a kind of mythology. And their role is like that of rules of a game; and the game can be learned purely practically, without learning any explicit rules.
96. It might be imagined that some propositions, of the form of empirical propositions, were hardened and functioned as channels for such empirical propositions as were not hardened but fluid; and that this relation altered with time, in that fluid propositions hardened, and hard ones became fluid.
97. The mythology may change back into a state of flux, the river-bed of thoughts may shift. But I distinguish between the movement of the waters on the river-bed and the shift of the bed itself; though there is not a sharp division of the one from the other.
98. But if someone were to say "So logic too is an empirical science" he would be wrong. Yet this is right: the same proposition may get treated at one time as something to test by experience, at another as a rule of testing.
99. And the bank of that river consists partly of hard rock, subject to no alteration or only to an imperceptible one, partly of sand, which now in one place now in another gets washed away, or deposited.
100. The truths which Moore says he knows, are such as, roughly speaking, all of us know, if he knows them.
L. Wittgenstein On Certainty Go here To Read http://budni.by.ru/oncertainty.html
From "The Snowfall" by D. Justice
The landmarks are gone. Nevertheless
There is something familiar about
this country.
Slowly now we begin to recall
The terrible whispers of our elders
Falling softly about our ears
In childhood, never believed till now.
Jackson's Rules Of The Road
I'm going to be a happy idiot And struggle for the legal tender Where the ads take aim and lay their claim To the heart and the soul of the spender And believe in whatever may lie In those things that money can buy Thought true love could have been a contender Are you there? Say a prayer for the pretender Who started out so young and strong Only to surrender
Gotta do what you can just to keep your love alive Trying not to confuse it with what you do to survive
And in the end they traded their tired wings For the resignation that living brings And exchanged loves bright and fragile glow For the glitter and the rouge And in the moment they were swept before the deluge
Don't confront me with my failures I had not forgotten them
But its a long way that I have come Across the sand to find you here among these people in the sun Where your children will be born You'll watch them as they run Oh its so far the other way my life has gone
I caught a ride into the city every chance I got I wasn't sure there was a name for the life I sought Now I'm a long way gone down the life I got I don't know how I believed some of the things I thought
Rock me on the water Sister will you soothe my fevered brow Rock me on the water, maybe Ill remember Maybe Ill remember how Rock me on the water The wind is with me now So rock me on the water Ill get down to the sea somehow
But you said "morocco" and you made me smile And it hasn't been that easy for a long, long while And looking back into your eyes I saw them really shine Giving me a taste of something fine Something fine
"In camp too, a man might draw the attention of a comrade working next to him to a nice view of the setting sun shining through the tall trees of the Bavarian woods (as in the famous water color by Dürer), the same woods in which we had built an enormous, hidden munitions plant.One evening, when we were already resting on the floor of our hut, dead tired, soup bowls in hand, a fellow prisoner rushed in and asked us to run out to the assembly grounds and see the wonderful sunset.Standing outside we saw sinister clouds glowing in the west and the whole sky alive with clouds of ever-changing shapes and colors, from steel blue to blood red.The desolate grey mud huts provided a sharp contrast, while the puddles on the muddy ground reflected the glowing sky.Then, after minutes of moving silence, one prisoner said to another, 'How beautiful the world could be!'
Groucho Marx to S J Perelman: “From the moment I picked up your book until I put it down, I was convulsed with laughter. Some day I intend reading it.”