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Conflucians Say: The Dark Side of the economic meltdown

Like there’s a good side, right?

From Market-Ticker: What’s Dead (Short Answer: All Of It)

Just so you have a short list of what’s at stake if Washington DC doesn’t change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can’t believe, and they’re showing it as an imminent event – like perhaps today imminent.)

  • All pension funds, private and public, are done. If you are receiving one, you won’t be. If you think you will in the future, you won’t be. PBGC will fail as well. Pension funds will be forced to start eating their “seed corn” within the next 12 months and once that begins there is no way to recover.
  • All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can’t earn anything off investments, and if you have a claim in process at the time it happens, it won’t get paid. The probability of you getting “boned” on any transaction with an insurance company is extremely high – I rate this risk in excess of 90%.
  • The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they’re doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare.

And that’s just the first half of the list.

The President is thinking about ways to save money:

Why Would the Obama Administration Want to Make Vets Buy Private Insurance for Their Health Care?

I am not a health care wonk but some of my good friends are, so I’ll refrain from pretending I can construct a health care argument whereby this makes sense (or doesn’t, for that matter). Instead, as a moral matter, veterans deserve free, government-provided health care. As a political matter, why the Obama administration would want to squander its good will in the military community is completely beyond me. Murray calls the plan DOA, as she should. But why should it be considered seriously in the first place?

Has lying become the underlying theme?  More from Market Ticker:

“The Bezzle” Defined

Here are some examples of “The Bezzle”:

  • Liar loans: The borrower can’t possibly pay off the loan on the original agreed terms and the institution that makes the loan “passes it” to an investor fully aware that the borrower almost certainly lied about credit capacity.
  • Overly-rosy projections about growth in property values: The speaker is either incompetent (doesn’t understand exponents – a fundamental mathematical concept) or is intentionally deceiving people.
  • Overly-rosy projections about the stock market: “The market always comes back” and “over long periods of time it outperforms other investments.”  Both true, but both misleading; if you’re 18 you might be able to wait for it to come back, but the market has remained flat to down from a given level for more than 20 years before.  How long did you say it was before you intended to retire?
  • “The Internet is doubling every three months!”:  It was – for about six months.  But that got embedded into the business plans of thousands of businesses, long after the growth rate had started to slow down to something more sustainable.  Oh by the way, the fundamental lie of that claim is that in 7 years  the Internet would have gone from its original two people to covering more than the entire population of the planet, including the rice farmer in China and the starving child in Bangladesh.

In short The Bezzle is “the lie” that is always present in business.

The truth is always some degree of lying in business transactions – always has been, always will be.  And so long as The Bezzle doesn’t become the underlying theme in business, it simply bankrupts the people who try to run it when they get discovered.

But when The Bezzle becomes the underlying premise and basis for business transactions that entire segment of the market is doomed.

All this and more will be discussed tonight on Conflucians Say: The Dark Side of the economic meltdown

Conflucians Say tonight at 10PM EST

Conflucians Say tonight at 10PM EDT

Please join me (Katiebird), BostonBoomer, and Dakinikat at Conflucians Say:
Time: 10pm Eastern
Call-in Number: (347) 539-5420

Comments closed until after the show

Women’s Groups still hoping for change….but keep coming up short

So we have all heard that Barack Obama has created a White House Council on Women.  Sounds great, right?  Well as always one must read the fine print. 

According to Politico Obama dissed women again, suprise suprise suprise:

After Barack Obama’s election, some in the women’s movement thought big – pushing for a Cabinet-level office, or even a blue-ribbon Presidential Commission on Women.

But when Obama announced his plans Wednesday, he brushed aside those requests.

Instead, he started the White House Council on Women and Girls — a sort of inter-agency task force with no full-time staff, no Cabinet-level leader and no set meeting schedule.

Well, it’s really hard to NOT say, WE TOLD YOU SO! Isn’t it too bad so many are learning this lesson the hard way.  Not us PUMA’s though!  It’s nice to be right, but would have been nicer to have some real change.

So what do these Women’s Groups that were hoping for so much change think now:

Women’s advocates who filed out of his East Room announcement Wednesday said they were delighted that their issues would get White House-level attention, whatever the forum.

But Obama’s move left others in the women’s movement questioning why he simply wouldn’t give the panel the prestige and heft they feel it deserves. Some activists already are strategizing about new ways to elevate women’s issues, beyond what Obama did.


One group – made up primarily of women who supported Hillary Clinton over Obama in the Democratic primary — said it will go to Congress seeking a presidential commission on women. The group sent out a blast email to rally its members around the idea just hours after Obama spoke.

But some like you can guess who (hmmmm, Kim Gandy President of NOW), is still snorting, spiking and drinking the most potent red Kool Aid:

“We have a commitment from the administration that they are determined to make this work and that, if it doesn’t work in the way they and we hope, they’ll take another look at it,” said Kim Gandy of the National Organization for Women. “It has not been given short shrift in any way. … I’m satisfied with that.”

You can read what these Women’s Groups were asking of the Obama, here. You will realize quickly just how much he stuck it to them. Well one more time in UNISON PUMA’s – – WOMEN KEEP YOUR PLACE UNDER THE BUS, and don’t try to get out from under!

I’m with Jane on this (Open Thread)

[Edited to clarify that this IS an Open Thread]

From Cancer Patients Die While ‘New Dems’ Help Bankers Get Billions by Jane Hamsher

And what are Americans–who are losing their jobs and their homes because AIG acted like a casino and taxpayers paid off all their gambling debts–getting?

They get to die:

21% of Americans scramble to pay medical, drug bills
Denise Prosser, 39, has battled cancer since she was a toddler.

Yet Prosser can’t afford her next cancer treatment — a radioactive therapy that she’s supposed to receive once a year — because she and her husband lost their jobs in December. Without insurance, she has postponed the radiation indefinitely and is taking only half of her asthma medications — sacrifices that often leave her gasping for air and could allow her cancer to come surging back.

She’s dying because she lost her job and she can’t pay her medical bills. She didn’t steal anything so she could get taxpayer money so she can pay lobbyists to get her more taxpayer money–that’s AIG.

The one thing I thought we might get out of this last election is some improvement in our national health care policy. But it looks like we elected a few too many “New Democrats”:

But don’t think Tauscher and the New Dems are completely cold to people who can’t pay for healthcare. Tauscher voted for the bankruptcy bill that made it more difficult for people with bills from catastrophic illness to file for bankruptcy, saying it “encouraged personal responsibility.” I’m sure Denise is touched by Tauscher’s concern for her moral fiber. And the power of the New Democrats is only growing — yesterday, Obama proudly identified with them, saying “I’m a New Democrat.”

Thursday: Lords, Serfs and Change!

By the time you read this, I’ll be on my way to an overnight camping trip with 100 7th graders.  I know your prayers will be with me that I will survive the night.  I’m just not sure prayers will be enough.  Needless to say, I won’t be posting tomorrow morning.

Now, to follow up on the post from yesterday about misinterpretation of Darwin.  The feudal system derives its power from violent struggle and getting the other guy before he gets you. And many of our fronteir ancestors had an opportunity to practice a sort of fedalism in isolation as they scooped up resources.  As James Burke pointed out, those pioneers turned out to be the forerunners of our modern business culture where there is a wild west, anything goes brutality about the way things are done.  But feudal, stratified societies have been toppled before.  Let’s take a look at medieval Europe for example.

Back in the middle ages, the population was divided into three basic food groups: the aristocracy, the clergy and everybody else.  The lords owned everything that wasn’t owned by the church.  Everyone else was left to scrabble over what was left.  If you were a serf back then, you couldn’t leave the manor without permission.  Even free born people could be expected to put in a certain amount of work for the lord, with a meager pay.  If you did manage to end up in town on business and remain there for a year and a day, theoretically, the lord couldn’t force you back on the farm.  But the grim reality was that the lords could get away with a lot.  The clergy’s role was to maintain the status quo and keep everyone’s eyes on the prize- the afterlife.  That kept the peasants in their place and the monasteries fat and happy.

Back then, Aristotle was king.  The clergy prevented a lot of scientific discovery because they tended to revere the old classics.  Besides, why ruin a good thing?  The status quo was working out so well.  Back then, a craftsman or someone with a smidgeon of book learning who had a good idea based on direct experience was the butt of ridicule and a menace to society.  Change happened very slowly because there was no need to change.  Everyone in the aristocracy and the clergy were perfectly content to keep things as they were.  It was all tickety boo.

Then the bubonic plague hit and wiped out a great big chunk of the population.  Oh, how the worm had turned.  Suddenly, there weren’t enough people to till the lord’s land and the damn serfs started to get all uppity.  They demanded higher wages.  Well, the nerve!  But it was to get worse for the clergy and academicians.  All of the sudden, there were craftsmen all over the place doing things their way and experimenting.  Well, who was going to stop them?  Before you knew it, the seeds of the Renaissance had been planted and a century later, great works of art and architecture were all over Europe.

So, a catastrophe does have the potential to work in our favor, at least in one case.  But were there other examples?  Yep.  In the 18th century, in France, the aristocracy got a little careless.  There was also a major financial catastrophe as well.  I can’t remember all of the details but it involved some CFO that France hired who got them way over their heads in debt.  The end result was higher taxes for the working guy, followed by bad weather, that lead to the average French literally starving for bread. The bourgeousie started to get restless.  It all came to a head when they directed their frustration on the Bastille, symbol of the state’s power over them.  Before they knew it, they were marching on Versailles and dragging their monarchs out of their silk stockings.  It got very nasty for several years as the sans coulottes purged the countryside of their aristocracy.  And there was a second revolution about 50 years later to adjust for the failures of the first.

The Great Depression was a  catastrophe of sorts.  It also transformed society but in our case, the government stepped in to reform itself.  This is somewhat unusual.  We had Hoovervilles and protests and life was grim.  But there wasn’t a revolution.  Roosevelt just barely nipped that in the bud.  We came very close though.  But what FDR demonstrated was that it was possible to make adjustments to the system that would dampen the disparities in income and social stratum and prosperity followed for many decades.

Um, that’s not what we have with the Obama administration.  No, these guys seem to be focussed on keeping the aristocracy fat and happy, at your expense.  We are very much back to the feudal model.  The bankers get all of the taxpayer money.  You, the taxpayer, get nothing.  And Obama is coddling the religious right as well, making sure that entrenched attitudes regarding gender and sexuality remain firmly in place, limiting the ability of women and the gay community from making contributions to society, and focussing our attention once again on the afterlife.  As we have seen from Dakinikat’s earlier post, Obama and his finance guys are getting failing grades from economists.   They have failed to get tough with our lords and make demands of them.  Therefore, the recession/depression is expected to last longer and have a significant impact on employment levels and GDP for an extended period of time.  And THAT is going to have an effect on Social Security, which is dependent on a growing economy to keep the system solvent.

Now, some of you may wonder if this is by design.  Maybe the lords have unlimited power to keep us all in a state of serfdom.  The loot at will and terrorize us with lack of income while they plunder the world’s human resources looking for the next cheap source of labor.  Well, yeah!  Of course they would- if they could get away with it.  And so far, our society has told them that such a thing is not only possible, it is desirable.  We reward these people lavishly and are vulnerable to the propaganda that if they don’t have their taxbreaks and perks, they won’t be able to create jobs.  The newest propaganda is a doozy.  See, if you are laid off, don’t despair.  You are being sacrificed for the greater good!  The company/corporation wouldn’t be able to grow if you were still employed.  If you still want your job, you are just being selfish and depriving one of your still employed colleagues from having a paycheck.  You are a martyr for the cause!  Feel good about your joblessness.  Embrace it.  Think of it like a wildfire in the forest, restoring the environment with new life.  You will find another job in the new economy.  Oh, it doesn’t pay as much?  Well, we never promised you a rose garden.  Loooooser.

The bad part of that model is that we will probably plunge ourselves into a new Dark Ages.  If all of the resources belong to the corporations and new aristocracy and the consultant class continues to drive research, we can look forward to a long period of stagnation.  That doesn’t mean there won’t be discoveries.  It’s just that the only ones that will be developed are the ones the owners decide they want and their stinginess can afford.  We’ll start to resemble those countries where there are a lot of very creative people who are kept in their places by the people who do not desire change because it might upset their way of life.  Come to think of it, the Villagers are the most visible representation of this class of people and they were gung-ho over Obama.

I would just caution Obama and his team to be careful how they handle this crisis.  Those French bakers had no idea that storming the Bastille would turn into a rout. It’s just that irresistable force met immovable object and something had to give.  It’s the nature of Change!™  and there are more serfs than there are lords.