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From Fed Accounting Fraud to the Socio-Economic Structure of Anarchy?

June 20, 2012

Today the links start off crazy like usual, but end up on an optimistic note… I must be coming down with something. The optimism will pass. {{Shrug}}

Here is some top-notch crazy: Did the recent analysis of the effects of the great recession on household wealth leave out a crucial little cluster of oligarchs? It is entirely possible that the Fed left out the top 400 richest Americans from its study. 400 people – what is that, maybe 0.0000035%?? How much influence on the study could 400 people really have?

You might say that the exclusion of 400 people isn’t significant; after all, it’s just 400 people.  How big a difference could that really make?  Well, it turns out, as of 2011, that the top 400 people in America own more than the entire bottom 60% of Americans.  So this is not a trivial exclusion.  The Fed claims in the report that it has a method for adjusting for rich people who don’t respond to their survey.  Why the Fed has just not included the Forbes 400 is not clear, and I’m curious how they adjust for leaving out Mr. Gates and Mr. Buffett and company.  I’ll send an email to the Fed to find out.

Son of a…

Spain is getting hammered. I mean you can say it all fancy if you wanna, but we call this “throwing good money after bad.”

Yields on 10-year Spanish bonds surged to a record high of almost 7.3pc as investors ignored the victory of pro-bailout parties in Greece’s elections.

The closely-watched two-year yield rocketed by 65 basis points in a matter of hours, signalling a near-total collapse of confidence in Spain’s €100bn (£80.3bn) rescue from the EU last week to shore up its banking system.

Cristobal Montoro, the economy minister, warned that Spain is now in a “critical” condition and pleaded with the European Central Bank to act with “full force” to defeat markets hostile to the euro project.

The entire approach needs to be changed, but that would mean admitting to a deep ideological error and backing off of a hostile neo-liberal take over of social democracies… I’m betting with the bond markets here – as in, not gonna happen. A little more depth on Spain:

What is obviously true is that Spain is in trouble, and needs help. Five years after the Global Financial Crisis broke out unemployment is at 25% of the labour force (and rising), house prices continue to fall, non performing loans continue to rise in the banking sector, bank credit to the private sector is falling, and, as Finance Minister Cristobal Montoro said two weeks ago, the sovereign is having increasing difficult financing itself. Hence the bank bailout.

On top of which Spain’s economy is once more in recession, a recession which will last at least to the middle of 2013, even on the most optimistic forecasts, and is in danger of falling into the dynamic which has so clearly gripped Greece, whereby one austerity measure is piled onto another in such a way that the economy falls onto an unstable downward path, as austerity feeds yet more austerity. Spains citizens are naturally nervous, anxious and increasingly afraid. Hardly a dynamic which is likely to generate the kind of confidence which is needed for recovery to take root.

Dark Money. Great little article on campaign finance… I often think that the most dangerous delusion is that we actually & fully “think for ourselves.” I mean, how could money be such a determining factor in elections? Simple – it buys ads and ground troops. That being said, we are damn near selling elections. And the truth is that, from a strictly self-interested and rational (read: pseudo-economic) perspective, driving to the polling place to vote is unlikely to yield you a “return on your investment” because of gas and opportunity costs that can’t possibly be rewarded by the relatively insignificant influence of your single vote. But when you can dump tens of millions of dollars into organizations that already do their own polling and shift attack ads to the districts and states that are closest… That is influence, and it goes way beyond 1 person – 1 vote. Such a sham. I did, however, find something interesting – see below – that was at least marginally hopeful.

For decades, the campaign finance wars have pitted two ideological foes against each other: one side clamoring to dam the flow while the other seeks to open the floodgates. The self-styled good-government types believe that unregulated political money inherently corrupts. A healthy democracy, they say, needs robust regulation—clear disclosure, tough limits on campaign spending and donations, and publicly financed presidential and congressional elections. The dean of this movement is 73-year-old Fred Wertheimer, the former president of the advocacy outfit Common Cause, who now runs the reform group Democracy 21.

On the other side are conservatives and libertarians who consider laws regulating political money an assault on free markets and free speech. They want to deregulate campaign finance—knock down spending and giving limits and roll back disclosure laws. Their leaders include Senate Minority Leader Mitch McConnell (R-Ky.), conservative lawyer James Bopp Jr., and former FEC commissioner Brad Smith, who now chairs the Center for Competitive Politics, which fights campaign finance regulation.

In this ongoing battle, the upper hand shifts regularly. Wertheimer and his allies scored historic victories in the 1970s in the wake of Watergate and again in the early aughts. Yet more recently, the deregulation camp has won a series of court decisions—FEC v. Wisconsin Right to Life, SpeechNow.org v. FEC, and, of course, Citizens United—that have toppled more campaign finance regulations in less time than ever before. Even the Tillman Act’s century-old corporate contribution ban is under siege by conservative interest groups.

Meanwhile, money is flooding the political system like never before. This has forced lawmakers, as many of them will forlornly admit, onto an endless fundraising hamster wheel in which they spend more and more time beating the bushes for campaign cash and less and less time actually legislating. In the 2012 election, experts project spending could top a staggering $11 billion—more than double the 2008 total.

Dark Ages of Politics.

We are witnessing an epochal shift in our socio-political world.  We are de-evolving, hurtling headlong into a past that was defined by serfs and lords; by necromancy and superstition; by policies based on fiat, not facts.

I often think in what I would call “Integral” terms. There is a sense that our worldviews, our culture, politics, media, communications, socio-economic structures and business organization all move in tandem – at least to a certain degree. The problem, as I see it, is that there is no way to realistically accomplish the non-hierarchical vision of the anarchists – at least not yet… The libertarians are naive about their vision of individualism. You simply can not dismantle the state. But the state could be transformed, perhaps. I read a Hayek essay the other day, and came away with a few points:

  • His idea of “emergent, organic” structures is correct.
  • But the very nature of emergent systems shows the fallacy of radical individualism.
  • Think in terms of cells and the human organism, as a metaphor. Certainly the 100 Million cells exert an upward control of sorts on “you.” But the nature of emergence is such that “we” are more than just our cells. “We” exert top down control over our cells also (where they go, what they get fed, etc).
  • I don’t think you can completely do away with hierarchy, but we can potentially rebalance the scales. But that will require new socio-economic structures.
I bought this book almost a year ago now, but just started reading it the other day – I got distracted. There is a certain genius to it. I am only concerned about the viability of widespread renewables; but I doubt it is an insurmountable obstacle. Anyway, here is a video describing the “Third Industrial Revolution.” It is not dissimilar from the “Smart-Grid” based vision of “Hot, Flat & Crowded,” except that it seems to focus on the social organization that would emerge from a non-hierarchical energy distribution to compliment our distributed internet communications system. All in all, it is appealing to me. I’ll write it up in more detail if it still makes sense when I finish the book. Keep in mind one thing – we seem to be conducting a massive “natural experiment” with these ideas in Europe right now. This is not simply academic activism.
Ho hum.
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