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Debunking the Myth of the Financial Markets

by NBBooks Tue May 26th, 2009 at 04:03:05 AM EST

Cross posted from The Economic Populist. Also on DailyKos.

Suggestions to solve the financial crises by basically shutting down most of Wall Street are always shouted down by howls of "How are companies going to raise money?" or "How are people going to invest in companies?"

Well, take a good, long look at this graph, which shows the percentage of capital expenditures by U.S. non-financial companies that was raised in U.S. financial markets from 1952 to 2006.

NFC Capex from Financial Markets

From the diaries - afew


Wall Street simply is not doing what most people think it's doing. Nor what most people think it should be doing. Wall Street is not even doing what it says it is doing. Wall Street is pushing a big myth that its services are essential to the functioning of the rest of the economy. But the truth as, as this graph shows, Wall Street does not -- and has not for a very long time -- serve the function of allocating credit in the economy.

This graph is from page 85 of a book by Roosevelt University economics professor Ozgur Orhangazi, entitled Financialization and the US Economy, published in May 2008.

As Orhangazi notes, "The largest and most important use of funds by the NFCs is the expenditures made to acquire capital goods for productive purposes." (I disagree; the most important, but certainly not the largest, is spending on research and development. Capital expenditures is the second most important use of funds by NFCs.) Wikipedia has a useful definition of capital goods:

Individuals, organizations and governments use capital goods in the production of other goods or commodities. Capital goods include factories, machinery, tools, equipment, and various buildings which are used to produce other products for consumption. Capital goods, then, are products which are not produced for immediate consumption; rather, they are objects that are used to produce other goods and services. These types of goods are important economic factors because they are key to developing a positive return from manufacturing other products and commodities.

Also interesting is the graph on the next page of Orhangazi's book, which shows that since 1984, new equity issues have been less than capital expenditures by U.S. non-financial companies, except for the three years of 1991 to 1993. In other words, non-financial companies do NOT use the stock market to raise funds for capital improvement programs.

NFC Capex from Equity Markets

In fact, Orhangazi notes,

Figure 5.3 shows net funds raised through equity issuance, this time as a percent of capital expenditures (recall that in Figure 2.14 we saw NFC stock buybacks as a percent of NFC / gross value added). It is evident that the stock market has not historically been a major source of NFC funds. On a quarterly basis, its contribution never exceeds 18 percent of capital expenditures. On average its contribution has been below 10 percent, even in the 1952-1980 period before (the increase in stock buybacks. However, there is a dramatic change in the relationship between the stock market and the NFCs starting in the early 1980s. Except for brief periods, in the post-1980 era the net equity issuance of the NFCs has been negative and often large. The NFCs have indeed been buying back their own stocks. The stock market has turned into an institution through which NFCs channel funds to financial markets, not the other way around.

What about the bond market? According to Orhangazi, from 1952 to 1980, NFCs obtained eight to 25 percent of their capital expenditures from the bond market. After 1980, when the "Reagan Revolution" allowed Wall Street to regain the control over the rest of the economy it had lost in the New Deal, NFCs usually obtained around a quarter to a third of their capital expenditures from the bond market, with the high reached in 2001 of 45 percent. But the largest source of funding for NFC capital expenditures had been far and away internal funds.

But isn't it a good thing that non-financial companies mostly use their own funds for capital expenditures? First of all, remember that what we're trying to do here is debunk the myth perpetrated by Wall Street that the financial markets are of crucial importance to the rest of the economy.

Second, the fact that the financial markets contribute so little to the most crucial operations of non-financial companies is just the beginning of the story. The financialization of the economy has had severe effects on the goals and objectives of NFCs, not just their operations and capital expenditures. What has really happened is that while the size of financial markets and types of financial instruments and transactions have increased, non-financial companies have been forced to abandon the long-term planning and goals of industrial capitalism, and instead adopt the short-term perspective and "quick buck" goals of the financial markets. This short paper by Orhangazi, Financialization and Capital Accumulation in the Non-Financial Corporate Sector: A Theoretical and Empirical Investigation of the U.S. Economy: 1973-2003 an October 2007 Workingpaper of the Political Economy Research Institute, University of Massachusetts, Amherst, contains many of the main points of the book. Beginning on page 6, Orhangazi explains how and why real investment, such as capital goods expenditures, have suffered in the "financialization era" from Reagan until today.

There are two main channels through which financialization could hamper real investment. First, increased investment in financial assets can have a `crowding out' effect on real investment. Total funds available to a firm can either be invested in real assets or used to acquire financial assets. When profit opportunities in financial markets are better than those in product markets, this creates an incentive to invest more in financial assets and less in real assets. There are two cases to consider. First, if we assume that external funds are limited because of quantitative constraints, because additional funds are only available at a higher cost, or because internal funds are `safer' than external financing for the firm, then investing more in financial assets crowds out investment in real capital. Second, the pressure on firm management to increase returns in the short-run can force them to choose financial investments, which provide more rapid returns, as opposed to real investments, which provide returns in the medium to long-run. . . .

A second channel through which financialization could undermine real investment is by means of pressure on NFCs to increase payments to financial markets in the form of dividends and stock buybacks by the firm.8 Of course, if the evolution of financial markets and practices in the era of financialization leads to greater debt burdens on NFCs, interest payments will rise as well. The increase in the percent of managerial compensation based on stock options has increased NFC managers' incentive to keep stock prices high in the short-run by paying high dividends and undertaking large stock buybacks. Simultaneously, the rise of institutional investors, who demand constantly rising stock prices, as well as the aftermath of the hostile takeover movement have pressured NFC managers to raise the payout ratio. NFC managers are thus motivated by both personal interest and financial market pressure to meet stockholders' expectations of higher payouts via dividends and stock buybacks (a shift in incentives) in the short-run. Both the NFC objective function and its constraint set have changed. As a result, the percent of internal funds paid to financial markets each year has risen dramatically. This creates three distinct restraints on real investment. First, if internal funds are cheaper or safer than external financing, rising financial payments would decrease the funds available to finance real investment by reducing internal funds. Second, the time-horizon of NFC management has dramatically shortened, hampering the funding of long-run investment projects, including research and development. Third, since the firm management does not know how much it will cost to re-acquire the financial capital it pays back to financial markets each year (i.e. it has no idea what the cost of financing for ongoing long-term projects will be next year), uncertainty rises, making some projects with attractive expected gross long-term returns too risky to undertake.

And there is no mistaking what the results have been.
Capex as Pcnt GDP

The fundamental problem is the big players on Wall Street have misused the credit mechanism of the economy for their own private gains through the bloating of debt and speculation, at the expense of actually allocating and supplying capital to the real economy. The dollar volume of financial trading has increased nearly forty-fold since the 1960s, but almost none of that trading is of any use to the real economy. Even now, after the collapse of September 2008, big Wall Street firms like are still making most of their money by trading for their own account. Last month, Time.com reported that Goldman Sachs

made nearly $2 billion in the first three months of this year alone. But some analysts say Goldman, which received $10 billion from the government through the Troubled Asset Relief Program, is generating most of those profits by making risky bets on interest rates and other fluctuations in the financial markets with money it has received from the government.

Anyone who believes that saving the financial system is the way to save the economy, just does not know what the financial system is really all about.

But what about those people who want to save the financial system, because they do know what the financial system is really all about? They're the ones winning the political fight, so far.

Display:
Quite a number of thinkgroups like ET have pointed out the distortion of reality represented by the quasi-religious beliefs about the "Markets" and the "financial system" no matter which region of the political spectrum they originate from. This is a good one, --yes. Well written, logical. Yet there are lots of good books that tell the same story. Some decades old.

Question 1: Who is it that still believes the doctrine of prosperity as a result of plunder? Is Obama that rigid? Or just trapped? Or just a politician?

Question 2: Since we clearly live in a world--our world-- in which all the previously derided malthusian time-bombs are resurfacing, ticking loudly, is the process of convincing people in general --even the elite for whom these concepts are essential doctrines supporting privilege-- that they got it wrong really important any more? Only a new model with new tools and a new definitional set --productivity, prosperity, wealth, quality of life,-- has the possibility to change the course, and perhaps it's unnecessary to slay that incredibly resistant old dragon--perhaps we can simply let events reveal that it's dead and rotting, while we build something better? We could joust ourselves into the ashpit of evolution here, trying to convince the pope of the impossibility of virgin birth.

Anyone remember the "Whole Earth Catalog? "Access to tools".

Real tools. Like shovels. like a potter's wheel.
We need a new Catalog, and the head TO USE IT.

Nice piece, still.  

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Sun May 24th, 2009 at 06:27:28 AM EST
geezer in Paris:
Real tools. Like shovels. like a potter's wheel.
We need a new Catalog, and the head TO USE IT.

Agreed. But IMHO these need to be new financial tools.

Peer to Peer Finance

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun May 24th, 2009 at 06:48:13 AM EST
[ Parent ]
So maybe there is a new Whole Earth Catalog to be made?

You can't be me, I'm taken
by Sven Triloqvist on Sun May 24th, 2009 at 07:00:53 AM EST
[ Parent ]
I think we need to accurately identify what the present system is doing as well.  The markets are not producing capital because they aren't designed to.  All the capital is raised with the initial placement; after that, it's just speculation, and the "after that" is what the markets are really all about.
by rifek on Mon May 25th, 2009 at 01:13:47 AM EST
[ Parent ]
rifek:
 The markets are not producing capital because they aren't designed to.  All the capital is raised with the initial placement; after that, it's just speculation, and the "after that" is what the markets are really all about.
Precisely. "Investment" happens when someone buys stock or bonds in a primary issue, because this capitalises the issuer. Trading in the secondary market is speculation.

The function of the financial markets is to make shares and bonds liquid and therefore attractive to the casual investor. But the way liquid markets encourage investment is indirect and, as the graphs reproduced by NBBooks show, largely obsolete.

Keynes put it this way in The General Theory:

The spectacle of modern investment markets has sometimes moved me towards the conclusion that to make the purchase of an investment permanent and indissoluble, like marriage, except y reason of death or other grave cause, might be a useful remedy for our contemporary evils. For this would force the investor to direct his mind to the long-term prospects and to those only. But a little consideration of this expedient brings us up against a dilemma, and shows us how the liquidity of investment markets ovten facilitates, though it sometimes impedes, the course of new investment. For the fact that each individual investor flatters himself that his commitment is 'liquid' (though this cannot be true of all investors collectively) callms his nerves  and makes him much more willing to run a risk. If individual purchases of investments were rendered illiquid, this might seriously impede new investment, so long as alternative ways in which to hold his savings are availale to the individual. This is the dilemma. So long as it is open to the individual to employ his wealth in hoarding or lending money, the alternative of purchasing actual capital assets cannot be rendered sufficiently attractive (especially to the man who does not manage the capital assets and know very little about them), except by organising markets wherein these assets can be easily realised for money.


The brainless should not be in banking. — Willem Buitler
by Migeru (migeru at eurotrib dot com) on Tue May 26th, 2009 at 05:16:26 AM EST
[ Parent ]
Migeru:
This is the dilemma. So long as it is open to the individual to employ his wealth in hoarding or lending money, the alternative of purchasing actual capital assets cannot be rendered sufficiently attractive (especially to the man who does not manage the capital assets and know very little about them), except by organising markets wherein these assets can be easily realised for money.

Units redeemable in the use value of location, energy or knowledge  are both a form of investment, and an open-ended or undated form of credit.

Such Unitisation resolves the dilemma, because Units would be pretty widely acceptable in exchange, and essentially the outcome is the direct - rather than indirect, via an intermediary - monetisation of these forms of use value.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue May 26th, 2009 at 07:10:50 AM EST
[ Parent ]
All the capital is raised with the initial placement; after that, it's just speculation, and the "after that" is what the markets are really all about.

Worse, access to shares at the initial offer price is typically highly controlled so that only a few big players and some insiders are able to buy at those prices.  Then the hype game runs up the price significantly in the interest of a quick profit for all those who could buy at that price.  This usually results in overshoot, so many small buyers become "investors" perforce, having to wait for an indefinite time before the price rises again above their own "initial" price.  This could easily be remedied, but that would presume that the system is run for the benefit of any but the insiders.  The whole system is an attractive nuisance for the unwary.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 26th, 2009 at 11:39:31 AM EST
[ Parent ]
I know it well.  I was in Seattle for the Dot Com Boom.  And Bomb.
by rifek on Thu May 28th, 2009 at 07:48:06 PM EST
[ Parent ]
Whole Earth Catalog was an epiphany for me (almost hierophany ;-))

I moved out into the forest by a lake in Finland in '75, about 55 kms from Helsinki, while working as a record producer, with the work of Stewart Brand and how to "catalyze the emergence of a realm of personal power" ringing in my ears.

Water came from a well, our toilet a traditional Finnish countryside PuuCee or latrine - 20 long metres away during a cold winter. Washing was in a separate sauna house. House heated by traditional floor to ceiling brick ovens and the wood chopped by my hand. Large vegetable garden and an earth cellar to store potatoes etc over winter. All our furniture was recycled and rebuilt by me. Even the living room carpet was made up of architects' samples donated by a friend.

It was a much slower life than the one I have lived for the last 20 years - although I have been back in the countryside for the last 5 years. But though slower, it was full of life. We had guests most weekends and often got them happily working! Two close friends even rented summer cottages in the same woods for their families to enjoy the same experience. We had quite a community.

I'm glad I did it and I learned a lot, but it was hard physically and I am not sure I would be up to it anymore ;-)

You can't be me, I'm taken

by Sven Triloqvist on Sun May 24th, 2009 at 06:59:55 AM EST
[ Parent ]
Yes, but I gotta say that at the age of 67, we're still doing it. And yes, they died young.
Coming again to your neighborhood theatre, the saga of real shit!---Today Ivonne and I fixed a plugged holding tank, and repaired my goddamned scooter--flat tire.
Something really satisfying about being in touch with the real world.
Here's an amazingly good article in the NYT-- let me know what you think, Sven and all.
Mechanical work has required me to cultivate different intellectual habits. Further, habits of mind have an ethical dimension that we don't often think about. Good diagnosis requires attentiveness to the machine, almost a conversation with it, rather than assertiveness, as in the position papers produced on K Street. Cognitive psychologists speak of "metacognition," which is the activity of stepping back and thinking about your own thinking. It is what you do when you stop for a moment in your pursuit of a solution, and wonder whether your understanding of the problem is adequate. The slap of worn-out pistons hitting their cylinders can sound a lot like loose valve tappets, so to be a good mechanic you have to be constantly open to the possibility that you may be mistaken. This is a virtue that is at once cognitive and moral. It seems to develop because the mechanic, if he is the sort who goes on to become good at it, internalizes the healthy functioning of the motorcycle as an object of passionate concern. How else can you explain the elation he gets when he identifies the root cause of some problem

The case for working with your hands

Wonder if the writer has read Piersig?

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Sun May 24th, 2009 at 03:05:08 PM EST
[ Parent ]
The book `Decision & Control' (Stafford Beer) which introduced me to the fascinating history of Operational Research, contained a little anecdote that, at the time, as I read it, struck me a rather sharp knuckle on the forehead i.e. wake up time. It went something like this....

"During WWII bombers built in the US were flown to the European theatre via Greenland. Mechanics were needed at the station on Greenland where they refueled and were checked over (brand new bombers coming off overstretched production lines needed tuning after their first flight, just as new cars did 30 years ago). The USAF decided that, with a lack of men available, they would have to train locals to do the job.

The mechanics course for basic engine maintenance took about 8 weeks stateside. It involved learning to follow a parts book - "washer # 245-644-213 B fits inside housing #135-320-998 E" and so on, along with some basic engineering skills, such as the use of tools to disassemble and assemble the parts.

Being that the locals were fishermen and hunters, the USAF decided that twice the length of the course - 16 weeks - should ensure they got at least some engineers. But the locals completed the course in 4 weeks. At first they were confused, but as soon as they realized that an engine and a seal had much in common, they soon got the hang of it. They already knew everything there was to know about seals."

They stepped back and saw the gestalt.

I cannot remember the exact number of weeks involved, but the gist is the same.


You can't be me, I'm taken

by Sven Triloqvist on Sun May 24th, 2009 at 03:37:14 PM EST
[ Parent ]
It's the way I grew up (although I only spent one year with only an outside toilet), and it wasn't some romantic, back-to-the-land movement out of Thoreau.  It was simply the way it was down on the farm.  One of the reasons the US is in the mess it's in is that the knowledge and ethic of that way of life has been considered worthy of nothing more than ridicule for decades.  We are now so severed from the land that 90%of the population wouldn't know what to do with land even if they had access to it.
by rifek on Mon May 25th, 2009 at 01:09:43 AM EST
[ Parent ]
We are now so severed from the land that 90%of the population wouldn't know what to do with land even if they had access to it.

reminds me of numeros stories of urban children encountering sheep and cows.

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Tue May 26th, 2009 at 08:06:40 AM EST
[ Parent ]
The Billy Connolly one....?


"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Tue May 26th, 2009 at 08:20:56 AM EST
[ Parent ]
amongst others, but are all far to vague memories to quote.

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Tue May 26th, 2009 at 08:37:19 AM EST
[ Parent ]
Wee Jamie comes back home to Easterhouse from a school trip to the countryside...his first...and his Da asks him what he saw.

"Weel we wuz walkin doon this road and we saw a field fule of sheep...".

"Aye and what else did youse see?"

"Weel then we came tae a field fule of pigs"....

"Aye. Anything else?"

"Weel, then we came tae a field fule of fuckers".

"Wut? (smack)...a'll have none o that language in ma hoose!"

"But, Da...teacher said 'heifers' but we knew what she meant!"

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue May 26th, 2009 at 09:39:08 AM EST
[ Parent ]
I'm reminded of another one in a similar vein:

Little Jimmy takes his granddad to school for show and tell, to talk about being a fighter pilot during the War.

At some point in his narration, Granddad goes "an' then these three fokkers come out from behind a cloud..."

All the kids go "oooh, he said 'fokkers!'" and the teacher hurriedly injects "perhaps you should explain that the Fokker was a German aircraft during the War?"

Granddad goes "yes, yes, that's true." Then he scratches his head and adds: "But these particular fokkers were flyin' Messerschmidt."

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 26th, 2009 at 10:47:31 AM EST
[ Parent ]
geezer in Paris:

Anyone remember the "Whole Earth Catalog? "Access to tools".

Real tools. Like shovels. like a potter's wheel.
We need a new Catalog, and the head TO USE IT.

that was what made me go to the US, that whole earth catalogue.

there wasn't (and still isn't, afaik), anything remotely its equal in europe.

and within 3 months of arriving, had participated in a simple project that would have pleased stewart brand and kevin kelly and paul hawken no end: recycling an old hot water tank, a sheet of glass and some black paint and a 50's sunbeam refrigerator into a solar water heater. what was cool about it was we could shut the fridge door at night and keep the water hot.

that afternoon was an great lesson in tinkering for change...

 jerome's hot shower, right there!

still working on the 'ave maria'...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun May 24th, 2009 at 08:11:36 AM EST
[ Parent ]
melo:
recycling an old hot water tank, a sheet of glass and some black paint and a 50's sunbeam refrigerator into a solar water heater. what was cool about it was we could shut the fridge door at night and keep the water hot.

Sounds like you went even further than the

Kyoto Box

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun May 24th, 2009 at 08:23:03 AM EST
[ Parent ]
there wasn't (and still isn't, afaik), anything remotely its equal in europe.

Nor in the US at the moment. And yes, we desperately need another Whole Earth Catalog. That catalog is the best memory I have of the US-- it's brighter side, it's "Can be proud of this!" stuff.

Stu--and I- are getting old. Sucks. Need young turks with strong backs. And strong sense of community, strong love of the earth, strong sense of the relationship.

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Sun May 24th, 2009 at 03:11:30 PM EST
[ Parent ]
geezer in Paris:
That catalog is the best memory I have of the US-- it's brighter side, it's "Can be proud of this!" stuff.

yup, it was that old 'can-do' cliché for real. people being incredibly creative, pragmatic and respectful of the future we'll leave behind us, but never twee or preachy.

the co-evolution quarterly kept going for a few years, and that was a joy too.

there were some great periodicals back then, mother earth news, (hi sven!) and east west journal.

the well still has some good discussions once in a while, and kevin kelly's web presence still has some of that spirit, paul hawken and stewart brand are still doing great stuff too.

that blend of joy, irreverence and hunger for positive change, it really captured the zeitgeist. the promise between the lines...largely still to be realised.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun May 24th, 2009 at 04:51:23 PM EST
[ Parent ]


You can't be me, I'm taken
by Sven Triloqvist on Sun May 24th, 2009 at 07:02:30 AM EST
I think the chart showing investment in capital equipment is misleading. The US has had a large shift of de-industrialization over the past several decades with much manufacturing moving first to Mexico and then to southeast Asia and China.

As a consequence there has been less demand for capital equipment. Just yesterday a huge steel plant in Bethlehem Pennsylvania reopened as a gambling casino. Attached to it is a bit of a museum showing what used to go on in the center of the US steel industry.

When people talk about the transition to "services" this also includes the intangible businesses like those in finance. These firms require much less in the way of physical infrastructure, a few buildings and some computers and networking. We are supposed to see this trend as a good thing, less consumption of material stock means less strain on natural resources and less pollution.

Now what you are asking is a moral question. Is the creation of meaningless financial fluff a good use of human effort? Let's compare to some other virtual products. How do you feel about international sports or the movie/TV industries? Do they add to the welfare of mankind?

The problem with the excessive rise of the financial system was that it distorted priorities and took money away from more important areas. This is the result of lax oversight brought on by a lack of clear vision of what the goals of society should be and good old-fashioned greed.

Assuming one could put the genie back in the bottle what would you have society do differently in the future? Most suggestions I've heard are to re-inflate the consumerist culture as quickly as possible, especially by fostering the buying of more "stuff".

Consumerism is what got us into trouble, restoring it will not get us out.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Sun May 24th, 2009 at 09:34:11 AM EST
I think the chart showing investment in capital equipment is misleading. The US has had a large shift of de-industrialization over the past several decades with much manufacturing moving first to Mexico and then to southeast Asia and China.

I recall a post from almost a year ago that argued that the "de-industrialization" you described was often not driven by lack of profitability of existing US companies, but by the prospect of great profits to the financial sector arising from buying profitable manufacturing companies, breaking them down into their pieces and selling off what could be sold, firing the workers and transferring the production along with the production equipment to China, where labor was essentially free.  WalMart was a significant enabler. National account balances were not an issue at the time and the prospect of their arising was studiously ignored or denied.  Once the pattern was established it acquired an air of inevitability.

This could have been prevented with some foresight from the Congress and Executive branches, but they were ideologically predisposed to such activities and, as the process proceeded, came to be effectively owned by the financial sector.  There is no question that our domestic industry needed to be periodically updated, but the process did not have to take the form that it did, but for the personal profit opportunities of those in the financial sector.

Sadly, the prospect for effectively reforming that situation seems dim.  Geithner says that Wall Street compensation models must change, but his actions are to do everything possible to save Wall Street by sacrificing what is left of the future of our society in a vain attempt to save those worthies.

Bruce McF has up an excellent diary pointing towards a viable future.  The problem is breaking the evil spell under which so much of our population lies.  Thanks for this diary.  It and the work of Ozgur Orhangazi, especially the stunning graphs, are great aids in any attempt to break the spell.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun May 24th, 2009 at 02:57:38 PM EST
[ Parent ]
"Bruce McF has up an excellent diary pointing towards a viable future."

Link?

Yes, I should know, as a McF fan, but life is just too short to spend that much time on ET. Or anywhere else on the web.

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Sun May 24th, 2009 at 03:21:14 PM EST
[ Parent ]
It Need Not Be an Economic Calamity  Also in Recent and Recommended Diaries.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun May 24th, 2009 at 03:58:53 PM EST
[ Parent ]
Kunstler is a dingbat when it comes to Israel, but he's right in this:
"Happy motoring is over."
Another decade of hard lessons will do it-will strongly focus the attention--and then if there is an alternative other than authoritarian, Cheneyesque psychosis, it can then happen.  (see my link to "Working with your hands" above)

Capitalism searches out the darkest corners of human potential, and mainlines them.
by geezer in Paris (risico at wanadoo(flypoop)fr) on Sun May 24th, 2009 at 03:17:37 PM EST
[ Parent ]
This is no surprise. Financial capital invests mostly in real estate during housing bubbles. Neoliberal economists don't see depression coming after it because they don't make difference between capital and land.
by kjr63 on Sun May 24th, 2009 at 05:12:41 PM EST
Neoliberal economists...don't make difference between capital and land.

The whole point of Neo-Classical Economics was to equate land with capital so as to undermine the rationale for primarily taxing land, which would have been most inconvenient to land speculation, the favorite pastime of the Robber Barrons.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon May 25th, 2009 at 01:34:30 AM EST
[ Parent ]


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