Feckless Leaders-LK’s WOR BroadKast 4/6/11

Phony inflation numbers, wars galore, and government shutdowns are raising the fear factor, while blinding us to our leaders’ fecklessness.  Dr. John is in NYC and in studio for the entire show.

Here’s the link.

Ben and the Little Blue Pill (PG-13)

Saw Ben Bernanke wearing a raincoat and baseball cap pulled way low over his face entering a Boston Medical office the other day.  That’s the place with the ubiquitous advertisements for methods and medications that deal with, um, well, impotence.

Seems that QE2 has identity issues and thinks it’s the Titanic.

Ben was pretty damn sure he could perform.  As he smugly relayed on 60 Minutes this past Sunday, print another 600 billion smackers and buy our own debt with it (get your head around that without getting big time dizzy) and at least two economy friendly conditions would ensue:

1.  Interest rates would stay down, way down, to prime the housing market and other big ticket purchases, while also driving money into equities (stocks in Main Street lingo) because the yields on savings accounts, CD’s and bonds would probably be zero or worse once inflation’s taken into account.

2.  The banks could borrow at those lower rates, lend more freely to businesses of all sizes, which might induce said businesses to find the courage to expand and get the unemployment rate out of its anemic state.

Ben’s coming up limp, which explains the brown rectangular paper bag he was carrying as he entered the clinic while looking furtively from side to side.

Interest rates are rising, as there’s a limit to the wool he can pull over the eyes of savvy money managers worldwide.  The buck’s getting weaker, so we’ve got to offer higher rates to lure domestic investors and foreign countries like China, who own us like Visa owns your next door neighbor.  Rates on home loans, although still low by historical standards, have risen 10-20% since Ben’s attempt to suppress them.   You know things are upside down when rising translate to impotence.

And on the front page of today’s Wall Street Journal, the front page headline reads: “Companies Cling to Cash”, with the sub-heading “Coffers Swell to 51-year high as Cautious Firms Put Off Investing in Growth”.

At least something’s swelling, but it’s not what Ben was looking for.  He’s batting zero for 2, and the stakes are a little higher than moving a runner into scoring position.

So Ben’s team, “The Feds“, aren’t, well, scoring, and since they want to score ever so badly Ben is seeking professional help.

Aunt Samantha (Uncle Sam’s sister) can’t get no satisfaction, and a frustrated Aunt Samantha may look elsewhere sooner than later if she doesn’t get it from Ben.

Rumor has it she’s got her eye on Ron Paul.

Oscar Sounds Off

LK here.  A few days ago I received a missive from “Oscar the Observer”, once an employer of mine, who I’m now honored to call a mentor.  The man is no liberal Mr. Softee; he believes in a hard day’s work for a good day’s pay, but he also believes that every citizen should be given the tools to be able to compete for that hard day’s work.

I don’t agree with every last word in his piece, although we disagree more on how to get where we’re going than the destination itself.  And his final paragraph re Afghanistan and our inability to change a culture, and particularly its abhorrent attitude towards women, is something I’m resigned to as well.

Other than that, his innate optimism is in full regalia, as is his belief in the “can do” spirit of America, a belief nurtured as a child of the depression and WWII.  Killjoy that I can be, I wrote back that he continually frustrates me by retaining the belief that ethical, objective, even-handed thought is worth anything more than a rat’s ass in today’s irrevocably corrupt world, and that additionally, cynicism is the new reality.

Here’s his response:

Yes, to an extent, cynicism is the new reality ——- but my view is that distortion is more the new reality.

It amazes me, as cynical as I am about American intellect, that Republicans have succeeded so emphatically by their self-serving ignorance that has resulted in such gullibility by Americans, and especially the “independents” and blue dog Dems.  Everything the Republicans have promoted and pontificated about is completely wrong and adverse to pulling out of this recession.  And their ignorance has resonated as “moderation” with too many Americans.

I majored in Economics in college.  In the 1950’s, I was studying Economics in the midst of the “Eisenhower Recession” and consequently a lot of attention was given to the parallels of the Depression (the 1930’s) and the fits and starts of Roosevelt’s administration to overcome the worldwide recession and depression, which finally ended by deficit financing without limits to finance our and our allies’ armies and navies for World War II.  A large part of that financing came in the form of War Bonds that Americans bought to aid the war effort, and those debt instruments were paid off after the war in an economy that was on the upswing.  The Republican morons in Congress, who control and influence their party as if it were Stalin’s Russia, seem to me to be completely ignorant of Economics, and blind to the factors such as  the “circular flow of money,” confusing “pump priming” (Keynes and Galbraith) as being antithetical to reducing “waste.”  Congress threw a crimp into Roosevelt’s programs in 1938 by cutting off a lot of money (out of panic that our national debt was out of control), and that resulted in a double dip to the recession until we started to get ready for war, in 1940, and began manufacturing for the Lend-Lease program.

I am in favor of the broad aspects of the Simpson-Bowles plan.  We need to try it to see if it works and see if it can hold down long-term debt without crippling current economic policy to overcome the recession.  (We also need to energize American corporations and industry to begin manufacturing things here that are unnecessarily manufactured in China —– the same “patriotic” mindset that resulted in buying War Bonds instead of just putting money in the bank is needed to be brought to bear in a constant and emphatic ”Make It In America” campaign.  Why the hell is almost every tool in Sears made in China?  We must reduce our tendency to manufacture in China and bring our balance of payments back to realistic levels.  We have to eliminate our knee-jerk reaction to have everything manufactured in China that neuters our industrial ability and idles our labor force; American workers earning salaries in factories and in vertically integrated businesses that result from increased industrial productivity enables more workers here to buy products and keep the circular flow of money chugging along.)

I point out that Paul Krugman, the first day that the Obama Administration proposed the $700,000,000,000 stimulus package, went on record forcefully, writing that it would be insufficient, that at least $1,200,000,000,ooo or $1,300,000,000,000 was necessary to stimulate the economy enough.  He said $700,000,000,000 was only a start, and should not be regarded as the limit.  He was right.  Here’s the evidence:  Bernanke will throw $600,000,000,000 more into the economy over a short period of time.

And before we let the Congressional morons who are devoid of understanding economics and history pull the wool over Americas eyes further until we are completely blind, let’s remember that Bernanke, as a Princeton professor, came to prominence through his study and analysis of the Great Depression; he knows that constricting the economy and abandoning deficit financing prolongs the economic malaise and paralysis.

The Republicans resisted and tried to prevent the stimulus package.  They were stupid, still stuck in Herbert Hooverville.  At the core of their interference with support for programs and legislation that will get more money into the economy that will drive the circular flow of money is their plan to reduce the stimulus package by making Obama use the unspent stimulus money for continuation of unemployment benefits, etc.  Okay.  So, instead of selling out on the Bush tax breaks, Obama should spend the money from the stimulus package for the unemployment extension —— and Bernanke can just increase his, in effect, “additional stimulus package” by the amount deducted from the $700,000,000,000, if need be.

One last thing:  Until we get out of Afghanistan, there will continue to be a pervasive, crippling drain on our economy and weakening of America politically and in world affairs .  It’s time to say “Sayonara” to Karzai and let him be executed by the Taliban.  I believe we can preserve our safety and deal with Afghanistan as a haven for Al Qaeda by bombing Afghanistan whenever necessary.  They’ll get the message that it’s safer just to terrorize Afghanis than to establish Al Qaeda training camps.  It seems clear to me that we will never, never be able to overcome the culture of corruption in countries like Afghanistan, Iraq, Yemen, Iran, Somalia and Sudan.  No matter what we do we cannot protect women from domination by Islamic mores in those countries.  It’s unfortunate, but if we can’t deal with reality we are condemning ourselves to constant failure.

Name That System!!

There was an article on the front page of Monday’s WSJ about AIG being able to undercut competitors by as much as 30% due to the government backing it’s receiving.

Some of AIG’s competitors met with Chairman Bernanke on Sunday to voice their complaints about the unfair advantage and unintended consequence AIG is the beneficiary of, as a direct result of it’s atrocious stewardship of the funds it was entrusted with.

There’s also been a lot of banter going around about what our economic system is evolving into, from capitalism to socialism to (yikes) communism to some bastard child of them all.

I’ve heard from some brilliant and clever minds who have suggested the following monikers and descriptives:

Enactmint (spelling intentional): pass laws and print money.

Survival of the witless: requires no explanation

Adverse selection: an economic term that refers to a situation where sellers have information that buyers don’t (or vice versa) about some aspect of product quality.

Unnatural selection, in which mediocrity is the key to survival. Not dissimilar to survival of the witless, above.

Additional entries are welcome. Leave them as comments. Winner receives a LooseKannon t-shirt, as it’s not clear that there’s any greater incentive these days than that.


If the Fed and the Treasury are going to supercede the free market, and everything big is too big to fail, then short America, ignore the day to day gyrations, and pick up your profits in 7 years or so. Congress and Bush are utterly impotent failures. Bernanke and Paulson, representing both theoretical and hands on experience, are doing yeoman’s jobs buying time while temporarily selling out the U.S. citizen/taxpayer. They’re hoping that John and Jane Q. Public don’t notice their added burdens, while Ben and Hank bail water in the hope that the ship of state doesn’t capsize and sink before help arrives.

Oh, and they have no idea what form that help will take, or when or even if it’s coming.