The Wall Street Examiner Sun 2010-05-09 10:02 EDT

The Minsky Cruise (part 3, Business)

...While non-financial domestic corporate profits have shrunk from a Korean War inspired 11% of GDP to average around 5% of GDP since 1970, the financial sector's profits have been growing...The love affair with finance and disdain for what, during the tech boom, we called the "bricks and mortar" industry- and admittedly a failure, by some in those industries, to accept the transition to maturity- has inspired, for want of a better word, envy in the non-financial sector. While financial sector stocks seem to levitate on their own, non-financial sector stocks, if intent can be inferred from behavior, are believed to require a boost. I suspect the use of options as payment has something to do with this as well...Additionally, the non-financial sector, since the mid-80s has- a true sign of envy- opted to copy finance, by breaking into that field. GE Capital and GMAC Financial are two prominent examples...To paraphrase Nixon, "we're all Ponzis, now."

business; Minsky Cruise; Part 3; Wall Street Examiner.

Culture of Life News Tue 2010-04-06 10:23 EDT

Ireland And US Will Be Devoured By Derivatives Beast

Elaine Supkis

The banking mess in the West continues. It has rather deep roots. That is, we decapitalized our own banking system long, long ago. The fix for this was to create a fake banking system with virtually no real capital reserves at all. This was possible thanks to the floating fiat currency created when Nixon suddenly cut the gold standard back in 1971. By 1987, the banking collapse was tremendous during a deflationary time that followed a hyperinflation era. This fix created conditions that caused the near-total collapse in Western banking...So far, governments in the West are being bailed out by Asia. And this is being done so Asia can continue to rapidly expand its own industrial base. This savage business gets worse and worse over time due to the self-feedback system of this debt expansion: you get more credit from export powers via letting them export even more to your own home base. So as capital vanishes, the need for debt shoots upwards and the system continues to get more and more unbalanced...Sure, we have little inflation except in important commodities but this is due to the Goddess of Zero slashing away at the mountain of debt, using the default tool to fix this mess in a very brutal way. Unfortunately, the bankers still control our `democracy' so they are moving all their losses onto our books and far from things going to zero, it is actually heading towards infinity: infinite debts owed by the taxpayers who want to continue stupidly cutting taxes while increasing credit based on virtually no capital at all! Sheesh.

Culture; Derivative Beast; devouring; Ireland; Life News.

Thu 2010-01-07 20:04 EST

Hard times at the Washington Post

Dean Baker

The Washington Post is a newspaper with a proud legacy. It has done much important reporting over the years, most famously its coverage of the Watergate scandal that resulted in the resignation of Richard Nixon. Unfortunately, it seems to have abandoned its journalistic standards. In its last issue of the decade, it published as a news piece an article by the Peter Peterson Foundation-funded Fiscal Times. This compromised the Post's journalistic integrity to the extent that readers can no longer take it seriously.

hard times; Washington Post.

Thu 2009-09-17 10:36 EDT

Milton Friedman and the Economics of Empire

Greg Grandin

Excerpt from Greg Grandin's Empire's Workshop. (Milton Friedman, Chile, Arnold Harberger, General Augusto Pinochet's military government, shock treatment) Not only had Nixon, the CIA, and ITT, along with other companies, plotted to destabilize Allende's "democratic road to socialism," but now a renowned University of Chicago economist, whose promotion of the wonders of the free market was heavily subsidized by corporations such as Bechtel, Pepsico, Getty, Pfizer, General Motors, W.R. Grace, and Firestone, was advising the dictator who overthrew him on how to complete the counterrevolution -- at the cost of skyrocketing unemployment among Chile's poor. The New York Times identified Friedman as the "guiding light of the junta's economic policy," while columnist Anthony Lewis asked: if "pure Chicago economic theory can be carried out in Chile only at the price of repression, should its authors feel some responsibility?"

economic; Empire; Milton Friedman.