Charlie Rose

tartufe  02/05/2009 11:20 PM Report

Two puzzlements. 1. Your affinity for engineers (Electrical or otherwise - Carter was a Nuclear), 2. your inclusion of domestic. Is anarchy on your mind? To the point the police have to call in the Federalies? Perhaps. Taxpayer revolt, eh? Our children's children may have no other recourse.

A Chinese "blue water navy" could have gone awry as well. Military adventurism can lead to arrogance, and arrogance to a downfall. It happens. Their current ascendancy seems to suggest they've overcome your imagined deficiency quite well. They now have a blue water navy topped with a lunar rocketry program as well.

You seem to be fighting the last land war a la Johnson, Nixon's Vietnam and the land war cum insurgency Bush, Cheney's Iraq, worrying about "repeated foreign land invasions." Terrorist worries supplants and trumps such arcane worries now.

Ironically, the last two land wars were peremptorily started by your vaunted and our bloated M-I oligarchy with bogus Gulf of Tonkin and WMDs precepts. We seem to enjoy killing more than most. Millions in Vietnam, Cambodia. Remember the napalmed naked little girl running, screaming? I do.

Which brings me to - maybe our species shouldn't survive. Religions may bring about some ultimate purge with a self-fulfilling Armageddon. Championing the M-I killing-for-profit machinery will accelerate it.

The CEOs of the leading oligarchs [Financial wise-guys, M-I profiteers, Big Pharma vampires, yadda, yadda] can all hold hands singing kumbaya as they turn the third rock into a cinder. But we'll do it with panache.

KMGuru  02/05/2009 09:15 PM Report

I understand your trepidation, tartufe. I have a slightly different POV. We need the M-I Complex to protect us from threats “both foreign and domestic”. During the Ming Dynasty around 1433 AD, the Chinese had the opportunity to build and maintain blue water Navy along with major trade around the world, but was refused. If they would have been smart and gone in that direction, the world today would have been different.

About 3000 years ago, the Indians started a class system – the Warrior Class, the Religious Class and the Merchant Class. Over the years the Warrior Class was marginalized by the other two classes perhaps as people lived in peace for a relatively long period. As a result, India lost its defense capabilities and also created internal conflicts thus opening to repeated foreign invasions. Eternal vigilance is the price of liberty, perhaps.

My conclusion is, we do need a robust M-I Complex, but they have to have the right leadership and goals to provide that economic security as that is our national security in every sense of the words. Because the Financial Group is extremely powerful, there is no other Group that can stand up to the challenge.

There are many ways for the M-I Complex to support our economic security. What is needed is the acknowledgement that we are on assault from both foreign and domestic threats. It is not the people but the ideas and greed. To understand the issues, you need engineers, perhaps electrical engineers with strong control system experience. They should understand the system dynamics. Anyone else is like dentists doing brain surgery. I am sure the M-I Complex and NASA has plenty of these types of people.

I would like to make a case that people in the financial industry and economists who created the complex Ponzi schemes are not qualified to solve our present problem. That is because they do not understand the system dynamics part of our economic ecology (the globalization).

Some neuro-economists understand the issues but because they do not have the Control Systems math behind them to fully understand the complexities. So they would not be able to articulate to our ignorant politicians let alone solve it.

My thinking is, if we fall in to the Abyss, the M-I Complex will go down with it like the Russians. So, it is in their best interest to solve this economic threat. No one else is qualified or has the capabilities. We shall see how smart they are! As to those wars, that is for another time.

tartufe  02/04/2009 11:19 PM Report

The M-I complex is anathema for me. They lean toward sustaining conflicts not ending them. Our folly in Afghanistan-Pakistan (A-P) a case in point. Bin Laden will die of old age. Our mission is ill-defined (hang around forever creating more insurgents than we eliminate) recruiting more al Qaeda with drone fired missiles with resultant civilian collateral damage and collateral resentment.

We'll ultimately leave only after spending trillions with a negative result. Too many deaths on both sides. Anti-American feelings are migratible. There's probably more of it in Yemen than A-P. We can't preemptively attack every country that wishes us ill. But, alas, we're inclined to try.

Maybe a less robust M-I oligarch would increase rather than decrease our security. Too liberal? Too pacifistic? Perhaps. More realistic for me than never passing up a potential for conflict.

KMGuru  02/04/2009 09:42 PM Report

Well put tartufe. The powerful interest groups are definitely the Financial, M-I Complex and Big Pharma. The only group that can and should stand up to the other two is the M-I Complex because they will be marginalized if we lose the economic war. Yet when I saw an advertisement by our esteemed CIA (assuming they are part of our intelligence community and the M-I Complex) today, I wondered. You see, the CIA wants you to believe that the economic security is their top priority. So the CIA is advertising for a boat load of people to hire for our economic security. When you go to their website for Analytic positions, they are looking for economic analysts with degrees in economy not an "OR" in technical field (engineering, system dynamics etc.) in our highly complex globalized technical society. That says, they are clueless and behind by about 30 years. This type of cluelessness is what happened to Rome. Poor intelligence and action. Economic intelligence and action should come from engineers and not economists, who have never produced any goods. It is like hiring a dentist to do brain surgery. We are next.

tartufe  02/04/2009 09:01 PM Report

USA has to be a successful country as defined by Guru's book citing. Obama's glow is dimming as we speak, so his political capital will not be potent enough to curb the oligarchic powers really running the show. The financial, M-I complex and Big Pharma oligarchs are too powerful for any one man president or otherwise.

A culture that tolerates the likes of the abuses from these three powers may long endure, but greatly diminished beneath its rightful level. The putrescent malignancy is metastasizing.

In all of Washington not one statesman comes to mind. Limiting them all to one (say 8 yr) term, might cure the reelection whoredom (making them for sale en masse), but even then the lobbyists would doubtless prevail.

Was corruption the cause of Rome's collapse (as well)?

KMGuru  02/04/2009 07:05 PM Report

"The Big Fix" by David Leonhardt is an excellent article with some inaccuracies in key places. Whether it is "ignorance" or "deliberate", I can not say. He writes: "In Olson’s telling, successful countries give rise to interest groups that accumulate more and more influence over time. Eventually, the groups become powerful enough to win government favors, in the form of new laws or friendly regulators. These favors allow the groups to benefit at the expense of everyone else; not only do they end up with a larger piece of the economy’s pie, but they do so in a way that keeps the pie from growing as much as it otherwise would. [Trade barriers and tariffs are the classic example. They help the domestic manufacturer of a product at the expense of millions of consumers, who must pay high prices and choose from a limited selection of goods.]"

What he should say, that is shown in the large brackets is: "Free Trade and Outsourcing are the classic example. They help the domestic companies to increase profit at the expense of millions of consumers, who lose their jobs thus creating an economic crisis.]"

Again he writes: [Doctors, drug makers and other medical companies persuaded the federal government to pay for expensive treatments that have scant evidence of being effective.] Those treatments are the primary reason this country spends so much more than any other on medicine. In these cases, and in others, interest groups successfully lobbied for actions that benefited them and hurt the larger economy.

What he should say, that is shown in the large brackets is: "AMA and the Doctors controlled the number of doctors graduating in the country to keep the demand high while medical companies kept the drug prices artificially high. The specialists and hospitals charge an extortion level fees for any treatment."

Another one: "We have been consuming rather than investing." should read "We have been importing almost double than exporting." We can not import our way to economic recovery. At some point we have to produce more where jobs will be.

He is right about the Wall Street though. Our economy should be such that the profits of our finance companies should only be about 12% of the nation's corporate profits.

chrisbak  02/04/2009 12:27 AM Report

There is a serious loss of confidence in the legislative solutions we've seen thus far, including this stimulus bill being debated in the Senate. The Democrats housing legislation in particular is almost certainly extending the housing crisis. However Martin Feldstein was excellent in this interview and the interview is worth watching for that reason.

Capslock  02/03/2009 11:09 PM Report

It's ironic that the new Senate bill created by the Pubs to fix the financial crisis is based on the very same policies that created the mess that we're now in. Tax cuts for the wealthy (AMT relief) will certainly lead to individual saving (and a bigger deficit) rather than entreprenurial projects and spending. The banks confirmed this outcome by stuffing their TARP funds into their crouches, em... vaults, while giving themselves bonuses. Regarding housing relief, any subprime-like incentives for people to buy more houses will do nothing but artificially inflate housing prices beyond reach of those who can't afford them now as it is. The housing market is a pyramid scheme that is crashing just as it should be doing! Investing in America via construction projects, etc. will help soften, but not eliminate, the impact of this crisis on individuals as we deflate an artificially inflated economy to a level free (hopefully) of products and services with imaginary value. As we all know, Wall street is a con game and the American people just lost their shirts. We must have a new set of rules now if we expect a different outcome going forward, and the failed economic policies of the past are certainly not what we need.

tartufe  02/03/2009 03:06 PM Report

More gloom about Shalom's Dark Age concept.

It's incredible the extent egregious greed has overrun statesmanship. Obama can't even fill his cabinet for the mindlessness of tax evasion.

And this is from people that should know better. It's a good weaning tool. If your values and intelligence is that skewed your judgment is too questionable to be in government.

The Secretary of Treasury of all positions should be drummed out of the government. Mocks / taints Obama's judgment as well.

There's no adults left. An epidemic is loose in the land. From Wall Street to Pennsylvania Ave.

But it's tax time, so all you naive and honest folks turn to and get your payments made in a timely manner. Someone's waiting for it.

tartufe  02/03/2009 02:34 PM Report

Could it be that the best long term action is no action? Let TRUE (laissez faire) capitalism exact its natural laws. That would mete out the consequences where due.

That should reduce the remaining banking to commerce. The gimmicky stuff like credit default swaps etc would sort itself out on a sink or swim basis. If none is left standing is probably so much the better. Citigroup in particular.

Their bailouts merely assure the moral hazard syndrome of a repeat bubble downstream. Their "gimmickry financial instrumentation" should be punished NOT REWARDED. In fact fines and jail time for many in both finance and government would go along way in restoring confidence.

The complicitous / duplicitous collusion this collapse required between government and financial wise-guys was outright criminal. And they're not only getting away with it, they're being rewarded with bailouts on the backs of our children's children.

Indeed, a well-earned and well-deserved Dark Age.

tartufe  02/03/2009 02:05 PM Report

Shalom, struggling with your sign-off? Could we change "now" to "not?"

A new Dark Age indeed seems to be looming, but to pray for it seems a bit masochistic.

doodahdaze  02/03/2009 11:00 AM Report

Mr. REMant, your honest intelligence inspires me to shut-up and listen. Thanks for taking the time.

ShalomFreedman  02/03/2009 02:32 AM Report

Jack Welch and Martin Feldstein seemed to be on the same side in criticizing Sen. Schumer who represented the Democrats and the Obama government. Schumer also represents the responsible party here for he is one of those whose actions are determining government policy in the days ahead. He expressed great confidence in Geithner and Summers but I wish he had given us a more certain idea of the way out of the mess. Perhaps he did not because he like I think so many of us, has been humbled a bit by it. Still the three sides of the Administration action, the stimulus package of eight- hunded billion plus, the coming effort to more effectively deal with the Housing- Home- Mortgage problem, the effort to deal with the Banks and the Credit squeeze will Schumer promises 'kick in' later this year.

What it seems to me, and this is a very general impression, is that almost everyone has lost their confidence that they truly know what to do. After all other sides of the problem were not discussed here, including the negative trade - balance, the global situation, the great problems of Energy and Environment which will in some way be addressed by the stimulus package.

The sense is as Mathew Arnold said of his own time of an Age dead, yet without another yet waiting to be born.

Let us pray we are now all going down into a new Dark Age which most of us in our lifetimes will not see the way out of.

tartufe  02/03/2009 02:18 AM Report

Whew! If I were smarter I would agree - I think. REMant is too voluble for my limitations. A quote that sounds full of wisdom, ". . . because possession by itself is not productive, and one could, to reduce it to absurdity, become the last man on earth and own everything, and nothing."

A poetic kind of hell I like to visualize for Robert Rubin and his Citigroup exploiters of human frailty, Henry Paulson that Porky Pig capitalizer of governmental his position, along with Barney Frank, Ben Bernanke, Bush, yadda, yadda. Unrealistic that the temporal world will mete out redemption, the thought of all their acquisitions piled high in the Bahamas and no one to give a damn, no envy. Only contempt. And each wise-asses' yacht is always a foot shorter than the one it's next to. And they're the last on the 3rd rock, surrounded by nothing but things and stacks of credit default swaps. Sigh - . . . .

REMant  02/03/2009 12:14 AM Report

In July 2007 David Leonhardt appeared on The News Hour, where I was apparently expected to join him I discovered later, tho I can't think of any earthly reason why, except that we were both arguing that the run up in the stock mkt was all due to inflation. It seems we were right. Thus it is surprising to hear him saying that we need more of the same now. Chances are that tax cuts will be hoarded, but I part company with Feldstein and the others here, because I think if used to pay down debt it will be better than if directly spent. Now thoroughly frightened, many ppl have taken up the reflationist line, who, I am certain, know better. The fact of the matter is, however, that the normal inflationist economic model is unsustainable, and unjust, besides. Fortunately, tho reflation will not likely get off the ground.

If ppl not only are unemployed, but also owe so much to others they cannot afford to spend, the only possibility is to refinance, which is what the central banks are trying to do in taking more and more into the national debt, but cannot, because credit is so far depleted that creditors cannot afford to do even that, unless they simply print money, which will be inflationary even in these circumstances. I am not persuaded that because the debt is a smaller percentage of GDP we can afford to take on more, because to be at all responsible someone has to purchase it, and I don't see anyone wanting or able to do that, at this juncture. For the Fed to do it by fiat will exacerbate the problem. The only other purely financial possibility is for deflation to reduce prices so much that ppl will be able to buy.

There are only two positions one can take: 1. that the pre-crash prices were correct, and every attempt should be made to shore them up; or, 2. that the pre-crash prices were wrong and need to be lowered to correct levels. But it is alleged that we are in a deflationary spiral, usually by those who believe the opposite - an inflationary spiral - to be a "virtuous cycle." Not only do they misuse the latter term, which properly refers to a situation were prices are dropping due to productivity increases, but there is no such thing as a deflationary spiral apart from a necessary correction in an economy where productivity has not kept pace with credit/monetary expansion, leaving aside the notion that there should be no credit/monetary expansion at all, and that it would not be necessary were there any productivity increases to begin with. What they bemoan is not the loss of wealth, but of their position as holders of over-valued assets. Since the assets are valued in debt, due to the nature of money, it is not really possible for the actual worth of them to be increased until the debt has been paid. In other words the price will go down, but they will actually be worth more, if productivity increases, than if it does not, because possession by itself is not productive, and one could, to reduce it to absurdity, become the last man on earth and own everything, and nothing.

Our situation is simply bankruptcy, the plant is being liquidated and the employees discharged, since sales have plummeted and the creditors cannot afford to sustain it any longer. All of this is due to the extreme overinvestment in unproductive (not necessarily unprofitable, because they are by no means the same thing) activity in the past 10 yrs at least, and probably since the Vietnam-era in this country.

What we need to do is what any company in bankruptcy needs to do: attempt to get better terms, yes, but mainly reorganize under a sustainable business model. Thus I would stifle talk about stimulus and concentrate on Welch's other two buckets: relief, because we have to do that, and reconstruction for a return to sustainability. What I am advocating is what the Austrians (who opposed the inflationists led by Keynes in GB in the 30's) would, I think, advocate, and it would be nice to hear from that quarter.

Thoughtless ppl run around today complaining how long it took the Dow to reach pre-Crash levels without understanding that the absolute price of the Dow is irrelevant, and a high figure not a good thing anyway. What matters is how productive the underlying industry is. That took a quantum leap during WWII, and when coupled with a decade of enforced savings and the Marshall Plan, took us out of the Depression for good.

I was and still am in favor of restructuring the mortgages and said so when the crisis struck, even before Feldstein and Hubbard, but I am not in favor of holding up necessary reorganization of our economic relationships overall, which I view as not only necessary, but desirable.

Inflationists believe that lower than real interest rates and/or deficit spending will induce ppl to spend and thus maintain employment. This is the current version of the position of the 19th c silver and Greenback party and what it means in reality is watering down the currency with the objective of taking value from present holders. It is roughly the same behavior as exhibited in Shay's Rebellion and in the Depression the same attitude was also exhibited against farm foreclosures. (Shay's Rebellion, which was among the causes prompting the Constitutional Convention, is instructive. After the Revolution due to British spending on provisioning their Army - yes, American farmers supplied them - the country was not only awash in gold, the farmers, esp those who avoided taking American paper money, had, as always in wartime, and did during WWI under similar circumstance, greatly expanded production. They then proceeded to squander all the gold on British mfrs, causing a depression in the 1780's and farm foreclosures, just as happened again in the 1930's.)

However, if there is no return on investment, there is no inducement to invest, and thus no production, therefore those with money keep it. Prices of essential goods, as a consequence, rise. In other words, in the attempt to increase "demand," supply is choked off, leading to inflation. Do this enough and productivity declines across the board, thus creating the demand for more "action" in a vicious cycle of decline, a real deflation, or stagflation, such as the country experienced in the Vietnam-era, in which prices rose as unemployment increased. Persistent inflation also devalues work. More money is sunk into assets, commodities and gold. So you can argue that while it allows business to borrow and employ, from a supply-side or credit perspective it is less than worthless.

My mother, who, not having taken physics in school, believes you can turn on the exhaust fan to cool the house without opening the windows. But like air, money has to go from somewhere to somewhere, and its value, in any case, depends not on the flow, but on its temperature. Like my mother, the inflationists have always thought that Japan should somehow have made its "bad" debt disappear, which it could not do, because debt of that magnitude cannot be made to disappear without simultaneously causing a currency to collapse, i.e, to continue our metaphor, to create a vacuum. They seem to have missed the point that money is debt, whether past or future. That the debts need to be paid by someone is, therefore, indisputable, however, in Japan's case, as in ours, this is not so easy.

In the world of constant inflationary "growth," savings are not needed. There is, in general, as with phoney evangelicals, an absence of any real idea of cost, debt or sin, or the ultimate justice of nature. Indeed ppl who think so are labeled mean-spirited monopolizers and the like. They argue that easy money counters monopoly, in a counterpart to the democratic argument against aristocracy, without realizing that it is their own abuse which promotes it. And they exhibit the enthusiasm of the true believer; once the bust arrives, they flat out refuse to believe it.

Another inflationist foible is the idea that high prices reflect wealth. Rather, they reflect its absence. The rise in the price of assets including stocks means that there is too little profitable investment around. When cos have nothing to offer investors they sell equity; when investors buy equity they are basically doing it only in the hope of hedging inflation. The inflationists in the FDR admin actually tried to keep agricultural prices up by destroying crops.

If inflationists believe they are saving the retirement of retirees, nothing could be further from the truth; they are actually trying to spread and postpone the loss, which some of them euphemistically call insurance. It would be as accurate to call it a pyramid scheme.

However, it can't work if no one is duped by it, and I would have to regard the ppl at the moment smarter than their government. You cannot increase demand without decreasing supply, nor increase supply without decreasing demand - the two HAVE to be in balance, as do govt budgets. If we all go out and spend, the "multiplier" will multiply our spending and we will have income that exceeds the amount we spent, so the more spending the better, right? Be serious!! That's as bad as my mother. The only thing that will be achieved is to add employment for as long as the spending can be sustained, but this should in no way be confused with economic growth. That depends on increasing productivity.

Beyond this, easy money in an inflationary regime, while intending to help the poor, ironically transfers wealth to the wealthy thru raising the price of assets and equities. That is no doubt why it has always been popular on Wall St. It is fair to say that if it were not for the Fed's interest rate manipulations and Congress' deficits neither the country nor the world would be in the pickle it is today, because no matter how hard Wall St and the banks tried, it would be impossible, at least without foreign help doing the same things we have been doing or, like China, consumer surplus, or because of the damage already done by encouraging merger and monopoly. I think it ought to be clear that more of the same is not about to make the situation any better. That is not "the change we need."

On the other hand, deflating the wealth of the wealthy elevates the value of the really productive. Economics is always in tension between those whose idea of value lies in possession, and those who believe it lies in productivity. All of the great pre-19th c philosophers - Hobbes, Locke, Hume, Rousseau, Smith - believed wealth to lie in productivity - in reason not passion. Even in the 19th c Darwin also believed this, until the mood of the times twisted his words into Social Darwinism. Ironically, the Progressives and Social Democrats, in attempting to remedy this shift chose inflation, which has proved even more costly.

A successful economy must be both distributively and contractually just, i.e., that ppl can afford what they make, that what they make is what they want, AND, that it proves to have actual utility, i.e., that it doesn't increase overall costs, e.g., everyone wants cars, but cars threaten health of the planet, thus eventually, having too many of them will prove a liability.

I don't disagree with the propositions, on the one hand, that we need to take care of the needy, or on the other, that govt should not dominate all spending, but a median must be found, and one also that does not interfere with the necessary readjustment to existing conditions that must ultimately take place, including, most especially, sorting out the value and financing of real estate, or investment in stuff that will both effect growth in productivity and redress the imbalance in the distribution of wealth. Inflation, as far as I can see, can only retard these things.

Re the bonuses: Not only did the Wall St types not perform, the bonuses were and are made illicitly; that's the point. It's like arguing that Exxon deserves the windfall profit from the stupidity of the Fed that allowed oil to be cornered last yr. The first thing you should have learned in microeconomics is that with a given technology when the system is working properly no one should be able to make a profit, and if they do it must be at the expense of someone else. We are certainly not more prosperous if they do; on the contrary, it is a sign of our decline. That is the real problem of the middle-class, of the rise of our healthcare and education costs. And the cost-of-living in NYC is what it is because of it.

Re mark-to-market: It is an accounting rule that economists had lobbied for, for years, and meant to bring some reality to the valuation of assets. Removing it, will only hide that reality, and, of course, benefit those who do not want to face the latter.

tartufe  02/02/2009 11:24 PM Report

Right on fccm. The conflation of corporate (think Citigroup et al) and corrupt government (think Barney Frank, Henry Paulson et al) makes for a capitalistic destroying complicity that could ultimately threaten democracy itself.

Citigroup was instrumental in getting legislation passed or repealed (Glass-Steagall), overriding states usury laws, more stringent bankruptcy laws re health and unemployment on and on.

Paulson with his faux sense of urgency stemming from an original three page proposed hand out pulled off one of the biggest heists in history to bailout the perpetrators of the financial mess - the very ones laissez faire capitalism would have purged.

Now even Obama's appointees are being tainted with the same egregiously greedy brush - now Daschle (Dancer to Blitzen?).

Can you visualize the corruption associated with the printed money coming in the bailouts? Our grand kids will be forced into anarchy. Taxed into perpetual poverty bailing out the mess the financial wise-guys got us into.

fccm  02/02/2009 04:55 PM Report

Feldstein is a walking, talking economic carcinogen. This chief economic advisor to President Reagan continues to proselytize his voodoo economics. His toxic carcinogens have infected formerly healthy institutions to include AIG [Financial Products] as a member of the board. The resulting liaise-faire cancer to AIG and other global institutions have them on life support with massive government intervention. These institutions are now in intensive care and still may not recover from their self-inflicted, risky exposures to these known trickle-down toxins. Assuming the institutions recover, they must practice known prophylactic measures to prevent re-infection of this unregulated disease. Meanwhile, Feldstein is a tumor that must be excised and incinerated to minimize further infection.