10/31 Owners seen putting 125 High St. [Boston] on block, by Richard Kindleberger, Bos Globe, F1.
If a sale goes through, 125 High St. would join a parade of other high-profile office properties that have changed hands in the past year and a half. Those include the Prudential Center, 225 Franklin St., 100 Summer St., and, most recently, 75 State.... It is a tricky time to negotiate a sale, according to real estate specialists. Real estate investment trusts [REITs], their share prices battered in a down market, have largely been sidelined as buyers. And the main source of public debt to acquire commercial properties, commercial mortgage-backed securities, has dried up....
[And compare the parade of high-profile retail stores that have gone bankrupt in the last couple of years - Woolworth's, Jordan's, Lechmere's, Somerville Lumber, Grossman's.... Oh yeah, this is a real "boom economy"!]
10/31 G7 details financial reform plan - Group seeks to keep tighter rein on currency flows, boosts IMF funds, by Alan Wheatley of Reuters via Bos Globe, F1.
The measures, set out in two statements...aim to keep a tighter check on destabilizing flows of so-called hot money from speculative investors and will give the IMF $90 billion more to help beleaaguered economies stay afloat. Brazil, the Latin American powerhouse hovering dangerously close to the economic abyss, was set to become the first beneficiary of a new war chest designed to give nations fast and easy access to funds needed for fighting off investor attacks.
[Note first that this says nothing about plugging "the Big Leak" - the fact that .001% of the world population can still concentrate 99% of the world's wealth and keep us in the progress-blocking "Chesterton Pan-Utopian Trap."
[Note secondly the war language here - the IMF has a new "war chest" for "fighting" off investor "attacks". This is not Karl Marx talking, it's a Reuters financial writer! This language indicates there's a world "war" between national governments and international "speculative investors." Now let's watch for war language in the relationship between CEOs and layoff-targeted employees. That will fit Marx's classic "class warfare" paradigm even more closely and it will not be the employees who declared that war.]
[Folks, here's a dramatic example of our partitioned brains -]
10/28 Retail groups sees a merry holiday sales season, Reuters via Bos Globe, D5.
[and RIGHT underneath, same page -]
10/28/98 Consumer confidence hits 2-year low; layoffs, volatile market blamed (D5, article continuation from D1) - Anticipating a tough holiday season, many merchants, including the world's number one retailer Wal-Mart Stores Inc., are issuing very conservative sales estimates for Christmas (D1).
[Now let's go back to p. D1 and delve into this battle of reality vs. retail -]
10/28 Consumer confidence slumps; Layoffs, volatile market cited; report fuels fear of slowdown, by Diane Lewis, Bos Globe, frontpage Business section (D1).
The Conference Board reported yesterday that its consumer outlook index dropped to 117.3 in October from 126.4 in September, the lowest level since December 1996. What's more, confidence in the economy for the coming six months has reached an almost three-year low.... Economists' blamed consumers' gloomy outlook on layoffs and the recent upheaval in the stock market. "The job market has a great influence on confidence levels," noted Lynn Franco, economist and associate director of the Conference Board, a nonprofit research organization in New York.... Economists consider the mood of American consumers a key guide to the future because consumer spending accounts for more than two-thirds of the US economy.... Anticipating a tough holiday season, many merchants, including the world's number one retailer Wal-Mart Stores Inc., are issuing very conservative sales estimates for Christmas....
[So let's notice the chain of causation here - from job market to consumer confidence to consumer spending to consumer markets to market-supported productivity to financial markets.]
Challenger, Gray & Christmas, a national outplacement firm, reports that layoffs were 53% higher this year than they were in the first nine months of 1997. In September, more than 73,000 job cuts were announced in the electronics, computer, consumer products, banking, securities, and telecommunications industries - all which have led national job growth in the past. Both Gillette and Raytheon recently announced plans to cut thousands of jobs nationwide. According to Challenger, job growth also has dropped from an average of 200,000 a month since the early 1990s to only 69,000 in September, as firms braced for the possiblity of a downturn.
[A little trimming here, a little trimming there... "Hey, where'd our consumer markets go?!" (And a little later, "Hey, what happened to our financial markets?!")]
10/28 Retail groups sees a merry holiday sales season, Reuters via Bos Globe, D5.
CHICAGO - The National Retail Federation, the largest US retail trade association, said yesterday that, based on the strength of retail sales in the first three quarters of the year, sales at general merchandising, apparel and home furnishing stores are expected to rise 5 to 6% this holiday season. Sales in that category rose 4.8% in 1997. The International Mass Retail Association said retailers can expect a 4 to 5% increase in holiday sales this year. More than three quarters of all consumers it surveyed said they expected to spend as much or more than they did last year on holiday purchases.
[They must have been pretty selective to find enough optimistic consumers to survey.]
The NRF represents department, specialty and discount stores, among others, and the IMRA represents discount department stores, home centers, dollar stores, warehouse clubs, deep discount drugstores and off-price stores. "We expect a little more restraint on the part of consumers but the economic fundamentals are still strong enough to produce a good Christmas selling season," NRF chief economist Rosalind Wells said. She said the 5-6% estimate assumes no negative economic or political surprises.
[Folks, you see here "The Economist as Cheerleader." So much for objective science.]
10/24 Pentagon gets $1B it has no use for, by Fred Kaplan, Boston Globe, front page.
[Makework alert! Major MAJOR makework alert!]
When Pres. Clinton and the Congress reached their Oct.15 budget compromise - which added $1B for weapons to defend the U.S. from an enemy missile attack - they did not address a crucial fact: the Pentagon has no idea how to spend the extra money.
Nor did they underscore the little-known fact that the Defense Dept. has been quietly spending over $3B a year on this program for each of the past 14 years - $45.1B in all - and has made no notable headway toward being able to shoot down a single ballistic missile. Indeed, the most promising anti-missile weapon on the drawing board, the THAAD (Theater High-Altitude Area Defense) system - has failed all 5 of its tests.
Top Pentagon officials tried to tell Congress some of this news 2 weeks before the budget settlement.
10/23 Bank seeks takeover by Tokyo - Long-Term Credit declared insolvent, Bloomberg News via Bos Globe, C2.
...would be Japan's first bank nationalization since World War II.
[Great, now you Japanese guys have copied another one of our American bad habits =
nationalize risks and losses, privatize and concentrate profit.
There's only one thing -
the more concentration, the less circulation (it's called "the marginal efficiency of wealth").
You guys sure are inventive when it comes to committing economic harikari.
Too bad you can't just do it alone without taking all the rest of us with you.]
10/23 IMF to provide $15b in Brazil aid - Full package of about $30b from lenders expected to be announced next week, Bloomberg News via Bos Globe, C2.
[Boy, here's an argument for bringing back a steeply graduated income tax! - since most of the IMF's dough comes out of American taxpayers, and since most of this stupidity is committed by the rich and, hey, they're the only ones that have any serious money anyway, they should be paying a much bigger chunk of all these bailouts! Remember "no taxation without representation"? They've got the representation, even the perpetration! So why not the taxation?! Thank God the national GOP is doing something useful and holding up more funds for the IMF!]
10/22 US executives expect global crisis to worsen, AP via Bos Globe, C2.
...with many Latin American countries soon falling into recession, and with little chance for a rebound in Asia before 2000. Despite that..., only one in five executives surveyed by the National Association of Manufacturers [NAM] believes the United States is headed for a recession [definition narrowed as circumstances require!].... The...guarded optimism...was bolstered by recent actions of the Federal Reserve, including last Thursday's unexpected quarter-point rate cut. ...[NAM] members were particularly relieved because many were growing worried about a possible credit crunch in the United States and a reluctance by lenders to supply new loans to businesses and consumers.
[And these rate cuts give lenders even less incentive to supply new loans.]
[Another story showing your "free market" at work and the privatizing of profit but the socializing of loss.]
10/22 Hedge fund lost 92% of its money, by Katherine Burton, Bos Globe, C2.
Long-Term Capital Management LP was left with about $400 million of its original $4.8 billiion, just days after the fund was taken over, a letter to the fund's investors said.... Fourteen banks and securities firms...pumped $3.625 billion into Long-Term Capital last month, bringing the fund's net asset value to about $3.81 billion as of Sept. 30, according to the letter. In exchange they got 90% of the fund.
[And, class, 90% of nothin' would be ...??]
...The banks invested their money for three years, during which they are expected to get their money back.
[Just "get it back"?! They could have achieved that just by not handing it over! Could this possibly be private-sector makework perhaps? Let me get this straight - these boys are going to take on enormous, humungous, gargantu-astronomical risk - for nothing. All this is going to do is delay and worsen the ultimate collapse, because with ever-weakening wealth-centrifuging mechanisms, it's still possible for (and still trending toward) 1% of the population owning 99% of the money, thus intensifying the "diminishing marginal utility of wealth" - i.e., we're still in Chesterton's Pan-Utopian Trap. As Jackie Mason says, "People are stupid, and I say that with the greatest respect."]
[An economic "bellweather" tanks again -]
10/22 Housing construction slows for 2d month, AP via Bos Globe, C2.
10/22 Big oil firm earnings continue their skid, Bloomberg News via Bos Globe, C2.
[Drops so far: Exxon (biggest US oil co.) 23%, Texaco (3d biggest) 58%, Amoco (5th) 54%, Occidental (8th) 98%]...because returns from chemical or fuel sales fell. The Asian recession reduced chemical demand at the same time new plants began production, creating a glut that pushed down profit margins. Prices for ethylene and propylene...fell by 30-35% on the US Gulf Coast during the quarter....
[Ah, boys, let's be honest - "recession" plus "deflation" (i.e., price drops) = DEPRESSION]
10/22 M&A Dept. Newell to buy sagging Rubbermaid in $5.6b deal, Bloomberg News via Bos Globe, C2.
10/16 Fed cuts rates again; stocks soar - Board's goal: keep economy from stalling, by Peter Gosselin, Bos Globe, A1.
[In our primitive form of crisis capitalism (the crisis mentality covers over all kinds of lazy management and special fixes), the only conventional bulwark against depression short of more government borrowing and finally, war and taxes on the rich, is interest rate cuts. Rate cuts do in a mild form what Stinnes' hyper-inflation did in Weimar Germany - they hurt those on fixed income from investments. Phil's approach on rate cuts is that, by "No Taxation Without Representation" or "no pain without input", these arbitrary calls should be made by regular public referendum, not by unaccountable central banks.]
NEW YORK - In an unexpected move, the Federal Reserve cut interest rates yesterday for a second time in just over two weeks, saying that it was forced to act to protect the economy from a freeze-up among nervous lenders.
[Note the abdication of responsibility required by any subset of the whole population, however prestigious - the Fed was "forced to act". If they had not been so insulated by their blue-ribbon lifestyles from the millions of lost jobs over the last 15-20 years, they would have been "forced" to act a lot sooner. Phil's approach on rate cuts says, OK, let's use this conventional remedy until everybody is convinced that it's done all it can, that it's exhausted - and that we need a new, less superficial approach. Because nothing about interest rate fiddling addresses the real problem for the rich = they're not reinvesting big enough fast enough in the markets underlying their huge income-source investments, i.e., in the consumption potential of those markets, i.e., in the consumers..., i.e., in the employees, i.e., in their own employees.]
The Fed's governing board moved to reduce the federal funds rate, the rate at which banks make short-term loans to each other, by one quarter of a percentage point to 5%. Central bank officials underscored th eurgency of their move by acting between regularly scheduled meetings for the first time in more than four years - and by reducign a second rate, the largely symbolic discount rate that the Fed charges banks for loans, to 4.75%.
These new cuts come atop a Sept. 29 reduction that shaved a quarter-point from the federal funds rate and represented an abrupt about-face for the Fed, which as late as August was more worried about an overheating economy than a stalling one.
"This is not the end of the story," said Allen Sinai, chief economist with Primark Decision Economics in Boston. "Rates have got to come down further because the global economy depends on the US continuing to grow. The US is the Maginot line," he said.
[OK, let's examine this lovely example of economese. First, the guy's name is Sinai, so people unconsciously like quoting him because he resonates with the Mount whence Moses brought the Ten Commandments. Oooo, such symbolic security and morality!
[Note secondly the assumption that the US has been growing. This assumption prevailed throughout the 1920s also. And the superficial thinking of standard economists today is still that the Depression started in 1929 - because despite their admission, when pushed, that things must have been going wrong before that, they have never researched those background problems enough to notice their uncanny similarity to what's been going on throughout the 1980s and 90s.
[So we can take two tacks here. We can either say, Well, the US was not really growing. Or, we can say that growth, or at least, this kind of growth, is irrelevant. (And suffers, say, from Chesterton's pan-utopian trap. Note the function of this kind of growth - the middle class's share can decrease relatively but they can be pacified by the absolute increase in their dollar portion - as long as inflation doesn't vitiate it, or even if it does, to some extent. For example, as long as the whole pie enlarges from 100 to 120 liters, the middle class will be appeased even if their slice shrinks from 40% (.4x100=40 liters) to 35% (.35x120=42 liters), because their absolute amount has gone up. "What are you belly-aching about?" say the rich. "You're better off this year than last, aren't you? Pipe down then, you ingrates!" Meanwhile the rich pick up 18 liters of the increase and the middle class only 2 liters. And the rich already have more pie than they could ever eat in thousands of lifetimes, so basically, we just get a lot more pie in storage. This is what standard economists call the "marginal utility of wealth" - though they never do anything about it. Then there are all those nitwits in high tech saying, Oh I don't begrudge Bill Gates his money.... Thank God the Belgians are a little smarter and, exonerating themselves somewhat (from maintaining the last holdout of slavery into the 20th century), wafted a couple of pies into his face.) Has he taken the warning? No. Because Phil just published last month and just in Harvard Sq. So Bill still has no idea what to do. Speaking of those nitwits in high tech (and like Jacky Mason, I say this with the greatest respect), here's one now...]
"The people I know are doing well," said Joseph Baumann, a biotech company employee from Shrewsbury. "I have not been exposed to anybody who's been laid off, thankfully."
[Joseph, close your eyes! The story right below this one in the Globe says "Arco to fire 900..."! But seriously, God forbid that ANY of us should be "exposed" to, yeugh, "anybody who's been laid off"! Bear in mind, however, that this is the kind of thinking and talking that is going to get the USA into the next world war, because if we don't care and won't share with the downsized and those in our bulging prisons, and we don't want to be straightforward about it like Hitler and just build assembly-line extermination for them, we'll need another big war to "solve" the problem, won't we. In Baumann's defense, he does apparently have some perspective, because he goes on to say -]
"From my day-to-day outlook, I see people buying new cars, buying new houses, making ungodly amounts of money," he said.
[So Joseph, if their amounts of money are "ungodly," what amount would be "godly", or, how do we rearrange our "day-to-day outlook" to reinvest a godly amount in our downsized neighbors and our own long-term security? (Timesizing answers this specifically by bringing the workday down to seven or six or five hours and requiring reinvestment of income earned over that time in training or hiring, i.e., conversion of overtime into skills and jobs, i.e., "no overtime alone!")]
10/12 Homelessness rising despite brisk economy, by Zachary Dowdy, Boston Globe, p. B1.
In a disturbing paradox of a booming economy...soaring real estate market....
[When are we going to straighten out our economic indicators so we stop prattling about a "booming economy" merely because of inflation in the money-storing instruments of the super-rich? Clearly a major reason for a "soaring real estate market" is given by the story on 10/9 below called "High anxiety - Investors are shifting huge sums of money in search of safety." Where are they shifting money from careening stock markets? U.S. Treasury bills, real estate....]
...homeless people in Massachusetts seeking shelter has reached a record high.... Last winter, 5,016 people were counted as homeless, up from 4,948 the previous winter and continuing a steady upward trend since the early '90s.... Meanwhile, the number of public-housing units available to low-income families is dropping...as the economy pushes rents out of the price range of even the working poor.
[And prisons are already bulging. "O beautiful for patriot dream That sees beyond the years. Thine alabaster cities gleam Undimmed by human tears! America! America! God shed His grace on thee, And crown thy good with brotherhood From sea to shining sea."]
Also, as many as 8,000 families could lose welfare benefits as soon as Dec. 1.... "We're finding that economic growth comes at a certain price, a heavy one for those at the bottom," [said Xavier Briggs, acting asst. sec. for policy for HUD.]
[When are we going to stop dignifying this as economic "growth" and call it what it is, economic cancer?]
10/12 Britain reports higher robbery, assault rates than US, Reuters via Boston Globe, C17.
[Fine, why don't we just tell them to do what we do - wait for demographics to take your bulge of high-risk males out of the high-risk age range (16-31?), bring in zero tolerance law enforcement, bring back the death penalty, and make prison construction your number one industry - then they can boast about low crime rates too.]
10/10 Yen's Rise Against Dollar Is Threatening Japanese Exports, by Stephanie Strom, New York Times, p. B1.
...It could even prolong Japan's worst postwar recession....Up until this week, the yen had been weakening for months, a reflection of the litany of economic problems confronting Japan: debt-laden banks, rising bankruptcies, falling domestic sales, plummeting business confidence and a stock market that has continued to flirt with 12-year lows. Asia's economic crisis put further downward pressure on the yen. But the yen's weakness has also been regarded as a benefit to Japan because it has helped stimulate exports, the one area of Japan's economy that has continued to maintain relative strength. Now, the abrupt change to a stronger yen, combined with signs of economic weakness appearing in Japan's most important market, the United States, has raised doubts about Japanese exporters as well.
[This is our first story that lists Japan's problems. It also confirms US problems from a trans-Pacific viewpoint.]
10/10 Russia Seeking Aid From Europe, squib, New York Times, B1.
Rocked by its worst harvest in 45 years and a plummeting ruble, Russia appealed for relief aid from the European Union. It has also approached the United States and Canada for help.
[Hey, look what else is happening to the "free market" - and American taxpayers are paying for most of this! - I guess the "free market" is the way investors all over the world can make mistakes and never have to pay for them because Americans taxpayers will be forced to -]
10/10 World Bank [and IADB] set to help Brazil [fight off the global crisis], Reuters via Boston Globe, F1.
...raising the prospect of big new loans in a not-yet-agreed rescue deal. [The two banks are] ready to help Brazil reform its banking sector, its labor markets and its social security programs.
[Byby Brazil - when the World Bank comes in to help you, your enemies can smile, go buy popcorn, and just watch.
Throwing money at crises, rich boys' ideas of reform - how long before we wise up? As long as 1% of the population can concentrate 99% of the wealth, we have a fatal contradiction in the functioning of wealth and incentives.
For the "foothills" of the solution, see story below 10/7 "Europeans Challenge U.S. in Economic Crisis" and on Downsizing page 10/10 re Volkswagen.]
10/9 High anxiety - Investors are shifting huge sums of money in search of safety, by Kimberly Blanton, Boston Globe, p. C1.
...of short-term US treasury bills yesterday as US stock prices gyrated [7742 to 7493 to 7732 in the Dow], the dollar tumbled again [against the yen], and talk of a worse-than-expected slowdown in the US economy shook the financial markets worldwide.
10/7 Europeans Challenge U.S. in Economic Crisis, by Richard Stevenson, New York Times frontpage.
After more than a year on the sidelines, European governments are challenging the United States over how to address the world financial crisis, suggesting that new ideas and leadership are needed as the turmoil persists and Congress continues to block new funding for the IMF.... They have given far more enthusiastic consideration that the United States to efforts by the World Bank to shift the focus away from austerity programs to poverty-fighting [how many times do we have to relearn that austerity automatically accompanies recession - you don't need a government policy as well!] and to challenge the orthodoxy that [says] controls on the international flow of capital are always a bad idea.
[Speculators should be laughin' - they finally got their short-view game enshrined as economic "orthodoxy".]
With their economies strengthening after years of stagnation, European officials even dared to criticize domestic politics and policy in the United States, which for the last five years has not been shy about lecturing the rest of the world about how to achieve prosperity and stability....
[i.e., "What goes around, comes around." That's the good news - the Euros are finally kicking our big blind butt. Now the bad news - they're not dishing new ideas at all, just the same old contradictory ones, and they haven't even woken up to what they themselves are doing right, albeit half-assedly, along timesizing lines with longer vacations and shorter workweeks -]
The French Finance Minister...suggested that... the United States should consider increasing Government spending [this is a "new idea" to Democrats?!?] or cutting taxes [this is a "new idea" to Republicans?!?] to give a boost to the American economy, given the flexibility created by the Federal budget surplus.
[Boy, our kamekazi Congress has even fooled the Euros! - never mind the $5.5 trillion debt, we have a SURPLUS! And as for those "new ideas", they're nothing but two old brain-dead approaches, the Democratic one (gov't spending - actually Hitler did it first) recycled from the 1930s instead of a permanent automatic approach and the Republican one (taxcuts) recycled from the 1980s instead of a permanent automatic approach. Gov't spending was unsuccessful (except psychologically, or was it just propagandistically?) until the War and taxcuts unsuccessful apart from the Pentagon buildup and the mushrooming of the national debt.
[So what was the permanent automatic approach in both cases? A shorter workweek tied to a more inclusive unemployment rate (unemployment up, workweek down, and v.v. - no politicians need meddle) - a shorter workweek bill passed the U.S. Senate on Apr.6, 1933 to spread around the vanishing work ("timesizing"), instead of massive gov't makework programs to try to replace it, never successful in peacetime.
[VW followed the timesizing approach in the early 90s and then came back in the mid 90s (see story dated 10/10 on downsizing page) - Nucor and Lincoln Electric followed it in the U.S. and are among our strongest companies today.]
[Hey, maybe the World Bank is waking up -]
10/7 World Bank and IMF Squabble [on policy toward global crisis], squib, NYT, frontpage, & continued p. A6.
[The World Bank hasn't had any sense since Herman Daly left - except whatever his low-profile pal, Bob Goodland, could sneak through. Let's see what they're doin today without Daly...]
In a speech (10/6) to the finance ministers and central bank governors from 182 nations meeting here, James D. Wolfensohn, the World Bank president [an Australian-born former investment banker known for speaking his mind] said that in the rush to stabilize currencies and bring about economic reform [i.e., to treat the symptoms], too little attention was being paid to the growing ranks of unemployed [i.e., to the disease] and the risks of undercutting political stability."
[In the immortal words of the Three Stooges - "oo! oo! oo!" - the World Bank may be dimly realizing that political stability (dare we infer, "democracy") is actually the visible balancer of politics leaking its wealth-centrifuging effects into economics and getting dubbed "the invisible hand" by blindered economists.]
Without building political support for the bailout programs that have led to government austerity and unemployment, Mr. Wolfensohn said, "we may build a new international financial architecture. But it will be built on sand." [Oh oh, now he's starting to sound like he believes the international bailout artists can and should build political support for unemployment. This to us is the fatal error in their thinking. They have no full employment option on their menu because they cannot conceive of worktime (e.g., the length of the workweek) as a policy variable, even though that's the way the workweek functioned from 1776 to 1940, when for the first time in history it was frozen. Wolfensohn needs to consider this reality - political stability and high unemployment are mutually incompatible. High unemployment splits a population into workers and drones - workers are angered and discouraged by being forced to support ever more dependents, and the dependents are angered and discouraged by being excluded from self-support. The solution is to share the vanishing work and let everyone stay together and stay employed and self-supporting, at ever easier levels of the workweek - which, after all, is the whole promise of technology in the first place. Or in short, "timesizing, not downsizing." At this point in history, there is no alternative to timesizing but instability and war.]
Mr. Wolfensohn's critique struck to the heart of the complaints from many nations - especially Indonesia and Russia - that have found fault with the fund's priorities. But officials of the fund and the United StatesTreasury - which strongly influences its policy - say that Mr. Wolfensohn has not come up with alternatives that would reform sick economies fast enough.
[Jim Wolfensohn, as a Canuck to an Aussie, let me repeat what I said above before I'd read this paragraph, "At this point in history, there is no alternative to timesizing but instability and war." We can't go on trying to save a ludicrously extreme and intensifying income concentration. We must share. And it's much easier to share the skills and the work than to share the money directly - and it doesn't create dependency. You're right that "the usual IMF prescriptions are causing far too much pain to the poor and the middle class" but you've missed the point in stating that that just increases the risks of political upheaval. The point is, IT WORSENS THE PROBLEM - which is the astronomical concentration of wealth beyond what consumer markets anywhere in the world can support as investment targets. You don't have to reach into politics to show the inherent self-destructiveness of this level of wealth concentration. It is all there in economics. There are no market-supported productive investments ANYWHERE in the world big enough to support investments on a scale needed by the current concentration of wealth. Markets have been bludgeoned and starved by downsizing, over and over and over again across the last 12-15 years. Like the oceans and the rain forests and the ground water, they are not infinite. Chainsaw Dunlap and his ilk have been ASKING for the natural limits, if any, and guess what - they're here! Investment bankers like Nick Leeson are still undiscovered, still ASKING for the natural limits, if any, and guess what - they're here!
[You're right in saying that "We must focus on the institutional and structural changes needed for recovery and sustainable development" but you still think govt spending and taxcuts are the changes we need. Jim, these are NOT "structural changes." They paper over our current flawed economic structure with its astronomical and still rising wealth concentration. Listen to the IMF and Treasury officials who are saying to you, "You still have not come up with alternatives that will reform sick economies fast enough." And never mind "fast enough", your present non-new ideas won't reform economies at all because they're contradictory without even larger megadebt! And Jim, as Keynes hunched in 1934, debt is inherently temporary, so govt spending based not on taxes but on debt is inherently temporary. We need to centrifuge wealth. We need to do it in as close to a market-determined way as possible. We need to do it via skills and work rather than just transfers and giveaways . Timesizing meets all these criteria. There may be other plans that do too (though I doubt it because of the need for a general approach and the nature of generalization). At least look at timesizing to get a feel for what a real solution or an adequate structural change looks like! Merely getting the Russians to "collect their taxes and crack down on corruption" is not going to do it - those are just symptoms of the incentive-battering, honesty-eroding lack of sharing going on in the world in general and in Russia in particular. We need a quantum leap ahead in the technology of sharing, and timesizing is the most developed "first cut" in this area that is available in print today.]
10/5 US economic policy faces scrutiny with G7 - Worldwide crisis sparks new calls for constraints on markets [i.e., speculators], by Aaron Zitner and Peter Gosselin, Boston Globe, frontpage & D4.
...France said...some nations...should be able to restrict investors [i.e., speculators] from moving money into or out of a country. The [British] Commonwealth said nations should be able to suspend debt payments...without triggering a default. And some...leaders of developing nations and economists well in the US academic mainstream are proposing...a more powerful IMF or a global Federal Reserve Bank. "The truth is, nobody knows what the one true path is...," [said] Paul Krugman, an economist at MIT who has become a leading thinker on the crisis....
[Shades of Treasury Secretary Robert Rubin, who suggested, on the way into a meeting with Japanese finance minister Miyazawa on 9/4 (see story below on 9/5), that it would produce little in the way of policy initiatives to shore up Japan's ailing banks and revive its flagging economy....
[Hey, if our 6-figure Treasury Secretary is spinning meetings as pointless before they've begun, and a "leading thinker on the crisis" (Krugman) has no idea of even the general lines of an optimal solution and justifies himself by portraying his own ignorance as universal, necessary and sane (because the very idea of a solution is as ridiculous as religious language about "the one true path"), why, people in our society are actually getting paid for discouraging solutions to our biggest problems.
[And Newt Gingrich, via Kenneth Starr, is distracting the nation from these problems by a prolonged investigation into the President's private life that's already cost us taxpayers $30 million ($44m as of 11/20) and four years of Congressional and media "dead air time."
[The British Navy was in this position prior to 1707, according to the PBS documentary "Lost at Sea." They were losing millions from ships going aground or getting robbed by pirates, all because they could tell their latitude but not their longitude in mid-ocean. But in 1707 they lost a whole fleet of four victorious warships that had nearly reached home. It took seven more years but this gradually woke them up. What did they do? They finally set up a 20,000 pound sterling prize equivalent to millions today, the "Longitude Prize," for anyone who could solve this key problem of navigation and within fifty years it was solved by an self-educated carpenter from the boondocks.
[So, Robert Rubin, Paul Krugman and Newt Gingrich, Phil Hyde challenges you to put up or shut up. With your blue-ribbon contacts, get a merely two-million-dollar "Longitude Prize in Economics" established for anyone who can (identify, define, and) solve the key problem of economics today. Let half be paid for the theory (identification, definition and theoretical solution), a quarter for a national implementation and the rest for global implementation to the designer's heirs. It took nearly fifty years for the Longitude Prize to be won. We'll bet you the theoretical part of the "Longitude Prize in Economics" will be won within one year, and the national part within five years using a smart nation like Holland or Iceland for the test run.]
[And here we have one of those delightful stories which indicates that capitalist devotion to the free market goes only just so far, as in "We're for the free market except for regulations in our interest." Compare our story on 9/25 about the Fed's extraordinary rescue of the Long-Term Capital Management hedge fund.]
10/2 Big Board revises its trading-halt limits, Bloomberg News, via Wall St. Journal, C7.
The New York Stock Exchange said yesterday that it would take an 800-point intraday drop in the Dow Jones industrial average to halt trading in United States equity markets in the fourth quarter. The changes took effect yesterday.... Previously, the Big Board halted trading after a decline of 900 points. The change reflects the market's poor quarter, in which the Dow declined 1,109 points, or 12.4%. The exchange determines how much it willl allow the Dow to fall before halting trading by setting decline levels of 10, 20 and 30 percent, based on the average closing level of the Dow industrials for the previous month, rounded to the nearest 50 points../..[A 10% drop] will halt trading for one hour if the decline occurs before 2 P.M., for 30 minutes if between 2 and 2:30 and have no effect between 2:30 and 4.... A 20% drop, now calibrated at 1,600 points, will halt trading for two hours if the decline occurs before 1 P.M.; for one hour if before two, and for the remainder of the day if between 2 and 4. A drop of 30%, or 2,350 points [huh?], will halt trading for the rest of the day regardless of when the decline occurs. The percentage levels, first used in April, are adjusted quarterly.
[Now this is part of a big market-rigging scheme that makes it harder for the market to go down than up, regardless of the fundamentals (if any). These boys think they're dealing with reality and increasingly, they're only dealing with their own skewed game rules. In an ecological economy where everything has to be balanced, any of these trading halts for a drop in the Dow would have to be matched by a symmetrical trading halt for an equal RISE in the Dow. Only then would these boys have some rational argument for saying they're dealing with reality and not their own rose-colored expectations.]
10/2 As Economies Fail, the I.M.F. Is Rife With Recriminations - A Fund of Trouble, by David Sanger, New York Times, frontpage.
10/2 Russian Premier's Calming Words: He Has No Economic Plan - Russians are worried that the Kremlin's cure might be worse than the disease, by Michael Gordon, NYT, 3.
[In case you folks don't remember, when FDR got elected in November, 1932, he didn't have any economic plan either. And that lack of a plan continued until he pushed the 30-hour workweek bill through the Senate on April 6, 1933 and freaked out some short-sighted businessmen in Chicago and Philly and other towns (not, we're happy to report, in New England). And then his plan became "Block that bill in the House" per their orders for the rest of his presidency. In his desperate attempt to block shorter hours, he threw sop after sop at labor to try to appease them without giving them the one thing they wanted and knew they needed - a weapon against their own gross over-supply in the job market. FDR wound up throwing at them unemployment insurance, workmen's compensation, social security, minimum wage...and a whole alphabet soup of makework campaigns such as the WPA, CCC, NRA, NIRA, TVA... - none of which worked until the War because at its best, the whole "New Deal" only solved 40% of the Depression while the War, when it came, took the solution up to the 92% level.
[And you know what, folks? FDR's cure was worse than the disease because he froze a problem right in the middle of the economy - an arbitrary already-obsolete workweek - and tagged taxpayers with the tab, for all future time, of creating enough makework to maintain that workweek regardless of the labor savings of all future technology. And if government did not invent enough work to keep up with technology (and it hasn't), then despite the mounting strain of overlooking it, a larger and larger overall labor surplus would build and demotivate employers from offering training or keeping wages and benefits up with constantly mounting, technologically enhanced productivity. Scams, welfare, homelessness, prisons, plus forced part-time and "self-employment" would grow and wealth would concentrate - beyond all precedent - until the contradictions of 1928 were all reproduced - on a much larger scale. Sound familiar?
The alternative is to go back to the "fork in the road" in 1933 where we went wrong. To break through the blindspot of standard economists that bars them from using worktime as a regulatory variable and choose "timesizing" (work sharing) instead of upsizing government programs (job creation) or downsizing the workforce (dependency building).]
10/2 The boats not lifted, by Michael Crowley, Boston Phoenix, p.6.
In seeking election...Acting Governor Paul Celllucci has offered just one clear rationale for his campaign: the economy...[near-perfect...] to most affluent and comfortably middle-class voters...but poverty is on the rise.... Massachusetts's poverty rate increased by about 20% [last year and] today, 734,000 Massachusetts residents - or 12.2% - live below the federal poverty line ($16,400 for a family of four in 1997).... more...than at any time in the past two decades. [And Mass. is often a bellweather for the nation which last year experienced a small poverty decline.]
10/02/1998 Trades apprenticeships, letter to editor by Louis Coletti & Edward Malloy, NYT, 26.
In a pilot program conducted with the Board of Education and its vocational program, we reserved construction-trades apprentice positions for several hundred graduates of the city's vocational high schools. Before placing them of the job site, we offered additional training in basic math and English and work preparedness. These graduates make, on average, enough in wages to contribute $4,000 each in city and state income taxes. More important, the training they received places them on a solid career path [i.e., solid self-support].
["Several hundred" isn't going to make it, boys. We need the kind of pervasive on-the-job training that popped up spontaneously during World War II because of a real labor shortage then - any unemployment over 2% was seen as problematic - and not just the rhetorical labor shortage of today, spun so we can get visas for more cheap labor from India. How to engineer a healthy labor "shortage" without world war? Timesizing.
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