Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

In the 9/14/11 post titled, “How about socialized banking,” and elsewhere, I have suggested that all banks be federally owned – i.e. the elimination of private banking.

I gave the following reasons:

No bank ever would become insolvent. There would be no “runs” on banks by depositors. Savings would be 100% protected. The lack of a profit motive would eliminate “credit default swaps” and other risky investment derivative beasts that helped lead to the Great Recession. The lack of a profit motive also would eliminate the temptation to lend to credit-poor borrowers.

The absence of outrageous, multi-million dollar salaries would translate into less costly banking services, plus services would be offered in what are now “bank deserts,” where the poor are required to use expensive, neighborhood check-cashing storefronts. There would be no need for “reserves” or for the massive bureaucracy needed to track reserves, nor for the massive compliance bureaucracies, nor for FDIC insurance. No need for Fannie Mae or Freddie Mac.

I was reminded of this when I read in the naked capitalism blog:

JP Morgan Loss Bomb Confirms That It’s Time to Kill VaR
Posted: 11 May 2012

One of the amusing bits of the hastily arranged JP Morgan conference call on its $2 billion and growing “hedge” losses and related first quarter earning release was the way the heretofore loud and proud bank was revealed to have feet of clay on the risk management front. Jamie Dimon said that the bank had determined that its Value at Risk model was “inadequate” and it would be using an older model.

While firms look at VaR over a range of time frames, daily VaR (what is the most I can expect to lose in the next 24 hours) to a 99% threshold is widely used. The fact that VaR is a lousy metric should not come as a surprise.

When people are paid bonuses annually, with no clawbacks for losses, and banks show profits a fair bit of the time, who is going to question bad metrics when the insiders come out big winners regardless?

But VaR is a particularly troubling example, more so because it is sufficiently, dangerously simple minded enough that regulators and managers a step or two removed from markets have become overly attached to its deceptive simplicity.

As mathematician Benoit Mandelbrot discovered in the 1960s, and Nassim Nicholas Taleb popularized in his book Black Swan, risks in financial markets do not have normal (Gaussian) distributions. Taleb, in his article The Fourth Quadrant, pointed out there are many situations where statistics are at best questionable and at worst unreliable: where you have non-Gaussian risk distributions (as you have in financial markets) and complex payoffs.

Now VaR isn’t the only risk model JP Morgan is using, but it has served to allow the inmates to run the asylum.

Basel Committee on Banking Supervision has considered alternative risk metrics, in particular expected shortfall (ES). ES measures the riskiness of a position by considering both the size and the likelihood of losses above a certain confidence level. In other words, it is the expected value of those losses beyond a given confidence level. The Committee recognises that moving to ES could entail certain operational challenges; nonetheless it believes that these are outweighed by the benefits of replacing VaR with a measure that better captures tail risk.

See the problem, here? The regulators believe that to prevent bank failures and malfeasance, banks need a better model to evaluate risk. That’s like saying, “To prevent losing in Las Vegas, people need to improve their gambling systems.” How about, just not gambling? Wouldn’t that work better?

Banks are run by humans. As long as humans are rewarded for risky behavior, they will engage in risky behavior. Period. No models, no regulations, no punishments can prevent it.

Rather than trying to develop the impossible — a system that not only will evaluate risk, but prevent motivated humans from engaging in risk — how about if we eliminate the risk and the motivation, altogether.

If all banks were owned by the federal government, there would be no profit motive — no reason why banks would trade for their accounts — and no personal motivations for bonus rewards based on trading success.

JPMorgan, “a-too-big-to-fail” bank, is not the first — not by a long shot — to engage in excessively risky behavior. And it absolutely, positively will not be the last. So long as there is a profit motive and a bonus motive, these events will happen, again and again and again.

The Basel Committee on Banking Supervision is whistling past the graveyard if it believes there is any solution for the problem, so long as banks are profit-making enterprises. There is not one good reason why banks should be privately owned, and a multitude of reasons why they should be owned by the federal government.

In the past decade, how many U.S. banks have failed? Go to: The FDIC’s “Failed Bank List”. I was too lazy to count; you can see for yourself. At least 450 U.S. banks have failed in the past 10 years!

That’s an astounding number. A ridiculous number. And those are just the banks taken over by the FDIC. This huge list doesn’t include all those banks that were rescued without FDIC intervention. The cause was always the same: The profit motive led to greed overriding sense.

And this was not an unique occurrence. In the 1980’s hundreds of Savings and Loans went bankrupt, costing the public hundreds of millions of dollars. Why. Again, the profit motive overrode sense.

Finally, there is one more reason the federal government should own the banks and indeed, all lending institutions. Today, there are about $38 trillion dollars in the U.S. domestic economy. Of these, only about $10 trillion (26%) were created by the federal government. The rest were created by banks.

History shows that when the federal government begins to lose control over its money creation, we have recessions. It seems that when times are good, banks become more and more reckless with their lending and investment, until they cause a recession, at which time the federal government has to step in with stimulus spending.

Wouldn’t we be better off if there were no recessions and no reasons for the federal government to save the risk-takers and the public?

I call on Congress and the President to have the courage to protect the public and to do what is necessary: End private banking, and have the federal government assume ownership of all lending institutions.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

You may think you know the most important characteristics for being President of the United States. You may be wrong.

Perhaps you think honesty and intelligence count. Not at all.

Or you might think understanding America’s past and concern for America’s future are important. Or having an understanding of the military and of economics? Not a chance.

What about a strong desire to help the under-classes — you know those tired, those poor, those huddled masses yearning to breathe free, the wretched refuse of a teeming shore, the homeless and tempest-tost? Ah, who cares about them?

What about having a clear vision for economic growth? Solid plans to help people achieve “the American dream?” Consistency of message? Naw. Not important.

The single most important criterion (according to “Christian conservatives”) is the determination to prevent gay people from finding happiness in marriage.

Washington Post
Obama gay marriage endorsement mobilizes Christian conservatives
By Dan Eggen and Sandhya Somashekhar, Published: May 11

President Obama’s endorsement of same-sex marriage is energizing Christian conservative support for Mitt Romney in a way that the likely GOP nominee has so far not been able to do on his own, according to religious leaders and activists.

Pastors in Ohio, North Carolina, Florida and other swing states are readying Sunday sermons inveighing against same-sex unions,. . .

And here, you probably thought that to maintain its tax-exempt status, a religious organization could not engage in politics. Laws don’t count for right-wing Christian extremists, except for the single most important law of all (the 2nd Amendment).

. . . while activist groups have begun laying plans for social media campaigns, leaflet drives and other get-out-the-vote efforts centered on the same-sex marriage issue. Romney could benefit from a strong turnout among evangelicals and other social conservatives, many of whom remain skeptical of his commitment to their causes.

“So many people were rather lukewarm toward governor Romney and were really looking for some more tangible reasons to support him,” said Phil Burress, president of Citizens for Community Values, who led the ballot drive that banned gay marriage in Ohio in 2004. “Then lo and behold, it just fell out of the sky when Obama came out and endorsed same-sex marriage. . . . We are going to make this our key issue: the attack on marriage.”

The National Organization for Marriage, a leading anti-gay-marriage group, lashed out at Obama after his announcement and promised to campaign against him “ceaselessly” in swing states.

As one can see, the single most important qualification for President is the desire to prevent two people, who love each other, from achieving happiness.

You of the so-called “religious” right (America’s version of the Taliban), insist that gay marriage violates the bible, and so should be prevented and punished. I agree. While gay marriage is not mentioned in the bible, male gay cohabitation is.

So, for consistency and for all our benefit, I publish below a list of other biblical rules we should insist every candidate follow. Obviously, we “religious” folk already follow these rules; otherwise we’d just be a bunch of mean-spirited hypocrites, injuring people for our own amusement. Right?

Leviticus 20:13 If a man has sexual relations with a man as one does with a woman, both of them have done what is detestable. They are to be put to death

Exodus 21:17 Anyone who curses their father or mother is to be put to death.

Exodus 22:19 Anyone who has sexual relations with an animal is to be put to death.

Exodus 31:15 Whoever does any work on the Sabbath day is to be put to death.

Leviticus 20:10 If a man commits adultery with another man’s wife — with the wife of his neighbor — both the adulterer and the adulteress are to be put to death.

Bad news for Newt Gingrich, Herman Cain and just a “few” others.

Leviticus 20:11 If a man has sexual relations with his father’s wife, he has dishonored his father. Both the man and the woman are to be put to death

Leviticus 20:12 If a man has sexual relations with his daughter-in-law, both of them are to be put to death

Leviticus 20:27 A man or woman who is a medium or spiritist among you must be put to death.

Leviticus 24:16 anyone who blasphemes the name of the LORD is to be put to death.

OMG!

Numbers 1:51 Whenever the tabernacle is to move, the Levites are to take it down, and whenever the tabernacle is to be set up, the Levites shall do it. Anyone else who approaches it is to be put to death.

Deueronomy 25:11-16. When two men are fighting and the wife of one intervenes to save her husband from the blows of his opponent, if she stretches out her hand and seizes the latter by his genitals, you shall chop off her hand; show no pity.

I should mention this last law is one of my favorites.

You shall not keep two differing weights in your bag, one heavy and the other light; nor shall you keep two different ephahs in your house, one large and the other small.

Leviticus 19:19 Do not plant your field with two kinds of seed.

27-28; Do not cut the hair at the sides of your head or clip off the edges of your beard. Do not cut your bodies for the dead or put tattoo marks on yourselves.

Genesis 17:11 You are to undergo circumcision, and it will be the sign of the covenant between me and you.

I do hope all you “religious” conservatives voluntarily have been circumcised. Don’t make us pass a law requiring you to do it.

Deuteronomy 17:12 Anyone who shows contempt for the judge or for the priest who stands ministering there to the LORD your God is to be put to death.

Deuteronomy 21:18-21 If someone has a stubborn and rebellious son who does not obey his father and mother and will not listen to them when they discipline him, his father and mother shall take hold of him and bring him to the elders at the gate of his town. They shall say to the elders, “This son of ours is stubborn and rebellious. He will not obey us. He is a glutton and a drunkard.” Then all the men of his town are to stone him to death.

Deuteronomy 22:5 A woman must not wear men’s clothing, nor a man wear women’s clothing, for the Lord your God detests anyone who does this.

Deuteronomy 22:9-11 Do not plow with an ox and a donkey yoked together. Do not wear clothes of wool and linen woven together.

Deuteronomy 22:23 If a man happens to meet in a town a virgin pledged to be married and he sleeps with her, you shall take both of them to the gate of that town and stone them to death—the young woman because she was in a town and did not scream for help, and the man because he violated another man’s wife.

Deuteronomy 23:20 You may charge a foreigner interest, but not a fellow Israelite.

Deuteronomy 24:5 If a man has recently married, he must not be sent to war or have any other duty laid on him.

Deuteronomy 25:4 Do not muzzle an ox while it is treading out the grain.

Let’s get busy, “religious” right. There are plenty of biblical restrictions to enforce — usually by putting someone to death. Let’s clean up this nation. Put sinners to death. Follow the bible, strictly. Remember, you’re the Christian right. Don’t let the Islamic Taliban show you up.

And above all, don’t let anyone different from you, find happiness.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Much has been written about the Republican Party’s takeover by the Tea Party and the “religious” right wing, but the following may put it all in simple perspective:

House Republicans pass sweeping domestic cuts, spare Pentagon
By Lisa Mascaro
Tribune Washington Bureau
3:10 p.m. CDT, May 10, 2012

1. WASHINGTON _ House Republicans approved a sweeping package of budget cuts to food stamps, Meals on Wheels and other domestic programs _ while sparing the Pentagon _ in an election-year showcase of party priorities.

2. Democrats overwhelmingly opposed the legislation, which is expected to stall in the Senate, but House Speaker John A. Boehner’s decision to call a vote gives the GOP an opportunity to highlight its agenda and attack President Barack Obama’s efforts to reduce the deficit. The bill was approved on party lines, 218-199.

The Tea/Republicans know the bill will be defeated in the Senate, and if not, vetoed by President Obama. So why did they vote for it — unanimously? They wish to demonstrate to the lunatic right-wing fringe that they are opposed to anything that helps the poor.

You don’t believe it? Read on.

3. The legislation is “literally taking food out of the mouth of babies” while continuing tax breaks for the wealthy, said Rep. Nancy Pelosi, D-Calif., the minority leader. The cuts would replace across-the-board reductions to both defense and non-security programs that had been agreed to as part of last summer’s debt-ceiling deal with the White House.

That terrible debt-ceiling deal was forced by the Tea/Republicans. But now, they can’t even live up to their own agreements. First they demand a disastrous deficit cut. Then when the Democrats cave, the Republicans up their demands, to cut anything that helps the 99%. The military is spared only because the 1% own the industrial complex that supplies the military.

4. Republicans countered they were tackling the nation’s deficit problems while preventing steep military cuts that Defense Secretary Leon E. Panetta has said would be devastating.

5. “Were hearing lots of comments about how this hurts people, how this hurts the poor,” said Rep. Paul Ryan, R-Wis., the House Budget Committee chairman. “Let’s take a look at our poverty-fighting efforts. … These programs aren’t working.”

This is the same heartless bullsh*t the Tea/Republicans use when discussing the deficit. If money is spent on a problem (recession or poverty) and the problem isn’t 100% cured, the Tea/Republicans claim the money spent “didn’t work.” They said the stimuli “didn’t work,” because we’re still fighting the recession, not admitting that without the stimuli we’d be in the depths of a depression.

According to the lunatic Tea/Republican fringe, reneging on agreements you yourself forced, then cutting federal spending, will stimulate the economy and help the poor. I used to say this merely reflected ignorance of Monetary Sovereignty — indeed of all economics — but no more. It is a calculated effort to increase the gap between the rich and the not-as-rich, bought and paid for the Koch brothers et al.

You now know everything you need to know about the Tea/Republicans.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Already, millions have been spent on preparations for this extravaganza. Is the summit worth the cost, inconvenience and danger?

npr

In a little more than a week, thousands of dignitaries, protesters and media are expected to pour into the city as world leaders gather to discuss the future of Afghanistan, and any evolving threats. Chicago officials and protesters alike say they’re ready.

They’re ready for what? Does this sound peaceful?

Protest Groups Detail Plans For NATO Summit
May 10, 2012 1:31 PM

CHICAGO (CBS) – Activists planning anti-NATO protests, marches, concerts and counter-summits gathered Thursday at the headquarters of Occupy Chicago to discuss a week’s worth of events leading up to the NATO summit on May 20 and 21.

WBBM Newsradio’s Mike Krauser reports, with the permit hassles protesters have been having with city officials, protest organizer Andy Thayer said he’s looking for some presidential intervention.

“This president has got to say to Rahm Emanuel, ‘Cut the hell out, guarantee people’s First Amendment rights in the city of Chicago,” Thayer said. “In terms of public convergence, the last time I checked, the First Amendment had not been annulled in the city of Chicago, and so people should feel free to walk the streets.”

Occupy Chicago representative Rachael Perrotta said the First Amendment is the only permit the group needs to stage protests, so the group won’t be seeking any permits for their events protesting the NATO summit. Occupy Chicago will join forces with the Anti-Nato Coalition to stage a weeklong series of demonstrations and forums, addressing issues ranging from foreclosures to immigration reform, and from education to the environment.

From May 18 to May 20, organizers plan to stage a so-called “barefoot summit” at the Petrillo Music Shell in Grant Park – a kind of Chicago Woodstock with local bands, poetry readings, and speeches

Given the enormous cost, the massive inconvenience to the residents of Chicago and the real danger of turmoil, what is the purpose of the NATO summit? Here’s what NATO says:

NATO’s 25th summit meeting

At the Chicago Summit, 20-21 May 2012, NATO will drive forward key principles and policies that will shape the Alliance of 2020 and beyond. It will deliver on decisions taken at the Lisbon Summit in November 2010, turning them into concrete programmes and initiatives.

Allies will commit to maintain the necessary capabilities and to developing cooperation and dialogue with partners. And at a time of austerity, it will be a question of striking the right balance between fulfilling NATO’s shared responsibilities and balancing national budgets.

The summit will principally focus on three main themes:

–the Alliance’s commitment to Afghanistan through transition and beyond;

–ensuring the Alliance has the capabilities it needs to defend its population and territory and to deal with the challenges of the 21st century; and

—strengthening NATO’s network of partners across the globe.

NATO is an essential source of stability. In order to maintain its capacity to safeguard the security and values of its members, it needs to continue developing the means to do so and building partnerships beyond the North Atlantic region.

Considering the massive cost and inconvenience, and the real danger of assembling so many high ranking people in one building, I have two questions:

1. Haven’t you been discussing these things every day for the past couple of years?
2. Have you people never heard of video conferencing?

We now live in the 21st century. The world has changed. Even teenagers know how to communicate electronically. Is a physical summit the smartest way for thousands of dignitaries to meet?

Really?

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY