“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Thursday, October 28, 2010

US interest rates at zero are 7% too high!

The Fed's impending blunder

By Ambrose Evans-Pritchard Economics Last updated: October 27th, 2010

OK, I’ve calmed down after a week of Jamon Iberico and Rioja in Granada’s Albaycin, so I will try to be polite about the US Federal Reserve. Try, that is, not necessarily succeed.

For a good insight into the thinking of the New Keynesian priesthood that rules our money and our lives, it is worth reading “QE2: How Much is Needed?” by Jan Hatzius from Goldman Sachs.

His argument – crudely – is that US interest rates at zero are 7pc too high given the Taylor Rule on output gaps, et cetera (not that Professor Taylor himself happens to agree, but let us not quibble).

Since rates cannot be minus 7pc, the Fed would need to launch a $4 trillion blitz of fresh bond purchases to fully compensate, such is the mess that America’s leadership has inflicted on the Great Republic. I have over-simplified: Goldman Sachs relies on a “policy gap” concept, which factors in fiscal tightening et al.

This would push the Fed balance sheet to $6.3 trillion, above the $5 trillion pencilled in as the upper limit during the Great Crash.

Mr Hatzius is not saying the Fed will do this, or should do this. His forecast is that the Fed will start off with baby steps of $500bn spread over six months or so, rising over time to meet the bank’s “dual mandate of low inflation and sustainable employment”.

(Actually the Fed’s mandate is “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” Stable prices are not the same as low inflation. It takes Ben Bernanke’s maniacal obsession with the doctrine of inflation targeting to twist this into a mandate for printing large sums of money at a time when the Dallas Fed’s `trimmed mean’ measure of annual inflation has jumped from 0.5pc in May, to 0.8pc in July, and 1.5pc in August. But again, let us not quibble).

Mr Hatzius said the Fed sees “tail-risks” in using QE to the full, but may nevertheless do another $2 trillion in the end.

I have no doubt that this report reflects thinking at the Fed Board in Washington, and among Bernanke allies at the San Francisco Fed and Boston Fed – though not of course at the Dallas Fed where Richard Fisher confesses: “In my darkest moments I have begun to wonder if the monetary accommodation we have already engineered might even be working in the wrong places.”

What we have is a glimpse into the Sanctum Sanctorum of money creation, a glimpse of Jesuitical fanaticism.
Now, I put my hand up and confess to having supported QE when the financial system was imploding in late 2008 and early 2009, and I continued to do so as the M3 money supply collapsed at 1930s rates earlier this year. I persist stubbornly in thinking that it was the right thing to do, AT THAT TIME.

But we are no longer in a systemic financial crisis, and the Fed’s motives have become subtly corrupted. Having argued during the boom that it was not the business of central banks to stop asset bubbles – and specifically that any fall-out could “safely” be cleaned up later – Bernanke now seems to determined to validate this absurd doctrine, bending all the sinews of the US economic and financial system to this end. One error leads to the next.

In a sense QE has worked all too well. M3 has stabilized. The M2 gauge used by the Fed – which was still contracting in May – has been growing annual rate of 8.4pc over the four weeks to mid-October. The pace has been accelerating for months.

OK, 8.4pc is not Weimar, but it is not imminent deflation either.

And what about velocity, the other part of the monetary cocktail? It is coming back from the dead as you can see below?

Simon Ward from Henderson Global Investors said his measure of velocity is rising at a robust rate of 8.7pc. “QE1 was justified during the crisis because monetary velocity was collapsing at that time. But now that velocity is recovering further QE is not needed. In fact it is potentially very dangerous,” he said.


This is the theme of Chapter 17 entitled “Velocity” in Jens O’ Parsson’s book Dying of Money, the cult text of our brave new world.

If I may recycle a passage from a column I wrote about the book in July: “Each big inflation – whether the early 1920s in Germany, or the Korean and Vietnam wars in the US – starts with a passive expansion of the quantity money. This sits inert for a surprisingly long time. The effect is much like lighter fuel on a camp fire before the match is struck.

People’s willingness to hold money can change suddenly for a “psychological and spontaneous reason” , causing a spike in the velocity of money. It can occur at lightning speed, over a few weeks. The shift invariably catches economists by surprise. They wait too long to drain the excess money.”

“Velocity took an almost right-angle turn upward in the summer of 1922,” said Mr O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to “smell a government rat”.


No doubt the Bernanke Fed views monetarism with contempt, despite paying lip service to Milton Friedman. This is a grave error. Surging M3 gave forewarning of the credit bubble from 2005-2007, and then rang alarm bells before the banking crash in late 2008. Ignore money and velocity at your peril.

The immediate effect of the Fed’s QE2 rhetoric has been to drive up commodity prices, negating much of the benefit. “How this possibly helps out the moribund US economy is anyone’s guess,” said David Rosenberg from Gluskin Sheff.

“If there is an `imbalance’, it is in the US pretending it can solve structural headwinds, overextended balance sheets, chronic unemployment and a massive housing inventory backlog with untested Fed policy tools,” he said.
Nor is it clear that Bernanke’s aim of driving down interest rates serves any useful purpose at this stage. As GMO’s Jeremy Grantham argues, this policy is reducing pensioners to penury. “Lower rates always transfer wealth from retirees (debt owners) to corporations (debt for expansion, theoretically) and the financial industry. This time, there are more retirees and the pain is greater, and corporations are notably avoiding capital spending and, therefore, the benefits are reduced. It is likely that there is no net benefit to artificially low rates.”

If you crunch everything in the mixer you can perhaps claim that QE2 will be a net plus of sorts. But is it really wise policy to embark on such a contentious adventure at a time of deep misgivings among the public and in Congress, and in the face of blistering criticism from China, Germany, Russia, as well as a lot of Western economists?

I hate to cite Alan Greenspan but he is right this time to warn that the Fed is playing a “dangerous game”, whatever the claims of New Keynesian economic theory. Politics matter.

Yes, the Fed is right to worry that protracted deflation would be lethal in an economy with total debt at 350pc of GDP. Those who call for a liquidationist policy of mass bankruptcy and default are an even greater danger to political stability than the Bernanke Fed. That policy was enacted from 1930-1932, with observable results.
But I suspect that something else is happening at the Fed. Bernanke is refusing to accept that the US must go through the slow painful cure of debt-deleveraging. He is trying to air-brush away the consequences of 20 years of debt creation and Fed error.

The proper role for the Fed from now on is to steer a narrow course between the Scylla of deflation and the Charybdis of inflation, for year after, for as long as it takes, until America is properly purged. AND THEN NEVER COMMIT SAME IDIOTIC MISTAKE AGAIN.


  1. Napolitano, and Schiff.

    That's almost too much crazy for even me.

  2. "US interest rates at zero are 7% too high!"

    That may be why the Fed was able to float those bonds with a negative yield, that I think doug posted a piece about, not long ago.

    Pay $105, get a guaranteed $100 back.

    There is trouble in River City, no doubt of that.
    Asset devaluation and wage deflation is seen all around the 'hood.

    There is no move away from being energy dependent upon our Wahhabi allies. An issue that is not even mentioned in this election cycle.
    To volatile an issue to address, perhaps?

    Little mention of foreign adventures.

    Lots of meaningless blather about "jobs", without a moments discussion to the cause of job losses.

    It has been almost 100 years of piss poor performance from the Federal Reserve, another progressive Republican reform that has gone awry.

    If the powers that be think I'll vote for a Quayle, they must be smoking crack. That the young fella will win, an example of the real deep shit we're in and not about to get out of.

  3. Ah yes more fun and tricks from our friends the moslems...

    MOGADISHU, Somalia — An al-Qaida-linked Islamic group said Thursday it has executed two girls in a western Somali town, accusing them of spying for Somalia's weak, UN-backed government.

    Al-Shabab judge Sheik Mohamed Ibrahim on Wednesday sentenced the girls to death for working for government soldiers fighting the group in the town of Belet Weyne.

    Ayan Mohamed Jama, 18, and Huriyo Ibrahim, 15 were executed by firing squad soon after sentencing.

    As the girls were shot, they shouted "There is no God but Allah," says an eyewitness who asked not to be named for fear of reprisals.

    Al-Shabab controls large parts of southern Somalia and its members vow allegiance to al-Qaida. It has carried out several whippings, amputations and executions to enforce its own strict interpretation of Islam.


    Mr Islam strikes again..

    Farooque Ahmed, 34, of Ashburn conspired with people he thought to be al-Qaeda operatives to bomb the Arlington Cemetery, Pentagon City, Crystal City and Court House stations, according to a federal indictment.

    An Obama administration official said Ahmed, a naturalized U.S. citizen born in Pakistan, first drew the attention of law enforcement officials by seeking to obtain unspecified materials. He later became the target of an undercover sting, officials said.

    According to the indictment, federal agents posing as Islamic radicals began meeting with Ahmed in April. At the meetings, held in Northern Virginia hotels, he allegedly agreed to conduct video surveillance of the stations and suggested the best time to attack and the best locations to place explosives to maximize casualties. He is also accused of later turning over video and sketches he made of the stations.


    and from Jolly ole Londonstan

    Mohammed has become the most popular name for newborn boys in Britain.

    It shot up from third the previous year, overtaking Jack, which had topped the list for the past 14 years but was relegated to third spot.

  4. Good Morning EB...

    Howdy to our resident Cliff Claven and all his Names...

    and yes, today would be a great day to nuke the Black Rock of Mecca...

    and in OTHER Dhimmi news?

    Sec of State Hillary the Clitless? Just bowed to Iran....

  5. Again, the Story of "o" posts an item that contradicts his own propaganda.

    His claim that Islam is a monolithic force, shown to be false in his own post

    ... its own strict interpretation of Islam.

    Which exemplifies that there are other, not so strict, interpretations of Islam.

    That the "strict interpretation" is an exception, not the rule, with Islam. Or it would not be mention as an aberration from the mean.

  6. That there are really evil fellpws in Somalia, not in dispute. That they use an interpretation of Islam to excuse their behavior, granted.

    That their behavior indicts anyone but themselves, ludicrous.

  7. By the CNN Wire Staff Paris, France (CNN) -- France and some other NATO nations may begin to withdraw some troops from Afghanistan next year ...

  8. Our resident liar says:

    His claim that Islam is a monolithic force, shown to be false in his own post

    Please do not lie...

    I never have made that statement...

    You distort and misdirect...

    tsk tsk...

    you are no better than Joy Behar...

    You are a bitch

  9. Get with the program. Even I know that the federal reserve, inflation/deflation, debt and money have nothing to do with Islam, stick and stones or some black rock some feel the need to blow up.

    Stick with the post. At least for the first 20 comments. Sheeesh….

  10. The Story of "o", putting all Islamoids in the same basket, a monolithic group.

    Let's use the Arab/Islam standards for life from now on...

    If one infidel is murdered by a moslems?

    1000 moslems must be executed. (we can use the moslems already in jails across the world) ...

    Tue Oct 26, 10:55:00 AM EDT

  11. Like I said..

    Show me the money fool...

    you quote one thing and show another as proof?

    you are worse than Barney Frank

  12. The issue of civil unrest in the United States, as addressed in a Time Magazine article has nothing to do with Islam, except for the vast amount of treasure that has been wasted in the attempt to modify Iraqi culture through new-conservative strategies.

    Gandel finishes the article by leaving the prospect of widespread civil unrest as an open question.

    “So it seems clear what the Fed is likely to do,” he writes. “How the economy, the militias and the rest of us react is up in the air. The count down is on. T minus 15 days to Fedamageddon. See you there, hopefully.”

    Of course, people like Gerald Celente and a host of other economic forecasters have been predicting civil unrest, food riots and tax rebellions for the past two years, but to have Time Magazine seriously entertain the notion of civil war in the United States is a shocking reminder of just how close to the precipice we now stand.

    Numerous forecasters, governments, spy agencies, and international bodies are predicting mass riots and unrest in response to a worsening economic picture.

    In November 2008, right as the economic implosion was unraveling, the U.S. Army War College released a white paper called Known Unknowns: Unconventional ‘Strategic Shocks’ in Defense Strategy Development. The report warned that the military must be prepared for a “violent, strategic dislocation inside the United States,” which could be provoked by “unforeseen economic collapse,” “purposeful domestic resistance,” “pervasive public health emergencies” or “loss of functioning political and legal order.” The “widespread civil violence,” the document said, “would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.”

    Time Magazine: Prospect Of Civil War In U.S. “Doesn’t Seem That Far Fetched” .

    The true threat to domestic tranquility is just that, domestic.

  13. Going back one day was all I cared to do, in proving the Story of "o" as unable to remember what even he wrote, previously.

    I did not quote him, but paraphrased his claims against Islam. That he does not understand the difference, an indication of his education, or lack there of.

  14. The issue of domestic terrorism grows. Terrorism not by Muslims against the people of the United States, but by the people of the United States against the government.

    The suicide assault against the IRS, in Austin TX, exemplifies the issue.

    Pilot Crashes Into Texas Building in Apparent Anti-IRS Suicide

    A pilot furious with the Internal Revenue Service crashed his small plane into an Austin, Texas, office building where nearly 200 federal tax employees work on Thursday, igniting a raging fire that sent massive plumes of thick, black smoke rising from the seven-story structure.

    Austin Police Chief Art Acevedo said the incident was a single act by a sole individual, who appeared to be targeting the federal building. He refused to classify it as terrorism.

    Another lone crazy, like Timmy McVeigh? Or a part of a larger conspiracy, like Timmy McVeigh?

    Mohamed and Malvo?

  15. As more and more folk feel that it is their "right" perhaps even duty to fire upon Federal workers.

    A U.S. law official said investigators were looking at a lengthy, anti-government "manifesto" Stack is believed to have written on his Web site. The message outlines problems with the IRS and says violence "is the only answer."

    This trend mentioned by bob, from moscow, when he brought up the incident in Idaho, where a Game & Fish helicopter was fired upon and hit, due, b thought, to policy differences concerning elk and wolf resource management disputes.

  16. The Charlotte Observer
    Sep 10, 2010 ... They say he collaborated last week with a confidential informant to plan the bombing of an abortion clinic in North Carolina. ...

  17. Justin Carl Moose, 26, is a self-described "extremist, radical" and the "Christian counterpart of Osama bin Laden," according to an affidavit filed by FBI agents. Agents arrested Moose, who lives in a northwest Concord neighborhood, on Tuesday.
    "Extremist, Radical, Fundamentalist...? Yep! Terrorist...? Well, I prefer the term 'freedom Fighter.'"

    Read more:

  18. The Time Magazine piece "Will the Federal Reserve Cause a Civil War?"
    Courtesy of the Curious Capitalist

  19. LAGOS, Nigeria, Oct. 28 (UPI) -- Nigerian authorities seized 13 containers of Iranian weapons Israeli officials believed were to be smuggled to Hamas in Gaza, authorities said.

    Nigeria's secret service announced rocket launchers, grenades and explosives camouflaged as building materials were seized at the port of Lagos after they were unloaded from an Iranian ship, the Haaretz daily reported Thursday.

    After unloading the weapons, the ship left the port, the Israeli newspaper said.

    A source at Israel's Foreign Ministry told the newspaper Israel's Embassy in Nigeria was attempting to garner further details from the country's security service and receive information concerning the investigation, Haaretz said.

    "On opening the first container, the service operatives discovered rocket launchers, grenades and other explosives," Nigerian State Security Service spokeswoman Marilyn Ogar said. The paper said the Nigerian authorities had received intelligence concerning the ship's cargo before it docked at the port.

    The clearing agent in charge of unloading containers reportedly offered to bribe Nigerian customs officials to transfer the containers to a terminal for screening outside the port, the Israeli daily quoted Nigeria media reports saying.

    An Israeli defense source told Haaretz the seizure of the cargo has revealed a new smuggling route from Iran to Gaza, adding it appears the Iranians have encountered difficulties shipping weapons via the Red Sea to Sudan and from there to Gaza, because of the international forces monitoring Iranian ships in the Red Sea.

  20. Rat you distort and misdirect...

    You make up quotes and then when your feet are in the fire you back pedal and call it "paraphrasing"

    Face the truth man, you are so full of shit your breath smells like an obama...

  21. Wretch had a post about negative yield "inflation protected" Treasuries:


    Bloomberg reports that “the Treasury sold $10 billion of five-year Treasury Inflation Protected Securities at a negative yield”.

    Yes, you heard that right. The New York Times writes:
    Bizarre as it sounds, that is correct.

    In an auction of a special kind of five-year Treasury bond, investors paid $105.50 for every $100 of bonds the government sold — agreeing to pay the government for the privilege of lending it money.

    But these aren’t just any bond, they’re bonds insured against inflation. The securities, called TIPS or Treasury Inflation Protected Securities, “are indexed to inflation in order to protect investors from the negative effects”

    The NYT explains:

  22. Haven't watched the third video yet, but in the second I learned that Soros bought Indymac for peanuts after Schumer started the catastrophc run.

    The Regieme then gave him 2 Billion Bucks for his effort!

  23. Allah is not happy with the world's largest Islamic nation...

    Indonesia tsunami toll hits 343 as bodies found


    MENTAWAI ISLANDS, Indonesia (AP) - Rescuers searching islands ravaged by a tsunami off western Indonesia raised the death toll to 343 Thursday as more bodies were found and said the number is likely to climb higher because hundreds of missing people may have been swept away.
    Elsewhere in Indonesia, the volcano that killed 33 people this week began erupting again, though there were no reports of new injuries or damage. Mourners held a mass burial Thursday during a lull in Mount Merapi's rumblings.
    President Susilo Bambang Yudhoyono was to meet Thursday with survivors of the twin catastrophes, which struck within 24 hours in different corners of the seismically charged region, severely testing the nation's emergency response network.
    Officials say a multimillion-dollar warning system installed after a monster 2004 quake and tsunami broke down one month ago because it was not being properly maintained.
    In the tsunami-ravaged Mentawai islands, search and rescue teams - kept away for days by stormy seas and bad weather - found roads and beaches with swollen corpses lying on them, according to Harmensyah, head of the West Sumatra provincial disaster management center.

  24. Obama claims "he has done stuff we dont even KNOW about" this from the Jon Stewart's show...

    Hope and Change?

    More like Bullshit and Piss....

  25. President DUDE...

    Yep, have some Mad Dog 55 and a Kool...

  26. Obama claims "he has done stuff we dont even KNOW about" this from the Jon Stewart's show...

    Well we had a basic clue when he went on The View complimenting the set decor and knew who made the dresses they each were wearing.

  27. Scientists Find 'Liberal Gene'

    Of course it's rapidly dying out due to the Roe Effect, where mostly liberal parents abort.

  28. Melody: Stick with the post. At least for the first 20 comments. Sheeesh….

    Be careful Mel or he'll want to nuke you too.

  29. "In fairness," the president replied defensively, "Larry Summers did a heckuva job."

    "You don't want to use that phrase, dude," Stewart recommended with a laugh.

  30. SEIU is in charge of maintenance of voting machines in Nevada.

    The Secretary of State is overseeing this enterprise.

    The Secretary of State was part of the "SOS Program" funded by Soros, also backed by SEIU.

  31. Selah said...
    Melody: Stick with the post. At least for the first 20 comments. Sheeesh….

    Be careful Mel or he'll want to nuke you too.



    /off sarc.


  32. Mel,

    the stick it up your ass was a request from bob...

    he's obsessed with your butt...

    not I

  33. .
    China Wrests Supercomputer Title From U.S.

    A Chinese scientific research center has built the fastest supercomputer ever made, replacing the United States as maker of the swiftest machine, and giving China bragging rights as a technology superpower.

    The Tianhe-1A computer in Tianjin, China, links thousands upon thousands of chips.
    The computer, known as Tianhe-1A, has 1.4 times the horsepower of the current top computer, which is at a national laboratory in Tennessee, as measured by the standard test used to gauge how well the systems handle mathematical calculations, said Jack Dongarra, a University of Tennessee computer scientist who maintains the official supercomputer rankings.

    Although the official list of the top 500 fastest machines, which comes out every six months, is not due to be completed by Mr. Dongarra until next week, he said the Chinese computer “blows away the existing No. 1 machine.” He added, “We don’t close the books until Nov. 1, but I would say it is unlikely we will see a system that is faster.”

    China Gains Bragging Rights


  34. .
    I see we can always count on WiO to raise the quality level of the
    conversation a notch.

    I assume that's why you are Bob's hero.


  35. Announcing Radical-in-Chief

    Obama, Socialism, and Deception

    The question of deception adds another dimension to this debate. Let’s say the hypothetical scenarios of Obama’s past socialism spun out by Debs were all true. If that was the case, it would mean that President Obama had systematically and profoundly deceived the American people about his own political history during the 2008 election.

    I believe that the president has, in fact, deceived the public in just this way. Radical-in-Chief makes that case in detail. Obama’s deceptive handling of his past undermines democracy.

    It also undermines trust in Obama’s claims about the motivations behind his current policies. Americans knew the truth about Ronald Reagan’s liberal past, just as they clearly understood that he was a committed conservative when he ran for president. But the American public has not been told the truth about Obama’s socialist past. That deception matters immensely for our assessment his conduct in office.

  36. .
    US not tracking spending on Afghan projects, audit says

    Billions have been spent on contractors in Afghanistan, but US records are poor The US government has spent about $55bn on rebuilding in Afghanistan since 2001 but cannot easily show how the money was spent, a government watchdog says.

    The special inspector general's office for Afghanistan reconstruction talked of a "confusing labyrinth" of spending.

    It said some 7,000 contractors received $17.7bn from 2007-09 but data prior to 2007 was too poor to be analysed.

    It is the first comprehensive audit of US spending in Afghanistan since US-led troops ousted the Taliban in 2001.

    According to the report, US government agencies are not tracking Afghan contracts in a shared database and cannot easily show where the money went...

    Money From Heaven

    They talk about Ben Bernanke 'dropping money from helicopters'; however the Pentagon actually has the helicopters and at least figuratively does it.

    Ever since the stories of the pallets of cash that were shipped into Iraq to be handed out as walking around money, bribes, etc. that just seemed to disappear with no record, the Pentagon has proved it is incompetant to handle anything more than their paychecks. The same applies to the State Department.

    The Pentagon and State Departments need separate divisions that handle and audit the funds that are dispersed. No general should handle anything more than his paycheck. The separate disbursement divisions should be judged strictly on how well they control the funds. They should not be wearing medals and ribbons, they should be wearing eyeshades.

    The military may be the best in the world at what they were designed to do but they are children at best when it comes to handling money, indifferent to the billions they squander, and at worst corrupt.

    The same applies to the State Department. What kind of training has any of these people had handling funds?

    For those that complain about adding more bureacracy, I say make personnell cuts in other areas to offset it. Maybe cut out some of those bag men handing out the cash.

    Not only are billions wasted, the corruption further adds to the cynicism that is so widespread among the public. Also, a billion here a billion there quickly adds up.



  37. Remember all the brains from business school and Wall Street arguing that so called obsolete industries and manufacturing going out of business was a good thing.

    These businesses were thought to be better off in the hands of the Chinese. Well; the Chinese have gone from making a cheap abacus to having the world's fastest super computer.

    Creative destruction has creatively destructed our economy, but not for the Germans who treated their manufacturing as a strategy asset:

    "German unemployment fell slightly in October, dropping to its lowest level in 18 years as the impact of persistently strong growth in Europe's top economy continued to filter through to the jobs market.

    The number of jobless fell by 3,000 to a seasonally adjusted 3.153 million, figures from the Labor Office showed on Thursday, while the headline level dipped to 2.945 million, confirming figures announced a day earlier."

  38. .
    I see Trish Regan over at CNBC is now a redhead. She's still a nitwit but she looks pretty good.


  39. It looks like the Republican one-man-wrecking -machine George Bush has one of his books leaked on the weekend before election.

    The jack-ass that keeps on kicking.

  40. CL, This

    is the type of thing I'm referring to when I say "Environmental Disaster.

    I had to leave last night so I couldn't put proper closure on this subject. Couple of points just to consider since I am out of time again. (Probably out of luck, out of sync, out of sorts, out of steam, and out of answers as well.)

    The cost of industrialization (one of them) is environmental mitigation. Was the automotive industry in Detroit more or less 'dirty'? I am noting the argumentative conflict on the subject of industrialization.

    Second, the energy 'solutions', both transportation and power, will likely be blended technologies that combine the energy density of fossil fuels with the environmental attributes of renewables. Blended technologies do not lend themselves well to policy debate in a political context defined and driven by financial gain. Whether the techs can pull us out of oil dominance seems to be the question of the moment.

    Third point is philosophical. The short version is The Precautionary Principle, which has been discussed here before. A quote from a previous link to emphasize what PP entails:

    CCS is still nothing more than talk. There are no scientific
    guidelines for burial of CO2 in the ground. There are no agreed-upon criteria for selecting (or rejecting) a burial site, or for
    characterizing it (meaning, to examine it in detail for suitability).
    No one has defined "success" or "failure" for a CCS burial project. No one is exactly sure how to monitor for leakage. No one has determined how much leakage is "acceptable" during what period of time. No one has decided who will be responsible if leakage occurs. (All the coal- to-liquids plants will be privately owned, according to the Air Force plan.) All these questions, and many more, are -- or should be -- subjects of vigorous debate.

    Answering these questions properly would require decades of careful work, experimentation, scientific evaluation, and public discussion.

  41. .
    Jobs up. Unemployment down

    The market drops.

    Exxon gains $7 billion, stock price falls.

    3M does great in all categories, stock drops 6%.

    The market is grouchy today.


  42. .
    The Education Department is issuing new guidelines today on various issues affecting student loans. There has been discussion here on which is better, having the government run the student loan program or funnelling the administration through the banks; but the rules put out today effect who gets the loans.

    For those not familiar with the issue, the following article kind of explains it:

    Last week the Education Department released a report showing nearly two-thirds of students who attended for-profit colleges aren’t repaying their federal student loans...

    The Student Loan Giveaway

    The politics are kind of muddled since natural enemies like Lanny Davis and the GOP appear to be on the same side of the fight.

    Lanny Davis says,

    Suppose that a conservative Republican Administration, in the middle of high unemployment and an economic slowdown, proposed new regulations that would most hurt lower income people and minority groups and the for-profit colleges and universities that serve them? Can you imagine the cries of outrage from liberal critics, condemning "hard-hearted" Republicans targeting the most vulnerable young people in our society?

    Yet that is exactly what the Department of Education's proposed "gainful employment" regulations would likely do. They are almost exclusively aimed at "for profit" private colleges, which are predominantly comprised of lower income and minority students. Let's be careful about characterizing, as some liberals have done, those schools catering to such vulnerable at-risk students with "open admission" policies as "bad actors" whereas the more selective elitist Harvards and Stanfords with less student loan defaults are deemed "good actors..."

    This has the uncomfortable look and feel of disparate class and racial treatment - which should make liberals very uncomfortable.

    The Liberal Dilemma

    The other side argues,

    "Today's announcement recognizes that students and taxpayers are getting fleeced and cannot afford to wait for protection from unscrupulous schools," said Pauline M. Abernathy, vice president of the Institute for Access and Success, in a written statement. The institute, along with more than two dozen other education and consumer groups, is seeking an even stricter gainful-employment rule.

    The institute said it was also pleased that, under the timetable, the department could begin enforcing by next year some portions of the gainful-employment regulation that would require colleges to provide greater disclosure about programs' costs and their students' job prospects. Those parts of the regulation could "warn students away from the programs most likely to leave them with debts they cannot repay," said Ms. Abernathy in the statement. A Chronicle analysis in July found that 40 percent of government loans to students at for-profit colleges who entered repayment in 1995 have gone into default.

    Why Throw Money Away

    I have to agree with those that argue the advertising of some of these colleges amount to a scam.


  43. The comment had nothing to do with sticking anything up my ass and everything to do with kissing yours. Whether you're out nuking murdering rocks or serving the homeless at a soup kitchen, either way I wouldn't give you the pleasure.

  44. I too wonder where the lines are between the central bank and government - which are supposed to be separate. Ben Bernanke is an incredibly smart man who has studied the Great Depression at great length but is the US the same today as it was then? Interest Rates are as low as they can be so quantitative easing is the only tool left. What about Obama's promise to double exports? Where are the jobs and consumer spending which would cause companies to dip into their stockpiles of cash? That's what is needed to avoid deflation.