Here is a link to the MP3 of my interview yesterday with Michael McSorley on his Morning Magazine radio show.
Bank failures: 115
Total Deposits: $7,566 billion
Failed Deposits: $107.2 billion
Failed Assets: $129.5 billion
Estimated Losses: $29.4 billion
Actual Losses est: $52.4 billion
Failed Deposits/Total Deposits: 1.42 percent
Estimated Losses/Failed Deposits: 27.4 percent
Actual Losses/Failed Deposits: 48.8 percent
Total loans & leases: -6.8 percent (6720.3, 10/14/09)
DIF balance Q3 reported: negative
DIF balance FDIC est: -7.7 billion
DIF balance actual est: -20.3 billion
FD/TD 1929: 0.47 percent
FD/TD 1930: 1.65 percent
FD/TD 1931: 3.60 percent
FD/TD 1932: 1.99 percent
FD/TD 1933: 8.55 percent
AL/FD 1929-1933: 25.66 percent
FD/TD 2008: 3.21 percent
AL/FD 2008: 14.99 percent
I really liked The Far Side. Bloom County was another favorite along with Calvin and Hobbes. But their merits notwithstanding, I think there is a reason that Peanuts wasn’t merely long-lived, but was superior to even the best comics of subsequent generations.
I always despised Lucy as a child. She was so pointlessly mean, so needlessly cruel. Her selfishness and narcissism were incredible; what other cartoon character would kick her own little brother out of the house when given the opportunity? She bothered me to the point that I used to refuse to make Lucy cookies at Christmas with our old Peanuts cookie-cutters. I could not understand what could possibly have possessed the cartoonist to spoil what was otherwise a lightly amusing comic with such an unpleasant character.
Now that I’m older, however, I understand why intellectual sophisticates hailed Charles Schulz as one of the great philosophers of the 20th century. Unlike most creative sorts, he fully recognized the fundamental pettiness and cruelty of human nature and explored it to the full, often in the persona of Lucy. The seeds of his brilliant and unusual perspective are visible in the very first Peanuts strip, published 59 years ago on October 2nd.
My favorite bits usually concerned Snoopy’s fantasy life. The vulture, the dinosaur, the Sopwith Camel, and, of course, the literary career. But what ultimately distinguished Peanuts from the rest was Schulz’s fearless recognition of Man’s fallen nature. Lucy is not driven by biological or economic imperatives, she simply is. And we all know a Lucy, we all have aspects of Lucy in us to a larger or hopefully smaller degree. Charlie Brown’s persistence in the face of his own haplessness is obviously a major aspect of the comic, but even Charlie Brown is most notable for the foil of human decency he provides to Lucy’s all-too-human petty evil.
I do not believe that Eco was entirely correct when he wrote: “”These children affect us because in a certain sense they are monsters; they are the monstrous infantile reductions of all the neuroses of a modern citizen of the industrial civilization.” For all his brilliance, Eco is an Italian urbanite, and does not understand American suburbia or the complete irrelevance of European modernity and urban civilization to it. Charlie Brown’s neuroses are amusing, to be surebut they are far less significant than the interplay between him and the quotidian cruelty of the other children, the innate and trivial cruelty that one can easily observe in the interactions of children and adults today.
Perhaps the most poignant in the series of strips is the baseball game when Charlie Brown’s team finally has the opportunity to win a game. All he has to do is let the team’s best batter do the work, run home from third, and tie the game. It is the obvious thing to do. It is the smart thing to do, and even the girls who seldom pay any attention to the game while they are playing in the outfield know it. Surely, they say to each other, surely he could not be so stupid as to try to steal a base. But Charlie Brown suddenly finds himself seduced by his desire to be the hero… and as a result finds himself lying on the field, staring into the night sky, crying “why? over and over again.
And who among us has not found himself in a similar position? There is little overt religion in Peanuts, the classic Christmas special notwithstanding, but as Tolkein once said of The Lord of the Rings, “it is of course a fundamentally religious and Catholic work.” Peanuts is catholic rather than Catholic, but whether you grasp the religious aspects of it or not is totally irrelevant; it is worth reading and re-reading because it is the greatest philosophical work produced in the 20th century. It is our Iliad and Schulz was our Homer. And if his poetry was less than lyric, well, that was fitting too.
Anyway, it’s not as if California voters can claim they didn’t know about Ahnold’s predilection for this sort of crassness:
Governor Arnold Schwarzenegger has made American political discourse a little cruder – which is saying something. As California journalists noted, he sneaked an obscene acrostic into a veto message. The first letters of the middle paragraphs lined up to spell “F*** you.” A spokesperson for the governor half-heartedly suggested that it was a coincidence. Yeah, right. The odds against those seven letters appearing in that specific order by chance are 8,031,810,176 to one.
At least it wasn’t something like “All hail Obama, Devourer of Worlds!”
While I wasn’t able to make the ebook available for free, you can get the PDF for only $1.99 at Scribd immediately. The Kindle version will also be $1.99 when Amazon finally gets around to updating their database and makes it available. Even if you’re waiting for your hardcover to arrive, you might still like to check out the Scribd preview, since it features three four-page sections that cover the comparison of present and historical bank failures, the “global savings glut” and the failure of the monetarist predictive model, and five of my suggestions for what can and should be done on the macro scale. I always prefer to have both the book and the ebook myself, and thanks to the low ebook price and the Amazon discount you can get both the hardcover and the PDF for less than the cover price of the former alone.
Today looks like a busy day. I had three radio interviews yesterday and five today; it was gratifying to discover how keenly interested people are in the subject matter. Granted, the national show was focused on money matters, that being the name of the show, but regardless, it was remarkable to observe the divergence between the reactions of the Wall Street-based financial media and the talk radio hosts to yesterday’s “surprising” GDP report. Speaking of today’s radio shows, one of them is The Barry Farber Show. I’ll be on from 8PM to 9 PM Eastern and his producer said that he’d very much welcome callers with questions about the book in the second half-hour. The number is 800-336-2225 if you’ve got an economics related one that I haven’t addressed here already and the show has an Internet live stream available.
Luke responds to my fourth letter:
We agree that a rational demonstration that someone is wrong – about the facts of evolution or their own knowledge of theology, for example – can be taken as an insult. Your continuous implications that I am ignorant or stupid sounded like insults to me, but perhaps you only meant to rebut my factual claim to have some understanding of Christian theology.
Then again, maybe not. I thought the purpose of our dialogue was to get at the truth, but you seem proudly preoccupied with your self-described role as a “Cruelty Artist” bent on orchestrating my own “self-evisceration” (self-disemboweling) which is a “more perfect beauty” than “any collection of dabs of paint on canvas.”
In any case, I am not motivated to defend my theological knowledge. I have read many books on theology and taken many courses. I have spent hundreds of hours reading the Bible and popular commentaries. But if you still think I am ignorant, well… that’s your own judgment.
Read the rest at Common Sense Atheism.
It can quite reasonably be said that at no point in economic history has technical knowledge ever been less relevant to being a good economist than today. Mainstream economics is in complete disarray. In the UK, economists are reeling in shock as their predicted third-quarter recovery has failed to appear, while in the USA, Nobel-winning Keynesians are first calculating the need for a $600 billion stimulus, then turning around and declaring a $787 billion stimulus is insufficient. A report from the Kiel Institute entitled The Financial Crisis and the Systemic Failure of Academic Economics has concluded that a “reconsideration” of the “basic premises” of standard macro and finance models is required due to their inability “to provide any insight into ongoing events.” And even the venerable Economist has been wondering aloud where economics went wrong.
Garbage in, garbage out. The truth that is known to every computer programmer is finally beginning to penetrate the economic elite. Keynesian models have failed. Monetarist models have failed. Neo-Keynesian and Post-Keynesian models have failed. The only known concepts that have not completely failed – yet – are the financial instability hypothesis of Hyman Minsky, Richard Koo’s concept of a balance-sheet recession, and the credit-focused cycle theory of the Austrian School.
Mr. Rockwell, the chairman of the Mises Institute and a great champion of both Austrian economics and human liberty, was kind enough to ask me to personally introduce RGD to his readership. This is an article I wrote specifically lewrockwell.com for the official launch of the book today, and I’d encourage you to check it out. I have to admit, I was a bit taken aback to hear the host quote the opening sentence of it during my interview on The Rob Johnson Show.
I’ve been asked to consider the possibility that the thesis of my latest book, The Return of the Great Depression is incorrect. If I were the Mogambo Guru, this would of course be the correct occasion to respond with nothing more than the Mighty Mogambo Snort of Derision (MMSoD) followed by a verbose and entertaining rant involving pitchforks, firearms, indignities performed upon the corpses of deceased central bankers, and gold, but as I am merely an Internet Superintelligence with a tendency to take things literally even when they are clearly intended as metaphor, sarcasm, or irony, sometimes for the purposes of illustration but more often for my own amusement, I shall consider the question of what would indicate that I am incorrect and we are not in the early stages of a massive worldwide economic contraction.
As it happens, I have gone into some detail in examining the possibility that I am wrong in the book itself by cataloging the six plausible scenarios, five of which are presently part of the present economic discourse. While the five scenarios that range from Saint Bernanke and the Green Shoots to Great Depression 2.0 each have their public advocates who are listed by the scenario they are forecasting, I have yet to discover any economist who is genuinely convinced that we are headed for the sixth scenario: Fallout 4 Live.
Since a significant part of my conclusions are based on Austrian theory with a much-lesser nod to Minsky’s financial instability hypothesis, the first indication that I could be wrong is related to bank credit. Austrian theory teaches that either the money supply and/or bank credit has to contract; as Mises puts it: “[T]he moment must eventually come when no further extension of the circulation of fiduciary media is possible.” So, an sustained increase in either TOTLL or total credit market debt would be the first and strongest sign that either a) the depression is coming to an end or b) Whiskey Zulu India, the hyperinflation scenario, is coming to pass. TOTLL is presently down 8.2% from its peak one year ago, while TCMD was very slightly down in the second quarter; we are still waiting for the third quarter results.
The second sign will be rising property tax revenues, particularly at the state and local level. While it is easy for governments to play games with statistics, it is much more difficult for them to falsify their tax revenues. The document “State Finance in the Great Depression” is useful on this score. “After the Depression began, local government property tax collections did not again reach the 1927 level until 1944. For states, it took until 1952 to reach the 1927 level, although in the interval, states had reduced their reliance upon the tax.” Since state and local governments now already derive their revenue from a much broader range of taxes, it is unclear if one can use aggregate tax revenues as a similar indicator, but the collapse in cumulative tax revenues from declines in sales and income taxes suggests that this may be the case.
“Among the worst cases is Indiana where revenue collections were 8 percent below forecast, or $254 million lower than expected, leading state budget officials to speculate revenue could fall $1 billion by the end of the fiscal year.”
Most economists will be looking primarily at the GDP figures, and indeed, a positive report above three percent will probably be widely cited as evidence that the recovery has arrived, although anything south of the 3.3% growth expected by the mainstream consensus will likely sink the markets. But the current numbers are considerably juiced by the summer housing and automotive subsidies and the “positive” aspects of the improvement from the second quarter were entirely the result of a) government spending, and b) Americans buying fewer imports, neither of which is a legitimate sign of economic growth. But, I would regard two quarters of economic growth of four percent growth without any substantial government programs propping up consumer spending to be a legitimate sign of recovery. The fact that it is looking increasingly likely that the home buyer’s credit act will now be extended to April 2010 does not inspire great confidence in the legitimacy of the GDP numbers for the third and fourth quarters. I will be analyzing the Q3 Advance report on the RGD blog later for those who happen to be interested. (UPDATE: the BEA is reporting 3.5% growth for Q3, of which almost half, 1.7%, is from “motor vehicle output”. In other words, from additional government-subsidized debt.)
Finally, it is important to remember that GDP is an artificial construct intended to provide a means of modelling Keynes’s general theory which is predicated first and foremost on employment. The very concept of a “jobless recovery” is a contradiction in economic terms. As with GDP, U3 and U6 are subject to government statistical shenanigans, but unemployment is a little harder to disguise, so regardless of how the BLS plays around with the consistency of the “labor force” in order to make the rate look lower, seeing the Employment/Population ratio move back above the 60% would also be a strong sign of genuine economic recovery. Note that we are presently at 1984 rates of employment-to-population.
A fifth indicator that I am incorrect and the hyperinflationary scenario is unfolding instead of the debt-deflationary one is a rapid increase in the price of gold. Please note that this is not an economic recovery scenario, it is only a different form of the massively contractionary one. I believe that gold, being a form of money, can benefit from deflation. So, $1,075 gold is not conclusive, especially since it’s still lower than the $1,425 inflation-corrected 1981 peak. But only inflation could possibly account for the sort of rapid rise in price that would be projected to take it above, say, $5,000 per ounce, and if there is hyperinflation, the gold price can safely be expected to exceed that by a considerable margin.
Finally, physical shipments of goods are a necessary and relatively objective measure of economic activity. The Baltic Dry Index is a daily average of international shipping prices and it was at 11,771 at its peak in 2008. It is presently below 3,000 but rose as high as 4,291 in May, so any move above 5,000 would be an initial indication that an economic recovery is underway. Above 10,000 would appear to be positive proof that the economy was completely back on track, barring the hyperinflationary scenario, of course.
In summary: 1) Increasing bank credit and overall debt. 2) Rising state and local property tax revenues. Possibly increasing aggregate tax revenues as well. 3) Consecutive quarters featuring four-percent plus GDP gains not created by government spending, reduced imports and consumer spending subsidies. 4) Employment to population ratio over 60 percent. 5) Rapidly increasing price of gold over $1,500 per ounce. 6) The Baltic Dry Index exceeding 5,000. If anyone else has any suggestions, please feel free to list them.
How, I wonder, do you attempt to explain this sort of thing to the next-of-kin if you’re the responsible policeman? I mean, somewhere under the badge, you too are a human being, you have feelings, and you probably wouldn’t be given the assignment if you weren’t at least somewhat sensitive to the emotions of others. But then comes that critical moment when you are asked how it happened, and you have to answer “Coyotes.”
Wolves would be one thing. Bears, no problem at all. Even ants, I could understand, having kept a suspicious eye on the little bastards since reading about Leiningen’s encounter with them as a child. Squirrels or lemmings, on the other hand, would be even worse. And then of course, when one first reads the headline, it’s hard to escape the fleeting thought that there could be an element of divine justice at work there.
Granolas never seem to grasp that “communing with Nature” sometimes means that you’ll be playing the part of the bread and wine.
The usual suspects are going to be VERY unhappy about this CoD:MW2 mission, considering it begins with gunning down civilians in an airport. Of course, I think the scenario will probably have great appeal to lots of people, considering what they face whenever they’re dealing with the security goons at the scanners. Speaking of which, where was the security anyhow?
Anyhow, throw in the devastation of Washington DC as well and Infinity Ward/Activision clearly have a huge winner on their hands. They should have kept the dedicated server support, though.