Post Monday Linkages

Kunstler discusses the eventual collapse of the Rube-Goldberg machinery of all American institutions and the potential outcomes:

Reality unfolds emergently, and this ought to interest us. For instance, I have maintained for many years that we are approaching the twilight of the automobile age - and the implications of this for daily life in the USA are pretty large. For a long time, I had assumed that this change of circumstances would proceed from our problems with the oil supply. But reality is sly. It has thrown two new plot twists into the story lately. America's romance with cars may not founder just on the fuel supply question. It now appears that our problems with capital are so severe that far fewer people will be able to borrow money from banks to buy cars at the rate, and in the way, that the system has been organized to depend on. Our problems with capital are also depriving us of the ability to pay to fix the hypercomplex system of county roads, interstate highways, and even city streets that make motoring possible. What will we do?

He goes on...

For now, a cashless government gives out cash-for-clunkers, which is basically a self-esteem building program designed to make the government feel better about itself because it is ostensibly taking 11-miles-per-gallon cars off the road and replacing them with 27-miles-per-gallon cars, thus forestalling scary problems with climate change.

Except a new report suggests the Cash for Clunkers program hasn't been nearly as successful as those numbers imply. (I don't know if those are pulled from thin air by JHK or were goals set forth by the administration.) Notice this report has nothing to do with the $24K claim that is the main talking point for the bickering:

The single most common swap — which occurred more than 8,200 times — involved Ford F-150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford F-150s. The fuel economy for the new trucks ranged from 15 mpg to 17 mpg based on engine size and other factors, an improvement of just 1 mpg to 3 mpg over the clunkers.

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Andrew Sullivan opens up an IEA report on peak oil.

"Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources," he added.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was "imperative not to anger the Americans" but the fact was that there was not as much oil in the world as had been admitted. "We have [already] entered the 'peak oil' zone. I think that the situation is really bad," he added.

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Thankfully, there is growing support for legislation to end this "too big to fail" nonsense.

"The lesson of Lehman should not be that the government should have prevented its failure," David Einhorn, head of hedge fund Greenlight Capital, said in a recent speech. "The lesson of Lehman should be that Lehman should not have existed at a scale that allowed it to jeopardize the financial system."

All that matters here, is that anything that is "too big to fail" is SO big that it equates to an agglomeration of wealth and power that they (singular individuals or the corporations they represent) are above any justice system and can either bribe or threaten the very foundations this country was founded upon. Once again, as soon as something approaches "too big to fail" it immediately means that it is "too big to exist."
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And more from the BackAsswards land of bizarro Keynesianism and stupid or corrupt economic development:

But it was the odd story of a parking structure in Columbia Heights, built by the city with $40 million of taxpayers' money, that may be the most pertinent data point in the future of parking. Here was a classic case of how good intentions can get fouled up with old-fashioned civic extortion. The retailer Target demanded the garage as a condition of moving to the city. The city built it. But something strange happened along the way: The expected hordes of drivers didn't materialize. They came by foot, by Metro, but not in cars, at least not in the numbers projected, and now the lot is losing money, costing the city some $100,000 per month.

Lesson: it rarely pays to bend over for any business, let alone one with a suburban business model in an urban setting.

Picking Up Steam

...I wonder how long it will take for the rabble to truly be roused and force some change. Mish agrees with me that any bank or entity considered "too big to fail" is absolutely too big to exist. Why? Because it means they are SO big that they can manipulate markets and hell, even governments.

That Goldman, Citigroup, and the now defunct Bear Stearns and Lehman, etc, could ever be in a position to front run trades based on analysis they know they are going to publish, and/or to purposely make recommendations to ignite short squeezes or selloffs based on positions they hold is simply wrong.

Citibank to Investors: We Suggest You Bet Against Us

Please consider the following horrendous advice last week by Citigroup. Flashback March 31, 2009 Citibank to Investors: We Suggest You Bet Against Us.

Something to Read..

...while my mutt expresses her displeasure toward the tyranny of the leash.

If you read one thing all day, nay all week, make sure it is Matt Taibbi's The Big Takeover in Rolling Stone:

Which, when you think about it, is insane: What had brought us to the brink of collapse in the first place was this relentless instinct for building ever-larger megacompanies, passing deregulatory measures to gradually feed all the little fish in the sea to an ever-shrinking pool of Bigger Fish. To fix this problem, the government should have slowly liquidated these monster, too-big-to-fail firms and broken them down to smaller, more manageable companies. Instead, federal regulators closed ranks and used an almost completely secret bailout process to double down on the same faulty, merger-happy thinking that got us here in the first place, creating a constellation of megafirms under government control that are even bigger, more unwieldy and more crammed to the gills with systemic risk.

In a not-so-ironically related note, Texas bailout money is going directly into the same sprawl beast that helped bring it all down. From the NYT:

Texas plans to spend $181 million of its federal stimulus money on building a 15-mile, four-lane toll road — from Interstate 10 to Highway 290 and right through the prairie — that will eventually form part of an outer beltway around greater Houston called the Grand Parkway.

The road exemplifies an unintended effect of the stimulus law: an administration that opposes suburban sprawl is giving money to states for projects that are almost certain to exacerbate it.

Quotes from the condo auction at Atlantic Station:

“I can’t wait to get downtown,” he said, “and not having to worry about driving a lot. We’ll be walking a lot and taking advantage of Atlantic Station.”

from another satisfied customer:

“I’m so excited,” the 28-year-old Delta employee said. “I didn’t know how it was going to go, but it all turned out well. I probably couldn’t have afforded it otherwise.”

See, falling housing prices is a good thing. People can now afford homes in places where they actually want to be, not Conyers, GA, wherever the eff that is.

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And in happier news, a follow-up to last week's guest post on the what, how-to's and why's of converting your patch of grass into something productive, the Obama's have planted an organic veggie garden in the White House lawn:

“My hope,” the first lady said in an interview in her East Wing office, “is that through children, they will begin to educate their families and that will, in turn, begin to educate our communities.”

No. The Real REAL Problem

Robert Reich: The Real Problem is AIG execs are accountable to no one.

AIG's arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid (they would have had a lower priority under bankruptcy law that AIG's debts to other creditors); indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if laughing weren't already so expensive.

This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. To whom should they be accountable? As long as taxpayers effectively own a large portion of them, they should be accountable to the government.

Too big to fail. Ugh. I'm tired of this propaganda fed straight from the too big's big mouth. Too big to exist.

And he's absolutely right, but the deeper issue is that American Democracy had long ago been taken over by the new Kings of the Castle. Their corporations are their kingdoms and the executives are the modern day royalty. Our government representatives were/are merely their pawns; beholden to the biggest lobbyists.

If and when we take the power back, perhaps then our newly and freely elected representatives can make decisions for people first, quality of life first, not status quo business first. And don't get me wrong, I love business. I love a functional economy. But clearly, allowing lobbyists to corrupt effective executive decision making, so that business can maintain the status quo, stifle competition, and quell innovation is not working.

"More with Less"

The theme of the fifth season of the Wire (or one of them anyway) as an oft repeated rallying cry uttered by the corporate stooges as their institutions failed around them. I have no illusions. Point being, that I apologize if content is lacking lately (despite visitorship being up - perhaps I'm getting more entertaining?), but my responsibility level at my job has been increasing exponentially lately.

New quote for today:

George Monbiot says "Every pound we spend on driving is a pound withheld from the alternatives, many of which (such as buses and trains) employ far more people for the same amount of money."

Has Someone Been Reading My Blog

Doubtful, but Harvard prof. Howard Glaeser comes to the same conclusion as I did here:

That is how innovation works: small companies competing like crazy and trying out new things. Across cities, there is a strong connection between an abundance of small firms and local growth. The last thing that the government should be doing is propping up big declining firms. Real innovations are far more likely to come from someone’s garage, which is where Chester Carlson came up with the Xerox machine during the Great Depression.

My words:

Let me be the first to say, that instead of saving dinosaurs, how about we start thinking about saving that money to help startups on the other side of this bottoming that will be smaller, nimble, and more able to meet the needs of the 21st century.

It is time to fossilize the AIGs of the world and hang their bones in a museum. We'll dedicate it to decadence and an unrelenting belief system to the religion of greed. As I once heard somebody say, Greed makes for a useful agent in democratic free market economies, but also makes for a horrible master.

Another Bad Day on the Market

Let me be the first to say (with thoughts for the other side), that instead of saving dinosaurs, how about we start thinking about saving that money to help startups on the other side of this bottoming that will be smaller, nimble, and more able to meet the needs of the 21st century.

It is time to fossilize the AIGs of the world and hang them their bones up in a museum. We'll dedicate it to decadence and an unrelenting belief system to the religion of greed. As I once heard somebody say, Greed makes for a useful agent in democratic free market economies, but also makes for a horrible master.