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Who caused San Diego's massive power failure September 8?

SDG&E blames utility worker at Arizona Public Service

SDG&E and Arizona Public Service tried to blame the September 8 blackout on a single worker. Critics reject the explanation. - Image by Sandy Huffaker, Jr.
SDG&E and Arizona Public Service tried to blame the September 8 blackout on a single worker. Critics reject the explanation.

Fumbling European banks may drag the whole world into another slough, but a couple of them have done the right things responding to adversity. A trader at UBS (once known as Union Bank of Switzerland) recently lost $2.3 billion on a bunch of bad bets, tried to cover them up with phony trades, and finally turned himself in. He was immediately branded a rogue trader — losing all that money on his own, without management’s permission or knowledge.

Trader Kweku Adoboli lost $2.3 billion for UBS.

The trader, Kweku Adoboli, has confessed his sins and gone to the slammer. Then something refreshing happened: the bank’s chief executive, an icon in European banking circles, resigned. “As [chief executive officer] I bear full responsibility for what occurs at UBS,” he declared. Good. Management is admitting it lacks a failsafe system that will thwart out-of-control individuals, and the top head is rolling.

Rogue trader Jérôme Kerviel became a folk hero.

Then there was Jérôme Kerviel, a trader for France’s Société Générale, who allegedly lost $6.7 billion for the bank, exceeding his trading limits by a mile. The trades were discovered in 2008. Like Adoboli, Kerviel was allegedly making unauthorized trades and then creating phony transactions to cover up the transgressions. This bank, too, admitted its own failures and weaknesses in its risk control system. The institution fired Kerviel’s two direct supervisors. The bank’s three top officials, including the chief executive officer, volunteered to resign, but the board asked them to stay. However, the chief executive soon stepped down.

The main point is this: so-called rogues, or individuals allegedly acting alone, don’t bring a well-managed company to its knees. Trying to blame one person for a huge loss is an admission that the company does not have adequate risk control systems. In the investment world, traders are encouraged to take big gambles. When they backfire, one trader is often blamed. (Although Kerviel has been sentenced to prison, he is a folk hero in France, where people recognize that the blame game is phony.) It’s similar with shock jocks: they are paid to be outrageous, but when they step too far over the line, offending a key constituency, management saws off the limb they are perched upon.

In an intelligently managed company, when the company’s reputation or billions of dollars are at stake, no one person’s neck should ever be in a noose.

Are you listening, San Diego Gas & Electric? Are you listening, Arizona Public Service? There was a massive power failure September 8 that knocked out San Diego and Imperial counties and parts of Orange County, Arizona, and Mexico. Initially, the blame was heaped on one forlorn Arizona Public Service laborer in the North Gila substation in Yuma County. He supposedly was responsible for a short that caused the transmission line that carries power into California to disconnect, causing the dominoes to fall and leaving millions of people in the dark.

Michael Shames, executive director of Utility Consumers’ Action Network (UCAN), scoffing at this tale, wrote Michael Niggli, chief operating officer of San Diego Gas, and requested data that would authenticate the claim that a single worker was responsible for the blackout. Shames calls that alibi the “Homer Simpson” theory.

Niggli had a lawyer write a letter to Shames. It said that the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation were making an inquiry into the blackout. San Diego Gas “will respond only to government entities involved in the investigation,” said the letter. “Responding to data requests from non-governmental entities would inappropriately divert resources away from the formal investigation and would only serve to confuse the public,” stated the lawyer’s missive.

Hmm… “Now that [San Diego Gas] has bamboozled the public into thinking that a single utility worker at Arizona Public Service caused the massive power failure of September 8, 2011, it now wants to avoid any further confusion that might lead the public into thinking about the real story,” wrote UCAN’s Charles Langley on the watchdog’s website. “And the real story, as it will turn out, had little to do with the poor Arizona worker. It took a lot of people and a lot of wrong decisions” to take down reactors at the San Onofre nuclear power plant and collapse the power grid.

One purported rogue case affecting many San Diegans is still working its way through the legal maze. Five years ago, the San Diego County Employees Retirement Association, which serves county retirees, boasted incessantly about its strategies to bring in fat returns year after year. At that time, the association had 20 percent of its portfolio in hedge funds, those high-risk pools of private capital that are often run by billionaires, sometimes from offshore tax hideaways.

The county association had $175 million invested with Amaranth Advisors, a hedge fund that closed down — not surprisingly, because it lost $6.6 billion of its $9 billion portfolio betting the wrong way on natural gas futures contracts. One young fellow, a Canadian named Brian Hunter, got the blame. The Commodity Futures Trading Commission and the Federal Energy Regulatory Commission accused Hunter and Amaranth of manipulating gas prices. They wanted to levy a $291 million fine on Amaranth, but eventually that was whittled down to $7.5 million.

The Senate Permanent Subcommittee on Investigations issued a 130-page report charging that Amaranth’s manipulations caused huge price swings in the natural gas market and ultimately socked consumers with higher prices. The Federal Energy Regulatory Commission fined Hunter $30 million, but among other things, he said the agency had no authority because he is a Canadian citizen.

The retirement association had $175 million invested with Amaranth. It got $84.9 million back and sued Amaranth, Hunter, and three of Amaranth’s officials, including the chief risk officer for the balance. In 2007, when the suit was filed, the retirement association’s chairman charged that Amaranth “turned our money over to Mr. Hunter, who in my opinion was an absentee rookie trader located thousands of miles from Amaranth’s office.” Then, Amaranth “recklessly failed to apply even basic risk management techniques and controls” to monitor Hunter, according to the suit. However, a New York court ruled last year that Amaranth had warned investors that they could lose all their money. The retirement association lost at the trial level. The suit is now on appeal. The association still entrusts its money to hedge funds but in a more balanced way.

“Don’t put all your eggs in one basket,” says an old adage. But those who do put too many eggs in one basket — say, in the hands of one person — better watch that basket intently. Blaming one individual is a sure sign of incompetence and disingenuousness.

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They have everything you’d expect, including my latest fave taco, octopus
SDG&E and Arizona Public Service tried to blame the September 8 blackout on a single worker. Critics reject the explanation. - Image by Sandy Huffaker, Jr.
SDG&E and Arizona Public Service tried to blame the September 8 blackout on a single worker. Critics reject the explanation.

Fumbling European banks may drag the whole world into another slough, but a couple of them have done the right things responding to adversity. A trader at UBS (once known as Union Bank of Switzerland) recently lost $2.3 billion on a bunch of bad bets, tried to cover them up with phony trades, and finally turned himself in. He was immediately branded a rogue trader — losing all that money on his own, without management’s permission or knowledge.

Trader Kweku Adoboli lost $2.3 billion for UBS.

The trader, Kweku Adoboli, has confessed his sins and gone to the slammer. Then something refreshing happened: the bank’s chief executive, an icon in European banking circles, resigned. “As [chief executive officer] I bear full responsibility for what occurs at UBS,” he declared. Good. Management is admitting it lacks a failsafe system that will thwart out-of-control individuals, and the top head is rolling.

Rogue trader Jérôme Kerviel became a folk hero.

Then there was Jérôme Kerviel, a trader for France’s Société Générale, who allegedly lost $6.7 billion for the bank, exceeding his trading limits by a mile. The trades were discovered in 2008. Like Adoboli, Kerviel was allegedly making unauthorized trades and then creating phony transactions to cover up the transgressions. This bank, too, admitted its own failures and weaknesses in its risk control system. The institution fired Kerviel’s two direct supervisors. The bank’s three top officials, including the chief executive officer, volunteered to resign, but the board asked them to stay. However, the chief executive soon stepped down.

The main point is this: so-called rogues, or individuals allegedly acting alone, don’t bring a well-managed company to its knees. Trying to blame one person for a huge loss is an admission that the company does not have adequate risk control systems. In the investment world, traders are encouraged to take big gambles. When they backfire, one trader is often blamed. (Although Kerviel has been sentenced to prison, he is a folk hero in France, where people recognize that the blame game is phony.) It’s similar with shock jocks: they are paid to be outrageous, but when they step too far over the line, offending a key constituency, management saws off the limb they are perched upon.

In an intelligently managed company, when the company’s reputation or billions of dollars are at stake, no one person’s neck should ever be in a noose.

Are you listening, San Diego Gas & Electric? Are you listening, Arizona Public Service? There was a massive power failure September 8 that knocked out San Diego and Imperial counties and parts of Orange County, Arizona, and Mexico. Initially, the blame was heaped on one forlorn Arizona Public Service laborer in the North Gila substation in Yuma County. He supposedly was responsible for a short that caused the transmission line that carries power into California to disconnect, causing the dominoes to fall and leaving millions of people in the dark.

Michael Shames, executive director of Utility Consumers’ Action Network (UCAN), scoffing at this tale, wrote Michael Niggli, chief operating officer of San Diego Gas, and requested data that would authenticate the claim that a single worker was responsible for the blackout. Shames calls that alibi the “Homer Simpson” theory.

Niggli had a lawyer write a letter to Shames. It said that the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation were making an inquiry into the blackout. San Diego Gas “will respond only to government entities involved in the investigation,” said the letter. “Responding to data requests from non-governmental entities would inappropriately divert resources away from the formal investigation and would only serve to confuse the public,” stated the lawyer’s missive.

Hmm… “Now that [San Diego Gas] has bamboozled the public into thinking that a single utility worker at Arizona Public Service caused the massive power failure of September 8, 2011, it now wants to avoid any further confusion that might lead the public into thinking about the real story,” wrote UCAN’s Charles Langley on the watchdog’s website. “And the real story, as it will turn out, had little to do with the poor Arizona worker. It took a lot of people and a lot of wrong decisions” to take down reactors at the San Onofre nuclear power plant and collapse the power grid.

One purported rogue case affecting many San Diegans is still working its way through the legal maze. Five years ago, the San Diego County Employees Retirement Association, which serves county retirees, boasted incessantly about its strategies to bring in fat returns year after year. At that time, the association had 20 percent of its portfolio in hedge funds, those high-risk pools of private capital that are often run by billionaires, sometimes from offshore tax hideaways.

The county association had $175 million invested with Amaranth Advisors, a hedge fund that closed down — not surprisingly, because it lost $6.6 billion of its $9 billion portfolio betting the wrong way on natural gas futures contracts. One young fellow, a Canadian named Brian Hunter, got the blame. The Commodity Futures Trading Commission and the Federal Energy Regulatory Commission accused Hunter and Amaranth of manipulating gas prices. They wanted to levy a $291 million fine on Amaranth, but eventually that was whittled down to $7.5 million.

The Senate Permanent Subcommittee on Investigations issued a 130-page report charging that Amaranth’s manipulations caused huge price swings in the natural gas market and ultimately socked consumers with higher prices. The Federal Energy Regulatory Commission fined Hunter $30 million, but among other things, he said the agency had no authority because he is a Canadian citizen.

The retirement association had $175 million invested with Amaranth. It got $84.9 million back and sued Amaranth, Hunter, and three of Amaranth’s officials, including the chief risk officer for the balance. In 2007, when the suit was filed, the retirement association’s chairman charged that Amaranth “turned our money over to Mr. Hunter, who in my opinion was an absentee rookie trader located thousands of miles from Amaranth’s office.” Then, Amaranth “recklessly failed to apply even basic risk management techniques and controls” to monitor Hunter, according to the suit. However, a New York court ruled last year that Amaranth had warned investors that they could lose all their money. The retirement association lost at the trial level. The suit is now on appeal. The association still entrusts its money to hedge funds but in a more balanced way.

“Don’t put all your eggs in one basket,” says an old adage. But those who do put too many eggs in one basket — say, in the hands of one person — better watch that basket intently. Blaming one individual is a sure sign of incompetence and disingenuousness.

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Comments
126

What you say is so true in these instances of "blame game." Push the blame to the lowest level and use some small fry employee as scapegoat. In Japan the top dog usually resigns in disgrace. AT SDGE, the president and the CEO of parent, Sempra, are not threatened at all. Oh, they give some half-baked apologies, but the accept no real blame. So, they will assist with an investigation, will they? Wonderful. Will SDGE be held blameless? It could be.

As these organizations grow larger and more complex we see progressively less accountability and an almost total absence of personal responsibility by executives for failures. That does not offer much hope for the future.

Oct. 6, 2011

You are so right. Top executives are paid 400 to 500 times what the average worker gets, up from around 60 fifty years ago. But with this increased pay comes LESS responsibility for corporate disasters. Best, Don Bauder

Oct. 6, 2011

Have you noticed that all reported rogue traders lose money? I guess those traders who operate outside the box and make money end up with corner offices and a key to the executive wash room.

Oct. 6, 2011

If the rogue traders make money, the firm looks the other way. Best, Don Bauder

Oct. 6, 2011

Most trading firms and banks have really good risk management systems in place that won't allow a single trader to put on a hundred thousand cars of T-Bonds or whatever. It's the firms that get sloppy that mess up, like UBS etc.

Oct. 7, 2011

Most trading firms and banks have good risk management systems. Is that why we had to bail out Wall Street to the tune of about $13 trillion for their derivatives gambling? Best, Don Bauder

Oct. 7, 2011

Even the best risk management can be met with an outlier of biblical proportions. Furthermore, we didn't have to bail out the firms...it's just that they are politically connected and got the government to bail them out. Frankly, I wish that they would have all gone under, kind of like 1873. We need a brush clearing of biblical proportions and kicking the can down the road until the politicians are out of office isn't going to solve anything.

Oct. 8, 2011

Furthermore, we didn't have to bail out the firms...it's just that they are politically connected and got the government to bail them out.

Of course.

Goldman Sachs would have been BK without the AIG bailout-and AIG was bailed out because GS owns half the top executive positions, in nearly every department, in government.

GS should have been FOTCED to go BK. That si what BK courts are for. That is how a free market is SUPPOSED to work. As it is the bailouts/QE I/II/III harmed the poor and middle class, destroyed it, whiel the idiots that wrecked havoc on America, and the world, by gaming the market with toxix, bogus mortgaged backed securities kept their millions, and even billions. This is why we see the "Occupy Wall Street" movement. Average people are getting screwed royally.

i caught this video a few days ago, and while I do nto agree with everything the guy said I do agree with much of it-and no one accuses me of a liberal bias;

Oct. 8, 2011

surfpuppy619,In a completely unrelated story, have you heard that Al Davis died this morning? I say it come across about 10 min ago. Just curious as to your thoughts, considering how big a Davis/Raiders fan you're not.

Oct. 8, 2011

I was a die hard Raider fan my entire youth, un until 1982 when Davis moved the team. After that I followed them for 2-3 more years-including the Marcus Allen Superbowl victory in 83, but then dropped them all together. I had no respectf for Al Davis being a carpet bagger. The Raider team has had one of the worst decades in NFL history.

I think Davis was very smart in so many ways, including always taking top football talent that had problems off the field, or who were not used to their capacity and giving them a second chance. Look at Jim Plunkett, Ted Hendricks, Lyle Alzado, the NFL thought they were washed up or so out fo control they were toxic, but Davis set them straight.

Davis was also VERY loyal. The original Raiders center, Jim otto, was still working with the Raiders just a few years ago, been with them for 5 decades. Jim Plunkett still works for the Raiders, as does former superstar wide receiver Cliff Branch and All Pro Defensice back Willie Brown. Once you were a Raider you were family.

But the last 10 years Davis lost it, maybe it was alzheimers, or dementia, who knows.

I was a proud Raider fan right up until the dumped Oakland and ran to LA over $$$$$$$. there is so much more to Football than just $$$$$.

BTW-the line Davis used in 1980 when he signed the deal to love to LA was he needed "luxury boxes" in order for the team to "stay competitive"!!!! Spanos is using the exact same lines today, 31 years later.

Oct. 8, 2011

Wall Street does not believe in free markets, free enterprise, competition, and never has. It believes in corporate socialism, and always has. You are right: Goldman Sachs should have gone under. Ditto others. The AIG bailout was a government scam. Best, Don Bauder

Oct. 8, 2011

I agree that we should have let them go under. The U.S. has a good bankruptcy system. Bailouts only lead to more bad habits, and you can see that now. The top Wall Street execs still have outrageous salaries. Their reaction to Occupy Wall Street (a great movement) was typical arrogance. These nabobs are so divorced from the real world that they simply do not understand the forces gaining ground in this country. Being so blind, how can they judge markets? Sorry, Wall Street does NOT have good risk control systems and doesn't want to have them, because, as you point out, rogues who make money from the firm are secretly celebrated. Best, Don Bauder

Oct. 8, 2011

ur on a roll with this one Don

Oct. 9, 2011

But it all starts with the insatiable desire of money by our elected leaders that get in bed with the big business guys(capitalists but the antithesis of free markets). Here's a lecture from an acquaintance, and she describes the "Shadow Elites" and their impact on democracy and this country. http://www.youtube.com/watch?v=SiXGcE... She coined the term, "Flexion," which describes those shadow elites, and the term means one of those who moves freely through the highest levels of government, business, academia...these people are all lining their own pockets and their friends pockets at the expense of everyone else. Her latest book is pretty good.

Oct. 8, 2011

The pols of both parties are in Wall Street's pocket. But you seem to put all the blame on the pols. Blame Wall Street for controlling the political system with money. Best, Don Bauder

Oct. 8, 2011

But whose really at fault, the corrupt pols who took, and continue to take the money, or the fat cat WS firms and individuals who offer it up? The same goes for the WS insiders who take gov't positions. Are they at fault for taking the "influential" jobs or is it the fault of the ones who offer up the jobs, all the while knowing who/what they are getting, and by all appearances, really not caring about it?

Oct. 8, 2011

The briber and the bribee are equally at fault, and both belong in the slammer. It won't happen, because they run the country. Best, Don Bauder

Oct. 8, 2011

I recommend her youtube to everybody. I love the line about shadow elites "failing upwards." Best, Don Bauder

Oct. 8, 2011

I think you're bumping against what came first the chicken or the egg. I understand your need to beat up Wall Street as that's just part of who you are.

Oct. 8, 2011

I don't just beat up Wall Street. I beat up the pols in Wall Street's pocket, too. Best, Don Bauder

Oct. 8, 2011

"Most trading firms and banks have really good risk management systems in place that won't allow a single trader to put on a hundred thousand cars of T-Bonds or whatever. It's the firms that get sloppy that mess up, like UBS etc."

They didn't get sloppy, they got caught. The reason why the financial rewards are astronomical boils down to the simple concept of honesty - it is no longer an asset, indeed it is a liability if you want to join the fat cats. You have to pay a lot of money to someone to play the game, and eventually the enrichment of dishonest people leads to a very corrupt society - the one we are seeing now. Every one has a price and no one is willing to blow the whistle, because money equals power (also the reason why incredulously, many of these influential people are not in jail). Risk management is a joke - the only risk management corporations and the governments they influence take is whether or not they should wait a year in case BMW comes out with a better body style.

Oct. 10, 2011

You are so right. How can anybody claim that most trading firms and banks have good risk management systems when we paid $13 trillion to bail them out? Best, Don Bauder

Oct. 10, 2011

anyone who does claim that Don is living in a dream world paid for by corporate lobbyist and corporate greed

i believe they r lying when they say they can't see those woe begotten faces, with their noses up against the window, asking for their piece of the always promised pie

those paid dreamers have no shame!!!

Oct. 10, 2011

Somebody says corporate lobbyists are paying me? And all this time I thought they were planning to assassinate me. Best, Don Bauder

Oct. 10, 2011

Don please...will u take this discussion on for us

only u can really do it right

thx guy...Nan

Oct. 10, 2011

I admire the Occupy Wall Street protesters 100%. I just hope the movement grows and grows. Those in Washington and on Wall Street live in a bubble. Most banks are delighted that unemployment remains high because then they can borrow from the Fed at almost zero. They would much rather have the ability to borrow at 0% than have the economy recover. They make most of their money speculating. Now the central bank is providing them with chips for nothing. Best, Don Bauder

Oct. 10, 2011

I would contest your contention that commercial banks make most of their money speculating. JPM Chase only made about 1.4 billion out of the 5.6 billion Q1 FY 2011 trading. BofA's income is 85% reserve releases and they are on life support. Wells Fargo made 3.5 billion Q1 FY 2011 and only 250 million was due to trading, most of their income was managing their 1.7 trillion under management. Most banks trading income has lessened under the new rules and regulations, and is less than 25% of profits on average, if at all....remember some pretty banks reported big trading hits as of late.

I would also question the contention that banks are delighted with high unemployment. Has this been quantified, or just editorial/opinion?

Then there's this myth that banks can borrow all the money they want from the Fed at 0% which is simply not true. While the fed does occasionally loan some monies out at 0%, this is a rare exception, not the rule. The allowing the banks to borrow infinite money at 0 fallacy should be addressed. Somehow, the popular culture has gotten in it's head this 0% money meme, and it will not go away because it's repeated by financial press that largely does not do it's homework. The discount window is overnight and can be rolled over and consists of primary, secondary, seasonal, or emergency credit. The Fed's overnight loans are largely made at several rates depending on the classification, and is not usually zero.http://www.frbdiscountwindow.org/index.cfm Plus, if you look at the Fed's consolidated balance sheet, you will find that an average of 9 borrowers are at the discount window in March 2011(latest release)http://www.federalreserve.gov/monetarypolicy/files/monthlyclbsreport201103.pdf On page 17-19, you will also notice that the Fed demands collateral for using the discount window in most cases, so even a 0% rate would have a real interest rate after the collateral was figured in. Also, note the sizes of the institutions using the window...The table suggests that Citi, BofA, Wells Fargo and the other major banks are not using the window as of now. Has the author ever studied the Fed's balance sheet? I suppose the public would be better served if the business press used more due diligence in their reporting, and avoided repeating fallacies, untruths, and representing editorial as fact.

Oct. 11, 2011

The rate on short term money is 0 to 0.25%. I sometimes round that off to zero. No problem there. You named institutions whose trading is not such a heavy percent of total business: B of A, Wells Fargo, JP Morgan Chase. That's because their primary business is banking, and, particularly in the case of B of A, they are in trouble with mortgages. You left out Goldman Sachs, Morgan Stanley -- former investment banks that were transformed into commercial banks during the crisis in one of the horrendous mistakes that the Fed and the federal government made. The startlingly low rate on overnight loans is one of our major problems. You seem to worship Fed balance sheet numbers. Remember, a good many people don't trust those numbers, greatly because the Fed has only released names of banks getting the massive loans after a Bloomberg lawsuit forced revelation. Sorry, the fact remains: the banks are getting loans at shockingly low interest rates, and they can gamble with that money any way they want. What a deal; you're playing poker with money that the Fed essentially gave you. It's not just journalists who say the Fed is essentially giving money away. David Stockman is another. Wake up: no matter how you try to manipulate these numbers, the Fed is essentially giving away money to the large institutions. Moral hazard is a huge threat. Best, Don Bauder

Oct. 11, 2011

you will also notice that the Fed demands collateral for using the discount window in most cases, so even a 0% rate would have a real interest rate after the collateral was figured in

If they are using their own assets as collateral, such as buildings, it would not cost them anything. I have no idea what their "collateral" consists of and if it actually costs the bansk money-if it doesn't then the real interest rate IS 0%.

Oct. 11, 2011

But Don, You obviously didn't look to see how many banks went to the Fed window in the first place. If you would have bothered to read the balance sheet, you would have seen only 9 small to mid-sized banks at the trough. You say...giving away, I see collateralized transactions. You say they're giving away to large institutions, yet there is no evidence of those gifts, or any transactions beyond the normal daily clearing actions. Plus, the Fed earned over 82 billion dollars in 2010 which strongly suggests that they weren't putting too much money out at 0.25%. They sure didn't make it off of check clearing and Fedwire. They made that profit from their treasuries and loaning to banks(US and offshore).

And, although GS amd MS did convert to banks under the emergency order, look at the percentage of their base vs that of the commercial banks. BofA has a bigger portfolio than both GS and MS combined. None of the aforementioned banks are at the Fed window by the way. Money is cheap because the Fed is pushing it out the door right now. Look at the M2 since 2007 and you'll see what I mean.http://research.stlouisfed.org/fred2/series/M2 Notice that the M2 supply is 45% less than the government debt? That does not bode well for the future.

And so what if Stockman says something. That authority argument you are making is just another complex logical fallacy. Just because a high profile apparatchik says something that doesn't mean it's correct. Furthermore, those authority argument logical fallacies are so wonderful because one can take the opposite side and logically and successfully argue that Stockman doesn't know a thing and this renders your argument false. Furthermore I'd lay 8:7 that when Stockman was around in the 80's you were probably beating him up.

It's not what people say that matter, it's only the price action of the market that means anything. But you say that the short term rate for money is cheap(correct), but you have demonstrated a problem with calculating interest(like when you told me my returns should make me a billionaire because you were confused with simple and compound interest.) That being said, what about the yield curve? What about the long term end of the curve? The short end of the yield curve is not allowing for much gambling these days, plus combined with the new regulations...not much gambling by the banks at all. The yield curve doesn't allow a carry trade, nor any speculative, at risk rational investment beyond 91 days if you look at it.

I notice a lot of premises being made on these pages that are, in fact, unwarranted assumptions. The assumptions seem to be chosen that will give the best fit for the conclusions that are desired. Also, many different types of Ad Ignorantium arguments are made here, with a number of disproved contentions and premises just casually ignored because of the inability to come up with something that will successfully counter those pesky facts.

Oct. 11, 2011

You say: "Money is cheap because the Fed is pushing it out the door right now." Thanks. That's what I have been saying. To whom is the Fed pushing the money? The big banks. They are still on the dole despite being shoveled $13 trillion (some say $16 trillion) at the height of the crisis. I do not understand how you can make some of the statements you do. For example, you said that most big financial institutions have good risk control operations. After being gifted $13 trillion in the bailout? Come now. In claiming that banks are not receiving much at the dole window, you are looking only at very recent statistics. I am taking a much broader look -- going back to 2007 and up to the present. This is a typical maneuver of a pettifogging lawyer -- focusing on the very short term, limited number of stats, instead of looking at the long term. The Occupy Wall Street people have many legitimate complaints, and I am with them.

Oh, Stockman. When he was in the Reagan administration I was a conservative Republican who tended to find alibis for all manner of corporate and banking industry thievery. I criticized Stockman (I can't remember whether I did so in print) because he embarrassed his boss, Reagan, whom I then supported. Best, Don Bauder

Oct. 11, 2011

The Occupy Wall Street people have many legitimate complaints, and I am with them.

Occupy Wall Street and the Tea party are two sides of the same coin, they are both SICK AND TIRED of Wall Street bail outs.

That is saying something, a fiscal conservative group and a liberal group essentially protesting on the same issue-bailouts of Wall Street ....while everyone else is in the toilet.

Oct. 11, 2011

Yes, the Tea Party folks protest the bank bailouts. Still the thrust of their overall messages greatly helps those banks and other private sector cozeners. Best, Don Bauder

Oct. 11, 2011

You say...giving away, I see collateralized transactions

They're collateralized-SO WHAT?

They are still getting a 0% interest rate.

The gov may or may not be at risk depending on the collateral, but the fact remains they are getting deals no one else in America, in the world, is getting. All the bank have to do is lend that money right back to the US gov via a T-bill and they collect the spread.

Oct. 11, 2011

Yeah, and if they borrow money from the Fed at 0.25% and put it into T-Bills, they are losing a lot of money as the yield on the farthest out T-bill is only 0.12%. This would only work if they were borrowing and investing in the 2 year part of the yield curve, and those are not T-Bills and you're getting into notes. But their risk would be very significant as they would be borrowing short and lending long. Here's the current market rates from the treasury.http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

No matter what you might think, there's no such thing as easy money...even for the big banks.

Oct. 12, 2011

No matter what you might think, there's no such thing as easy money...even for the big banks."

Rightttttt......I am sure that money Goldman Sachs scammed off the taxpayers via the AIG bailout was sooo hard to get. That was the very definetion of EASY MONEY, as easy as it gets. And the fact is GS would have been BK without that EASY money, and furthermore there was NO REASON AIG should have paid out 100 cents on the dolalr to GS-that was a set up by Big Business and those shadow elites in gov to scam EASY MONEY off the poor and middle class.

Give it up Jeff, your apologist comments about Big Business and finance are so far off the mark you look like Bozo the Clown at an MIT convention on Astro-Physics.

Oct. 12, 2011

Never have I apologized for the horrible behavior of GS et al. Frankly, I think they should have been allowed to fail. Your sophomoric invective has been duly noted.

Oct. 12, 2011

"But their risk would be very significant as they would be borrowing short and lending long."

And here is the problem with this comment, as with most of your comments, the banks were/are not lending long, they were not lending short, they were not lending at all. They were making billions off the spread.

Try to get off the short bus and give at least one intellectually honest answer.

Oct. 12, 2011

Why would one even think that banks have not been lending at all the past few years? Never? There has not been one loan made from a bank through this crisis? That is the most preposterous statement I've ever seen you make...except for the one where you said you know 10X more than I do about statistics. On a personal note, my credit needs have been satisfied just fine over the past 42 months, and I have not had any trouble drawing on my revolving credit even at the height of the crunch. 30 year mortgages were offered and written all throughout the crisis albeit at reduced levels. The business and commercial loan activity now is greater than in 2005 see link http://seekingalpha.com/article/264289-bank-lending-activity-on-the-upswing

One would think that if banks were not making loans, then the factoring business would be going crazy right now. Alas, that hasn't happened, and the factoring business is at 2004 levels. A basket of personal finance companies stocks, alternative lenders, is only up around 11% since 2005...one would expect without banks making loans that their business would be booming. It's not.

People and businesses with good credit ratings have no problems getting money they need from one bank or another.

Intellectually honest answer...your definition probably includes feelings and is light on facts.

Seriously, little puppy, you should stay out of this discussion because you're using the wrong side of your brain and I suspect that you're just not up to the challenge. Go write some briefs or whatever it is you do.

Oct. 12, 2011

And....you're going to stick behind your contention that the Fed is shoveling the money out to the banks to speculate with? By direction of the Treasury, US banks have greatly increased their capital. Plus, the increase in the banks liabilities is in deposits, which have been greatly increasing the past 3 years. Deposits are defined as money entrusted to the bank by somebody else that's not the bank's own capital. So the money from the fed is not necessarily going to the banks, but to someone else. Your cavalier mention of the 13 trillion dollar bailout...to the banks. Have you actually looked up who got what from that bailout? Money went to more than banks, which I'm sure you would realize if you read the details. Plus you say that money has been gifted to the banks...If it has been gifted, then why are they paying it back?

Still, as I asked you before, do the banks really want high unemployment? Is this even logical? Just repeating this because you have a tendency to avoid the tough questions.

And your mention that I take a very short term view. That has no basis in reality as I have previously brought up every crisis since 1812, and made great mention of the wonderful work by Henry Clews which described conditions in the 18th and 19th century. My broad view of the economy goes back to Emperor Diocletian, who did the first economic stimulus back in around 300 AD. My broad view also makes me realize that it was inflation which had a great hand in destroying the Roman Empire. Don't ever accuse me of not looking at the long term as I know chapter and verse the world wide interest rates from 3200BC through today, plus the price of grains, the value of money etc. Bet you never knew there were records of all that in 3200BC.

Oct. 11, 2011

I know chapter and verse the world wide interest rates from 3200BC through today, plus the price of grains, the value of money etc. Bet you never knew there were records of all that in 3200BC.

What was the prime interest rate July 23, 220 BC?

And I need the ask price for a bushel (it is a bushel isn't it?) of wheat on January 26, 105 AD.

Oct. 11, 2011

Jeff is looking up those figures right now. Best, Don Bauder

Oct. 11, 2011

Hey where did jeff run off to -I NEED those numbers!!!

Oh, and Jeff, since you're already looking up the prime rate for July 23, 220 BC, could you also give me the LIBOR rate for the following year.

Thanks.

Your buddy, Surfpuppy619.

Oct. 11, 2011

13 drachma would buy 2 artabae(an artabae is roughly a bushel) of wheat in 105 AD. Interesting that in 110 AD there was a poor crop and 15 drachma would only buy 1.5 artabae of wheat.

As far as the interest rates, interesting history in China. In 200 BC during the Han Dynasty in China, private interest rates were pretty high, around 72%. The bankers must have not trusted the government because government bonds yielded 84%. Around 900AD, interest rates went significantly lower and private loans were around 48% and government bonds paid 60%. It was not uncommon for rates to stay within a tight range for 200-300 years back then. Grain prices fluctuated a lot back then though.

Anyways pup, you should know that London wasn't founded until around 40AD so there was no such thing as a LIBOR rate. There wasn't a prime rate then either, but rates are very well documented for that time in all the empires. Pup, why don't you go study some statistics and let others worry about finance?

Oct. 12, 2011

Not that I don't trust you Jeff, but citation please.

Oct. 12, 2011

If you want to see where it came from, go to Amazon.com and get Homer and Sylla's book, "A History of Interest Rates," which is the most complete guide to ancient prices, exchange levels, discounting rates, Banking, bonds, grain prices, gold prices etc. http://www.amazon.com/History-Interest-Rates-Fourth-Finance/dp/0471732834/ref=sr_1_1?s=books&ie=UTF8&qid=1318433352&sr=1-1 This stuff is not on the internet, but just because it's not on the internet doesn't mean it's not true. Furthermore, it's only around $50 which I suppose to a guy with a big internet d**k like you is chump change.

Oct. 12, 2011

That's why I mentioned that the banks got $13 trillion but others put the total bailouts at $16 trillion. The latter figure would include GM, Chrysler, etc. Maybe you would put AIG in the non-bank bailout category. Glad you mentioned the $13 trillion figure. If you agree that is a good figure, give or take a few trillion, do you still stick to your assertion that most big financial institutions have good risk controls? Best, Don Bauder

Oct. 11, 2011

Frankly, I suspect that the bailout is much higher as evidenced by the action in the yield curve, the bond and currency markets.. Do they have good risk controls...perhaps against a 100 year storm but not against a catastrophe. This wasn't a catastrophe yet, but give it time with a little more government intervention. But then again, this crisis is nothing compared to 1873 when 90% of the banks went belly up.

Oct. 12, 2011

heads up any Christians around...Christ himself turned over the tables of the money lenders in the temple because they charged interest on the loans...Banking in general has been looked at skeptically ever since

bank practices have been the cause depressions and wars as the banks continued practices of inequity

and they're at it again...wake up peeps...the whole system concerning money and it's movement needs to be changed

Oct. 11, 2011

Yes, the whole system needs to be changed, Nan. Don't count on it. Best, Don Bauder

Oct. 11, 2011

change is not an easy thing to countenance Don...and we know by the laws of Physics that inertia is often impossible to overcome

often it takes a complete swing of the pendulum into chaos to disintegrate the occupying system 4 a chance to do a do-over

i think that's what the OCCUPY movement is all about...and as i've said many times..my walking shoes r all shined up and ready 4 the revolution!!!

;-D)

check Dadler's blog out....a fab missive about Occupy SF

Oct. 12, 2011

I would respectfully say that it was government trade practices, spending, etc that were the cause of most depressions. Wars, I don't know how banks would start a war and cannot find an instance where that happened. And Matthew 21:12-20 which concerns the temple, never mentioned interest rates. But it was mentioned, "These changers sat in the temple, in the court of the Gentiles, to change the foreign coins of pilgrims into the shekel of the sanctuary for payment of the annual tribute." The exact verse in Matthew 21:12 says "And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the money changers, and the seats of them that sold doves." "“It is written,” he said to them, “‘My house will be called a house of prayer, but you are making it a ‘den of robbers." Back then money was changed in the temple at a discount.

Oct. 11, 2011

if Christ called them a "den of robbers" there must be a reason 4 it...

and the Economics PHD program at Harvard taught that the temple money changers (because they charged to change money) started modern banking

Oct. 13, 2011

Maybe, but there are many records of banking in 2000BC in Assyria and Babylonia. It might go earlier than that, if one considers discounting and acceptances to be a form of banking.

Interesting thing said in Matthew 21 about robbers....Jeremiah(7:11) said the same thing 600 years earlier when there were no money changers in the temple.

Big difference between thieves and robbers.

Oct. 16, 2011

Surfpuppy, it seems that you know about as much about collateralized transactions and effective interest rates as you do statistics. (I did send you that solution to the problem you said you would solve and am surprised that you never gave me any thanks)And by your own admission, you said that "I have no idea what their "collateral" consists of and if it actually costs the bansk money-if it doesn't then the real interest rate IS 0%." Coomments like that are really embarrassing for you and you ought to quit while you still have some dignity. Also, you said that the real interest rate is zero...I provided a link to a Fed table of what the interests rates are for the different categories at the Discount Window, and they're not zero. For what it's worth, the Fed will accept as collateral paper of varying maturities, notes, bonds, bills, debentures, subordinated debentures, acceptances, mortgages, loans, discounted instruments, some preferred stocks, and about 100 other instruments.

Oct. 11, 2011

Remember, some people are very skeptical about the numbers released by the Fed. Best, Don Bauder

Oct. 11, 2011

For what it's worth, the Fed will accept as collateral paper of varying maturities, notes, bonds, bills, debentures, subordinated debentures, acceptances, mortgages, loans, discounted instruments, some preferred stocks, and about 100 other instruments.

It's still just collateral, nothing more.

Oct. 11, 2011

Look at all the junk the Fed took in at the peak of the crisis. Best, Don Bauder

Oct. 11, 2011

Some people also believe that we never landed on the moon. For your argument to be sound, it's premise must be true, and all you can offer is a version of a Tu Quoque fallacy. Doesn't really work, but then again, so what. I've noticed that the discussions around here gravitate towards "Moving goal post" types of logical fallacies. Every time a contention by the author is logically negated, the author or his lapdog simply moves the criteria for "Proof" or acceptance out of range of whatever the submitted evidence points to. Whenever I bring something new to the table(cited evidence from official sources) it is either ignored, or the goal posts are moved. Nice ploy, as you never lose an argument.....in your mind.

Oct. 11, 2011

On the other hand, some would argue that you have done the very thing you are complaining about. Best, Don Bauder

Oct. 11, 2011

I was wondering when you would get to the combination of a fallacy fallacy and a Tu Quoque fallacy.

Oct. 12, 2011

Deposits are defined as money entrusted to the bank by somebody else that's not the bank's own capital. So the money from the fed is not necessarily going to the banks, but to someone else.

The banks borrow money from the Fed and in turn use the money to buy Treasury Bonds. Bernanke had the law changed so that banks can write-off the interest expense they pay to the Fed on their taxes, while the interest income they receive from the Treasury is not taxed. This scheme effectively eliminates the bank's tax liability. This was done so that the banks can survive with little or no lending activity. The tax-free interest the banks receive from the Treasury is enough to maintain their core operations indefinitely. The rate of return banks receive on interest income from tax free Treasury bonds exceeds the after-tax return the banks receive from interest income on consumer loans and business loans. So there is no incentive to lend.

Oct. 11, 2011

Of course. Throughout the crisis, and probably up to today, banks are getting money for close to zero and then buying T bonds yielding a couple of points more. Nice deal. Matt Taibbi has written some poignant things about this little trick. I want to repeat: the Fed does not want the banks to lend out very much money. If the economy were to recover briskly, and lending were to pick up, inflation would zoom through the roof. This is one more way in which the Fed is pushing us toward a plutonomy. Best, Don Bauder

Oct. 11, 2011

If the economy were to recover briskly, and lending were to pick up, inflation would zoom through the roof.

Food and energy prices have gone through the roof the last 6 months.

I would argue inflation is sky high right now if you include those two huge factors, which are NOT calculated into the inflation index.

Oct. 11, 2011

Little puppy, please explain the mechanics of the economy recovering and lending picking up and causing inflation to zoom through the roof. Inflation 1923 Weimar style? Inflation 1946 style? What kind of inflation are you talking about? Couldn't one make the same case for a 1874, 1905, or 1933-38 style deflation? Remember, inflation was pretty high in 1928-29 before the deflation. Same thing in Japan and other places.

Oct. 12, 2011

Food and energy are in the CPI but are not in the so-called core CPI that the Fed pays attention to. Best, Don Bauder

Oct. 12, 2011

"So there is no incentive to lend."

You nailed this. Totally nailed it. The primary purpose of the Federal Reserve is political in nature; at best it creates the very environment it pretends that its purpose is to prevent. At worse, it creates that environment for the single sinister motive of ensuring its own existence. Ron Paul might be a nutjob, but he isn't wrong about the Fed. If the primary motive of banks is to hold money and invest it how they see fit, then the holders of such savings will always be at risk. If the Fed gives them that environment, then aside from killing any chance at economic growth, the incentives for banks to profit from loaning that money toward micro economic type investment are also dead. Keynes said to print money and spend it wherever (the concept of investing in infrastructure is not a requirement of Keynsian stimulus, it is a political attachment to macroeconomic theory), and so the Fed prefers to toss it - indirectly - into the very market it controls. That isn't stimulus nor is it sound economics, it is simply politics.

Oct. 16, 2011

What was the prime interest rate July 23, 220 BC?

===========

I think they used the Julian calendar in 220 BC.

Oct. 11, 2011

You got me on both questions. Best, Don Bauder

Oct. 11, 2011

There was no such thing as July 23, 220BC. Since they didn't have a prime rate back then would you like the Mesopotamian, Chinese, Roman, or the rate on the sub-continent?

Oct. 12, 2011

Why don't you give us all of them? Best, Don Bauder

Oct. 12, 2011

I'll tell you what, it might be a good intellectual exercise for you to find them yourself. Too much spoon feeding going on here.

Oct. 12, 2011

It may be a good intellectual exercise but I can find such exercises that are relevant to columns and blog items I write. Best, Don Bauder

Oct. 12, 2011

it's called a sharing communication nokomisjeff...helping out...if spoon feeding is needed to educate others to the phenomena better....why not

getting everyone on the same page is winning half the battle in situations like these

i like the way this guy shares

Oct. 12, 2011

I don't know who Dadler is but he writes well. Best, Don Bauder

Oct. 12, 2011

yes he does Don....i just met him here at the READER

Oct. 13, 2011

he got that blog printed with pics in the San Francisco Bay Guardian Don...yippee!!!

Oct. 21, 2011

Nan, I'm sorry that I didn't realize that others would be reading this. I got carried away and I was addressing Mr. Bauder, and Surfpuppy who would argue with me if it were daylight out and I said the sun was shining. Mr. Bauder said he was too busy to look the things up himself. I understand his position, although it might make a good column, or at least a blog entry and would teach him to return to the roots where reporters actually question the common wisdom and use more sources than what the other reporters are saying. I frequently find people wanting my opinions and information without a quid pro quo.

I like the way that guy you linked shares also. I was willing to share, but the data I have shared is not read, ridiculed, discounted, or completely ignored. Furthermore, since the general consensus from the peanut gallery is that I'm wrong about everything, why bother to share?

Oct. 12, 2011

"Furthermore, since the general consensus from the peanut gallery is that I'm wrong about everything, why bother to share?"

You are spinning again, no one said you're wrong about everything, or half, or 25% or 75%, there are just legit difference of opinions, your problem Jeff is you think you know everything and try to ridicule and demean others whom disagree with you. No biggie, this is the internet and that is what the internet was made for, but claiming everyone (excuse me, the "peanut gallery") says you're wrong is a falsehood.

How often do you post to your blog?? I see it goes back a few years.

Oct. 12, 2011

I post whenever I'm inspired. Right now, I'm in LA looking at some property so I'm not doing a lot of posting this week.

Oct. 12, 2011

You aren't perchance the third nabob in LA planning to build a football stadium? Best, Don Bauder

Oct. 12, 2011

Just looking at a little beach house. I don't do complicated deals like stadiums etc.

Oct. 13, 2011

Especially when you're competing with two billionaires, I suspect. Best, Don Bauder

Oct. 13, 2011

so r u gonna have an open house and serve up Wallstreet Bangers?

Oct. 13, 2011

[email protected] "Wallstreet Bangers"

Good one nan!

Oct. 13, 2011

If nokomisjeff goes back to look, he will see specific praise for his sagacious posts from me. Best, Don Bauder

Oct. 12, 2011

If Jeff goes back to school expect him to try to take over the macro-econ class and give the professor his "pointers" ! heheheheheheh

Oct. 13, 2011

Whereas I could probably give an econ professor a few pointers, I would not expect you to be able to do the same with a statistics professor.!hehehehehehe

Oct. 16, 2011

Ouch, you made me cry Jeff.

Oct. 16, 2011

he's a mean mean man pupster

but in spite of his arrogance he is a supersmart SOB

Oct. 16, 2011

Nan, I'm a very nice person and am not mean, nor am I arrogant. You might perceive me as being arrogant because he's debating me in my job sphere and debating him regarding markets, economics, finance, statistics etc. is like Derek Jeter playing baseball with a T-Ball player. I don't suffer fools gladly. If a non lawyer debated the puppy in the legal arena, or a non MD debated a doctor in the medical arena, one would probably come away with the perception that they were arrogant also, especially if the non person was so wrong about everything to be laughable. My antipathy for the pup had its genesis when he started the whole shebang a few months ago with scurrilous, ad hominem attacks on me. I love vigorous debate, but when the name calling starts, I am more than willing to take the gloves off.

Oct. 17, 2011

then that Pupster was being a mean scurrilous hound...hahahaha..i'm just mostly kidding with ya nokomisjeff

i do that sometimes...speak off subject...no harm is meant

you come by ur arrogance honestly in that u do have superior knowledge about the things u speak about

of course u know now i'm going to have to apologize to puppy 4 calling him a scurrilous hound....hahahahahaha

actually i'm a nice person 2

Oct. 17, 2011

Don't believe him Nan!!!!!..... Jeff is a little snarky turn coat liar, he will do and say anything to impugn Surfpuppy's reputation. Jeff hates puppies. Jeff hates the truth. Jeff hates baby seals and would kill them for their coats. He is only mad at me b/c I spanked him so hard my little puppy paws are still hurting!

Oct. 17, 2011

Pup, when did you spank me? Was it when you couldn't solve a simple little problem I gave you? Don't you think it's time to get your meds adjusted? Actually, I think you are spanking yourself a little too hard these days and you need to give it a rest.

Oct. 18, 2011

Spanking one's self very hard sounds difficult to me. Best, Don Bauder

Oct. 20, 2011

If you love vigorous debate, you will be the recipient of some ad hominem attacks. Best, Don Bauder

Oct. 20, 2011

Repeat: I have no time to check interest rates in 220 BC. I'm not sure of the relevancy either. Best, Don Bauder

Oct. 12, 2011

You might have time to read Menger's quick little book published in the late 1890's on the origin of money. 50+ pages and a little gem. http://mises.org/books/origins_of_money.pdf Highly recommended.

Oct. 13, 2011

Back in the 1960s, I believe, a renowned Wall Streeter named Sidney Homer (sp?) published a book on the history of interest rates. Best, Don Bauder

Oct. 13, 2011

It's called "A History of Interest Rates". Apparently, you missed Jeff's post yesterday when he referred surfpuppy619 to this book.

Oct. 13, 2011

I guess I didn't read the post carefully enough. Best, Don Bauder

Oct. 13, 2011

A History of Interest Rates is the name of the book. Apparently, you missed Jeff's post yesterday in which he referred surfpuppy619 to this book.

Oct. 13, 2011

I missed it too.

Oct. 13, 2011

ah that's OK Nokomisjeff...i learn a lot reading the Bauder's various blog...and always because of the great give and take commentors like u...and Bauder and the Pup

actually everyone who comments on Dons blogs Refried...Twister...Visduh...Ms Grant...and all the others...the ones that always come and the drop ins

differing opinions u know...smoothing out the rough stone \;-D)

and in this arena i need all the educating i can get...lolol

no worries Noko

Oct. 13, 2011

Interesting, but deeply flawed power point to a paper that Carmen Reinhart did for the IMF on debt reduction last April. http://www.imf.org/external/np/seminars/eng/2011/res2/pdf/crbs2.pdf I agree with her major contention that we'll probably either see an episode of inflation or financial repression or maybe both.

Oct. 13, 2011

On the other hand, some good economists, such as A. Gary Shilling, foresee deflation. Best, Don Bauder

Oct. 13, 2011

Deflation is a very good possibility and I have assigned a probability to it, but my probability for inflation is higher. That doesn't mean I'm right, but the market will ultimately give us the answer.

Oct. 14, 2011

The bond market seems to lean toward deflation, although Fed and Treasury policies push it in that direction. Best, Don Bauder

Oct. 14, 2011

From outward appearances, one might think the bond market was looking for deflation. However, this creature isn't following any playbook of the past and one could make a case that the high bond prices are a function of the extra money supply, the Fed buying much of the issues etc. Much of the demand is also banks etc putting money in bonds because they can get a yield....any yield out of them. Seriously, you can get 1% out of the 5 year and 3.75 out of the 30 year. This bond market has me very confused....During the Weimar, bonds lost 99.999% of their value, but still traded at extremely high prices and went up in price....Like the USZ is doing right now. I'll just have to admit to a lot of confusion on this one. Whatever happens, the only sure thing about all of this is that it is really going to be ugly....1874 ugly.

Oct. 14, 2011

Agreed: Fed and Treasury actions are pumping up the bond market. It's probably a bubble. However, if deflation comes, it will go higher still and isn't a bubble. Bonds have been in a bull market since 1981 -- a long time. If inflation surges, bonds tank. Interesting info on Weimar bonds. And you are right: the long term outlook is ugly. Best, Don Bauder

Oct. 14, 2011

If inflation surges....bonds tank....the value of them tank, but not necessarily the price.

Oct. 14, 2011

And the value of those bonds is more important. Best, Don Bauder

Oct. 14, 2011

Absolutely, unless you can trade them with really, really high margin.

Oct. 15, 2011

Bond trading is not an easy business. Best, Don Bauder

Oct. 15, 2011

The origin of money was the origin of unearned increment.

It's elementary, my dear Watson.

Re: By nokomisjeff 6:46 a.m., Oct 13, 2011

Oct. 20, 2011

The concept of the unearned increment initially applied to real estate. Now it applies to much of Wall Street's activity. Best, Don Bauder

Oct. 20, 2011

Unearned increment means that the transfer of payments leaves the other guy with undeserved excrement.

Oct. 21, 2011

Excellent way to put it. I wish I had thought of that. Best, Don Bauder

Oct. 21, 2011

I repeat my chant: "Don't buy their shit!" In any form. Avoid trinketry trickery.

Instead, make things and do things for each other. Put the lie to Winston Churchill's assessment of Americans: "Americans know the price of everything and the value of nothing."

The price of buying "local" may be marginally more "expensive," but far less costly than our present course. Value given for value received. What could be more liberatingly libertarian that that, my dear Watson?

The "price" of vaccinating ourselves against affluenza is the enjoyment of frugal luxury, the avoidance of impoverishment, and the damping of hysteresis.

Oct. 21, 2011

sing out Twister!!!

sing out loud and clear!!!

Oct. 21, 2011

Thank goodness, Twister is doing just that for the benefit of all of us. Best, Don Bauder

Oct. 22, 2011

I believe Oscar Wilde said cynics know the price of everything and value of nothing. I am not aware that Churchill applied the observation to Americans. Best, Don Bauder

Oct. 22, 2011

so many of us have become cynics Don...thinking we have to play the dirty greed game and take the beating while they're at it...thinking we r powerless...people in America and all around the world r rising

the Occupy movement is a baby now...but it can grow into a group of ethical fighters putting social injustice matters on the front burner of citizen thinking

and maybe stewed froggies won't be the soup du jour in this country much longer

btb...u guys r my heroes for speaking out the way u do!!!

Oct. 22, 2011

For decades, young people started out working for reformation, but after forming a family surrendered and began working for the almighty dollar. Now that there are so few opportunities, many young people are fighting the system again. Best, Don Bauder

Oct. 22, 2011

Don, Nan, et al:

U r probubly rite about Wilde, and it won't be the first time I have presumed wrongly about quoters; many an aphorism has been appropriated, some innocently, and then there's independent invention and downright plagiarism. Then there's Internet gurus who get it wrong and those who mix quotes and metaphors. I would like to know for sure. I don't quite understand the relevance of "cynic" in that context.

And whilst you are about it, maybe you can tell me to whom to attribute "It's a helluva lot easier to find a million suckers with a buck than one sucker with a million?" A'course Bernie done made off with that one.

And Nan, hero-worship is one of the extremes of thought-surrender that should be tossed out with egocentrism, no?

If intellectual discipline can't be wrested from the death-grip of rhetoricians on behalf of all of us, methinks we are headed down the sewer with all the rest of their bullshit. Citizen thinking indeed!

Oct. 22, 2011

Good luck eradicating egocentrism. It's deeply rooted in all societies and all political/economic systems. Best, Don Bauder

Oct. 22, 2011

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