Explaining Southern California's economy

The DeBord Report on "America Now with Andy Dean"

Listen in to my latest appearance on "America Now with Andy Dean." We have a lively conversation about the Greek debt negotiations, U.S. energy policy, and what in the world we should do about the U.S. Postal Service, which is probably going to run out of money by October. Andy is his usual take-no-prisoners self when it comes to things like European socialism, but I make a decent point or two about how we need to look at our national energy future A LOT differently as the discovery and extraction of new domestic resources threatens to turn us into the world's largest energy producer by 2020.

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Finance beats democracy in Europe

Violence Erupts As Greece Decides On Euro Future

Milos Bicanski/Getty Images

GREECE, ATHENS - FEBRUARY 12: Demonstrators throw pfire bombs to riot police during violent protests in central Athens February 12, 2012. Thousands of demonstrators clashed with police as the Greek parliament prepared to vote on a new and deeply unpopular EU/IMF austerity deal, to secure a 130 billion euro bailout, aimed at saving Greece from bankruptcy and what Prime Minister Lucas Papademos warned would be "uncontrollable economic chaos". (Photo by Milos Bicanski/Getty Images)

He doesn't go quite as far as I did yesterday when I said that the ongoing European debt crisis has spawned a series of financial coup d'etat, with democracy being subjugated to the needs of markets. But at Project Syndicate, Kemal Dervis lays out a similar case:

Beyond the specific problems of the monetary union, there is also a global dimension to Europe’s challenges – the tension, emphasized by authors such as Dani Rodrik, and Jean Michel Severino and Olivier Ray, between national democratic politics and globalization. Trade, communication, and financial linkages have created a degree of interdependence among national economies, which, together with heightened vulnerability to financial-market swings, has restricted national policymakers’ freedom of action everywhere.

Perhaps the most dramatic sign of this tension came when Greece’s then-prime minister, George Papandreou, announced a referendum on the policy package proposed to allow Greece to stay in the eurozone. While one can debate the merits of referenda for decision-making, the heart of the problem was the very notion of holding a national debate for several weeks, given that markets move in hours or minutes. It took less than 24 hours for Papandreou’s proposal to collapse under the pressure of financial markets (and European leaders’ fear of them).

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The parallel universe of Mitt Romney's auto industry rescue

Republican presidential hopeful Mitt Rom

Emmanuel Dunand/AFP/Getty Images

Republican presidential hopeful Mitt Romney holds a Caucus election night at Red Rock Casino in Las Vegas, Nevada, February 4, 2012. AFP PHOTO/Emmanuel Dunand (Photo credit should read EMMANUEL DUNAND/AFP/Getty Images)

Mitt Romney is doubling-down on his negative view of the the 2009 bailouts and bankruptcies of General Motors and Chrysler. In late 2008, he argued in the New York Times that a bailout of Detroit would mean the end of the U.S. auto industry. Today, in the Detroit News, he refuses to back off from his earlier position, says that a "managed bankruptcy" of GM and Chrysler was what was needed all along, and that the Obama administration practiced:

"...crony capitalism on a grand scale. The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better.

And:

Before the companies were allowed to enter and exit bankruptcy, the U.S. government swept in with an $85 billion sweetheart deal disguised as a rescue plan.

By the spring of 2009, instead of the free market doing what it does best, we got a major taste of crony capitalism, Obama-style.

Thus, the outcome of the managed bankruptcy proceedings was dictated by the terms of the bailout. Chrysler's "secured creditors," who in the normal course of affairs should have been first in line for compensation, were given short shrift, while at the same time, the UAWs' union-boss-controlled trust fund received a 55 percent stake in the firm.

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Is Bitcoin dead? No, but TradeHill is.

Behold, the cyber-banker. Above, Hermione Way interviews Jered Kenna, CEO of TradeHill, a Bitcoin trading site. He thinks that Bitcoin has a future, and he's probably right. The cyber-currency continues to chug along, even as it has fallen far from its speculative highs in 2011. TradeHill, on the other hand, is a goner, at least according to this post yesterday from the site's blog:

::::: Announcement :::::: TradeHill suspending trading and returning client funds.

Dear Clients,

Effective immediately TradeHill will be shutting down trading / deposits
and returning all client funds.

Due to increasing regulation TradeHill can not operate in it's current 
capacity without proper money transmission licensing. Combined with 
multiple bank account closures and Paxum's decision to close all 
Bitcoin business accounts, we have deemed the best course of action is 
to halt trading and pursue licensing while raising funds.

SEPA transfers for our Euro customers have been enabled.

Everyone at TradeHill has also been working without pay for several 
months after one of our payment processors removed over $100,000 dollars 
from our account without notice. We decided to cover this loss for now 
instead of passing it on to our customers and are taking legal action 
against the processor. We would also like to make it known that our 
relationship with Paxum has been great and hope to work with them in the future.

We will be focusing on Bitcoin.com and are preparing to release a new 
site before the end of the month.

It has been a pleasure working with the Bitcoin community and look 
forward to continuing our business in the future. More details to come soon.

Sincerely,

Jered Kenna
Chief Executive Officer
TradeHill 

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Where's the inflation? It's Ron Paul versus Ben Bernanke PART II

Ron Paul Continues Iowa Campaign Tour

Justin Sullivan/Getty Images

LE MARS, IA - DECEMBER 30: Republican presidential hopeful U.S. Rep Ron Paul (R-TX) speaks during a town hall meeting at the Le Mars Convention Center on December 30, 2011 in Le Mars, Iowa.

Last week, I wrote about how there's no significant inflation in the U.S. economy and that critics of the Federal Reserve's policies, chiefly Ron Paul, should admit that they were wrong and find something else to complain about. Such as Fed Chairman Ben Bernanke's inability to address the central bank's other mandate, maximum employment. With an unemployment rate at 8.3 percent, we're far from it.

The response from the commenters was swift, copious — and merciless! I got 120 comments, by far the most ever for a DeBord Report post, and all the one's that I didn't write myself disagreed with everything I had to say. Well, one didn't entirely disagree. This person just said I was as off-the-mark as Kenneth Rogoff and Paul Krugman and shouldn't be blamed.

I'll hasten to say at this point that I'm really fine with with this. I actually like being vigorously attacked, and I think that a good blogger brings the comment stream into the process. And so I'm doing that now (the comments are unedited, by the way).

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