The Real News Network has the video Yellen In Line to Head Fed, But How Will She Lead?

I find the entire video mildly interesting, but I took especial note of remarks by Greg Palast.

PALAST: You know, in the case of Rand Paul, you know, he preferred Milton Friedman for the post of Federal Reserve chief. And The Wall Street Journal reminded him that Friedman had been dead a few years. I know that because I was a student of Friedman.

There is a belief among the Republicans, who have a very poor understanding of economics, and some of the moderate Democrats, who have even a poorer understanding of economics, they think that if you print a lot of money, that automatically prices go up. You know, it’s some real simple formula that if you double the money supply, prices double tomorrow. And they’re always scaring us about the 1920 hyperinflation Germany, when you needed it to, you know, take a barrel full of currency to buy a loaf of bread.

Well, it was actually Milton Friedman, my professor, who came up with the monetarist theory that one way that you stop a depression is by printing more money. And as long as the economy is–as long as there’s a lot of unemployment in the economy, that is, the economy’s not at its maximum capacity, you’re not going to see prices rise. We have increased the money supply in America by over $4 trillion in the last few years, and prices are barely above dead flat.

So, first of all, they’re attacking Yellen on the basis of a theory that they do not understand.

Compare this to my previous post Senator Richard Shelby’s Ignorance of Keynesian Economics. In Shelby’s questioning of Yellen, he pinned the blame for monetarism on Keynes and cut Yellen short when she tried to correct him and said it was a Friedman concept. The very dead Friedman that Paul wants to head the Fed. Talk about confused over economics.

As for the economy being dead flat after the money supply has increased by $4 Trillion, what does that say about Friedman’s monetarist theory?

The Alternet has the article The 14 Habits of Highly Miserable People: How to succeed at self-sabotage. To give you just a flavor of this article, here is a brief excerpt.

After perusing the output of some of the finest brains in the therapy profession, I’ve come to the conclusion that misery is an art form, and the satisfaction people seem to find in it reflects the creative effort required to cultivate it. In other words, when your living conditions are stable, peaceful, and prosperous—no civil wars raging in your streets, no mass hunger, no epidemic disease, no vexation from poverty—making yourself miserable is a craft all its own, requiring imagination, vision, and ingenuity. It can even give life a distinctive meaning.

I’ll be amazed if you read this article and don’t recognize some people you know, or perhaps even yourself. I did, and I won’t tell you which is which.

For a hint, I’ll say that when the book by Stephen R. Covey The 7 Habits of Highly Effective People® was all the rage, I had no interest in reading it.  My interest became especially low when the book became the suggested reading of the CEOs and HR departments of companies where I worked.

The Daily Kos has the article Real Estate “Flopping” The New Corporate Screw Job.

I was reading the article, thinking there is nothing wrong with what the corporations are doing. This does not sound too different from what I proposed in my previous post in June 2011 Solution to The Housing Market Crash.

Then I read this quote of a quote in this most recent article that is the subject of this blog post.

In ‘flopping,’ a home is purchased by insiders at a steep discount, then immediately sold for a big profit.

Not only are home buyers being cheated out of the chance to buy a home at a reasonable price, but I suspect that the shareholders of the banks that are selling these houses at steep discounts are taking a licking too. What’s in it for the banks?  For the answer to that question read my previous post, The Best Way To Rob A Bank Is To Own One.  The title of that post comes from the same named book.  I just realized that the “owning” in the title is not about being a stock holder. It is about owning control of the management of the bank.  It is what the author of the book, William Black, calls “control fraud”.  This new scam is not about the specific items from the book that I chose to highlight in the previous post, but is about some new ways for the “owners” to rob the bank. You can think of this as the perfect example of what is wrong with the government accepting cash settlements from the bankers who perpetrated previous crimes instead of sending them to jail.  How many times must they be repeat offenders before we finally decide that they need to be in jail? Besides being the New Sheriff In Town, Elizabeth Warren could ride this issue all the way to the White House in 2016 if she were a mind to.

Well, this story may be worse than I thought.  I started to do a little research to if see I could prove that the Fed’s Quantitative Easing effort could be a loser in this fraud scheme, too. I found a Jun 10, 2010 Bloomberg story Banks Face Short-Sale Fraud as Home `Flopping’ Spreads.

By allowing broker price opinions, the Treasury exposes taxpayers to short-sale fraud after $49 billion of government bailouts for housing, Barofsky wrote to Congress. “As constituted now, the program permits home valuation, the key vulnerability point for a flopping scheme, without a true appraisal,” he wrote. “No program of this type and scale can be considered well designed without robust protections of taxpayer funds against the predation of criminals, particularly given the inconsistent treatment of home valuation.”

The Barofsky quoted above is Special inspector general for the Troubled Asset Relief Program Neil Barofsky.  So the TARP inspector general has known about this for over 3 years. I don’t know if the Fed’s buying of CDO’s (Collateralized Debt Obligations) existed three years ago when Barofsky made the $49 billion estimate of the loss to the government. The WikiPedia article Federal Reserve responses to the subprime crisis, uses the Government Accountability Office (GAO) report Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance for its assertion that

The Federal Reserve created five programs to give assistance to AIG: . . . Maiden Lane III, a special purpose vehicle created to purchase collateralized debt obligations on which AIG Financial Products had written credit default swaps.

I’ll let the professional journalists dig into this further.  I have already suggested this to The Real News Network.

If you believe in “The greater fool” theory of investing, you might be interested in this quote of a quote that originated in The New York Times article Behind the Rise in House Prices, Wall Street Buyers. This was cited in The Daily Kos article.

Wall Street played a central role in the last housing boom by supplying easy — and, in retrospect, risky — mortgage financing. Now, investment companies like the Blackstone Group have swooped in, buying thousands of houses in the same areas where the financial crisis hit hardest.

Of course, The New York Times should have added “fraudulent” to the list of adjectives describing Wall Street’s role.

You might want to invest in the Blackstone Group, if you weren’t badly enough burned in the last boom and bust, or if you managed to get out just in time last time.

I just received an email from Nancy Pelosi.

Steven —

With everything happening with health reform recently, I keep remembering this story from 2010. It’s a real tearjerker, but it reminds me why we are fighting every day to make sure that every American has access to health care. It’s worth a read.

CINDY MERCER JONES — March 19, 2010 11:25 am

“My beautiful daughter, Courtney Leigh Huber was an insulin dependent diabetic who was kicked off her father’s insurance the day she graduated from college. To try to conserve her insulin, she attempted to wean herself off her nighttime insulin dosage. She slipped into a coma and never woke up.” (You can hear more heartfelt health care stories here.)

This week, we got back in contact with Cindy to let her know how much her story motivates us all. Here’s what she said:

“Thanks 🙂 Means a lot.. my 14 year old son was recently diagnosed with Type I Diabetes too.. I am reliving Courtney’s disease with him now.. BUT he has insurance! It’s a struggle, and we are both scared, but we are strong and will pull through this… I am constantly reminded now, that Courtney’s death was not in vain.”

It’s inspiring to know that Cindy — because of all of your work — won’t have to worry about her son being kicked off health insurance for having a pre-existing condition.

This is what we’re fighting for. Thank you for standing with us.

Nancy

P.S. Will you take a moment today to show the strength of our grassroots movement to ensure that health care is a right, not a privilege, afforded to all Americans? Click here to automatically sign your name >>

The Guardian has the story Iran nuclear negotiations at crucial juncture over Arak reactor.

The fate of Iran’s heavy-water reactor has become a sticking point in high-level nuclear negotiations in Geneva, according to the French foreign minister, Laurent Fabius.

The Iranian delegation is believed to have presented western powers with a draft text of an agreement on Friday, which is now the focus of the negotiation. But Fabius told France Inter radio on Saturday that Paris would not accept a “sucker’s deal”. He said: “As I speak to you, I cannot say there is any certainty that we can conclude.”

I knew the above was why France blocked the deal.  However, I wanted to record the rebuttal of the French position.  Maybe I had seen the rebuttal before, but I was having a bit of a struggle finding it.  This article provides the following:

Daryl Kimball, the executive director of the Arms Control Association, in Washington, argued that the heavy-water plant at Arak should not be an obstacle to achieving a stop-gap deal to defuse tensions.

Kimball said construction work “is more than a year from being completed; it would have to be fully operational for a year to produce spent fuel that could be used to extract plutonium. Iran does not have a reprocessing plant for plutonium separation and Arak would be under IAEA safeguards the whole time.

“Arak represents a long-term proliferation risk not a near-term risk and it can be addressed in the final phase of negotiations. France and the other … powers would be making a mistake if they hold up an interim deal that addresses more urgent proliferation risks over the final arrangements regarding Arak.”

With the above information firmly in hand, we can move on to the conjectures as to why France is behaving this way.

The Real News Network has the video Why Did France Thwart The Iran nuclear deal?

Robert Parry speculates:

And what happened to some degree over the summer was that Prince Bandar and other Saudi officials began trolling through Europe, trying to figure out if they could pull away some of the countries of Europe in favor of the Saudi position, and essentially the Israeli position, on issues like Syria and Iran. They seem to have had great success with the French, who, of course, have a serious economic problem. They have been struggling trying to get out of this recession. They’ve had a recent credit downgrade. They’ve had high unemployment. And so when the Saudis began to flash some of their petrodollars around, it was certainly something of interest to the French. And the Saudis have recently been signing up contracts with the French for military assistance. There’s a one-and-a-half billion dollar plan for the French to help refurbish some of the Saudi Navy. And you’ve had other Gulf states making other deals with France in terms of buying their equipment, especially their military equipment. So what you’ve got here is the French having a very clear economic incentive to help the Saudis and the Israelis as much as possible.

Perhaps being armed with this “information” we will be able to fight off the warmongers in our Congress that would rather fight than switch.

I have isolated this clip from the Hearings on Janet Yellen’s nomination to head the Federal Reserve bank.

Why do you suppose that Richard Shelby is so adamant about getting economist John Maynard Keynes’ name so connected with using monetary policy to stimulate the economy? I suspect that he knows that he does not like Keynesian economics and he does not like using monetary policy as a stimulus, thus he wants to connect the two.

In a very diplomatic way and feigning ignorance of what Keynes thought, Janet Yellen attempts to point out that it is economists like Milton Friedman who believe that monetary policy is all you need to stimulate the economy. Milton Friedman is a darling of the right wing and the Republican party. Keynes, on the other hand, is on the sh*tlist of the Republican party.

Ironically, the whole premise of John Maynard Keynes’ economic theory about getting out of the depression of the 1930s was to explain how monetary policy would not work to stimulate the economy under the conditions of the 1930s depression.

It was economists like Milton Friedman who took a very anti-Keynesian position in order to prove that Keynes was wrong and that monetary policy would have worked to end the depression. In fact Friedman even went so far as to fudge the data to prove his point. Friedman won the Nobel Prize in economics for his insight. It was not until recently that people have realized how badly that Friedman fudged the data in order to prove his point.

All Shelby seems to be able to remember is that he dislikes Keynesian Economics. He doesn’t seem to know what Keynesian economics is, nor why he dislikes it. Yet Shelby is looked up to by some Republicans as an expert on economic and banking policy.

See the first paragraph of my previous post How Milton Friedman Fooled The Economists

The Real News Network has the video and transcript Hedges: Jeremy Hammond Exposed State’s Plan to Criminalize Democratic Dissent.

JAY: So, quickly, for people–most of our viewers must know this, but quickly, just what is it that Jeremy exposed?

HEDGES: He broke into the private security firm known as Stratfor, which does work for a variety of intelligence agencies–for the Marine Corps and the Defense Department, the Pentagon, but also for corporations, including Raytheon, Dow Chemical, and others. And he turned over 3 million emails, email exchanges within the company to Rolling Stone, WikiLeaks, and other publications.

Now, this was quite a significant dump, because it illustrated two or three very chilling things about the security and surveillance state, first of all that there was no division between corporate spying and government spying. It was seamless, including the same people going back and forth. It was from that dump that we realized the extent to which the Occupy movement was being spied upon and infiltrated and monitored and followed. And we also found from those email exchanges that there was a concerted attempt on the part of security officials, both inside the government and within the private security contracting agency, to link, falsely, nonviolent dissident groups with terrorist groups so that they could apply terrorism laws against these groups.
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Let me be perfectly clear about this – I DO NOT DO COMPUTER HACKING. However, it is clear that the government knows what I am publishing here. Who knows when they will decide that I support something or other that they do not like?

Well, at least they might decide to take care of my room and board for the rest of my life. How bad could that be?

The Daily Kos has the article Rush Limbaugh Fans Now Literally Crapping Their Pants.

Surely they don’t mean literally literally.  They must mean figuratively literally.  No, if you read the article it is literally literally.  I won’t quote the key sentence and spoil your anticipation of finding out how this could be true.

I have isolated this clip from the Hearings on Janet Yellen’s nomination to head the Federal Reserve bank.

Many times our fiscal policy and monetary policy has been working in cross purposes.

I have finally found someone from the Federal Reserve to plainly state what I have been claiming on this blog for a long time.

If this were not a job interview for Janet Yellin she could say it less diplomatically. The Fed would not had had to do some of the extraordinary things it has done, and you are so worried about, if the Fed had not needed to undo the damage that Congress has done with Congress’s economic policies.