Category: Philosophy

White People Do Not Trust Cops Either

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Susan Webber, better known by her nom de blog Yves Smith is white.

How white is she? This white: Harvard BA in literature and history (Phi Beta Kappa), MBA Harvard, Salomon Brothers, Goldman Sachs, McKinsey & Co, head of M&A for Sumitomo Bank, and now she is the head of Aurora Advisory.

And guess what, after 4 decades of the war on drugs, almost as long a period of militarization of law enforcement, and 10 years of anti-terror hysteria, she now does not trust police officers:

Since I live the most boring personal life imaginable, my interactions with the police types are limited to the every-thirty-five-year big speeding ticket, the TSA, and passport and customs officials (well take it back, I have a very long ago funny story when I went on a car ride in Harlem with a couple of black men who offered me a lift to try to find a kid on a bike who’d snagged my wallet out of my hand. The men who trundled up in the car knew the woman who’d run down the block ahead of me trying to apprehend or at least identify the robber, so they looked to be neighbors in that little corner of Harlem. The men dropped me back where I’d called 911 on a pay phone, this being in the pre-cell phone days. The cops had just arrived and drove me home and thought I was clearly insane to have take up an offer of local assistance).

 I have heard bad stories about cops from cab drivers here (New York City and Bloomberg in particular has it in for cabbies for reasons I’ve never been able to fathom) and former DAs in other cities (for instance, that decades ago it was routine for cops to plant evidence and fabricate testimony in high profile cases if they couldn’t find a logical suspect fast enough). I’ve also heard some good stories about cops from local people and have seen them have to perform some unpleasant duties (like enforcing ridiculous cordons mandated by Presidential visits, the degree of lockdown and the diversions forced on locals who wind up on the wrong side of lines are insane, and the police stay patient with irate locals. I suspect they think the procedures are overkill, and even with all the overtime, they look none too happy about it). And then we have the really hair-raising media accounts, of paramilitary crackdowns on Occupy Wall Street and other dissident groups, of tasers and pepper spray and pain-inflicting zip handcuffs becoming appallingly routine.

 I’ve noticed a shift in my reactions to police. While I generally assume they need to be handled with care, I’ve assumed in certain tame neighborhoods that they aren’t so bad (as in the local needs don’t call for much aggressive policing), such as my immediate ‘hood and coastal Maine.

 But the other night, I saw a fire engine pulled up outside the local fire house. It had its lights on but no siren and wasn’t going anywhere. There was a cone next to it. I wasn’t paying much attention but it looked to have been deliberately parked close enough to the curb to allow traffic to pass.

 I was walking towards the fire engine when I saw a cop stop a cab trying to go by the parked fire engine (I didn’t see any police car visible, so I’m not sure how he came to be there). He asked for the driver’s license and registration and told the driver in a normal conversational tone, “Park over there, this is going to take a long time.”

 Now I have no idea what lead to this. I see a policeman taking a cabbie off duty (and remember, cabbies rent their vehicles, so this will force they guy into a loss regardless of what else cams out of this interaction). I realized later than with no information either way, no basis for knowing whether the cop was being completely proper or not, I assumed the cop was likely not in the right.

 Maybe I’m just an outlier, but here I am, in one of the tamest spots (in terms of police likely to get rough with a resident going about their normal business) and my default assumption with my own police force has become not to trust them. That may have been what I believed on some deeper level before, but that view has now become more apparent to me.

When someone like Ms. Smith/Webber sees a confrontation involving a cop, and immediately assumed that the cop was abusing his authority.

This is a direct consequence of the changes that we have made in our police forces.  They have gone from being peace officers that served the community into a paramilitary force that is intended to exert control of the community.

In other words, they have increasingly adopted a mind-set of an occupying force.

What Ezra Klein Said

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He notes that when pundits talk about “the center”, they are endorsing a radical agenda that is overwhelmingly opposed outside the beltway:

Martin’s article doesn’t define “the center.” But it’s not the center of public opinion. It’s more a reference to an amorphous Washington consensus. Insofar as that concept ever made sense, the idea was that it’s the legislative center, the zone of compromise where things can actually get done. But even that concept has begun to break down in recent years, as that Washington center — what you might call the “Simpson-Bowles center” — no longer holds any weight in Congress.

When you’re judging policy, “good” and “bad” are descriptions that make sense. So are “popular” and “unpopular,” and “likely to pass” and “no chance.” But “the center”? It’s time to retire that one, or at least come up with a more rigorous definition of what we mean when we use it.

Word.

Gee, What Could Possibly Go Wrong?

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After all, the market solves everything, so the sale of the UK’s primary blood plasma supplier to Bain Capital should work out just fine:

The Government was tonight accused of gambling with the UK’s blood supply by selling the state-owned NHS plasma supplier to a US private equity firm.

The Department of Health overlooked several healthcare or pharmaceutical firms and at least one blood plasma specialist before choosing to sell an 80 per cent stake in Plasma Resources UK to Bain Capital, the company co-founded by Republican presidential candidate Mitt Romney, in a £230m deal. The Government will retain a 20 per stake and a share of potential future profits.

PRUK has annual sales of around £110m and consists of two companies: it employs 200 people at Bio Products Laboratory (BPL) in Elstree, Hertfordshire, and more than 1,000 at DCI Biologicals Inc in the US. DCI collects plasma from American donors and sends it to BPL where it is separated into blood proteins, clotting factors and albumin for supply to NHS hospitals in the treatment of immune deficiencies, neurological diseases, and haemophilia.

Considering the damage caused in the US because the American Red Cross (under the direction of Liddy Dole) and big pharma, both of whom resisted 100% testing for years,and  killed tens of thousands of hemophiliacs in the United States, and many times that world wide, this does not fill em with confidence about the UK blood supply.

They Pretend to Pay Us, and We Pretend to Work

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It’s an old joke from the Soviet Union, and in a very real way, it explains much of what brought down the USSR.

Well, the good folks at The New York Times have found a study showing that, after decades of MBA driven management by intimidation, a majority of American workers actually loathe their employers:

I thought of this black mark on my résumé while reading an exhaustive and depressing new study of the American workplace done by the Gallup organization. Among the 100 million people in this country who hold full-time jobs, about 70 percent of them either hate going to work or have mentally checked out to the point of costing their companies money — “roaming the halls spreading discontent,” as Gallup reported. Only 30 percent of workers are “engaged and inspired” at work.

 At first glance, this sad survey is further proof of two truisms. One, the timeless line from Thoreau that “the mass of men lead lives of quiet desperation.” The other, less known, came from Homer Simpson by way of fatherly advice, after being asked about a labor dispute by his daughter Lisa. “If you don’t like your job,” he said, “you don’t strike, you just go in there every day and do it really half-assed. That’s the American way.”

Or, as Gin and Tacos notes, “When a job devalues employee, literally and figuratively, their response is often to work just hard enough to avoid getting fired.”

In the G&T case, he’s talking about (underpaid and never getting a raise) teachers at a Catholic school basically checking out for the month of May (multiple showings of Toy Story), but it applies throughout our economy.

In a very real way, we are eating our seed corn, and I fear that it will not become apparent until it is too late.

What happens when we run out or rubes who think that good work and honesty will get you ahead?

H/T Balloon Juice.

I Have Got to Read the Works Of Iain Banks

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If this line from one of his last interviews is any indication of his mastery of the English language:

He learned of Thatcher’s death – which would have kept his own news off the front pages had it been the same day, he mused – on his honeymoon after inviting his partner, Adele Hartley, “to do me the honour of becoming my widow”.

“Then I realised I was celebrating the death of a human being, no matter how vile she was. And there was nothing symbolic about her death, because her baleful influence on British politics remains undiminished. Squeeze practically any Tory, any Blairite, and any Lib Dem of the Orange Book persuasion, and it’s the same poisonous Thatcherite pus that comes oozing out of all of them.”

(Emphasis mine)

I have to check out his work.

Won the Election and Should Have Been President

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Al Gore:

The National Security Agency’s blanket collection of US citizens’ phone records was “not really the American way”, Al Gore said on Friday, declaring that he believed the practice to be unlawful.

In his most expansive comments to date on the NSA revelations, the former vice-president was unsparing in his criticism of the surveillance apparatus, telling the Guardian security considerations should never overwhelm the basic rights of American citizens.

He also urged Barack Obama and Congress to review and amend the laws under which the NSA operated.

“I quite understand the viewpoint that many have expressed that they are fine with it and they just want to be safe but that is not really the American way,” Gore said in a telephone interview. “Benjamin Franklin famously wrote that those who would give up essential liberty to try to gain some temporary safety deserve neither liberty nor safety.”

There are some people who leave politics, and just cash in as a lobbyist (Evan Bayh comes to mind), and there are those who find freedom and grow.

Al Gore is one of the latter.

Let me offer a hearty f%$# you to the corrupt Supreme Court justices who mad the Bush administration happen.

Would You Cut Someone’s Throat for Money

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The hed is instructive, “Chicago Hospital Accused of Cutting Throats for $160,000.”

When people talk about how the private sector solves everything, just remember this story:

A surgeon at Chicago’s Sacred Heart Hospital cut a hole in Earl Nattee’s throat on Jan. 3, the day before he died. It’s not clear why.

The medical file contained no explanation of the need for the procedure, called a tracheotomy, according to a state and federal inspection report that quotes Sacred Heart’s chief nursing officer as saying it happened “out of the blue.” Tracheotomies are typically used to open an air passage directly to the windpipe for patients who can’t breathe otherwise.

Now, amid a federal investigation into allegations of unneeded tracheotomies at the hospital, Nattee’s daughter, Antoinette Hayes, wonders whether her father was a pawn in what an FBI agent called a scheme to defraud Medicare and Medicaid.

“My daddy said, ‘They’re killing me,’” Hayes recalled, in reference to the care he received at the hospital.

Based in part on surreptitious tape recordings, an FBI affidavit lays out allegations that a Sacred Heart pulmonologist kept patients too sedated to breathe on their own, then ordered unneeded tracheotomies for them — enabling the for-profit hospital to reap revenue of as much as $160,000 per case.

They have witnesses who wore wires, and a number of doctors, as well as the CEO of the for profit (notwithstanding the Catholic hospital sounding name) hospital.

There is a reason why governments need to aggressively regulate, or operate, critical services, because incentives to produce good behavior are either ineffective, or more expensive than explicit regulation.

H/t JR at the Stellar Parthenon BBS.

What a Surprise ……… No MBAs Equals Business Success

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Costco does not hire MBAs:

Costco Wholesale (COST), the second-largest retailer in the U.S. behind Walmart, is an anomaly in an age marked by turmoil and downsizing. Known for its $55-a-year membership fee and its massive, austere warehouses stocked floor to ceiling with indulgent portions of everything from tilapia to toilet paper, Costco has thrived over the last five years. While competitors lost customers to the Internet and weathered a wave of investor pessimism, Costco’s sales have grown 39 percent and its stock price has doubled since 2009. The hot streak continued through last year’s retirement of widely admired co-founder and Chief Executive Officer Jim Sinegal. The share price is up 30 percent under the leadership of its new, plain-spoken CEO, Craig Jelinek.

Costco Wholesale (COST), the second-largest retailer in the U.S. behind Walmart, is an anomaly in an age marked by turmoil and downsizing. Known for its $55-a-year membership fee and its massive, austere warehouses stocked floor to ceiling with indulgent portions of everything from tilapia to toilet paper, Costco has thrived over the last five years. While competitors lost customers to the Internet and weathered a wave of investor pessimism, Costco’s sales have grown 39 percent and its stock price has doubled since 2009. The hot streak continued through last year’s retirement of widely admired co-founder and Chief Executive Officer Jim Sinegal. The share price is up 30 percent under the leadership of its new, plain-spoken CEO, Craig Jelinek.

………

Jelinek earned $650,000 in 2012, plus a $200,000 bonus and stock options worth about $4 million, based on the company’s performance. That’s more than Sinegal, who made $325,000 a year. By contrast, Walmart CEO Mike Duke’s 2012 base salary was $1.3 million; he was also awarded a $4.4 million cash bonus and $13.6 million in stock grants.

These are some of the reasons why Costco is successful, but I think that the most important bit is this:

It will have to look inside, since Costco does not hire business school graduates—thanks to another idiosyncrasy meant to preserve its distinct company culture. It cultivates employees who work the floor in its warehouses and sponsors them through graduate school. Seventy percent of its warehouse managers started at the company by pushing carts and ringing cash registers. Employees rarely leave: The company turnover rate is 5 percent among employees who have been there over a year, and less than 1 percent among the executive ranks. That’s impressive, but it also suggests the company does not have a regular influx of outside views. Even John Matthews, vice president in charge of human resources, calls the company “awfully inbred.”

I believe that much of their success is from the fact that they do not hire pampered self important people who do not understand the finer points of the business.

“Business school graduate,” and, “Pampered self important people who do not understand the finer points of the business,” are pretty much synonymous, and the fact that they have gained much in the way of currency in contemporary American business, is one of the reason that we are so completely f%$#ed.

H/t  Washington Monthly

Good Point

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C.P. Chandrasekhar, discussing the so called middle income trap, where developing countries stall out at a slightly improved standard of living.

Why did places like Hong Kong, Korea, Singapore, and Taiwan become prosperous, while newer partners to the dance don’t.

Money quote is at the end:

And there are many who argue that growth in Asia stalled not before they liberalized but after they did. This is based in particular on the evidence that dynamism in Asian economies other than China, and to an extent India, faltered after the 1997 crisis. That crisis, we must recall, was related to the financial liberalisation many of these countries were forced to adopt, either as a quid pro quo for continued access to the export markets on which they were excessively dependent, or because waning manufacturing export competitiveness as a result of rising wage costs and appreciating currencies, pushed them into liberalisation of financial policies in the hope of making financial services the new engine of growth. The result was vulnerability to boom-bust cycles of various kinds that led to the synchronised downturn in many countries (with Thailand, Korea, Malaysia and Indonesia, among them) in 1997-98.

 This should possibly lead to two conclusions. The first is that, beyond a point export-driven growth has a way of running into internally generated constraints. Second, that among the factors that can undermine a country’s growth prospects, even at relatively higher income levels, is excessive liberalisation, especially financial liberalisation. Possibly most countries, whether poor, rich or in some ‘middle income’ range, find their growth has stalled for reasons such as these.

(Emphasis mine)

Hong Kong, Korea, Singapore, and Taiwan experienced their growths during the 1960s and 1970s, before we had “liberalization” (deregulation) and expanding inequality.

I tend to come from this from a more sociological perspective than a classical economic one, and I would argue that a liberalized economic policies, and in particular financial liberalization, is analogous to the colonial regimes in the 1800s.

The expanded financial services industries suck the marrow out of, well basically everyone in an orgy of non productive rent sinking, much like the colonial Satraps in the time of Victoria.

Basically, the banksters are f%$#ing the rest of us like a drunk sorority girl.

It shows that Timothy Geithner’s, and Wall Street’s creepy vision of the future:

Geithner hunched his shoulders, pressed his knees together, and lifted his heels up off the ground—an almost childlike expression of glee. “We’re going, like, existential,” he said. He told me he subscribes to the view that the world is on the cusp of a major “financial deepening”: As developing economies in the most populous countries mature, they will demand more and increasingly sophisticated financial services, the same way they demand cars for their growing middle classes and information technology for their corporations. If that’s true, then we should want U.S. banks positioned to compete abroad.

Is a disaster for the rest of us.

This Is Corrupt

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It may not be enough for a review of his tenure, but the fact that, “Senior associate dean for executive programs and a professor in the practice of management at the Yale School of Management,” Jeffrey Sonnenfeld is calling criticism of JP Morgan CEO Jamie Dimon a witch hunt without revealing that he was a paid consultant for JP Morgan. (See his Yale bio here, I was pointed to it by a commenter on his OP/ED.)

I wonder what the extend of his pecuniary interest is here.

Even if it’s a small fee, it would certainly help with his consulting sideline to shill for a CEO. Look at the list on his bio. It’s more than 30 big-name clients.

Maybe this is why he calls shareholder objections to Dimon’s performance a “lynch mob.”

My guess is that he is angling to get a gig at HP, because he also gushed about, “Meg Whitman to continue executing a brilliant turnaround strategy.”  (Gag me with a spoon)

When someone suggests that business management schools can manage their own ethics education, have them explain to you why, given the repeated undisclosed conflicts of interest in the field (and in economics departments as well), that we can trust them to get this right.

Quote of the Day

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The Republican congressional delegation — particularly the members of the House — are completely creatures of the base. They are former state legislators and state senators who got elected to those offices espousing ideas that likely were further out there than the ones they’re spouting now. In large part, they were raised within the base’s political structures, both inside and outside of government. They are the product of a closed information society, with its own history and its own science and its own truth. To borrow a line from Jack Nicholson in The Last Detail, the Republican members of the House are the fking base, motherfker. They’re not asking for permission to do the right thing, and they’re certainly not waiting for this president to provide it. They’re not posing. They are not doing what they’re told. They’re doing what they believe.

Charlie Pierce on why Barack Obama will not find common ground with the Republicans in Congress

(emphasis mine)

You know this, and I know this, but Barack Obama is unwilling to recognize reality.

Whiny Bitch of the Day

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Ambrose Evans-Pritchard is mad as hell about the Eu’s proposed financial transaction tax.

Oh the horror of a tax of one tenth of 1% on stock trades, and one one-hundredth of 1% on derivatives will destroy all life as we know it on the planet.

His argument is that it will crush the speculative arbitrage that is the meat and potatoes for Wall Street and the City of London, causing a shrinkage of the financial industry.

He says that it “has the character of a pogrom.”

Well, I got your “pogrom” right here.

Randall Munroe accurately reflects my feelings on this in this cartoon:

Excess financialization of our economy is not productive, nor is it symbiotic.  It is a parasitic drain on society, and a source of instability.

It needs to be ended.

Misplaced Priorities

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H/t JR at the Stellar Parthenon BBS.

I understand that they have problems getting their games out on time, and getting them out finished, they buy up companies and destroy their ideas, and they routinely treat their employers like galley slaves, but considering the excesses of they banksters, or the the slapdash contracting at KBR (which literally electrocuted soldiers in the shower), it is a bit much for a poll to vote computer gaming company Electronic Arts the “Worst Company in America”:

Video game publisher Electronic Arts has a new feather in its cap: It has won The Consumerist’s Worst Company in America award.

 The tournament rookie beat out America’s other most-hated companies by a landslide 64 percent vote. Rival honorees included Walmart, PayPal, Bank of America, and even fellow game industry villain, Gamestop.

 A statement from The Consumerist, part of the nonprofit group that publishes Consumer Reports, noted that “while both Bank of America and EA drew consumer ire for their poorly-received practices of swallowing up smaller competitors and nickel-and-diming customers with up-charges and fees, EA’s success in this year’s tournament shines a spotlight on an industry that is often considered ignored by regulators, courts, and the mainstream media.”

 “Some may look down their noses at the idea of voters picking a video game publisher as the Worst Company In America, but that is the exact kind of attitude that has allowed EA and its ilk to nickel and dime devoted customers for a decade,” said Chris Morran, Deputy Editor of Consumerist.com. “This is not just a few people complaining about bad games; this vote represents a large group of consumers who have grown sick and tired of being ignored and taken advantage of.”

There are plenty of companies that abuse and nickel and dime their customers, but the banksters blew up the world, and companies like Blackwater XE Academi murder brown people with impunity.

From all reports, and I know people in the game publishing business, EA is one of those companies that seems to fly in the face of the conventional wisdom that successful companies deliver good products that satisfy their customer needs.

But the worst company in America?

Puh-leeze!

It Works, and It Saves the Taxpayer Money, So Let’s Make it Illegal

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I am referring to the state-owned bank of North Dakota, which will be made illegal by the Trans-Pacific Partnership (TPP):

Clearly, from Wall Street’s perspective, the North Dakota bank must go, and all other state efforts to replicate it must be thwarted. Wall Street’s stealth weapon may be lodged within the latest corporate trade agreement called the Trans-Pacific Partnership (TPP), which currently is being negotiated in secret. We already know that Wall Street is seeking to remove all tariff restrictions that prevent the U.S. financial services industry from doing business in countries like Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The biggest banks also want the treaty to eliminate “non-tariff” barriers including regulations that create “unfair” competition with state-owned financial enterprises.

 Depending on the final language, it is possible that the activities of the Bank of North Dakota could be ruled illegal because “foreign bankers could claim the BND stops them from lending to commercial banks throughout the state,” according to an analysis by Sam Knight in Truthout. How perfect for Wall Street: a foreign bank can be used as a shill to knock out the BND.

The nickel tour on BND is that it is a state-owned wholesale bank (it only makes loans to other banks), and the state keeps its money in an account there.

It generates significant savings, and significant savings for the taxpayer, and its senior executives are paid less than the President of the United States.  (The most highly paid executive is paid about ½ that of POTUS.)

Also, the bank provides a financing alternative to bond sales managed by Wall Street firms.

Considering the Obama administrations neoliberal philosophies, along with its predilections toward direct and indirect government subsidies for the TBTF banks, I’m inclined to believe it.  Particularly since that is what the Obama Administration’s point person is explicitly saying the trade agreement:

Publicly owned enterprises, for example, are being targeted by negotiators. One such entity in the United States that has been the subject of considerable interest in recent years is the Bank of North Dakota (BND) – the only fully publicly owned financial institution in the country. The BND, which is only allowed to lend wholesale, was a stabilizing force that helped keep the already energy-rich state insulated from the shock of the financial crisis (Alaska, for example, didn’t fare as well). It has also brought a small fortune to the state’s treasury – $340 million in net tax gain between 1997 and 2009. Legislators in at least 13 different states have proposed studying or emulating the North Dakota model – state-owned development of central-bank style institutions guaranteed by tax revenue. But if the TPP is passed, that option might not be available. [Chief TPP Negotiator for the Office of the US Trade Representative Barbara] Weisel said that State Owned Enterprises (SOE) are routinely “competing directly with private enterprises, and often in a way that is considered unfair.”

 “Some of the advantages that can be conferred on State Owned Enterprises are things like preferential financing,” Weisel said. “Those are things that wouldn’t be provided to private companies – preferential provision of goods and services provided by a government.”

 She said that “State Owned Enterprises – which in some cases can comprise a significant percentage of an economy – can be used to undermine what we’re otherwise trying to gain from this free trade agreement.”

What they are “trying to gain” with this agreement is to replace democracy with unregulated markets (aka looting).

Call your Congresscritter and tell him that you are absolutely opposed to the TPP.

You Phone Company is Refusing to Complete Rural Calls, and Deceiving Us About It

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Telcom law maven Harold Feld shows how FCC Loopholes resulting from VOIP exceptions are destroying one of the central requirements of voice calls:

Increasing numbers of rural communities are reporting problems with incoming phone calls. Outgoing calls work fine, but when someone tries to call one of these rural communities from an urban area, the connection doesn’t go through.

Though the phone never rings in the rural community, the urban caller might hear a “false ringback” in his earpiece, inserted so he will think there’s simply no answer and won’t complain about the lack of service.

This “rural call completion” problem, which also includes connections with very bad sound quality, is getting scrutiny from the Federal Communications Commission.
The problem “causes rural businesses to lose customers, cuts families off from their relatives in rural areas, and creates potential for dangerous delays in public safety communications in rural areas,” according to the FCC.

………

In the last several years, businesses called “least cost routing” companies have sprung up. These companies promise phone networks to find the least expensive way to route their phone calls. The phone companies themselves don’t know how the least cost routing companies are routing the phone calls. They just trust them to do it.

Since completing calls to rural areas is expensive, least cost routers generally try to find long, complicated routes that will minimize the termination fees and other charges by making the call look like it comes from someplace with lower fees. This introduces something called “latency.” The lengthy routes mess up the IP-based phone call, causing long breaks in the signal that the traditional phone network (operated by a rural phone company) interprets as dead air or a disconnect.

………

The FCC refuses to classify IP-based services as “telephone” services (although it has the authority to do so). As a result, it can only regulate IP-providers indirectly with something called “ancillary authority.” Whether “ancillary authority” allows the FCC to regulate IP-based providers, such as least cost routers, remains to be seen.

The problem here is one of philosophy: the Washington consensus that deregulation always leads to innovation is a dangerous delusion.

We need only to compare the performance of our lightly regulated telcos to those of more highly regulated places like, Japan, France, or Korea, to see that consumers pay more, and get less, both in terms of performance and reliability.

Deregulation makes it easier to collect monopoly rents, and it is easier, and more lucrative to seek those rents than it is to succeed for innovation or evolutionary product improvement.

Every one gets screwed but the incumbent phone and cable companies, and it strangles real innovation.

This is Free Market Mousketeer Bullsh%$

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Bolivia President Evo Morales is looking about setting up a state owned concern to refine his country’s huge lithium deposits:

Is Bolivia poised to become the “Saudi Arabia of lithium,” the vital ingredient in batteries for smartphones and electric cars?

The Uyuni salt flats, stretching across a remote Andean plateau in the southwest of the country, are easily the world’s largest reserve of the soft, light, whitish metal coveted by high-tech firms from Silicon Valley to Tokyo.

This year, President Evo Morales has moved swiftly ahead with plans to finally begin reaping a potential lithium windfall of billions of dollars for the impoverished South American nation.

In January, Bolivia opened its first trial plant. It will produce 40 tons of lithium carbonate a year. Over time, the government wants to ramp production up to 30,000 tons — roughly a fifth of current global demand.

Of course there are some potential difficulties, the salt flats are both moist, and contain a fair amount of magnesium, which makes extraction more difficult.

But here is the assumption that seems to be everywhere these days that just pisses me off:

Meanwhile, Morales’ socialist administration’s go-it-alone attitude — including recent nationalizations of everything from utilities to airports — may mean it will have problems accessing the foreign technology needed to process the lithium.

This is bullsh%$.

If they want the technology, they will get it the same way that multinational megacorporations do today: they buy the f%$#ing technology.

Exxon, BP, and all the rest don’t know how to do difficult drilling, they hire companies like Halliburton or Slumberger for their expertise in deep water drilling, they hire companies like Transocean for its expertise in building deep water rigs.

I’m not talking about industrial espionage here, it’s that companies have increasingly outsourced core competencies in the name of cost savings, and these are now available freely for sale.

You hire a company to do the design, you hire another to do the construction, and if you have any sense, you structure it so as to ensure that the local folks get at least a general understanding of the process when you do this.

Ain’t capitalism grand?

The Germans Used the Euro to Exported Inflation

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Paul Krugman looks at the German economy at the start of the Euro, and compares it to the Spanish economy now, and observes that the Germans painlessly devalued relative to Europe as the Euro created inflation in the periphery:

1. Thanks to the giant housing bubble, Spanish costs got much further out of line than Germany’s ever did, so the required adjustment is much bigger.

 2. Germany got to do its adjustment in the face of a relatively strong European economy; Spain is being asked to adjust in the face of a depressed Europe sliding back into recession.

 3. In part because of this difference in overall macro conditions, but also because Germany doesn’t have a housing boom and is actually engaging in a bit of austerity on its own, the burden of adjustment this time around is falling much more on deflation by the overvalued country.

 ………

 You can see just how much harsher Spain’s adjustment is, and how much less help it’s getting from rising wages in the rest of the eurozone. Basically, Germany is refusing to do for Spain what Spain did for Germany in the past.

 And the result of all that is incredibly high unemployment.

German banks fueled speculative bubbles in the periphery, which raised costs relative Germany, and so made Germany’s labor markets relatively cheap.

I’m beginning to think that ending the Euro is the only way to save the EU.

Why the Mathematics of Finance are Crap

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I will give you this (admittedly old) example from Global Economic Intersection, which explains in very simple terms, how much of finance is much closer to a confidence scheme that we would like to imagine:

“If Timmy brings 100 marbles to school and lends them to his classmates at 5% interest for the day, and the classmates diligently work to trade and earn and win enough marbles to pay their debts, how many marbles will Timmy collect at the end of the day?”

The banker will promise a 5% return, and my guess is that a lot of you thought the same thing.

Only it’s not true.

Most of the pupils are of the linear thinking neoclassical persuasion steeped from the cradle in “banker arithmetic”, so they sharpen their pencils and calculate that Timmy will receive 105 marbles in total principal + interest. “Profit drives the marble economy”, Teacher correctly explains, “which is why the classmates were all so busily engaged working for marbles.” And the pupils agreed it would be great fun participating in a marble economy where you could exercise your talents to get out more than you put in.

But little Warren had failed to cram his head into the neoclassical pencil sharpening box where you learn banker arithmetic and he exclaims, “But there ARE only 100 marbles, so unless Teacher adds marbles into the room, Timmy can only get back as many marbles as he put in. So the correct answer is Timmy will get back 100 marbles and some of his classmates will default on their debts and suffer a life of stupid unemployed poverty because Teacher says “We must live within our means.” and she refuses to add the needed marbles even though she owns the marble factory that produces unlimited marbles at virtually no cost.”

Yes, his is a metaphor for the Euro Zone, and the Austrian school ratf$#@s who make up the Bundesbank.

Read the rest.