• No on limiting leverage.
• No on the FDIC ‘consumer financial protection’ department.  This was weak, but better than nothing.

I didn’t dig around long enough to find the other parts of the bill voted on, but the whole thing is dead and Feinstein gets some credit.

There was another critical vote yesterday that might have set the stage for a GAO audit of the Federal Reserve.  She voted No on that too.

It’s no longer hard to wonder why you’ve got such dismally low trust in the U.S. Government.  Few Representatives are legislating the interests of the majority of Americans.

Barbara Boxer did The Right Thing and has voted for all of the items mentioned above.

If the unwashed masses are discouraged from discussing social class relativity/locality then the economic leaders have more freedom to create greater social and economic divisions.  There’s a perverse logic at work that somehow makes a few very rich, a tiny unstable middle class, and the vast majority with the least resources a Good Thing.  The longer discussions of social class are kept out of the scrum of daily life, the more time there is for increasing political and social inequality.

In America 2010, everyone is Middle Class.  Howard Stringer, Jamie Dimon, Frank Atlee, they are all Middle Class.  Only they are more Middle Class (and right) than the rest of the primitive populists.  The actions of these Middle Class Warriors  since the 1980’s has resulted in increased political and economic inequality.  Some obvious artifacts of this is the declining distribution of wealth.  Another artifact is the stagnant wage growth for the bottom 90%.

Another example, in this post.  Towards the end of the piece on banking regulation, the author labels the ideological assault as Serfdom circa 2010. What’s nice about the article is that someone else at least recognizes that income inequality is an explicit goal .   But then it tries to add some heat to the discussion by abusing the term Serfdom.  I don’t agree with the use of the vague word Serfdom.   Otherwise, the author describes the mechanics of failure at re-regulating the current form of Banking very elegantly.

Why does a country need a large middle class?  Greater political and social stability on which to build a vibrant economy.   The simple fact of the matter is creating a vibrant middle class require redistributing wealth. Uh oh.  Another American thoughtcrime.  I’m actively encouraging redistributing wealth.  Your average deregulator demagogue will now chime in with some faulty logic wrapped in Economics lingo “Redistributing income destroys wealth!”  or the hilarious “deregulated markets are more efficient!”   The general consequences of believing some version of the previous two arguments is greater economic and political disparity.

To specifically refute the wealth destroying argument,  empirical evidence like the banking interests mentioned in the article above repeatedly shows wealth being destroyed any number of ways.  I’d also argue most mature segments of the American economy are Oligopolies continuously destroying wealth anyway.

To specifically refute the deregulated marketeer, the theoretical model is elegant, but humans just don’t work like that and no amount of deregulation gets to the mythic perfectly competitive environment.   Empircal evidence repeatedly shows that unregulated market suppliers continuously destroy wealth by restraining competition.  Some empirical evidence of market deregulation are the repeal of Glass-Steagal Act and the consequent bank bailouts, California’s deregulation of electricity suppliers that lead to artificial scarcity and exorbitant pricing.

Maybe the end-game is class immobility? Maybe that’s the point behind the destruction of New Deal goals?  The next time an industry is deregulated, ( Gramm–Leach–Bliley Act) it’s another strike against the vast majority of Americans regardless of your political affiliation.

Now they are trying to run a Redwood timber harvest.  “Second-, third- and fourth-generation redwoods will be thinned…”   SFGate Leaving only the largest of the great trees.  This is a classic power monger remake of the physical world.  The mightiest few are meticulously cared for (themselves and the oldest growth trees) and fell anything less.  That probably means clearing a few old-growth trees to make the property better conform to their orderly world view too.

They wrapped the harvest in the previously politically correct and fail-safe  ‘fire suppression’ meme.   Now, if it were the case that they did just harvest the fast-growing pine-variety invaders, I’d have no problem with the harvest.  It’s the fact they documented clearing the younger redwoods.  This is an external validation of the epic scale of their self importance.  Who needs to be bothered with petty small trees that won’t be large enough to gaze in wonder at (like me and my fellow Bohemians) for at least 1000 years?

Is it the case that their business lives are so slow they have time for a little ‘grounds maintenance?’  Or maybe they can’t get their rapacious urges sufficiently validated by a hostile proletariat?  Like the typical maniacal messiah, do they simply blame the thankless populists that can’t possibly understand the enormous burdens of remaking the world in their view?

An inquiring populist would like to know…

Welcome to the actual consequences of unfettered capitalism.  In the best economic situations, an Oligopoly serves the market, in the typical situation Duopoly/Monopoly firms control markets.  This is empirically evident regardless of the scale of observation. (local/regional/national)

People are making check cashing work for them now, so why change what isn’t broken?  Because it will inject more money into the economy.  Look at this presentation about banking in Central California.  The statistics clearly show there are banks, but few use them.

There’s an opportunity in between the commercial banks and the check cashing operations to lower banking costs for people who are employed and cannot afford retail banking.  They get a paper check and head to the check cashing store.   Then these people are getting reamed by check cashing operations.  In this day and age it is the peak of inefficiency.  It’s good Capitalism, at great expense to marginal consumers.

The USPS could offer consumer savings accounts and plain-vanilla debit card/checking services at monthly fees that decrease the more you save.  No credit operations.  They must offer limited services (especially limited access to paper currency) and be eternally forbidden from attempting to add more services beyond the gap between retail banking and check cashing operations.

Why the USPS?  Because they’ve got the bricks and mortar locations all over the country.  They’ve got very complex retail operation experience.  The post offices in my area have friendly, helpful people working in them.  The service is certainly better than the CSR’s Retail giants like Worst Buy and Target employ.

Would the JPMC’s and BofA’s in the U.S. decry this as ‘big government?’  Of course they would.  But they hate competition.  Check cashing operations would see a nominal decrease in customers because a check cashing store’s best customers would not/do not use banks anyway.

The scheme provides more efficiencies and opportunity for low-income people/families.  Low-income earners using the service would have more money to use as they see fit.  No question about it.

The idea will be legitimized when some Ivy League muckity-muck endorses it.

The way they get to this conclusion is by blending export-deflation with domestic inflation to disguise what is really going on.

In the real world, most of my monthly income goes to goods and services produced in the United States.  In spite of a contracting global economy AND deflation, prices are rising dramatically.

1. Food see graph on bottom
2. Gasoline  see graph on bottom
3. Utilities  No data.  Sorry.

Despite diminishing demand and diminishing valuations for capital goods, prices are still rising.  Fiscal and budgetary policies have unleashed massive amounts of money and there’s nowhere for it to go.  So, prices go up for domestic goods.

Best case scenario is 24+ months of punishing domestic inflation.  The common statistics used to measure inflation will still call this a ‘no inflation’ scenario going forward.  Best case scenario is the ‘rampant domestic inflation’ opinion  will be marginalized while the economy sinks into another malaise.

A wonkier version of this opinion and very worth the time and effort to understand is here.

In ‘light touch’ capitalism being practiced today, banks  are accustomed to using proprietary operations inside the bank to generate the bulk of their profits.  Mr. Volcker is calling for an end to those practices in this article.

It should be obvious that banking and finance should play a supporting role to economic activity.  It doesn’t when most of Finance’s profits come from inside the institution.  This inward view turns their own retail customers into carrion.  Retail investors don’t generate very attractive returns compared to proprietary operations.

It should be equally obvious that the Obama Administration’s deep and broad ties to the Financial elite make Volcker’s comments stir up counter-arguments of  ‘economic populism’ and other excuses to keep things exactly the way they are.

Still, Volcker’s position on this issue are valid and worthy of careful consideration.   Some ivy-league blogger should get on this story so it gets some play in to a point where Mr. Summers *has* to cede most of his influence to Mr. Volcker’s positions.

1. The Treasury and Federal Reserve and the Too-Big-To-Fail banks have reverse-engineered the debt pump without mentioning there’s a dump coming.  Instead of consumers taking on the debt, now your government is doing it for you.  “The Fed and Treasury have set up a scam over the past year to make it look as if there’s still money, but what they have actually done is to transfer risk from the private sector to the public sector”

2. The retail investor is as screwed by the financial media as they are by the financial institutions.“The media continues to feature the same people telling the same idiotic stories, pursuing the same tried and true practices of distributing insider stock, especially their own, at high prices to the masses.”

Read about the wackosphere

What the article lightly touches is the idea that Cisco’s going to enter consumer electronics in a bigger way than just Netgear. Woe betide those who tread on Sony/Panasonic/Philips/Samsung’s territory. They won’t capitulate anytime soon. And then there’s the problem of courting the entertainment conglomerates who are also their competitors in the consumer electronics space.

Now, it won’t happen this month or even next year. I’d say their market cap will increase dramatically (the pump) before the dump. The key moment to watch for will be when John Chambers leaves the daily management position of CEO. Things will start to go wrong for the new CEO when in fact, she just inherits all of John’s problems. Yahoo! problems version 2.0.

There’s a long story on NakedCapitalism absolutely worth reading very carefully and taking the time to fully comprehend. The summary: The Federal Reserve is trying to make the case it can be the ‘One Regulator to Rule them All’. Two words: epic fail. A grossly simplified analogy would be the fox wants to guard the hen house.

More importantly the abuse of statistics in logic/reasoning. There is nothing like statistics, and most other numeric reporting like financial statements, to redirect discussion away from an important issue into a cave no Average American would dare enter.

This blogger deserves major kudos for picking apart an important phenomena.