'Still Dancing'

Speaking of the memory hole, I suspect this one from July of 2007 won't drain for a while:

Citigroup’s chief executive, Charles O. Prince, says his bank hasn’t pulled back from making loans to provide funds for private equity deals, despite a skittish credit market and concerns that the recent run of big buyout deals could be losing steam.

But Mr. Prince used an interesting metaphor to describe his company’s situation as a major provider of financing for leveraged buyouts. “As long as the music is playing, you’ve got to get up and dance,” he told The Financial Times on Monday, adding, “We’re still dancing.”

Is Mr. Prince suggesting that leveraged lending is, on some level, a command performance? (1)

No, not a command performance. Just the way Wall Street works, maximizing profit for the next quarter. Then get bailed out if the ship rounds aground.

I'm guessing the music has begun again, and we're on a new dance.
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What ever happened to Chuck ?

Well , according to Wikipedia: "Prince is currently Vice-Chairman of Stonebridge International and serves in the influential trade group the Financial Services Forum, as well as a member of the Council of Foreign Relations, the Business Roundtable, and several other organizations."

and

"On November 4, 2007 he retired from both his CEO and chairman duties due to unexpectedly poor 3rd quarter performance, mainly due to CDO and MBS related losses, while still receiving a $38m pay package."

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But most definitely the biggest problem in the United States is lack of accountability for high school English teachers.

1'Citi Chief on Buyouts: ‘We’re Still Dancing’- - NYT, July 2007

When Wesley Clark Almost Started World War 3

This little piece of history has almost gone down the memory hole:

Singer James Blunt has told the BBC how he refused an order to attack Russian troops when he was a British soldier in Kosovo.Blunt said he was willing to risk a court martial by rejecting the order from a US General.

But he was backed by British Gen Sir Mike Jackson, who said: "I'm not going to have my soldiers be responsible for starting World War III."

Blunt was ordered to seize an airfield, but the Russians had got there first.
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"The direct command [that] came in from Gen Wesley Clark was to overpower them. Various words were used that seemed unusual to us. Words such as 'destroy' came down the radio."(1)

Part of the long term destruction of Yugoslavia was about eliminating Russian influence and clear-cutting for the development of capitalist relations, as Yugoslavia was a nominally independent 'socialist', or non-capitalist, country standing between Greece and the rest of Europe. The Western powers did many things to destabilize the region: illicitly supplying arms, encouraging and funding nationalist parties, quickly recognizing breakaway provinces, blocking access to the international capital markets, to further these aims. The Bosnian war was the final stage in this process; by the fervor of Mr. Clark it is pretty obvious the war had little to do with human rights and everything to do geo-political dominance. Russia obviously understood this too, but in the end Pristina airport 'fell' peaceably and it would be another decade - in Georgia - before Russia was able to counter advances into its historical buffer zone.

1'Singer James Blunt 'prevented World War III'' - BBC News UK

How Does a Government React to Problems ?

Generations of British children could sympathise with the impulse to riot over school dinners. But the Chinese teenagers who rampaged through their cafeteria this week were protesting at the rocketing prices of meals rather than the quality of the food.

While British students took to the streets to demonstrate against rising tuition fees, those at a school in Guizhou trashed the dinner hall after learning that the cost of dishes had gone up by an average of 0.5 yuan.

The south-western province is one of the poorest in China, with more than 5.5 million people living in poverty – 15% of the country's total, according to the state news agency Xinhua.(1)

There's been some doom mongering again over China and their inflation. I don't share it. Yes, in many ways it's an odious society - especially when it comes to challenging CCP state power. But, for now, China recognizes when it has problems and attempts to do something about them. More and more Western governments seem locked in the ideological box of slashing wages and raising taxes on their working class. And in this case, there's a good chance American school children who rioted would be sent off to court, or similarly punished without a recognition of underlying issues.

China's response, at least officially:

"The prices have returned to their original levels. The operations of both the cafeteria and the school have returned to normal," a local official told the Global Times. "Those students are mostly from poor families and they will be not be held legally responsible."

1'Chinese pupils trash dinner hall in protest at cost of meals' - UK Guardian

America, Land of the Meek

The invisible hand of a $10,000 fine keeps the people submissive.

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1'Airport protest never takes off, few delays seen'- AP, SF Gate

Draining the Host

The parasitism of both finance and mercantilism has bled the U.S. working class dry. And the future looks awful, especially keeping in mind that student loan debt stays with someone even through bankruptcy.

Recent college graduates, those in the labor force with the freshest batch of knowledge and skills, are currently underwater and sinking fast with unprecedented student loan and personal debt. Average student debt for the class of 2008 was $23,200, an increase over four years of about 25%, meaning that students are knee deep in negative equity between their educational investment and actual earnings.(1)

1'How Are the Kids? Unemployed, Underwater, and Sinking- Baseline Scenario

Nuclear North Korea

Analysis operating under the wrong set of assumptions:

North Korea has shown itself extremely adept at the game of nuclear bluff. It has provoked three previous nuclear crises, in 1994, 2002 and 2006, aimed at raising the stakes at the six-party talks and winning more pledges of economic aid and fuel oil deliveries. These new developments suggest that, whatever the health of the Dear Leader, Kim Jong-il, the regime as a whole has not lost its taste for brinkmanship.(1)

Many governments under U.S. threat must have seriously thought about developing nuclear weapons after the Iraq War. The U.S. has toppled numerous opponents over the last few decades, either overtly or covertly, and now endorses the concept of offensive war. This is the basis for North Korean nuclear development, not 'brinkmanship' or the desire for 'aid'. Judging by how fast their latest reactor got built, it seems they are already have access to quite enough aid , possibly from China.

1' North Korea's uranium plant sends a chilling message to Washington' - UK Guardian
2'US envoy heads to Seoul to discuss North Korea's nuclear activity' - UK Guardian

Links

'Chinese woman sent to labor camp for retweeting' - SF Gate 1

"China has sentenced a woman to a year in a labor camp for "disrupting social order" by retweeting a satirical message urging Chinese protesters to smash the Japan pavilion at the Shanghai Expo, an international rights group said."

'Gun-Drawing Incident At UC Protest Scrutinized - KTVU, San Francisco 2

Police only pull out a gun if they intend to use it; that's their training.

'China Sentences Activist in Milk Scandal to Prison' - NYT 3

Hardly the actions of a confident government ready to take over the world.

'Google Says China, Turkey Internet Curbs Act as Trade Barriers' - Bloomberg 4

Jumping aboard the WTO challenge bandwagon ?

'British minister 'dismayed' by author's Singapore jail term' - AP 5

The thugs are really in charge now, globally

Let the Lawsuits Fly

Michael S. Roberts, the ExpressJet pilot who resisted going through an advanced X-ray machine and refused to be frisked at a Memphis International Airport security checkpoint on Oct. 15, is charging that security screening violates constitutional rights against unreasonable search and seizure.

He will be joined by Continental Airlines Boeing 777 pilot Ann Poe as plaintiffs in a fourth amendment suit against the Department of Homeland Security and the Transportation Security Administration, scheduled to be filed later today, Nov. 16, in U.S. District Court, Washington, D.C.(1)

The serious lawsuits, in terms of money will come later. TSA is hiring on the cheap; this inevitably has to leak into the quality and background of the workforce. Mix that in with the pat-down or full body scanning of young people, and a lot of near-wealthy parents are going to filing lawsuits. It may be a torrent.

1'Screening, Frisking Protestor To File Suit' - Aviation Week

The Wall Street Journal Leads a Whine About China

Again, reminding one of the bully who finally gets punched in the nose, and runs off crying.

The article title, "China's 'State Capitalism' Sparks a Global Backlash", starts things off on a weepy note.

Since the end of the Cold War, the world's powers have generally agreed on the wisdom of letting market competition—more than government planning—shape economic outcomes. China's national economic strategy is disrupting that consensus...
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Charlene Barshefsky, who as U.S. trade representative under President Bill Clinton helped negotiate China's 2001 entry into the World Trade Organization, says the rise of powerful state-led economies like China and Russia is undermining the established post-World War II trading system. When these economies decide that "entire new industries should be created by the government," says Ms. Barshefsky, it tilts the playing field against the private sector.

So when the Chinese government invests in its national industries and defeats its economic competition in the West - 'It's not fair ! They are cheating !'.

For we know that America only does state investment when it comes militarism - an export sector we not coincidentally dominate.

1'China's 'State Capitalism' Sparks a Global Backlash' - WSJ

Links

'Latino kids now majority in state's public schools' - SF Gate 1

These type of articles usually provoke rage in newspaper comment sections.

'Should You Be Snuggling With Your Cellphone? - NYT 2

Wow, sticking one's head in a microwave might be dangerous too !

'Report: Chinese Develop Special "Kill Weapon" to Destroy U.S. Aircraft Carriers' - US Naval Institute3

A Game Changer.

'Brazil's Lula Says World Headed For 'Bankruptcy' Unless Rich Nations Act' - Dow Jones 4

'World Bank head calls for monetary system linked to gold' - World Socialist Web Site 5

Linked to because it references that "The US share of world auto production in 1950 was 79 percent. In 1955, it accounted for nearly 40 percent of world steel production."

In essence we have a global financial system backed by an economy whose production cannot longer support reserve currency status.

'Early Humans More Advanced Than Thought' - Science/Bloomberg 6

"Early humans were using a highly skilled stone tool sharpening method 75,000 years ago in Africa, more than 50,000 years earlier than previously believed, a new study indicates.

This adds more evidence that modern behavior developed over time during the Middle Stone Age rather than after our ancestors migrated from Africa to Europe, as some scientists have thought."

China Moving Into Airplanes

Using Western technology initially, which they will then reverse engineer and design in China. The price will be much lower, as well.

There appear to be few avenues for the United States and the G7 capitalist powers to reverse their comparative decline in the global economy. Even the flood of dollars emanating from the Federal Reserve, which is meant to destabilize China specifically, can be increasingly circumvented through swaps. In the oil and energy markets this is more difficult, due to the U.S. alliance with Saudi Arabia. But with Iran moving out of dollars and able to defy U.S. pressure on nuclear energy development, the days of petrodollar dominance may be ending as well.

It would be naive to look at the history of World War in the 20th century and not conclude we are entering a similar moment. Again, how can the U.S. ruling class reverse its decline without resorting to the residual dominance of its military ?

1'China to unveil its own large jetliner' - LA Times

A Push Back Against Full Body Scanners

I predicted this months ago. As opposed to draconian policies which just target the poor, this is one is going to affect a lot of upper-middle class and close-to-rich people . (The truly wealthy have their own jets.) We will soon start seeing the lawsuits. For one, the TSA is hiring on the cheap which means folks with criminal backgrounds are getting through the cracks. Mix that with pat downs and full body scans of children and there are many routes to litigation. It also looks like the unions are pushing back on grounds of exposure to repeated radiation.

As to this query :

“I don’t know why everybody is running to buy these expensive and useless machines. I can overcome the body scanners with enough explosives to bring down a Boeing 747,” (Israeli Airport Security expert) Rafi Sela told parliamentarians probing the state of aviation safety in Canada."(1)

It answers itself. Plush contacts from the public till to enrich connected friends in the security-military sector.

What could be better ?

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1'Full-body scanners are waste of money, Israeli expert says' - Vancouver Sun
2'We Won't Fly' - Website

The States Will Be Bailed Out

Texas has a larger deficit than California in relation to GDP. Not only that, the far right swept into state office on a pledge to cut 'fat' from a public sector that doesn't exist. (Excluding the law-and-order biscuits with gravy, cause we love cops down in Texas.)

This will all become clear after Good Hair is done with his silly little book tour. That man does like to prance around.

Rick Perry may have won his third term as Texas governor this month, but the prize is a state budget deficit analysts estimate has grown as high as $25bn.(1)

Why does this foreshadow a bailout ? It will become a bipartisan affair. The whole trick will be to do it while cuttin' taxes, bustin' teacher's unions, and kickin' ass.

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In the end, the federal government will probably start buying state debt.

Print Baby, Print.

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1'Texas faces deeper cuts to balance budget' - Financial Times

'Police Standing By'

From the UK Guardian comments section on the storming of the London Conservative Party headquarters:

The police stood idly by while fires were burnt and stones were thrown finally perhaps they wont work while their salaries are cut and so are their jobs.

A quandary for the ruling class is they depend on the state to defend their privileges and power. But constantly lambasting public pensions undermines their power in the end because it largely targets Cops - not DMV workers.
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Or, maybe this is what more people are thinking in their heads:

Nobody will listen to peaceful protests, that's the problem.
It is a shame that it has came to this but more of it is needed if we're all to make a stand.

1'Student fees protest: 'This is just the beginning'- UK Guardian

Germany Ups the Ante

Wolfgang Schäuble, Germany's finance minister calls U.S. economic policy 'clueless'.

"It is not consistent when the Americans accuse the Chinese of exchange rate manipulation and then steer the dollar exchange rate artificially lower with the help of their [central bank's] printing press."

Germany's export success, he argued, was not based on "exchange rate tricks" but on increased competitiveness. "In contrast, the American growth model is in a deep crisis. The Americans have lived for too long on credit, overblown their financial sector and neglected their industrial base. There are lots of reasons for the US problems -- German export surpluses are not part of them.(1)

1'Germany attacks US economic policy' - CNN/Financial TImes

What We Are Heading For

Despite the peace bubble of MAD - nuclear weapons - the newly elected president of Brazil just spelled it out "The last time there was a series of competitive devaluations. . . it ended in world war two.”

The world is in a classic crisis of overproduction - or what Martin Wolf has alluded to as weakness in global demand. Within capitalism it is only the destruction of capital, and mass bankruptcy, that can restore 'health' to the system. This is politically impossible domestically - we do live in a world of nation states - and so must be foisted off on rivals. For now the losing side is the United States, who also happens to be the predominant military power in the world.

The U.S. ruling class can't give up militarism - it has no choice but to press onwards because in every other arena it is losing or its advantages are being rapidly encroached on.

1'Brazil ready to retaliate for US move in ‘currency war’' - FT
2'The war recovery ?' - Broder
3'China and Germany unite to impose global deflation' - FT; Wolf
4Overproduction: Wiki

Bernanke - 'Let Them Eat Cake'

As the U.S. destroys the dollar it will lead to food and energy inflation - this is going to crush low income Americans but not be particularly noticed the further one moves up the pay scale. As Zero Hedge/JP Morgan/BLS note, the lowest quintile of income earners spend over 50% their income in food and energy. The second lowest quintile spend over 25 %.

So we may not have 'official' inflation but the poorest are going to get crushed.

All the more reason to be suspicious of liberals like Krugman, who defend official inflation rates in the face of reality - much as they did with 'free trade' until it started affecting their friends.

1'How Ben Bernanke Sentenced The Poorest 20% Of The Population To A Cold, Hungry Winter' - Zero Hedge

The Madmen Running Government

Republicans are planning to demand major spending cuts next year before they would agree to raise the amount of federal debt that can be issued, setting up a clash between the Obama administration and a Congress stocked with lawmakers who campaigned as deficit hawks.

The U.S. can't accrue debt above a certain ceiling set by lawmakers. In the most extreme scenario, the government would default on certain debts if the cap doesn't move.(1)

Even putting this scenario into the mainstream erodes the credibility of the U.S. government when it comes to paying back debt. Treasuries may have rock bottom yields now, but over the slightly longer term it just hastens the move away from a U.S. centered world.

1'GOP to Use Debt Cap to Push Spending Cuts'- WSJ

For Early Christmas Shoppers

From Ralph Lauren, Price $98.00 - Imported

Custom-Fit Big Pony Polo

The Asian Century in Film

Laughable.

The Tokyo International Film Festival descended into farce following a shouting match between the Chinese delegation, the Taiwanese and Japanese organisers over the use of the name "Taiwan".

Representatives of the Chinese film industry reportedly triggered the dispute on Saturday evening by demanding the Japanese organisers of the event change the name "Taiwan" to "China Taiwan" or "Chinese Taipei."

When the Taiwanese delegation refused to back down and the Japanese organisers declined to change the name, the Chinese said they would boycott the festival and withdraw the nine films that had been scheduled to be screened.(1)

The elites of East Asia love their racial purity and nourish xenophobia. With what will be declining populations and a hostility to immigration that would make the Tea Party proud - well - don't hold your breath about that Asian century.

Asia will inevitably need deep political changes to match its economic growth, or there won't be any more growth.

1'Tokyo film festival 'becomes shouting match between China, Taiwan and Japan'' - UK Telegraph

US Emigration Rates...

It will be interesting to look at U.S. emigration flows as this slump goes on. To what extent is there a low level of 'brain drain' outflow in the U.S. , as has happened historically with developing countries. To what extent are educated potential immigrants dropping the U.S from their list, for whatever reason ? Certainly Canada seems like a more favored destination right now.

Since the U.S. government does not keep track of emigration - no need to historically - then what I believe will be an increasing phenomena will be mostly observed by anecdote.

The Republican House Will Not Raise the Debt Ceiling ?

Remembering that the current Republican Party is far more rightist than 1994 - not raising the debt ceiling will crash the economy, mean outright default on bond payments, and globally spell the end of the American empire.

Think Progress reiterates:

Failure to do so (raise the debt ceiling) would almost certainly result in a devastating government shutdown and default on government debt, causing an economic catastrophe, but increasing debt spending is anathema to the far-right tea party rhetoric that has come to dominate the GOP.

It's amazing how fast it is all coming apart.