Saturday, July 21, 2007
Biblical Greek Resources by the Institute of Biblical Greek
Koine Greek Study Page
Little Greek 101: Learning New Testament Greek
Biblical Greek Resources
Learn Biblical Greek
Resources for Learning NT Greek by Corey Keating
Biblical Greek Readings
Learning New Testament Greek - Framed View
NT Greek grammar
Resources for Studying Greek
Koine Greek Pronunciation Question - KOINONIA Greek Forum
Koine (Biblical) Greek Audio Vocabulary Open Source Project.
Greek New Testament, Read by Marilyn Phemister
Greek 'n' Stuff for Homeschool and Christian School
Biblical Language Center Home Page
O LOGOS - Biblical Greek Classes
learn Ancient / Biblical / Classical / Koine greek / learning ...
Studies in Biblical Greek
Biblical Greek Online
Greek language - Wikipedia, the free encyclopedia
Differences Between Classical and Hellenistic Greek
History of the Greek Language
*** What Was Koine Greek? ***
The Greek New Testament Gateway
New Testament Greek Lexicon
Hmm How NOT To Learn Biblical Greek Withering Fig
[Los Angeles Galaxy; LA Galaxy Soccer Blog MLS - LA Galaxy]
As for Harry Potter, there has been some discussion of what impact the end of the series will have on the young and their interest in reading. Apparently, the book hasn't had much of an impact in keeping children interested in reading as they get older. But this is America, right? Who needs to read when we have electronic media to keep us diverted?
[Harry Potter and the reading phenomenon; Harry Potter and the Death of Reading - washingtonpost.com; JKRowling Official Site - Harry Potter and more; Harry Potter - Into the Deathly Hallows - Beyond Hogwarts; MuggleNet The ULTIMATE Harry Potter Site - Harry Potter and the ...; the movies: Harry Potter - The Official Site]
Reading for leisure seems to be something limited to the culture elites, and so perhaps it is futile to expect that it would catch on with the masses. What egalitarians and democrats make of this... Besides, being able to read (and functional literacy) is really just the bare minimum, despite the efforts of American educators to dumb down requirements for the intellectual life. What is really needed, both for the intellectual life and for active citizenship: critical thinking skills... and of course, high schools and colleges like to claim that they are able to impart these to their students, but for the most part they don't even know where to begin.
Not having read any of the books in the Harry Potter series, I won't say much about it. But I do think that if they represent in the minds of the many the summit of contemporary Western written culture we are in trouble.
As for solutions to the lack of interest in reading...
Instead of forcing children to read beyond their level, might it be possible to foster their interest by recommending age-appropriate books? And distinctions based on ability and talent need to be made, even if leftists and radical egalitarians would like to do away with them entirely. Some childrenmay thrive upon a classical curriculum, one that involves the memorization and recitation of poetry and so on. Others probably wouldn't.
There is another problem--public schools, because of the ascendancy of misandry, do not introduce to boys books that appeal to the male mind. Should it surprise us then that boys who would not normally touch a book to entertain themselves pick up a volume of Harry Potter? What we need are teachers who understand the differences between the sexes and can thereby foster the intellectual and moral development of the boys.
Laura Berquist: "Harp and Laurel Wreath" from Ignatius Press - Plays &amp;amp;amp;amp;amp; Poetry; "Designing Your Own Classical Curriculum" from Ignatius Press ...; Alumni Profile: Laura Berquist, '75
The Rockford Institute Center for the Restoration of Humane Learning
Dorothy Sayers, The Lost Tools of Learning
Why Classical Education?
Paper: The Liberal Curriculum and the Canon
Memoria Press Classical Education
Veritas Press - classical education curriculum for Christian ...
The Later Latin Society
Latin Aids for Classical Education
Classical Christian Homeschooling: Introduction to Classical Education
Welcome! The Latin-Centered Curriculum
Dallas Morning News News for Dallas, Texas Carrollton/Farmers ...
For Sarge: Brookfield Academy — Welcome to Brookfield Academy
Recent recruitment video (with the new uniforms)
Passing Out Parade 2006-10-28 (March On)
Passing Out Parade on 2006-10-28 (March Pass)
Passing Out Parade on 2006-10-28 (Inspects)
Passing Out Parade on 2006-10-28 (March Off)
皇家香港警察150週年大檢閱 (Part 1), 2, 3, 4, 5, 6, 7
Sigh... what is it that bothers me... the clothing? The hotel(?) setting? At least they had fun.
FolkMADness 2007 English Country Dance Workshop
Country Garden Dancers - Ladies of Newcastle
Country Garden Dancers - Garland Godesses
Slave labour “normal” in today’s China, says Han Dongfang
The founder of China’s first independent trade union talks about the brick kiln slave scandal. Slave labour is symptomatic of society in which those in power distort the common good for personal gain and hide their misdeeds. Deng Xiaoping’s black and white cat analogy has led to a society where the powerless get crushed.Beijing (AsiaNews/Agencies) – The presence of thousands of slave workers in Henan and Shanxi brick kilns was an open secret. Police knew about it; local authorities knew about it. Brick buyers and many residents knew about. But no one did anything about it. For Han Dongfang, founder of China’s first independent trade union, it “is just the tip of the iceberg” of a political system that...
Chinese Labor Activist Han Dongfang on Why China Needs Unions ...
Chinese Law Prof Blog: Han Dongfang on the June 4th anniversary
Han Dongfang - Wikipedia, the free encyclopedia
Han Dongfang - the man who beat Beijing
New Left Review - Dongfang Han: Chinese Labour Struggles
Q&A / Han Dongfang : A Dissident's Determined Battle
Statement of Han Dongfang
Human Rights Watch - Yang Tao - Tiananmen Square, 15 Years On
Red Pepper The Struggle Continues, Han Dongfang
Han Dongfang China's Emerging Labor Movement
Taliban kidnap South Korean Christians, Germans
Taliban kidnap 23 Koreans from Afghan bus: officials
Police: Taliban stop bus and kidnap Koreans
The Western Confucian has a photo of the group. (Here's another copy of the same photo.)
Friday, July 20, 2007
She favors a "greater social net" and "more government incentives for job creation" in order to offset the negative consequences of globalization and the outsourcing of jobs, but she doesn't oppose globalization.
How do a "greater social net" and "more government incentives for job creation" not lead to some form of fascism? But seriously, shouldn't the government be protecting the economic freedom of its cititzens, rather than increasing its services and favors [to the few] so that the few can grow richer at the expense of the many, who are no longer working in production but in service?
Forbes correspondent Robyn Meredith discusses her book: The ...
She is speaking at Kepler's in Menlo Park on July 23, at 7:30 P.M. (She'll be at Cody's on Fourth Street the next day.)
World Affairs Council of Northern California - Programs
Robyn Meredith On The Global Economy - Forbes.com
Think Flat: China will give in to temptation, says Robyn Meredith
Why Globalization is Good - Forbes.com
Giant Sucking Sound: Jobs Going Offshore ROBYN MEREDITH / Forbes ...
From What is the WTO?:
It’s a set of rules … At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives.
The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects — because this is important for economic development and well-being. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be “transparent” and predictable.
Principles of the Trading System
From The case for open trade:
All countries, including the poorest, have assets — human, industrial, natural, financial — which they can employ to produce goods and services for their domestic markets or to compete overseas. Economics tells us that we can benefit when these goods and services are traded. Simply put, the principle of “comparative advantage” says that countries prosper first by taking advantage of their assets in order to concentrate on what they can produce best, and then by trading these products for products that other countries produce best.
In other words, liberal trade policies — policies that allow the unrestricted flow of goods and services — sharpen competition, motivate innovation and breed success. They multiply the rewards that result from producing the best products, with the best design, at the best price.
And how far does "comparative advantage" extend? To basic economic necessities, thus destroying a community's self-sufficiency? No. There is an unequal distribution of natural resources and raw materials, there is no doubt about that--trade should ideally be limited to these and to luxury items. More to be written later.
WTO Document Dissemination Facility
World Trade Organization - Wikipedia, the free encyclopedia
World Trade Organization
Globalization and the World Trade Organization
Monthly Review January 2000 William K. Tabb
Resurgence issue 206 - GLOBAL PROBLEMS, LOCAL SOLUTIONS - Wendell ...
The WTO : a threat to Economic Justice, worldwide
United for Peace & Justice : Nationwide protests against World ...
NGOs and the WTO - NGOs - Global policy Forum
Foreign Affairs - Offshoring: The Next Industrial Revolution ...
How Offsourcing Undermines America
Losing the Economy to Mythology
By PAUL CRAIG ROBERTSEconomic discussion in the United States is trapped in ancient ruts. Both right and left are stuck in old habitual ways of thinking. Neither shows inclination or ability to think independently of ideology. For a country beset with economic problems, this is problematic.
The ascendency of free market economics during the past quarter century has removed some constraints on corporate power. It is difficult to argue that this is a desirable result. For example, the concentration of media ownership permitted by the Clinton administration in the 1990s has destroyed the independence of the US media, thus reducing the accountability of government. Deregulation has had unintended consequences. The growth of corporate influence has facilitated the reach of special interests into universities and think tanks and turned some from pursuit of truth to "for-profit activities" that compromise the independence of studies and publications.
The left-wing, which refuses to accept that the Great Depression was caused by the Federal Reserve's mistaken monetary policy and still blames corporate power and greed for the 1930s decade of high unemployment, is disturbed at the loosening of the leash on corporate power. Generally speaking, the left blames President Reagan for boosting corporate power by cutting taxes and for spear-heading union-busting by firing the striking air controllers.
John Kenneth Galbraith was correct that unions provided a countervailing power, one that has been removed. The left-wing is correct that corporations have grown in power and that income inequality has worsened. But the left is wrong in attributing these developments to tax cuts and dismissed air controllers.
The purpose of Reagan's reduction in marginal tax rates was to cure stagflation and worsening trade-offs between inflation and employment that had undermined Jimmy Carter's presidency. Reagan's tax policy brought a record economic expansion that did not require rising rates of inflation to sustain. It is impossible to argue that the decline in inflation and home mortgage rates benefitted the rich more than others. The rich have a lot of margin in their budgets. The poor have none.
US income inequality was worsened and the unions busted by the collapse of world socialism and the rise of the high speed Internet. These two developments, which were not part of Reagan's economic program, made it possible for corporations to substitute foreign labor for American labor in the production of goods and services for American markets.
Until the collapse of world socialism, corporations did not have access to the large pools of excess labor in China and India. Until the rise of the high speed Internet, corporations could not hire professional services supplied from distant lands. These two developments meant that highly productive and highly paid American labor could be substituted out of production functions and replaced with equally productive but much cheaper foreign labor, because large excess supplies of Asian labor suppressed Asian wages below the productivity of labor.
Industrial unions were busted by the movement of plant, equipment, and technology abroad.
The professional middle class was adversely impacted by the ability of corporations to contract for the delivery via the Internet of professional services from abroad and by the ability to import cheaper foreign workers on H-1B, L-1 and other work visas.
Jobs offshoring is dismantling the ladders of upward mobility in the US, polarizing the population into rich and poor, and, thereby, worsening the income distribution.
Americans need to understand that it is jobs offshoring, not lower tax rates, that is worsening the income distribution. Because of the million dollar cap on tax-deductible executive pay, executive incomes depend primarily on performance-related bonuses. The multi-million dollar CEO pay checks are not salaries. They are bonuses for making or exceeding profit expectations by such practices as offshoring jobs and lowering production costs. We have created an incentive system in which a few corporate executives are amazingly well paid for destroying jobs and career opportunities for Americans. The more they can worsen income inequality by offshoring American jobs, the higher they are paid.
The remedy to this crazy incentive system is not higher tax rates. High marginal tax rates curtail real output. The Federal Reserve then tries to force more output by pumping up the money supply to increase demand, and the economic system responds by raising prices instead of output. This is the serious economic problem that Reagan's supply-side economic policy cured. To resurrect this problem on top of our other problems would be anything but helpful. The emotional remedy for obscene pay packages is a surtax on multimillion dollar incomes.
Princeton economist Alan Blinder, a former vice chairman of the Federal Reserve, says that the entire range of tradable professional services can be offshored. I agree with him. He estimates the number of these jobs at approximately 50 million.
Should such displacement occur, what occupations would absorb such numbers of economically displaced Americans? As I have documented relentlessly, in the 21st century the US economy, according to the nonfarm payroll data of the Bureau of Labor Statistics, has been able to create net new jobs only in nontradable domestic services, jobs such as waitresses and bartenders and health and social services. Free trade ideologues claim without evidence that the lost jobs will be replaced by better jobs. They do not explain why any such better jobs, should they materialize, would not themselves be offshored.
What to do? Some economists think that the process will produce the solution. At some time in the future the Asian labor supply will be fully utilized. Wages will rise, and Asian labor will be paid in keeping with its productivity. In the US, the decline in demand for labor and the movement abroad of high value added jobs will have lowered real wages. At some point wages at home and abroad will become equal, and the incentive to move jobs offshore will be gone. What economists leave out of the story is the drop in American real incomes and the corresponding social instability in the US while this process works out.
A real solution as opposed to a theoretical one will have to address the powerful incentive to offshore jobs. A solution will have to address the American preoccupation with short-term results. Quarterly reporting was a "reform," the purpose of which was to provide shareholders with up-to-date information that approximates the information of corporate insiders. In practice, quarterly reporting drives share prices and executive pay. Management and short-term shareholders can get rich from practices that shorten a corporation's life span, such as selling productive assets and reporting the proceeds as profit and replacing the domestic work force with foreigners.
Another remedy would be a return to tariff protection. However, many economists believe that the decimation of unprotected American industry and professional occupations is a small price to pay for lower consumer prices. These economists ignore that the US prospered under tariffs, as did the tax bases of cities and states.
Considering the difficulty that both left and right experience in thinking outside the box, I do not think a policy remedy will be forthcoming. Rather, the remedy will impose itself. It will come from the loss of the dollar's role as reserve currency.
Offshoring of manufacturing and professional services turns domestically produced goods and services into imports that worsen the US trade deficit. The rest of the world is willing to finance America's $800 billion annual trade deficit, because the dollar is the reserve currency. Our trading partners add some of the dollars we pay them for our annual over-consumption to their monetary reserves and use others to purchase US assets such as real estate and companies. If the dollar were not the reserve currency, foreigners would have less inclination to accept them.
The question would then become: How do we pay for our imports when the dollar is no longer the reserve currency?
Since imports include the offshored production of US corporations for US markets, the ability to sell in America the goods and services produced offshore would decline. Corporations would be forced to move the production of goods and services for US markets back to the US.
It is a puzzle that free traders, who are adamantly opposed to tariffs on the grounds that they result in higher prices and lower consumer real incomes, are unfazed by currency devaluation. An excess of dollars is eroding the dollar's reserve currency role and undermining its value. As tariffs do, dollar devaluation also confronts American consumers with higher prices and lower real incomes.
The difference is that a tariff would have prevented the loss of jobs, careers, and community tax base to offshoring, which then requires a collapse in the dollar to reverse. The cost of not having the tariff protection is the disrupted lives and hardships associated with jobs offshoring and the loss in purchasing power from a lower valued currency.
Economists cannot understand this straightforward analysis, because economists, like neoconservatives, are not reality-based. Economists are governed by the illusion that America's post World War II prosperity is based on free trade. It is not. America's post-war prosperity was based on the destruction of the economic capability of the rest of the world by World War II and communism/socialism.
America was prosperous in its trade, because no one else could produce anything.
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.He can be reached at: PaulCraigRoberts@yahoo.com
Foreign Affairs - Eight Steps to a New Financial Order - Alan S ...
The new imperialism
Asian countries remain beholden to archaic economic notions, attempting to control the growth of their economies by indulging in significant trade and investment manipulation. The resulting large wealth transfer to already rich Western societies comes at high cost to Asians, preventing them from fixing the most pressing items on their domestic agendas, including corruption, pollution and infrastructure issues.
China's unbalanced economic engine
China, while acknowledging that consumer spending lags behind investments and exports, is blaming the wobbly axis on "three excesses" - bank loans, investments and exports - while doing its best to turn a blind eye to the excessive, widening gap between China's haves and have-nots, which is largely driven by the state itself. - Zhou Jiangong
Ladies first: China opens to Korean refugees
By Sunny Lee
July 20, 2007
Foreclosures Up 90% From Last Year
Winners and Losers in the Housing Market Crash
By ALAN FARAGO
In a quarterly conference call yesterday reported by The New York Times, JP Morgan CEO Jamie Dimon referred to the current business climate as "a relatively benign point in the credit cycle."
The market judged the company differently, sending share prices 3 percent lower by the end of the trading day.
Market jitters and JP Morgan's comments are relative to the subprime mortgage meltdown.
In recent weeks, Wall Street's biggest players have all stuck to the same pitch: that the subprime mortgage mess is "contained".
It is about as contained as inflation. You remember inflation? That's the index that omits food and energy prices because American consumers don't drive cars or eat.
Who would omit the price of food or energy from a core index? Clearly, someone or ones who want Americans to believe the cost of living is nothing compared to the benefits of democracy.
That's how the meaningful is turned to meaning-less.
Along the same lines, today Federal Reserve Chair Ben Bernanke told Congress in his mid-year economic report that he thought "the demand for housing would stabilize "soon".
Understand, though, that the charade that passes for current thinking on the economy in Senate or House subcommittee hearings is stage-managed by well-educated and well-compensated types who know perfectly well how poorly the broad stock market indexes have performed in relation to inflation.
And they read the papers and the blogs: consumer confidence is down, homebuilders confidence is plummeting, and public corporations, like Pulte Homes in yesterday's announcement, are hemorraging value.
Behind closed doors, including the doors of the Federal Reserve, one must infer that the dialogue is of a substantially different character. These knife-blade conversations do not show up in print.
Still, it is no secret: billions of dollars in Wall Street bonuses, over the past decade, and expectations for future wealth are tied to the creation of debt tied to mortgages, both commercial and residential. For every $1200/square foot apartment sold in Manhattan, there is at least one optimistic Wall Street banker in waiting.
That debt goes by as many different names as there are flowers in a garden. It is known, ubiquitously, as financial derivatives.
Leaving Manhattan aside, until housing markets in the nation's fast growing regions started to collapse, under the weight of the same liar loans, mortgage fraud, and adjustable rate, interest only mortgages (better known as toxic financial waste), holders of financial derivatives really didn't have to worry much about informing their own investors about the value of the debt.
As long as real estate prices were rising, no one asked.
No one asked in Congress, which allowed government sponsored entities like Fannie Mae and Freddie Mac to engage in massive fiscal irregularities. No one asked in pension fund management, which assumed that the blue chip folks at places like JP Morgan would hold their interests at the highest level of fiduciary responsibility.
But now that dozens of subprime mortgage lenders have shut their doors and left paperwork in shambles in hastily closed offices, now that Bear Stearns' funds have gone belly-up like crappie in a red tide, suddenly the rating agencies responsible for providing accurate values for financial derivatives as well as other credit have started to do what they should have done in the first place.
"Moody's Investors Service says it is paying a high price for its tough stance on lax lending standards for commercial mortgage-backed securities", reported the Wall Street Journal yesterday.
"On a recent CMBS (commercial mortgage back security) offering issued by Morgan Stanley, which included 225 fixed-rate loands on 268 multifamily, commercial, and manufactured housing community properties" Moody's rivals got the ratings business.
"We used to rate 75% of the deals, but since our announcement (tightening credit quality standards for CMBS pools), we were not asked to rate 75% of them," says Tad Philipp, a managing director for Moody's. ëOur market share has done a complete flip.'"
From one point of view, Moody's is costing the big banks money, in rating the issuance of debt (and bonuses, of course) and so big banks are penalizing Moody's.
The sharper point of view is that the big banks are suppressing facts about the vast excesses they have created in financial derivatives and the additions they make to the net worth of the nation's top financial executives.
And so, when one reads in the NY Times, JP Morgan CFO Michael J. Cavanaugh saying that "the bank's decision to increase its credit loss provisions did not reflect a spillover of subprime lending problems into prime lending", it is natural that the world financial markets begin to wonder, what the hell is going on?
In another Wall Street Journal article yesterday, concerning uncertainty in credit marketsónot just subprimeóCharles Gradante, co-founder of hedge-fund consultant Hennessee Group, said, "Right now things are starting to become unglued."
What exactly does that mean?
For one, the ABX index which tracks the price of insuring losses in subprime bonds has fallen precipitously. According to the Journal, "the portion of the triple-A subprime debt issued last year has fallen about 5% in the past week. The portion of the index which tracks low-rated triple-B bonds is down more than 50% this year."
Beyond falling indexes, beyond the matter of hedge funds, like the two disappeared from Bear Stearns', is the question: how many dollars and how many hedge funds have to re-price their assets to reality?
That's the essence of what Joshua Rosen, a managing director of Graham & Fisher, an investment firm, told the New York Times in a related story, "Bear Stearns says battered hedge funds are worth little." Asks Rosen, "...'do the prime brokers and others who have extended lines of credit to the hedge funds really have a good handle' on how those borrowings have been invested?"
The answer is, no.
The response of banking regulators is "to increase scrutiny". (AP, July 17) Now Federal Reserve Chairman Ben Bernanke is offering lawmakers "fresh assurances that regulators are taking steps to better protect would-be homeowners from abusive mortgage practices."
And this crew is going to protect America from inflation?
Putting the right price to inflation is as much anathema to the Federal Reserve, to Congress and the White House, as re-pricing synthetic financial derivatives to banks and hedge funds they loan and invest, sometimes on opposite sides of the same financial instrument: both are as substantial as smoke from a crack pipe.
And yet, reality has a way of forcing the air from whatever pipe dreams materialized from "the ownership society": one of the biggest speculative financial booms in US economic history, next to the dot.com bust it was meant to absorb, and did for a while.
It may be Jamie Dimon's point of view that this is a "relatively benign point in the credit cycle." Try telling that to an American who has lost his or her home, or, to one of the 176,000 Americans who got foreclosure notices in May.
According to California based RealtyTrac, it is "the highest figure they have ever recorded in their monthly report and is 90 percent higher than the numbers from a year ago."
Alan Farago of Coral Gables, who writes about the environment and the politics of South Florida, can be reached at firstname.lastname@example.org.
"Your problems are all self-inflicted, as you are the same drooling 'I Love Big Government Creating Perpetual Entitlements' moron that elected the Congressional morons that have spent us into the Hell Of Crushing Debt…"
by The Mogambo Guru
Educating for Oblivion
by Clyde N. Wilson
What is it that the multi-billion-dollar American higher education industry is supposed to be doing? (Set aside scientific and vocational education for the moment.) Its justification would seem to be in a mission to raise the civilizational level of the young by passing on our cultural inheritance and training minds in independent thinking.
If so, it is a fraud and a waste. Of professors of history, English, political science, and other “humanities and social sciences” today, not one in twenty is doing either of those things. Most of those who have recently been or are now being processed through advanced education would not even understand what I am talking about here, though they would vaguely sense that I am thinking an unacceptable thought. Whatever it is that they think they are supposed to be doing, it is not passing along civilization, and their concept of “independent thinking” is defined by the Leninist ideal of Political Correctness.
Decline of the “hard” sciences cannot be far behind because scientific discovery rests upon the Western cultural inheritance of imagination and inquiry, much in the same way that creative entrepreneurial capitalism rests upon pre-capitalist virtues. Without that inheritance, scientists can only repeat what has been done by their predecessors. They can learn “how to,” but not “why.” Not that it matters much, because American resources for scientific education are today devoted almost entirely to educating Asians.
I would go even farther and say that the "hard" sciences are in trouble now; indoctrination in the hard sciences reveals that tradition plays a greater role than those who believe in the pure "rationality" of the hard sciences might recognize. While there may be some original "thinking" when it comes to their own experiments, scientists do rely on the discoveries made by others in their field, and rarely do they double-check the work of others as a matter of course, unless it contradicts their own notions, in which they devise an experiment to confirm or deny those findings. Moreover, it would surprise the American public to learn that the logic skills of those in the hard sciences are generally in an appalling shape. (After all, logic is rarely required of anyone going through the university these days.) As for discoveries outside their specialty, they are as indoctrinated as non-scientists. As they clearly lack expertise, they cannot be cited as an authority. (Even if one were to accept an appeal to authority as a form of probable argument.)
Thursday, July 19, 2007
by Ed McCarthy
Prosperity today at the cost of tomorrow's growth
Guest Commentary - Jul. 19
by Bob Hoye
Chaning credit, changing times
Mid-Week Analysis - Jul. 18
by Chad Hudson
Will earnings justify market rally?
See also The Bear's Lair - Jul. 16
by Martin Hutchinson
Sometimes it’s not just a cycle
At twenty-three, Wendy Shalit punctured conventional wisdom with A Return to Modesty, arguing that our hope for true lasting love is not a problem to be fixed but rather a wonderful instinct that forms the basis for civilization. Now, in Girls Gone Mild, the brilliantly outspoken author investigates an emerging new movement. Despite nearly-naked teen models posing seductively to sell us practically everything, and the proliferation of homemade sex tapes as star-making vehicles, a youth-led rebellion is already changing course.
In Seattle and Pittsburgh, teenage girls protest against companies that sell sleazy clothing. Online, a nineteen-year-old describes her struggles with her mother, who she feels is pressuring her to lose her virginity. In a small town outside Philadelphia, an eleventh-grade girl, upset over a “dirty book” read aloud in English class, takes her case to the school board.
These are not your mother’s rebels.
In an age where pornography is mainstream, teen clothing seems stripper-patented, and “experts” recommend that we learn to be emotionally detached about sex, a key (and callously) targeted audience–girls–is fed up.
Drawing on numerous studies and interviews, Shalit makes the case that today’s virulent “bad girl” mindset most truly oppresses young women. Nowadays, as even the youngest teenage girls feel the pressure to become cold sex sirens, put their bodies on public display, and suppress their feelings in order to feel accepted and (temporarily) loved, many young women are realizing that “friends with benefits” are often anything but. And as these girls speak for themselves, we see that what is expected of them turns out to be very different from what is in their own hearts.
Shalit reveals how the media, one’s peers, and even parents can undermine girls’ quests for their authentic selves, details the problems of sex without intimacy, and explains what it means to break from the herd mentality and choose integrity over popularity. Written with sincerity and upbeat humor, Girls Gone Mild rescues the good girl from the realm of mythology and old manners guides to show that today’s version is the real rebel: She is not “people pleasing” or repressed; she is simply reclaiming her individuality. These empowering stories are sure to be an inspiration to teenagers and parents alike.
Odeo.com interview: Wendy Shalit: "Girls Gone Mild" (Random House) [mp3]
WAMU 88.5 FM American University Radio - The Diane Rehm Show for ...
‘Girls Gone Mild’ – Author: ‘Good girls' stand up against ...
Girls Gone Mild? A New Modesty Movement - Newsweek Society - MSNBC.com
A Modest Rebellion - WSJ.com
Modestly Yours: Wendy Shalit
Sex, Sadness, and the City by Wendy Shalit, City Journal Autumn 1999
Modestly Yours: "Middle School Girls Gone Wild"
On War #226
July 16, 2007
Tordenskjold Sails Again
By William S. Lind
Last Friday's Boyd Conference at Quantico was the best-attended to date, and, thanks to a visitor from across the pond, one of the most encouraging. That visitor was a delegation from the Royal Norwegian Naval Academy in Bergen, Norway, a handsome and historic town I have had the pleasure of visiting more than once.
I am sure I was not the only person surprised to find the Norwegian Navy manning the registration desk when the conference opened. It was a nice touch, and a commentary on the U.S. military's total lack of interest both in John Boyd's work and in Fourth Generation war, which was the focus of this conference. As usual at such events, almost all the U.S. military participants were Marine Corps captains, among whom the Boydian flame still flickers.
In marked contrast, Boyd is Big Stuff in Norway, as is 4GW. The Norwegians made their presentation at an informal second session of the conference on Saturday, and it was the best news many of us have heard in a long time. Quite simply, the Norwegian Navy is completely recasting the curriculum of their Naval Academy based on Boyd's work.
At present, their efforts are focused on the cadets’ first year, which is exactly correct: if the academy can develop the right mind-set at the beginning, when the cadets' minds are most open, they will have largely won the battle. The key to that, in turn, is to put cadets in situations full of ambiguity and uncertainty, situations for which they have not been prepared, then help them more or less as needed (the less, the better) to find their own ways out.
That is just what the academy is doing, in a wide variety of ways. Many of the practical exercises are done ashore, which is fine; mind-sets can be developed anywhere, not just at sea.
The Norwegians impressed all of us with a lesson they had learned inadvertently. At the beginning of their reform of the curriculum, they said, things got screwed up unintentionally more than once, as is inevitable with major change. The cadets had to unscrew it themselves. Doing so proved to be such a powerful learning experience that now the faculty creates deliberate screw-ups. We could hear John Boyd cackling his approval and delight; the faculty as well as the students had learned how to learn.
I shared with the Norwegians an idea I had come up with during a visit to the U.S. Naval Academy, where the education is as rigid as it is fluid in Norway. How about paintball at sea? Like all naval schools, the Norwegian Academy has small sailboats in which cadets learn basic seamanship. If a paintball gun were mounted on each broadside so the elevation could be changed but not the aim, the sailboat would become an 18th century warship. Naval paintball battles would require the cadets to rediscover and employ 18th century naval tactics, for both single ships and fleets. At least in Great Britain's Royal Navy, those tactics were highly fluid by century's end; maneuver warfare was actually developed at sea before it was born on land. The Norwegians loved the idea and said they would do it; at Annapolis, the midshipmen I suggested it to also loved it but said it would never happen, because they aren't supposed to have fun.
The Norwegians told us they faced a different challenge in extending their Boyd-based curriculum revisions into the academy's second and third years, where much of the instruction is in regular academic subjects such as ,mathematics and English. In teaching English, I suggested, there is one easy solution: have the cadets learn English by reading and writing about naval fiction that teaches maneuver warfare thinking, such as C. S. Forester's Horatio Hornblower series and C. Northcote Parkinson's excellent naval novels, both set in the age of sail. Could mathematics also be taught with reference to naval tactics, without becoming Jominian? It is a question someone more skilled in math than myself might want to consider.
I have no doubt that along with John Boyd, Norway's greatest naval commander, Tordenskjold, is looking down on the revolution underway at the Royal Norwegian Naval Academy and smiling. The Boyd-based curriculum the academy is implementing might end up producing lots of Tordenskjolds, a man noted for breaking the rules and thereby getting results. While Norway's navy is small compared to that of the United States, it is pioneering a path which the U.S. Navy would do well to follow.
Will we ever see this sort of flexibility and open-mindedness become dominant in the Pentagon and the U.S. military as a whole?
Mentor Series: Crossing the Line
by Scott Stanley
Dr. Scott Stanley is something of a "marriage research rock star." We snagged the pictures of him here at the 2007 Smart Marriages conference in Denver. We had to be creative to get these shots because of the crowd pressing around him eager to connect. Dr. Stanley is sought out by people of all backgrounds — military and political leaders, professors, social workers, marriage educators, pastors and family counselors. To a broad range of people he has become a trusted source for solid research about marriage and the relationships surrounding it. Dr. Stanley is also a strong Christian who, based on the setting, can speak as insightfully about the book of Genesis as he can about the Journal of Family Psychology.
We recorded this interview in the offices here at Focus on the Family. Typically, it would have been a short drive for Dr. Stanley down from his PREP, Inc. office in the Denver area, but he got caught in a downpour and we were off to a late start. Fortunately, we were able to meet him at the door with some hot Starbucks and get him settled into one of our cozier meeting rooms for what proved to be one of our best Mentor Series interviews.
This portion of the interview deals with the myth that men aren't able to commit. Surprisingly, Dr. Stanley has found that men can reach commitment levels that exceed women — they just get there down a different path. This groundbreaking insight is essential for both men and women trying to read the potential of a relationship.
The following segment of our 2-hour interview with Dr. Stanley kicks off with an observation Dr. Stanley made on research regarding marital delay.
* * *
Dr. Scott Stanley: You have people waiting to marry later and later. But the risk of marrying young, which has been very clear and strong, is really pretty much gone by 22. The risk doesn't keep going down with age. And other risks accumulate during that period. During that time people are greatly increasing the complexity of their lives in terms of finances and sexual relationships and then when people finally do enter marriage, there's all this history, which is very relevant to the risks in the marriage.
Steve: I've had friends tell me that their parents encouraged them to wait till 30 or so before they get married. I wonder in those cases if there's some projecting going on. I wonder if a lot of the recommendations about an ideal time to marry are based on parents looking back and saying, you know maybe we jumped into it too soon. And maybe they have forgotten some of the advantages that they had of marrying young and discovering life together.
Dr. Stanley: Part of what's going on in that scenario is there is such a diminishment of confidence in marriage. There is an increase in the sense that you have to be completely prepared to take care of yourself in life. You need to get your own career, your own education and work life as far advanced as possible before you do this risky thing called marriage, and you need all the possible parachutes in case you end up bailing out.
Steve: Something we've noticed among single men is that there is no urgency to marry — they're not worried that someone else will come and snatch up this great catch they found. What is the lack of urgency from?
Dr. Stanley: I think it has to do with a resistance to "moving across the line." When males cross the line, there is a huge step up in their sense of identity about the commitment and their level of responsibility. So essentially, there's a resistance to crossing the line. Because right now, men can get so much of what they want without crossing it, and they only see increased responsibility from crossing it — "why would I be in a rush to do that?" In the meantime, they are often treating women in a way that diminishes their value even while they hang on to all their power and choice.
Candice: So does it all come down to sex?
Dr. Stanley: I think it's sex and responsibility, but I think the way that women have lost their power does come down to sex. You can make an empirically based case that women are now seeing a less clear difference between "non-marriage" and marriage. Women start being moved to give all their best to men when they're strongly, emotionally attached. This is actually a very positive thing about how women are built in terms of their bonding system, and I think it's part of why women are more powerfully orientated towards sacrificing earlier in their relationship or until a commitment is established.
But we've convinced women that sex isn't part of what you should be holding out for in terms of acting in a committed way. And sex further accelerates the whole process for women, because they're more affected by oxytocin and the bonding stuff kicks in. For all the power of the way woman are built and their more powerful bonding system in terms of the biological part of it, they are much more prone early on — before commitment is closely or remotely formed in the male's view — to over interpret things the male may be doing as signs of commitment.
Candice: I want to come back to a statement you made about men respecting marriage more than women. How can this be true?
Dr. Stanley: This is an idea I've come to believe more and more with the research that we do. The classic view is that men are commitment phobic, and they really don't want to commit, and that's why it's harder for women to get men to walk down the aisle. Whether that was historically true or not, I'm not so sure. What I think is true, now, (and there're different kinds of research that show this), is that men see a much firmer line between marriage and "not marriage" than women do in terms of what it means for their identity and behavior.
Sociologist Steve Nock wrote a terrific book called Marriage in Men's Lives. I'm on the psychological side of marriage research and Steve is much more of a classical secular researcher, but we both have a very similar belief that marriage has a fairly profound function of changing how men think, how they see who they are. One of the ways that men are best regulated in life is by being married.
You can't point to nearly as much evidence suggesting that marriage changes women as much as it changes men (such as in the direction of greater responsibility, greater willingness to sacrifice and all the behavior that goes with that).
Candice: Because women are already there?
Dr. Stanley: I think women are already there. I think — and we have some research that shows this — women start giving all their best and sacrificing for men regardless of the clarity about commitment to the future. They do this when they're really emotionally attached to a guy.
I don't think that really clicks for a guy until he has decided "you're the one; you're my future." Until that switch is flipped in a guy evidence suggests it affects the degree to which they're going to sacrifice for a woman and that has lots of ramifications.
But let's go back to your question a second. I think men resist marriage not because they don't believe in it; there's evidence that they believe in it even more strongly now than women. I think men resist marriage more than women because it has more profound effects on how they must behave.
Candice: And are those profound effects on their behavior accurate? When you talk to men who do marry, once they're on the other side of the altar, are they happier?
Dr. Stanley: You can make a pretty strong case that marriage is one of the best things that can possibly happen to a man. (By the way, before I forget, I don't want to suggest in my theory that marriage makes a dangerous man a safe man — what I really want to say is that marriage makes the average pretty good man a better man.)
Candice: Let's go back to the fear issue. The men fear how the responsibilities of marriage will change them. It will affect their identity. Are those fears founded?
Dr. Stanley: Let me give you my favorite example. I was reading one of my favorite websites, the National Marriage Project. In 2002, they had a special report with interview data from single men in their 20s about how they're thinking about marriage and women and cohabitation. What young men were telling them is that marriage means being a grownup. And when I'm getting so much in life and so fulfilled without having to take on the responsibilities of being a grownup, why do I want to rush into it? I eventually want to cross the line, but why rush it.
And one of the things these men said to them is things like this: If I marry her she'll want to have babies. If I marry a woman — this is my favorite — she'll tell me what to do. Now, note the logic of this, because it's pretty stunning and should be very concerning to women in their 20s. Because what the men are essentially saying is: "I have a different kind of relationship until I cross the line. Once I cross the line, I'm responsible to you, and you have a right to start telling me what to do. I'm not exactly looking forward to that, but once I cross the line, I have a different duty and responsibility because we're teammates."
I'm reading this and because of my own warped sense of humor, I start laughing out loud. I'm thinking you dummies. Now, I do have empathy for these guys, but you know, they're saying she has the right to tell me what to do, and they're essentially saying that's bad. I don't want that. And I'm thinking – now, let me think about why researchers believe men live seven years longer on average because they're married. It's because their wives tell them what to do, and maybe they do half of it. You know. Go to the doctor and get that thing on your neck checked. You know, you need to drink less. You're not sleeping enough. Why aren't you coming to bed? What's going on with you? I'm concerned about what you're doing when you go off with these guys. Get your seatbelt on. Yeah, women will tell you what to —
Candice: Get down on the floor and play with the kids.
Dr. Stanley: Yeah. Get down on the floor and play with the kids. You need to exercise. Turn off the TV a little more. Gosh, you know if you do that stuff, you live longer and you're happier and your brain works better and you're healthier. Boy, what a terrible thing.
Candice: Well, and don't married men make more money, especially those with children?
Dr. Stanley: That's right. And this gets into Steve Nock's domain. Because this is exactly the kind of evidence that he points to. There's all this evidence that at marriage, men shift to a greater level of responsibility in keeping jobs, holding down jobs, seeking advancement in jobs, and bringing home more money. Is that every man? No. Is that always the man that a particular woman feels like she married? No. But on average, most men. It's just something about crossing the line that moves men to act more responsibly. So, a woman could be thinking, well, he might see these as negatives to get him across the line, but if he crosses the line all these positive things are likely to happen.
Now, let me throw in the big warning on what I just said. Because everything we just said could get a young woman thinking that way. What you see increasingly are scenarios where many marriages begin by the woman eventually coercing, dragging and pulling the guy over the line. But the caution I want to throw in is everything we know suggests that a guy that you have to get across the line isn't probably the best guy to have across the line.
Candice: Okay. But is there a difference between helping him, nurturing him, if you will, toward an understanding of why the things he sees as negatives are actually positives, and having a man who responds to that nurture in a positive way with marriage? Is there a difference between that and a woman who "makes it happen" — that she pops the question or that she beats him over the head with this information?
Dr. Stanley: That is a great woman question. You must be a great woman.
Yes. I'm totally convinced there's a difference.
It comes down to whether the guy look s back later and feel s like events forced him over the line — including events maybe contrived or at least partly related to what she's done versus him thinking, "okay, we're partners and, yeah, you led on these discussions at times, but I really chose of my own freewill to cross this line." And that's the key.
Lots of young women think if he crosses the line, he's going to be like, okay, he'll be really dedicated to me now. If he's not so dedicated to you before he crosses the line, he's not going to really take a jump up in dedication after the line. If he is really dedicated to you before he crosses the line and then you cross the line hand-in-hand together, what will happen is that his dedication will grow and deepen, and blossom into all these increased behaviors and responsibility — that's a very different thing and positive thing.
We're suffering from paradox overload this morning.
We read in the paper that June saw the lowest inflation gains in five months. Ben Bernanke, speaking to the U.S. Congress, dumbed-down his remarks, in a message dumbbells wanted to hear:
"Core net inflation should edge a bit lower," he said.
(More on the Federal Reserve, in today's guest essay, below…)
But food has been rising this year at three times the rate of a year ago - or 6.2% per year. And gasoline already sells for a price 30% more than it did last year.
Meanwhile, from Las Vegas comes word that house sales are collapsing - they're down 42% from a year ago. Nationwide, new housing permits are at their lowest in 10 years. And in Southern California, house sales are at their lowest volume in 14 years. But while houses weren't selling, when they did sell they sold for slightly higher prices.
Go figure again.
Up the mortgage loan food chain, on Wall Street, the big fish at Bear Stearns say that investors are out of luck. There is trouble galore in the CDO market. But over at the equity trading desks, things have never been better. What trouble, ask the stockjobbers? What housing problem, they want to know? The Dow is near an all-time high. Neither housing slump…nor subprime slump…nor any kind of slump is going to stop this market, say the pros.
Dick Gaylord, who will become the nation's top REALTOR next year, claims that the market "isn't down, but just returning to normal."
"I don't know that there's ever been a bad time to buy," adds Gaylord sagely. "If people will hold on, there's no bad time to buy in real estate…"
Many in the real estate market agree with Mr. Gaylord, and think that we've hit the bottom as far as the housing bubble is concerned…but some, like Mish Shedlock, think we have a ways to fall yet:
The End Isn't Quite Here
The whole financial world is full of paradox and contradictions.
Dollars are losing value. But that doesn't seem to stop people from wanting more of them. In exchange for gold, you can tender 673 dollars and get a single ounce. This is 7.80 dollars more than the rate on Tuesday. But it's still lower than the rate at the end of January one score and seven years ago, that is to say, the day Ronald Reagan was first sworn in as President of the United States of America. But that was before the United States had a $9 trillion public debt…and a financing gap over $60 trillion. People still had affordable mortgages…and only half as much debt, generally speaking. The United States was at peace…and still a net-creditor to the rest of the world. Its trade with the rest of the world was still more or less in balance. Derivatives had barely been invented. And the money supply - that is to say the number of dollars in circulation - was hardly a quarter of what it is today (we are just making an educated guess).
You'd think the price of gold ought to be a bit higher. Go figure.
And pity the poor investors in Bear's hedge fund - all their dollars have disappeared. Yes, dear reader, The Greatest Economic Boom Ever is fueled by dollar creation…and yuan creation…and yen creation…and euro creation. My god, this boom has seen a genesis of money everywhere. But just as the great boom giveth, it also taketh away. We are preparing an essay for tomorrow on this subject, so we don't want to give away the whole story, but readers need to be prepared. Just as we watched the geniuses at Bear and the other financial firms create wealth; we can also watch them destroy it. In a flash, billions…no trillions…of presumed, ersatz wealth can vanish.
Money that is created "out of thin air" - courtesy of central banks and financial firms - tends to go back from whence it came. For every genesis of wealth creation…there is an exodus of wealth destruction. Watch out for it…
Wednesday, July 18, 2007
Last week, all three rating agencies - Moody's, Standard and Poor's, and Fitch - announced downgrades of subprime linked debt. And this week, Bear Stearns said investors in one of its hedge funds that bought CDOs on a leveraged basis would get none of their money back. They were wiped out, said the letter reported by Bloomberg, buying Triple-A bonds. Just how subprime CDOs, suspicious byproducts of a disreputable industry, came to be rated AAA is a story worth telling, but today we will stick to the news. Bear went on to say that while investors in one of its two endangered funds had been wiped out, investors in the other fund could breathe a sigh of relief - they had only lost 91% of their money.Crazy.
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He gives the figures for various indicators, and then the punchline:
Worse Than Irrelevant:
For lack of a better adjective, I’ll say it was a rather “idiosyncratic” week for the markets and otherwise. Monday, Citigroup’s CEO Chuck Prince made curious comments regarding the boom in M&A finance (quoted by the FT – see above): “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing… The depth of the pools of liquidity is so much larger than it used to be that a disruptive event now needs to be much more disruptive than it used to be. At some point, the disruptive event will be so significant that instead of liquidity filling in, the liquidity will go the other way. I don’t think we’re at that point.”
Not all that comforting. I could only chuckle when a journalist from the Wall Street Journal, appearing on CNBC, compared Mr. Prince to a ticket scalper outside a concert venue imploring potential buyers with assurances that the show was going to be so good they wouldn’t want to miss out.
On Wednesday, Alphonso Jackson, the Secretary of Housing and Urban Development (HUD), was on Bloomberg television warning that the U.S. mortgage default crisis may impact one-fifth of all subprime loans. This is no small sum considering that there are $800bn of outstanding subprime MBS (from Bloomberg). And what do you know, on Friday a Bloomberg article had Secretary Jackson meeting with Bank of China officials in Beijing urging the Chinese to “buy more mortgage-backed securities after a surge in defaults by risky borrowers in the world’s largest economy eroded demand for such instruments.” Another ticket scalper in an age of scalpers, though one apparently forced to admit something like this: “Ok, I know you know this show isn’t going to be pretty but, please my friend, I really need you to help me out on this one.”
And when it comes to “selling a bill of goods,” I refuse to let Dr. Bernanke’s Tuesday speech, Inflation Expectations and Inflation Forecasting, before the Monetary Economics Workshop of the National Bureau of Economic Research, go unanswered. For starters, I don’t recommend reading it. It is academic, written specifically for so-called monetary economists, and basically propounds doctrine that is Worse Than Irrelevant with respect to current inflation dynamics. I found it disturbingly detached from reality.
I’ll plead once again that the issues of “money”, Credit, and inflation are much too vital to the long-term health of free-market democracies to be left to a select group of policymakers and “ivory tower” dogma. I would instead argue that it is imperative that citizens become sufficiently educated on the perils of Credit inflation, financial excess, and unsound “money.” This would provide our only hope against the inflationary tendencies of politicians, the Fed, and the Financial Sphere – tendencies that turn highly toxic when mixed with high octane contemporary “money.” Whether by design or, perhaps more likely, his theoretical indoctrination, Dr. Bernanke’s inflation discussion continues to evade and obfuscate when it comes to the central monetary issues of our day.
Dr. Bernanke: “As you know, the control of inflation is central to good monetary policy. Price stability, which is one leg of the Federal Reserve’s dual mandate from the Congress, is a good thing in itself, for reasons that economists understand much better today than they did a few decades ago.”
That’s all well and good, but to commence fruitful discussion and debate first requires up-to-date, understandable, and reality-based definitions of “inflation” and “price stability.” It should be clear by now that sticking with Milton Friedman’s “too much money chasing too few goods” over-simplification does more analytical harm than good. “Money” was already too much of an unclear, amorphous and indefinite concept during Dr. Friedman’s heyday. The ongoing “evolution” of contemporary “money” only lunged ahead madly over the past decade or so. Moreover, adherence to a Friedmanite monetary perspective leads one to an ill-advised focus on “narrow money” and confined “core” consumer price inflation, along with a false notion of the government’s capacity to manage both. Today, “good monetary policy” and “price stability” are erroneously associated with perpetual - if perhaps only moderate - inflation in a narrow index of aggregate of consumer goods and services prices that represents such a small (and shrinking) part of total economy- and market-wide expenditures.
It’s more productive to start with “inflation” as a multitude of potential effects emanating from the creation of Excess Purchasing Power (Credit). These may include various price effects, although excess purchasing power also typically engenders elevated real investment, imports, and/or market speculation. Inflation’s price influences may develop in “core” consumer prices, or perhaps become more prevalent in energy and food prices – depending on many factors including supply/demand dynamics and the nature of the flow of funds/purchasing power. Especially if a Credit system is heavily focused on real (i.e. real estate, commodities, sport franchises, art, collectables, etc.) and financial (bonds, stock, “structured” instruments, commodities-related, etc.) assets, asset prices will be a prevailing Inflationary Manifestation. Contemporary “price stability” must be examined in the context of system-wide price levels, Credit growth by sector and in aggregate, and the scope and nature of speculation – and to be reality-based it should begin with the asset markets.
We have today a unique finance-driven economy that becomes more finance-dominated each passing year (month). Analytically, it is important to conceptualize the evolving nature of finance generally and appreciate that a finance economy will be an atypically mutating economic animal. The pool of available finance grows ever larger; the flows of finance become all the more powerful; the speculative impulses more intense and diffuse; the inflationary impacts more dramatic; and the real economy effects more pernicious - yet almost by design effects upon the general (“core” CPI) price level are nominal and lagging.
In particular, incredible amounts of financial “wealth” (financial sector inflation) are being generated, distributed and expended quite unequally (a key Credit Bubble-induced inflationary dynamic). At the same time, highly-populated emerging economies are engulfed in Credit Bubble dynamics, with obvious inflationary consequences for global food and energy prices. It is not hyperbole to suggest that financial, economic and inflationary dynamics have been radically transformed over recent years to the point of leaving policymakers and conventional economic doctrine in the dark.
Today, the U.S. and global economies are buffeted by powerful inflationary forces unlike anything experienced in decades - if ever. Years of unrelenting Credit and speculative excess have created a vast global pool of enterprising “purchasing power” (including hedge funds and other leveraged speculators, sovereign wealth funds, pension funds, mutual funds, insurance companies, etc.) searching high and low for robust returns. At the same time, the perception that the U.S. dollar is now a perpetually devaluing currency has created a powerful inflationary bias in myriad “non-dollar” asset classes (and economies) across the globe. Dr. Bernanke and the Fed would be better off disposing of their old academic articles and notions of inflation and starting from scratch.
In a week when Dr. Bernanke applauded a tradition of “good monetary policy” and “price stability,” U.S. financial markets were notable for demonstrating acute instability. Dr. Bernanke states that, “undoubtedly, the state of inflation expectations greatly influences actual inflation and thus the central bank’s ability to achieve price stability.” He then reiterates the commonly accepted view that - because of the Fed’s ongoing commitment and success in fighting inflation - inflation expectations “have become much better anchored over the past thirty years.” Well, this may have been somewhat the case for a period of time, but it is foolhardy to believe it holds true these days. After all, seemingly the entire world prescribes to the view of ongoing asset and commodities inflation. And these expectations - in conjunction with liquidity and Credit abundance – provide one of the more highly charged inflationary backdrops imaginable.
I don’t recall Dr. Bernanke’s mentioning asset inflation in his speech, although he does sanguinely address the inflationary (non-) ramifications from the surge in oil prices. “…A one-off change in energy prices can translate into persistent inflation only if it leads to higher expected inflation and a consequent ‘wage-price spiral.’ With inflation expectations well anchored, a one-time increase in energy prices should not lead to a permanent increase in inflation but only to a change in relative prices.” And, “the long-run effect on inflation of ‘supply shocks,’ such as changes in the price of oil, also appears to be lower than in the past,” along with “inflation is less responsive than it used to be to changes in oil prices and other supply shocks.”
The major issue I have with such conjecture is that it blindly disregards the key issues and prevailing dynamics of contemporary finance. Oil has always been the most important commodity in the world, yet it has never been as economically and financially critical across the globe as it is today. The huge inflation in oil and energy prices has had much to do with the massive expanding global pool of dollar balances (mostly emanating from our Current Account Deficits), the depreciating value of the dollar, and the associated massive liquidity over-abundance throughout Asia. Energy and related inflation has had and will, going forward, have only greater geopolitical consequences. It is nonsensical today to concentrate on oil inflation’s (to date) impact on “core” U.S. consumer prices.
Liquidity-induced oil price inflation has been exacerbated by the interplay of boom-time global demand increases (especially in Asia). Knock-on effects then included the liquidity/purchasing power accumulated by OPEC and other exporters, as well as liquidity created in the process of leveraged speculation internationally. Importantly, inflating energy prices have fostered Credit creation through myriad channels. For one, U.S. companies, governments, individuals and the economy overall have borrowed more for energy purchases, in the process working to sustain destabilizing Current Account Deficits in the face of a weakening dollar. There has been no “supply shock” specifically because easily accessed cheap Credit has provided sufficient added purchasing power to ensure uninterrupted robust energy demand (“monetization”).
Across the globe, more borrowed finance has been needed to acquire energy resources and companies; more has been borrowed to explore, develop and extract oil and to pursue sources of alternative energy. The rising values of energy assets (including oil company stock prices and energy derivatives) have created additional collateral to borrow against. And, more recently, the surge in energy prices has led to more broad-based secondary effects, including the large transportation and food sectors – which will work to encourage additional borrowing and broadening price effects. It would be a huge analytical blunder to expect that “energy prices should not lead to a permanent increase in inflation but only to a change in relative prices.”
Importantly, rising oil prices were initially an inflationary effect which, accommodated by easy “money,” then spurred greater Credit creation and increasingly potent inflationary forces. Inflation begets inflation, and the Fed can continue to downplay asset and commodities inflation at our currency’s peril. Both may be exerting only modest pressure on “core” consumer price indices these days, but such a narrow-minded focus completely misses the point.
The Fed is forever fond of gauging “long-run inflation expectations” by measuring the difference in yields between nominal and inflation-indexed bonds. In the current financial backdrop, this is comforting but flawed analysis. It may illuminate the markets’ best guesswork with respect to prospective CPI levels, but when it comes to actual “inflation expectations” I would suggest the Fed monitor a “basket” of indicators including the price of gold, oil, energy, and general commodities indices, the relative value of “commodity” currencies, global equities and real estate prices and, importantly, the global demand for Credit. Furthermore, a reasonable view of “inflation expectations” could be gleaned through the study of speculative leveraging throughout global financial and asset markets. The key inflationary focus today should be on factors and dynamics driving Credit growth and speculative excess.
While on the subject, it’s worth noting that speculative excess in the U.S. stock market has reached the greatest intensity since early-2000. The nature of current synchronized global market speculation is extraordinary to say the least; virtually all markets everywhere. Here at home, all the fun and games, squeezes and intoxication should have the Fed alarmed. Surely, a destabilizing market “melt-up” is the last thing our vulnerable system needs right now.
And when I commented above that Dr. Bernanke’s (and the Fed’s) inflation doctrine was “Worse Than Irrelevant,” I had today’s global financial backdrop in mind. To be sure, a policy of pegging short-term rates with promises of fixating two eyes on “core” CPI and no eyes on asset prices/Credit/or speculative excess has been fundamental in nurturing history’s greatest Credit Bubble. Or, from another angle, relatively stable consumer prices have ensured runaway Credit inflation and speculative asset Bubbles. And the marketplace’s inability to orderly adjust to rising global bond yields, surging energy prices and mounting inflationary pressures, and unfolding Credit market tumult portend problematic market dislocations at a future date.