Cryptocurrency explained.

 

If Cryptocurrency Was Honest | Honest Ads

This is a humourous take on why crypto is a scam. 

And Robert Reich giving a more serious take on this issue.

We Went to a Crypto Conference: We Left Terrified

You can't trust banks or financial institutions, but you trust something which is based on computers?

What type of stupid are you?

CRYPTO CRASH: THE REAL REASON FTX COLLAPSED

OK, I've been saying that cryptocurrencies are a bad investment and generally not a good idea. But this is really interesting since he's saying that the Chinese have cornered the crypto market, caused a "run on the bank", and don't allow for cryptocurrencies in their country.

To quote Mr. Spock: "Interesting."

Wanna buy some tulips? How about an NFT of the Brooklyn Bridge?

The Rich Get Richer (a coming crash?)

 So, Warren Buffet is selling bank stocks for cash because of an impending crash in business real estate.

Maybe that's not the best way to summarise the situation, but it hits a bunch of fallacies.

First off, once someone gets into the millionaire class, they tend to make more money doing nothing than most people do by working. Especially if they are in the Warren Buffet league.

Next is the dislike of fiat currency for something commodity based, which is loaded with fallacies. First, commodites ARE volatile: just do a search on "economic crash commodities" for an eye opener. The Panics of 1869 and 1893 saw quite a bit of controversy around gold and gold reserves. Fiat currency is based upon the stability of the issuing body (usually national, but the European Central Bank issues the Euro, so multinational and definitely governmental). 

But the bottom line is that currency is basically a tool for commerce. The best example of this comes from Terry Nation's show Survivors from the 1970s, where a man has a suitcase he is very protective of. He dies during the night and we find out that its full of paper money, which is pretty much useless since most people have died from the plague. The world of Survivors is the libertarian's dream.

Seriously, while many people don't like central banks, they do a fairly good job of keeping the economy running along. Of course, any realistic discussion of avoiding crashes requires that we talk of things that the right likes to term "socialistic" because there is governmental intervention in the economy and people are supposed to play by the rules (e.g., competition laws).

Pew Charitable Trust on Cryptocurrencies

46% of Americans who have invested in cryptocurrency say it’s done worse than expected

Among the 16% of U.S. adults who say they have ever invested in, traded or used a cryptocurrency such as bitcoin or ether, 46% report their investments have done worse than they expected. By comparison, 15% of these Americans say their investments have done better than they expected; 31% say they’ve worked out about the same as they expected. The overall share of U.S. crypto users is unchanged since September 2021. 

• About half of Americans have heard about NFTs, but few have ever bought one

 

Is Crypto Really Going To Crash? (Yes) | Robert Reich

I'm not sure what to think about Robert Reich these days. OK, I have always liked him.

On the other hand, he is pretty much saying the same thing I have. Not sure if I would call this a Ponzi Scheme. I would go more with "pump and dump".

But Bob is usually pretty good in his analyses.

Please give this a squiz since it is worth it.

He surprises me that he aligns himself with the Democrats: especially post-Bernie.

The Crypto Crisis

Cryptocurrencies and Non-fungible tokens (NFTs) remind me of the stereotypical scam of buying the Brooklyn Bridge. NFTs could actuallty put that scam into practise since they are a digital asset that represents real-world objects like art, music, in-game items and videos.

I've got an NFT of the Brooklyn Bridge: you want to buy it?

Something about fools and money anyone?

Anyway, there has been a Cryptocurrency crash which has become public with Bitcoin, the largest cryptocurrency by market value, having a recent fall of more than 72 percent since its November high.

There is a great article on this by Trevor Jackson in Dissent, The Crypto Crisis. This pretty much sums up the problems with Crypto Currencies:

[At one time,] there were about 19,000 cryptocurrencies in existence. By the time you read these words, many of them will have failed. If you have heard of only one cryptocurrency, it is almost certainly Bitcoin. Bitcoin is a decentralized peer-to-peer network with no single clearinghouse and no equivalent to a central bank or money-issuing authority. Bitcoin the platform issues currency units called “bitcoins,” whose value is determined by supply and demand on several different exchanges. There is no single price of bitcoin. Demand is driven by its use in transactions. Supply is determined through “mining”: using computer processing power to solve increasingly complicated math problems. The inventors of Bitcoin have consistently maintained that there will be a finite supply of bitcoins, alleviating the danger of inflation and creating instead an intentionally deflationary system. All transactions are anonymous, and bitcoins are held in a digital “wallet.” A bitcoin spent in a transaction is really a unique code and a series of past transactions of that code in a kind of digital ledger, known as the blockchain. Imagine if every dollar you spend came with a list of every past transaction that dollar had been used in, thereby proving that you obtained it legally. It’s a way to verify transactions while preserving anonymity. Once a transaction happens, notice of it is sent to the entire Bitcoin network, and all the “miners” in the system race to verify the ledger of past transactions. If you win the verification race, you are awarded with new bitcoins.

He then gets into how problematic the crypto currency system happens to be, which is very.

As I said, if you don't like Fiat Currencies, you should avoid crypto like the plague. Fiat currencies at least have something backing them up. Crypto isn't even a commodity based currency, which also have their problems.

Crypto is the commidity.

And it's one that only exists in cyberspace.

You know I'm not a fan of bitcoin or cryptocurrencies: here is the best argument about why you shouldn't be as well.

I just finished watching Russell Brand discuss bitcoin, which he didn't understand. The concept intrigued him for the obvious reasons--cryptocurrency poses as something which is outside the banking and economic system.

That's not really true. I know enough about these things to know that they are not what they pretend to be. Which is why I suggest this e-book on the subject:

https://www.mybloggertricks.com/2018/06/bitcoin-is-scam.html

The person who wrote this knows a whole lot more about the subject than I do, which is why I recommend it. You don't really need to know a lot about the topic to sense that it is not what it purports to be.

On the other hand, knowing what exactly it is makes it far more scary than fiat currencies.

Bottom line is that commodity based currencies are volatile. Fiat based currencies values are determined by central banks. But cryptocurrencies aren't really either. If anything they combine the worst of both worlds.

But, hey, it's your money: not mine.

Barely do I do a post about Bitcoin when...

 The BBC does a piece on whether the blockchain is unsustainable.

It seems that the price of Bitcoin cannot stop increasing, but how sustainable is Bitcoin itself? With such huge energy demands to keep Bitcoin mined, are some countries risking the stability of their electricity supplies to take advantage of the Bitcoin boom? Financial economist and founder of the blog “Digiconomist”, Alex de Vries is on the show to answer these questions. He says, in his paper published in the journal Joule, that the entire Bitcoin blockchain network consumes as much energy per year as all data centres across the world.

If you don't like Fiat Currency, you should avoid Bitcoin like a shitcovered plague

 One of my hobbies is collecting hyperinflated currencies, I have old German Marks, Yugoslavian Dinars, and Zimbabwe dollars. I bought some "fake" bitcoins. Those things that get pictured when people talk about the Bitcoin since Bitcoins have no real physical form. I tossed in mention of the Euro as well since it had no real physical form until 2002, but there's a difference between the Euro and bitcoin.

Doggone has been asking me to write something about Bitcoins and why they are dangerous. I have been procrastinating about this in my usual style until the Wire article "Bitcoin’s Greatest Feature Is Also Its Existential Threat" popped up on my radar. There are three types of currency: one is currency backed up by a commodity which is usually gold or silver, Fiat currency which is where a government prints money and gives it value, and now cryptocurrency which isn't issued by a government. Cryptocurrencies are probably closer to commodity based currencies in that they get their value from the market. 

Yet Cryptocurrencies' market value isn't based upon a commodity. It's based upon something called a block chain, which makes it somewhat similar to Fiat currency in that there isn't some form of actual value to either one. Fiat currency at least has a government backing it up. The blockchain is far more fragile and dangerous.

"See footnote for Hitchhiker's Guide Quote"

But let's get down to a really basic history of what "hard cash" money is. Basically, an economy is based upon trade. I have grain and you have bricks, or some such. Maybe bricks aren't available where I live and I can't trade directly with you. So, a commodity was chosen to make trade easier. The commodity was made into coins. Currency came about when banks wrote promissory notes to pay the value of the note.

Cryptocurrency gets its value from something called a blackchain and isn't really backed up by anything other than that. Blockchains are fairly complex topics. I'm not going to get into what exactly the blockchain is, but it is actually quite fragile. It's based upon a key, and woe upon you if you lose that key. I was trying to find the story about the person who died taking his bitcoin key with him. A story titled "$66,500,000,000 in Bitcoin Is Lost and Will Never Be Recovered, Says Crypto Intelligence Firm Chainalysis" was one of many that showed up.

That gets me back to the Wired story which led to this being written:

It’s best to avoid explaining the mathematics of Bitcoin's blockchain, but to understand the colossal implications here, you need to understand one concept. Blockchains are a type of “distributed ledger”: a record of all transactions since the beginning, and everyone using the blockchain needs to have access to—and reference—a copy of it. What if someone puts illegal material in the blockchain? Either everyone has a copy of it, or the blockchain’s security fails.

In other words, anything which can corrupt the blockchain will result in bitcoin literally being nothing. Those fake bitcoins I have will be worth more than a "real" one. Toss in that cryptocurrencies require a lot of computer power, or eat up a lot of electricity, to store those blockchains. This comes from a very cryptocurrency friendly article:

Cryptocurrency mining, by its very nature, requires a lot of electricity and sophisticated computers. In a paper published this week in the journal Joule, data scientist Alex de Vries — correctly — argues bitcoin mining is likely to exceed an annual consumption of 101 terawatt-hours (TWh) of electricity as the price fluctuates.

The Wired Article is much better about the fragility of cryptocurrencies. The best way to remind someone of the danger of bitcoin is to point to things like Tulip mania. In other words, commodities, whether physical or not, can be subject to DRASTIC fluctuations in price. People who advocate for commodity based currency based upon their stability are ignorant of economic history. There were severe depressions when commodity based currencies existed. 

Bitcoin isn't even commodity based. it is based upon the integrity of the blockchain. And if you don't trust a government, You really shouldn't trust a blockchain. Bitcoin’s self-positioning in opposition to fiat monetary systems is misguided, because the established system relies less on fiat than Bitcoin itself.

See also:

• The Fragility of Bitcoin.
• Beat Weber: Bitcoin and the legitimacy crisis of money
  

 Footnote:

"The Triganic Pu is a unit of galactic currency, with an exchange rate of eight Ningis to one Pu. This is simple enough, but, since a Ningi is a triangular rubber coin six thousand eight hundred miles along each side, no one has ever collected enough to own one Pu. Ningis are not negotiable currency, because the Galactibanks refuse to deal in fiddling small change."

Robin Hood revolution

I've not really paid that much attention to The GameStop thing, but it points out something I have been pointing out about how the current "market capitalism" works: Or Las Vegas on Wall Street.

The short form is that a group on reddit decided to invest on GameStop since the Hedge Funds were looking at it. Their purchases were aided by a broker called Robinhood Investing, which offers no fee trades. I have some idea of how hedge funds work and it sounds as if the reddit crowd were doing something which the "big players" have been doing for a while.

The big problem is that it was a group of small investors making money instead of the few, wealthy getting rich(er).

That goes against the rules. The powers that be are upset that people outside their circles are using their methods to make money.

It also highlights that the people in power are the ones who caused the problems with the economy of a while back. And they were the ones who got bailed out: not the little guy. 

The current US political situation is also run by pretty much the usual suspects, which is one of the many reasons why I demexited in 2016. I see the power people circling their wagons to put down the revolution.

Unfortunately, the dam has broken.

The powers that be had their opportunity to make a clean transfer of power, but their bets were on the status quo. Unfortunately the best way to handle a revolution once one gets started is to try and control it. Try to keep the forces of change in control.

The problem is that is an option which is being applied FAR too late in the game. The time for real change was 2016, but the powers that be opted for the status quo.

Now it's going to be hard to blame any of the mess ups on anybody else than the people running the show.

Herman Cain, You Are TOO IGNORANT to Be President

from Last Word with Lawrence O'Donnell, MSNBC.com :

Visit msnbc.com for breaking news, world news, and news about the economy

So........how simple, how transparent, how much EASIER is this 9 9 9 plan of Herman Cain? NOT AT ALL. It is superficial, and ill conceived, and the numbers don't add up - yet again, more Republican math failures, with dumb ideas masquerading under the bogus label of common sense solutions. 

Let me point out that O'Donnell has put in his time in and around Congress; he was a key aide and senior advisor to Senator Moynihan for six years, and the staff director for an additional two years was the staff director of the Senate Committee on Finance.  So, O'Donnell knows his subject, clearly better than either Herman Cain, or Cain's chosen advisers.

from the Wikipedia entry on O'Donnell:

From 1992 to 1993, he was staff director of the United States Senate Committee on Environment and Public Works, then chaired by Senator Moynihan. And then from 1993 to 1995, he was staff director of the United States Senate Committee on Finance, once again under Senator Moynihan’s chairmanship. He thus led the staff of the Senate's tax-writing committee during the consideration of President Bill Clinton's first budget, which Congress enacted in the Omnibus Budget Reconciliation Act of 1993.

Herman Cain doesn't understand his own economic policy; he is far too easily stumped by simple, softball questions.

Koch Brothers and Economic History: a Surprising Letter

This epitomizes corrupt and dishonest intellectual discourse, and how money can buy an expert to say anything they want said.  Who?  Who else - one of the egregious Koch Brothers!

Charles Koch

From the Dylan Ratigan Show on 9/29/'11, MSNBC.com:

Ideas for sale September 29, 2011 “The Nation” magazine’s Mark Ames and co-writer Yasha Levine discuss an investigative report revealing that billionaire Charles Koch bought and paid for an anti-Social Security and Medicare stand.

Visit msnbc.com for breaking news, world news, and news about the economy

The original article appears HERE in the Nation Magazine.  It is written by Mark Ames and Yasha Levine.  The source of this letter is the collected papers of Friedrich von Hayek, in the Hayek Archive at the Hoover Institution, Stanford University, where it was an indexed part of the collection. From the article referenced above:

The private correspondence between two of the most important figures shaping the Republican Party’s economic policies—billionaire libertarian Charles Koch and Nobel Prize–winning economist Friedrich Hayek, godfather of today’s free-market movement—were obtained by Yasha Levine from the Hayek archives at the Hoover Institution at Stanford University. This is the first time the content of these letters has been reported on.

The documents offer a rare glimpse into how these two major free-market apostles privately felt about government assistance programs—revealing a shocking degree of cynicism and an unimaginable betrayal of the ideas they sold to the American public and the rest of the world.

"Publicly, in academia and in politics, in the media and in propaganda, these two major figures—one the sponsor, the other the mandarin—have been pushing Americans to do away with Social Security and Medicare for our own good: we will become freer, richer, healthier and better people.

But the exchange between Koch and Hayek exposes the bad-faith nature of their public arguments. In private, Koch expresses confidence in Social Security’s ability to care for a clearly worried Hayek. He and his fellow IHS libertarians repeatedly assure Hayek that his government-funded coverage in the United States would be adequate for his medical needs.None of them—not Koch, Hayek or the other libertarians at the IHS—express anything remotely resembling shame or unease at such a betrayal of their public ideals and writings. Nowhere do they worry that by opting into and taking advantage of Social Security programs they might be hastening a socialist takeover of America. It’s simply a given that Social Security and Medicare work, and therefore should be used."

The authors of the article have posted a digital copy of the letter here at the Nation, and here, at the blog Exiled.com, if you care to see it for yourself.  This is just a taste, a 'tease'.  The authors understood this surprising discovery, and they explain the significance of it very eloquently.  I encourage our Penigma readers to follow the links, and inform yourself more fully on WHY the discovery of this document is significant in the larger context of American economics and politics.

Republican Jenga-Nomics and Jingo-Nomics

From Comedy Central:

The Colbert Report Get More: Colbert Report Full Episodes,Political Humor & Satire Blog,Video Archive

Laci points out that TV was invented by a Scot, John Logie Beard.

The Colbert Report Get More: Colbert Report Full Episodes,Political Humor & Satire Blog,Video Archive

The GOP's "Job Creators" Are Really the Job Destroyers

The Republicans and the Tea Partiers like to talk about tax breaks, tax loopholes, and subsidies for the wealthy in the same sentences as the word 'jobs', and 'job creators'.

That would be the corrupt wealthy who like to buy themselves corrupt right wing politicians, and who pay for the extensive deluding of the right wing base through propaganda.

I am getting to the point where if I hear the words 'job creator' one more time, I might scream out loud from the extreme cognitive dissonance.  Saying these are job creators does not make them so.

The Right wing has controledf the House of Representatives since January of this year.  In December, they negotiated for an extension of the Bush Tax cuts of 2001 and 2003, including the UNPAID tax cuts that disproportionately benefited the wealthiest 2%, directly causing an increase in the deficit by the decrease in revenue that would have otherwise occurred.  Obama had already agreed to continue the tax cuts for all but the top 2% of the wealthiest, those who had disproportionately benfited for the preceding 9 years.  Insisting on 'UNPAID for' tax cut extensions, from those who have subsequently demanded even disaster relief be paid for by cuts in other spending, is purely, clearly, undeniably HYPOCRITICAL.

From 2001 to 2008 of the Bush administration, during there were also Republican majorities in Congress, 2.1 million jobs  were created, and by the end of the Obama administration, far more jobs than that were also lost.  That era of Republian policies were reflected in some of the slowest economic growth, and the fewest jobs created - less than the population growth - since World War II. 

Worse, there was a decline in manufacturing, and an increase in the number of low paying jobs, not high paying jobs.

In the preceding 8 years of the Clinton administration, there was a growth of 22.2 million jobs.  That was job growth WITHOUT those lower wealthy tax rates, and WITH largely Democratic fiscal policies, including tax policy.

So...........where are any of those jobs that the tax cuts to the wealthy, aka 'job creators' were supposed to generate?

Under the right wing dominance of the House, and the gain of a larger obstructive minority in the Senate, there has been very little effort in the first nine months of 2011 to address jobs.  The first six months of 2011, there were no efforts to pass ANY legislation other than right wing culture war bills.

So, when are the citizens of this country going to start asking why it is that the tax policy of the right hasn't done what it promised to do for the last 10 years? 

When will slogans stop replacing substance?  When will the tea party kool-aid drinkers stop being true believers and become a bit more skeptical?

The reality is that it is the wealthy, not the middle class small business owners, who are outsourcing jobs overseas, and it is corporations sitting on unprecedented cash supplies which are having mass firings.  This New York Times article  from 2010 goes into the developments more comprehensively.  Corporations are making money while cutting jobs, but that money is staying in the pockets of the wealthy, while the majority of employees in their labor force, at all levels below the top, are getting squeezed.

"“There’s no question that there is an income shift going on in the economy,” Mr. Harris added. “Companies are squeezing their labor costs to build profits.”


The trend is hardly limited to Harley. Giants like General Electric and JPMorgan Chase, as well as smaller companies like Hasbro, the toymaker, all improved their bottom lines despite slowing sales in the second quarter. Among the S.& P. 500 companies that have reported second-quarter results, more than one in 10 had higher profits on lower sales, nearly twice the number in a typical quarter before the recession, according to Thomson Reuters.
“Whole industries are operating at new levels of profitability,” said David J. Kostin, chief United States equity strategist at Goldman Sachs. “In the downturn, companies managed to maintain higher profit margins than ever before.”


Profit margins — the percentage of revenue left over after expenses — crumble in most recessions, as overall sales fall but fixed costs like infrastructure, commodities and rent remain the same. In 2002, during the recession that followed the bursting of the technology bubble in addition to the Sept. 11 attacks, margins sank to 4.7 percent. Although the most recent downturn was far more severe, profit margins bottomed out at 5.9 percent in 2009 and quickly rebounded. By next year, analysts expect margins to hit 8.9 percent, a record high.


The difference this time is that companies wrung more savings out of their work forces, said Neal Soss, chief economist for Credit Suisse in New York. In fact, while wages and salaries have barely budged from recession lows, profits have staged a vigorous recovery, jumping 40 percent between late 2008 and the first quarter of 2010.


Harley-Davidson’s profit gain last quarter was helped by a turnaround in its financing unit, as well as more efficient production, but the company is still cutting.

And this more recent article, from the L.A. Times, details some of the most dramatic losses in jobs, following zero growth August 2011.

BofA to cut at least 40,000 jobs


The layoffs reflect Bank of America's deepening woes and are likely to take a heavy toll on its California operations.


Bank of America has 45,000 employees in California and is expected to roll… (Kevin Lamarque / Reuters)September 10, 2011
By Walter Hamilton and E. Scott Reckard, Los Angeles TimesBank of America Corp. is preparing to slash 40,000 or more jobs nationwide, a dramatic retrenchment that reflects the deepening woes of the country's largest bank and the magnitude of the U.S. economic slowdown.

 thing that is growing, along with the size of the gap between the wealthy and the rest of us.  That is not a healthy economy.  A healthy economy benefits all classes, not a decline for most with a gain for the very few.
 
So..........when is it that those wealthy job creators will have enough money, in the eyes of the right wing corrupt politicians, both Republican and Tea Partiers, to start creating jobs? When? Not until that money is transferred back into the pockets of the middle and lower classes from whom it was swindled by unfair tax cuts.  Because we have a demand crisis, not a too-little-money-for-the-wealthy crisis.

From StLToday.com:Stocks, house values cited in decline of wealth in U.S.

At the same time, corporations hold a record $2 trillion in cash.
The value of Americans' stock portfolios fell 0.5 percent in the second quarter. House values dropped 0.4 percent.


Corporations held a record $2 trillion in cash at the end of June, an increase of 4.5 percent from the January-March quarter.


Consumers are already struggling with high unemployment and meager pay raises.


When people feel poorer, they spend less. That slows growth. Businesses then respond by cutting back on hiring and expansion plans. It can become a cycle.


Net worth is expected to fall even further in the July-to-September quarter because stocks plunged in late July and early August.


A key reason was the government said the economy barely grew in the first half of the year. Investors also reacted to lawmakers' battle over raising the government's borrowing limit and Standard & Poor's downgrade of long-term U.S. debt.
 
Eighty percent of stocks belong to the richest 10 percent of Americans, who also account for a disproportionate amount of consumer spending. The richest 20 percent represent about 40 percent of consumer spending.


The likely drop in wealth comes at the same time that incomes are stagnating, particularly for middle-income households. Average household income, adjusted for inflation, fell 6.4 percent last year from 2007, the year before the recession, the Census Bureau said. 

Conservative economic polices don't work; they haven't worked in the first decade of this century, but instead led to the greatest economic disaster of the past 70 years. They are wrong, they are bad, they are unsuccessful and they are corrupt.

The next time you hear someone on the right use the phrase 'job creators', stop for a moment.  Ask yourself, who are these wealthy job creators, and why aren't they creating jobs.

Because they aren't job creators, they are job destroyers.  When you hear that phrase, someone on the right is lying to you, and they KNOW they are lying, and they don't care.  They just keep taking money, continue lying........and hope you won't notice.

Notice.  It's way past time to stop listening to the bullshit and to start looking at the facts behind it.

The Science: Right Wing Class Warfare - What's Wrong with Rich?

This provides a fascinating insight into the political conflicts right next door in Wisconsin.  The following studies directly relate to the expenditure by a few wealthy individuals, and corporations, effectively to BUY elections, including through funding dirty tricks.  Look at this particularly in the context of the data in the post below this one; they should be read as a complimentary pair.
(Bold or enlarged type is my emphasis added - DG)From MSNBC.com:
The rich are different — and not in a good way, studies suggest
The 'Haves' show less empathy than 'Have-nots'
By Brian Alexander
msnbc.com contributor
updated 8/10/2011 9:12:12 AM ET 2011-08-10T13:12:12

Psychologist and social scientist Dacher Keltner says the rich really are different, and not in a good way: Their life experience makes them less empathetic, less altruistic, and generally more selfish.

In fact, he says, the philosophical battle over economics, taxes, debt ceilings and defaults that are now roiling the stock market is partly rooted in an upper class "ideology of self-interest."

“We have now done 12 separate studies measuring empathy in every way imaginable, social behavior in every way, and some work on compassion and it’s the same story,” he said. “Lower class people just show more empathy, more prosocial behavior, more compassion, no matter how you look at it.”

In an academic version of a Depression-era Frank Capra movie, Keltner and co-authors of an article called “Social Class as Culture: The Convergence of Resources and Rank in the Social Realm,” published this week in the journal Current Directions in Psychological Science, argue that “upper-class rank perceptions trigger a focus away from the context toward the self….”

In other words, rich people are more likely to think about themselves. “They think that economic success and political outcomes, and personal outcomes, have to do with individual behavior, a good work ethic,” said Keltner, a professor of psychology at the University of California, Berkeley.


Because the rich gloss over the ways family connections, money and education helped, they come to denigrate the role of government and vigorously oppose taxes to fund it.

“I will quote from the Tea Party hero Ayn Rand: “‘It is the morality of altruism that men have to reject,’” he said.

Whether or not Keltner is right, there certainly is a “let them cake” vibe in the air. Last week The New York Times reported on booming sales of luxury goods, with stores keeping waiting lists for $9,000 coats and the former chairman of Saks saying, “If a designer shoe goes up from $800 to $860, who notices?”

According to Gallup, Americans earning more than $90,000 per year continued to increase their consumer spending in July while middle- and lower-income Americans remained stalled, even as the upper classes argue that they can’t pay any more taxes.  Meanwhile, the gap between the wealthiest and the rest of us continues to grow wider, with over 80 percent of the nation’s financial wealth controlled by about 20 percent of the people.

Unlike the rich, lower class people have to depend on others for survival, Keltner argued. So they learn “prosocial behaviors.” They read people better, empathize more with others, and they give more to those in need.

That’s the moral of Capra movies like “You Can’t Take It With You,” in which a plutocrat comes to learn the value of community and family. But Keltner, author of the book “Born To Be Good: The Science of A Meaningful Life,” doesn’t rely on sentiment to make his case.

He points to his own research and that of others. For example, lower class subjects are better at deciphering the emotions of people in photographs than are rich people.

In video recordings of conversations, rich people are more likely to appear distracted, checking cell phones, doodling, avoiding eye contact, while low-income people make eye contact and nod their heads more frequently signaling engagement.

In one test, for example, Keltner and other colleagues had 115 people play the “dictator game,” a standard trial of economic behavior. “Dictators” were paired with an unseen partner, given ten “points” that represented money, and told they could share as many or as few of the points with the partner as they desired. Lower-class participants gave more even after controlling for gender, age or ethnicity.

Keltner has also studied vagus nerve activation. The vagus nerve helps the brain record and respond to emotional inputs. When subjects are exposed to pictures of starving children, for example, their vagus nerve typically becomes more active as measured by electrodes on their chests and a sensor band around their waists. In recent tests, yet to be published, Keltner has found that those from lower-class backgrounds have more intense activation.

Other studies from other researchers have not produced the clear-cut results Keltner uses to advance his argument. In surveys of charitable giving, some show that low-income people give more, but other studies show the opposite.

“The research regarding income and helping behaviors has always been little bit mixed,” explained Meredith McGinley, a professor of psychology at Pittsburgh’s Chatham University.

Then there is the problem of Tea Partiers’ own class position. While they are funded by the wealthy, many do not identify themselves as wealthy (though there is dispute on the real demographics). Still, a strong allegiance to the American Dream can lead even regular folks to overestimate their own self-reliance in the same way as rich people.

As behavioral economist Mark Wilhelm of Indiana University-Purdue University Indianapolis pointed out, most people could quickly tell you how much they paid in taxes last year but few could put a dollar amount on how they benefited from government by, say, driving on interstate highways, taking drugs gleaned from federally funded medical research, or using inventions created by people educated in public schools.

There is one interesting piece of evidence showing that many rich people may not be selfish as much as willfully clueless, and therefore unable to make the cognitive link between need and resources. Last year, research at Duke and Harvard universities showed that regardless of political affiliation or income, Americans tended to think wealth distribution ought to be more equal.


The problem? Rich people wrongly believed it already was.

Proof! Study Shows Union Busting Hurting Economy & Middle Class

It is also worth noting when reading the following article, that the right may have won, barely, in the senate recall elections in Wisconsin, but they were only able to do so through a wide range of dirty tricks, illegal voter suppression through robocalls and mass mailing to Democrats, and a whole lot of money, notably from the Koch brothers, and the Amway family fortune.  What started as another election ended as another political auction.

Keep that in mind the next time you fill up your vehicle with gasoline, or consider an amway product...

I like to go to the primary sources whenever I can, and encourage readers here to do the same; so here is the link to the study referenced below:

Unions, Norms, and the Rise in U.S. Wage Inequality


Bruce Western[a]
Jake Rosenfeld[b]

aHarvard University
bUniversity of Washington
Abstract
From 1973 to 2007, private sector union membership in the United States declined from 34 to 8 percent for men and from 16 to 6 percent for women. During this period, inequality in hourly wages increased by over 40 percent. We report a decomposition, relating rising inequality to the union wage distribution’s shrinking weight. We argue that unions helped institutionalize norms of equity, reducing the dispersion of nonunion wages in highly unionized regions and industries. Accounting for unions’ effect on union and nonunion wages suggests that the decline of organized labor explains a fifth to a third of the growth in inequality—an effect comparable to the growing stratification of wages by education.

And here is an excellent analysis of how that study is reflected in the politics taking place right next door; a dangerous political ideology which the right would love to extend into Minnesota if they could, and across the country.  This would be disastrous, because the right endorses an utterly failed economic policy which only advantages the 2% who are very wealthy, and the uppermost executives of corporations.
from aol news:

Declining Union Power To Blame For Rising Wage Inequality


By Claire Gordon, Posted Aug 10th 2011 @ 11:58AM

Wage inequality has ballooned in the last forty years, thanks in large part to the declining power of unions, according to a study published this month in the American Sociological Review, and reported by the New York Times.

Between the years 1973 and 2007, the study found that wage inequality rose 40 percent. In this same period, private sector union membership plummeted 34 to 8 percent among men and 16 to 6 percent among women. These drops explain one third of the increase of wage inequality among male workers and one fifth of the increased inequality among their female counterparts, the study concludes.


Climbing income inequality is usually blamed on technological changes, immigration, outsourcing, and the relative increase in wages for college graduates. The studies two authors found, however, indicate that waning union power is just as significant as any of these factors.

Private sector union membership is now lower than it was in 1935, when the Wagner Act, which protects workers' right to organize, came into force. Unions swelled after World War II, but since the early 1970s, Big Labor has been steadily and relentlessly shrinking.

This has reduced the political power of all workers, according to the study. Unions have long advocated for more equalized wages for labor, by opposing, for example, the radical deregulation of financial markets and the explosion of executive pay. "Union decline marks an erosion of the moral economy and its underlying distributional norms," the study claims. "Wage inequality in the nonunion sector increased as a result.

These findings support past research, which has shown that countries with strong unions, like Canada and Germany, have a flatter economic playing field.

The declining power of private sector unions has also produced another kind of wage inequality: between public and private sector workers. 36.2 percent of government workers are unionized, and thus have greater political clout on average than private employees.

As Wisconsin Governor Scott Walker likes to say, unions are the "haves" and the largely private-sector employed taxpayers are the "have-nots." But as this study tells us, organized Labor has been critical in battling the other war of "haves" and "have nots": corporate and Wall Street interests versus the average worker.

It is these tensions that came to ahead in Wisconsin's recall elections on Tuesday. Of the four Republican state senates seat up for grabs, Democrats managed to wrest only two away. Republicans have successfully kept control of the senate, and are calling it a big win. But if Wisconsin is a microcosm of the country on this issue, Americans are split almost perfectly down the middle, divided on which "have not" to defend.

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S& P Lowers Our Rating......And Our Bond Market GOES UP?

While I feel badly for those people who appear to be driving the insane sell-off in the stock market.....I don't feel THAT badly for them or for their losses.  Because this was a really stupid panic, an unnecessary, an unwarranted and unjustified panic.

Growing up at Daddy's knee, I learned early that there is money to be made, both when the market goes up AND when the market goes down.  If you aren't making money when the market goes down, then you should be asking yourself why, and what it is that the people who ARE making money on the down market are doing, that you are not.  It is about framing the questions correctly, to get the right answers, as part of critical thinking instead of blindly following the rest of the invstment market lemmings.  It is all about asking the right questions, framing the questions in the right way that separates the lemmings from the rest.

Although, to inject a factual element here, Lemmings do NOT actually leap off cliffs to their deaths at set intervals in mass suicides.  That was a fake event staged by Disney for the movie White Wilderness, although it is has widely passed into nature lore among those who don't stop to think, or question, what they see and hear.

I would be curious to know who made money on the recent market decline, and if any of it involved shady selling short action.  The simplest rule of thumb for making money in the stock market is buy low, sell high.  There are people out there, whether individuals or institutional investors, who are cleaning up, buying the quality stocks at record lows; because for every seller, for a transaction to occur, there ARE buyers.  One should look at the volume traded, not just the up and down numbers, to begin even a relatively simplistic understanding of the market activity.  There were smart people buying, and largely ignorant people selling.

This would be a great story for following the money; there are some already rich people on the street - Wall Street - who are richer now than they were during the debt ceiling debate.  And the fearful low information voter, er, investors? There are a lot of them who are a whole lot poorer.

Jon Stewart, as always, hit the nail on the head:

The Daily Show - The Forecloser
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

A better question to be asking than "Why is the bond market thriving if our credit rating is impugned?" would be why is S & P still in business, rating anything, after willfully and apparently criminally committing fraud in their ratings, fraud that was directly part of the worst financial crisis in this century, the worst since the market crash of October 1929 (bonus points if you know the date of the month off the top of your head).  The 1929 market crash ALSO occurred in large part because of crooked dealing.

Republican Revenue Lies

The Republicans claim we have a spending problem, not a revenue problem.  That is a lie.  We have a revenue problem.  Sessions makes the misstatement, the LIE, about the revenue side of the problem, some 7 minutes + several seconds into the video clip.

Don't take my word for it; the CBO, the Congressional Budget Office says so,  by way of Bruce Bartlett; (bold face, my emphasis added - DG).

GOP's Fuzzy Math Misstates CBO Revenue Projections

By BRUCE BARTLETT, The Fiscal Times June 3, 2011
Debt Ceiling: Complete Coverage
With the House voting 318 to 97 earlier this week against raising the Treasury’s borrowing authority, every Republican and some Democrats were digging in their heels on the idea that trillions of dollars of spending cuts must accompany any rise in the debt limit. Although they repeatedly say that “everything is one the table,” Republicans quickly add that this does not include higher taxes.


Simple arithmetic, however, tells us that a budget deficit and the concomitant increase in debt can result from either higher spending or lower revenues. And indeed, lower revenues are responsible for about half the increase in debt since 2001, according to the Congressional Budget Office.
Since 2001, the national debt has increased $11.8 trillion. This resulted from a $6.2 trillion decline in revenues and a $5.7 trillion increase in spending. Of the revenue decline, $2.8 trillion resulted from legislated tax cuts and $3.4 trillion from economic and technical factors. On the spending side, almost all of the increase was legislated, with $2.4 trillion of it coming between 2001 and 2008.

Despite the significant contribution of tax cuts to the national debt, Republicans argue that higher revenues are off the table in the debt limit negotiations. In a May 16 floor speech, Sen. Jon Kyl (R-AZ), the assistant Senate minority leader, made this fact clear in no uncertain terms. Said Kyl, “When we are talking about how to get the budget better balanced, how to reduce our deficits, we should not be looking at the revenue side or the taxing side; we should be looking at the spending side.”


A key argument Kyl made is that it is unnecessary to raise revenues because they are already projected to rise substantially in coming years to their historical level of between 18 percent and 20 percent of the gross domestic product. As he explained:

“CBO figures demonstrate that under any of the budgets offered…we will be back to historic average levels of tax collections in just the next few years – something on the order of 20 percent of our gross domestic product. Revenues are not the problem. They are going to be back where they have always been.”

Indeed, if one looks at the latest CBO projections, Kyl is right. They show revenues rising from 14.8 percent of GDP this year – the lowest level since 1950 – to 16.3 percent next year, 18.8 percent in 2013 and about 20 percent of GDP thereafter.


What Kyl neglected to mention is that the CBO is required to assume that all laws presently on the books will be followed to the letter. Therefore, it assumes in its projections that all of the tax cuts set to expire at the end of 2011 and 2012 will lapse permanently and on schedule – no matter how obvious it is that they will be extended. For example, the research and experimentation tax credit will expire at the end of this year. But it has expired many times in the past and always been renewed. Although there is no doubt that it will be renewed again because it has strong bipartisan support, CBO’s baseline projections presume that the research tax credit will cease to exist for good after Dec. 31.


More importantly, the CBO assumes that all of the Bush tax cuts will expire at the end of next year. By 2014, the end of all expiring tax provisions will raise revenues by 3.8 percent of GDP. Therefore, virtually all of the revenue increase Sen. Kyl says will take place is the result of allowing current tax cuts to expire.


This would be okay if Kyl and the rest of his party were committed to allowing the Bush tax cuts to expire at the end of 2012 and not press for their extension or for additional tax cuts. But everyone knows that this will never happen. It is a 100 percent certainty that Republicans will demand that the Bush tax cuts be extended, just as they did when they were previously scheduled to expire at the end of 2010.

We can't afford to live in a Right Wing fantasy world - a scary place, dominated by conspiracy theories, out of touch with reality. It is not only a very ugly place, a bad place, it is dishonest. We need to balance our budgets realistically, including increasing revenues and decreasing tax expenditures such as the  bad subsidies, like those to big oil, and ethanol and other Big Ag, and to big finance such as billionaire hedge fund managers.

We have a revenue problem, and it is the result, in large part, of the Bush era tax cuts and the subsequent tax cuts forced on the country by the right, the ones which primarily benefit the wealthiest over the interests of the majority. The decline in revenue occurred BEFORE the financial crisis that began in 2007, which only exacerbated the problem. The right as always, pushes their Republican Math, which doesn't add up, pursuing the Grover Norquist ideology and right wing 'Ickonomics". The  facts be damned, if you're one of these Republicans, the greedy, corrupt kind.