William Greider and Bill Moyers

William Greider wrote one of my favorite economics-related books, Secrets of the Temple: How the Federal Reserve Runs the Country. I've never heard him speak before, so when I saw him on Bill Moyers' PBS show, I eagerly watched. Mr. Greider also has a blog:

http://www.thenation.com/blogs/notion/_by-greider

Here is his most salient post on our current economic mess:

http://www.thenation.com/blogs/notion/336722/wall_street_s_great_deflation

Mr. Greider isn't a charismatic speaker, so hearing him speak was a bit anti-climatic; however, I will look forward to more of his writing. Mr. Greider made it clear the problem cannot be blamed on any one party, and the absence of financial regulation has long been the province of both parties since 1980. He indicated that a Democratic Congress did away with usury laws, thereby paving the way for the current Wild West of Wall Street.

His most interesting point was this: usury laws have been around since the beginning of religion and were designed on the common sense notion that moneylenders have more power than the poor and must be regulated to avoid enslaving the poor through one-sided terms. He believes the current subprime mess is a modern-day form of usury.

Full transcript is below, courtesy of PBS:

http://www.pbs.org/moyers/journal/07182008/transcript2.html

Another blogger had an interesting take on usury from Adam Smith's perspective:

http://thinkingecon.blogspot.com/2008/04/adam-smith-and-counter-productive.html

Starbucks (SBUX) and the Economy

Starbucks (SBUX) published a list of stores it is closing across the United States. The WSJ published an interactive map of the store closings:

http://online.wsj.com/public/resources/documents/info-STARBUCKS_080718.html

PDF file of store closings here:

http://www.starbucks.com/aboutus/USStoreClosureInfo.pdf

I'm not a huge fan of Starbucks regular coffee (I prefer Peet's, especially the Guatemala blend), but it occurred to me that an economist or potential real estate buyer could use Starbuck's information to assess how well a local economy is doing. Starbucks would not be closing stores in a particular place if it believed growth was imminent.

Government's Role

A friend sent me a postcard that reminded her of me--it was very kind of her, and absolutely up my alley:

It is not the function of government to keep the citizen from falling into error; it is the function of the citizen to keep the government from falling into error. -- Justice Robert Jackson (Nuremberg Trial Judge)

The key point here is good governance is a two-way street. Citizens should be wary of government attempts to solve problems, because in the absence of omnipotence, unintended consequences will arise from government intervention. One recent example occurred around 1992, when Bill Clinton promised to limit CEO pay by placing a cap on salary deductions. Although it sought to limit CEO pay, Congress's one million dollar cap on the tax deductibility of salaries ended up with corporate boards increasing CEO pay to just under a million dollars. The result was that the middle class got their taxes hiked while the executives got more stock options.

Also, rarely does Congress pass a law with a view towards long term consequences. Such consequences could include the creation of a new enforcement agency (e.g. Homeland Security), more taxes diverted or raised to support the agency, and a broadening of power. Given this natural predilection to increase rather than decrease jurisdiction and scope, most laws ought to have sunset provisions that subject them to more debate down the line about whether they are still necessary. The way Congress currently passes most laws and regulations, they stay on the books forever and spawn new enforcement measures, whether they are necessary or not.

Wall Street Finally Calls a Bottom on Banking...5 days after I did

As readers know, I correctly called a short-term bottom in banking and was one of the few people to do so in the country. See July 14, 2008 post: "I am calling a bottom in well-capitalized regional bank stocks."

http://willworkforjustice.blogspot.com/2008/07/colonial-bancgroup-cnb.html

And here:

http://seekingalpha.com/article/84988-well-capitalized-regional-banks-the-bottom-is-in

Now, after most bank stocks have jumped 20 to 50 percent, Wall Street deigns to tell the masses the bottom is in:

http://bigpicture.typepad.com/comments/2008/07/its-unanimous-b.html

It just goes to show you don't need specialized training to correctly pick stocks. Peter Lynch and Warren Buffett made billions picking stocks at the right time. The best skill as a stock picker isn't being able to discern a company's future cash flow prospects, but to know when to buy a stock. It took me over ten years to get some intuition on the market. Timing beats good research--as we've just seen.

Choose Life. Choose a job. Choose your future.

Paul Kedrosky (from http://paul.kedrosky.com/) cited Sterling Hayden's Wanderer in his blog recently:

Little has been said or written about the ways a man may blast himself free. Why? I don't know, unless the answer lies in our diseased values. A man seldom hesitates to describe his work; he gladly divulges the privacies of alleged sexual conquests. But ask him how much he has in the bank and he recoils into a shocked and stubborn silence.

"I've always wanted to sail to the South Seas, but I can't afford it." What these men can't afford is not to go. They are enmeshed in the cancerous discipline of "security." And in the worship of security we fling our lives beneath the wheels of routine---and before we know it our lives are gone.

What does a man need---really need? A few pounds of food each day, heat and shelter, six feet to lie down in---and some form of working activity that will yield a sense of accomplishment. That's all---in the material sense. And we know it. But we are brainwashed by our economic system until we end up beneath a pyramid of time payments, mortgages, preposterous gadgetry, playthings that divert our attention from the sheer idiocy of the charade.

The years thunder by. The dreams of youth grow dim where they lie caked in dust on the shelves of patience. Before we know it, the tomb is sealed.

Where, then, lies the answer? In choice. Which shall it be: bankruptcy of purse or bankruptcy of life?

Here's the direct link to Paul:
http://paul.kedrosky.com/archives/2008/07/16/words_to_live_b.html

It sounds a bit Communist in places ("brainwashed by our economic system"), but the overriding idea is true: when we remind ourselves what's really important in our lives, money won't be at the very top of our list.

In case you didn't recognize the title of this post, it's from Trainspotting, a film about the horrors of drug addiction (far better than any "Just Say No" government campaign). The addict in the film, Renton, has a less eloquent way of bashing an existence based on materialism. I've edited the curse words from his monologue after a reader complained. If you are interested in the full version, check out the video link below.

Choose Life. Choose a job. Choose a career. Choose a family. Choose a big television, choose washing machines, cars, compact disc players and electrical tin openers. Choose good health, low cholesterol, and dental insurance. Choose fixed interest mortgage repayments. Choose a starter home. Choose your friends. Choose leisurewear and matching luggage. Choose a three-piece suite on hire purchase in a range of f*cking fabrics. Choose DIY and wondering who you are on a Sunday morning. Choose sitting on that couch watching mind-numbing, spirit-crushing game shows, stuffing junk food into your mouth. Choose rotting away at the end of it all, pishing your last in a miserable home, nothing more than an embarrassment to the selfish brats you spawned to replace yourself.

Choose your future.

Choose life.

http://www.youtube.com/watch?v=T3g9nTOV9KM

(Link above may not work after a while, but you can do a search using "Trainspotting Intro" to get a fresh link.)

Renton, as film-lovers know, chose heroin, making the materialistic existence he refers to above seem better to him. Ironically, his jaded view of "life" drew him to heroin, and had he been more materialistic, he might have been better off.

Icahn's Board has Mark Cuban!

Carl Icahn's proposed Directors slate includes none other than Mr. Cuban. I am excited! I previously wrote about how Mr. Cuban had his eye on the ball:

http://willworkforjustice.blogspot.com/2008/05/mark-cuban-on-ceo-pay.html

What will happen if Mr. Cuban gets elected? Will he subject Jerry Yang to public criticism on a daily basis? Will he make Susan Decker work in a Dairy Queen for a day? With no commissioner to rein him in, this could be the beginning of a fun period at Yahoo...

I just realized Cuban might be at this year's shareholder meeting. I might wear my old Mav's Michael Finley jersey. "Fin" seems like one of the league's classiest players. He also majored in business management at University of Wisconsin.

Joe Nocera Has a Blog

Barry Ritholtz pointed his readers to a new business blog that looks promising:

http://executivesuite.blogs.nytimes.com/

Joe Nocera is a business writer for the NY Times. Of course, his blog is not as good as Barry's, at least not yet:

http://bigpicture.typepad.com/

If you read one economics-related blog, read Barry's "The Big Picture."