More Elitists via Venn Diagrams

I have posted once before the relationship between government and key Goldman Sachs employees, via Venn diagrams. Here is that diagram again, along with diagrams for top GE and Monasnato employees and their cozy relationships with government. (htGaryChartier)

The Elitists Behind the Internet-Based Effort to Shake Up Presidential Politics

Earlier this week in a post titled, Have the Rothschilds Placed Their Presidential Bet?, I reported that Lynn Forester de Rothschild was out with a column hinting at a potential victory for a third-party candidate. In her column, she wrote:

A not-for-profit organization, called Americans Elect is establishing ballot access in all 50 states for the candidates for president and vice president in 2012 who will be nominated directly by the people in an online nominating process. The sophisticated website of Americans Elect allows registered voters a revolutionary new way to nominate a bipartisan ticket to occupy the White House. To date, the website has over 300,000 delegates, more than 50 times the number that participate in both the Democratic and Republican Party conventions (in full disclosure, I sit on the Leadership Board for Americans Elect).

Salon's Justin Elliott has dug deeper into Americans Elect to see who else might be involved in Americans Elect besides a Rothschild. He found it is a bunch of elitists, Northeeast Corridor riders. Elliott writes:

There’s an increasing amount of buzz around Americans Elect, a peculiar Internet-based effort to shake up presidential politics. But dig a bit beneath the surface and there’s reason to be deeply skeptical of the endeavor.

The basic pitch of Americans Elect goes like this: We’ll go through the expensive and time-consuming process of getting ballot access in all 50 states. Then we’ll hold an online convention in June in which any registered voter can participate. Participants will nominate a presidential ticket including one Democrat and one Republican who will then enter the general election fray.

Here’s what the group is not so upfront about: It’s fueled by millions of dollars of secret money, there is a group of wealthy, well-connected board members who have control over Americans Elect’s nominating process, and the group has myriad links to Wall Street...

The group is hoping to raise $30 million for its effort. It has already raised an impressive $22 million as of last month. So where is all that money coming from? Americans Elect won’t say. In fact, the group changed how it is organized under the tax code last year in order to shield the identity of donors. It is now a 501(c)(4) “social welfare” group whose contributors are not reported publicly.

What we do know about the donors, largely through news reports citing anonymous sources, suggests they are a handful of super-rich Americans who made fortunes in the finance industry...

Americans Elect officials often tout their “revolutionary” online nominating convention, which will be open to any registered voter. But there’s a big catch. Any ticket picked by participants will have to be approved by a Candidate Certification Committee, according to the group’s bylaws.

Among other things this committee will need to certify a “balanced ticket obligation” – that the ticket consists of persons who are “responsive to the vast majority of citizens while remaining independent of special interests and the partisan interests of either major political party,” according to the current draft of Americans Elect rules. Making these sorts of assessments is, of course, purely subjective.

And who appoints the members of the Candidate Certification Committee? The board members of Americans Elect.

So who is on the Americans Elect board, and where is the money coming from?

Thomas Friedman reported over the summer that the group is “financed with some serious hedge-fund money,” which has paid for, among other things, prime office space in New York and Washington. A spokeswoman for the group did not respond to a request for comment about Friedman’s report.

At one point over the summer, the group was claiming that none of its funding comes from “special interests” – a difficult-to-define term that, if it has any meaning at all, would have to include the hedge fund industry.

We do know that Peter Ackerman, chairman of the board of Americans Elect, has given over a million dollars to the group. A wealthy investment banker, he has been a donor to both President Obama and Republicans over the years. He was also on the board of the [Koch funded] CATO Institute’s Social Security Choice project, which advocated for a Bush-style scheme to dismantle and privatize social security.

According to the Guardian, other funders include Melvin Andrews of Lakeside Capital Partners and Kirk Rostron of an investment firm called the Mt. Vernon Group. Rostron formerly worked as a director at Merrill Lynch’s hedge fund group. Another reported funder is Jim Holbrook, chairman of the Promotion Marketing Association, the trade association for the marketing industry.

And the list of political operatives who have signed on to the effort – including former McCain aide Mark McKinnon, Will Marshall of the Progressive Policy Institute, former New Jersey governor Christine Todd Whitman, and Bloomberg pollster Douglas Schoen – suggest the group will promote a kind of pro-establishment, “why can’t we just all get along by agreeing to dismantle Social Security”-style centrism.

Bottom line, this is a clever operation by the Northeast Corridor riders to co-opt the up and coming political internet movement. It's not about change, it's about those who want change being directed right into the Establishment hands who don't want chnage.

Walking in the Cinders of Ayn Rand

There's a funny musical video now circulating (see below) on the internet that was originally published in December 2008. Both the Big Picture and Naked Capitalist have posted it. It's about Alan Greenspan, as Fed chairman and his relationship with Ayn Rand.

Unfortunately, the production mis-states a few facts. It charges Greenspan with being for self-regulation, against government oversight and a libertarian. This is an absurd case to make since Greenspan was head of the Federal Reserve, which is all about government mass manipulation of the economy. This is about as far as you can get from government non-interference.

Barbara Walters, who was dating Alan Greenspan when he took the position as Fed chairman got this. In her book, Audition, she writes:

How Alan Greenspan, a man who believed in the philosophy of little government interference and few rules or regulations, could end up becoming chairman of the greatest regulatory agency in the country is beyond me. It was a big issue when Alan was first appointed...

Greenspan  has never been noyhing but a tool of the interventionist establishment elitists. This becomes clear from an understanding of who Greenspan's "friends" really were.

He writes in his memoir, The Age of Turbulence:

Even so, I did build up a wonderful circle of friends, Barbara [Walters] threw me a fiftieth birthday party. The guests were people I'd come to think of as my New York friends: Henry and Nancy Kissinger, Oscar a, Henry and Louise Grunwald and David nd Annette de la Renta, Felix and LIz Rohatyn, Punh and Carol Sulzberg Henry and Louise Grunwald and David Rockefeller. I am still friendly with many of these people today,more than thirty years later.

Rockefeller, Rohatyn, Sulzberg? How much more establishment can you get?

Murray Rothbard was unlikley to have known who Greenspan had as his "NYC friends", but as usual Rothbard instincts were right on. In 1987, he wrote:

Greenspan’s real qualification is that he can be trusted never to rock the establishment’s boat. He has long positioned himself in the very middle of the economic spectrum.

As for the Greenspan relationship with Rand and what that meant for Greenspan in terms of realeconomik, Rothbard had that nailed also:

There is one thing, however, that makes Greenspan unique, and that sets him off from his Establishment buddies. And that is that he is a follower of Ayn Rand, and therefore “philosophically” believes in laissez-faire and even the gold standard. But as the New York Times and other important media hastened to assure us, Alan only believes in laissez-faire “on the high philosophical level.” In practice, in the policies he advocates, he is a centrist like everyone else because he is a “pragmatist.”

As an alleged “laissez-faire pragmatist,” at no time in his prominent twenty-year career in politics has he ever advocated anything that even remotely smacks of laissez-faire, or even any approach toward it. For Greenspan, laissez-faire is not a lodestar, a standard, and a guide by which to set one’s course; instead, it is simply a curiosity kept in the closet, totally divorced from his concrete policy conclusions.

Thus, Greenspan is only in favor of the gold standard if all conditions are right: if the budget is balanced, trade is free, inflation is licked, everyone has the right philosophy, etc. In the same way, he might say he only favors free trade if all conditions are right: if the budget is balanced, unions are weak, we have a gold standard, the right philosophy, etc. In short, never are one’s “high philosophical principles” applied to one’s actions. It becomes almost piquant for the Establishment to have this man in its camp.

How Treasury Secretary Geithner Deals with Traffic Jams

Martin Crustinger of AP has a solid story on the opulent way Treasury Secretary Geithner has been traveling in Europe during his recent meetings with European Union officials.

But what really caught my eye is how the Geithner motorcade deals with traffic jams:

To meet with national leaders and financial officials in five cities in three countries in three days, you need a little help getting around. That's where a police-escorted motorcade comes in handy.

Geithner's caravan of limousines and vans for staff and reporters drew police escorts in each city he visited.

It all worked well until Geithner's entourage hit Marseilles right at rush hour. The road from the airport to a downtown hotel where Geithner was meeting Spanish Prime Minister-elect Mariano Rajoy Brey was jammed.

Still, not to worry. The motorcycle escorts simply squeezed between the two lanes of cars headed into town. The cars were forced to both sides of the road, clearing a path in the middle for the motorcade.

I think I may try this in DC. Any interns out there willing to hop on motorcycles to clear a path for me?

Jon Corzine's Relationship with CFTC Chair Gary Gensler Probed

This is from Matt Taibbi, who could screw up a report of the Second Coming, even if it happened right in front of him, so with that caution, I report what he thinks he has:

Getting a lot of calls about Jon Corzine [of MF Global] and his relationship with Commodity Futures Trading Commission (CFTC) chairman Gary Gensler.

Both Corzine and Gensler worked at Goldman back in the day, and the word is that Corzine personally lobbied Gensler to delay the implementation of new rules that would have helped prevent Corzine from raiding his own clients' funds.

This whole issue smacks of the improper communications between other former Wall Street co-workers like Hank Paulson and Lloyd Blankfein. More and more, it appears that, as a matter of routine, federal regulators like Paulson (in 2008) and, later, Gensler reach out to old friends on Wall Street to negotiate/discuss the timing and the form of various policy changes, bailouts, and other regulatory matters.

Bottom line: If you create power centers (like the CFTC)the unscrupulous will attempt to influence the power centers. Bernie Madoff was close to the SEC and now this possible Corzine relationship with Gensler.

Even Taibbi seems to get the problem with power centers:

This is one of those issues where there's no point in calling for more regulations. No matter what laws we have, we can't have regulatory heads breezily chatting about their enforcement plans with former co-workers who have huge financial interests resting upon their decisions

BTW, Goldman recruited Gensler hard, when he was getting his MBA at Wharton. Back in 2009, I reported:

A friend who attended Wharton with Gensler tells me he was the smartest student in the class. When Goldman visited the campus the year Gensler graduated, Gensler was the only student that they wanted to talk to.

America's New Untouchables

By Justin Raimondo

The Supreme Court has agreed to hear a case brought by Steven Howards, a Colorado man arrested by Secret Service agents when he confronted then-Vice President Dick Cheney at a shopping mall and told him he thought the Iraq war was “disgusting.” Howards happened to be in the mall when he noticed Cheney was there, signing books and posing for photographs with mall-goers: he phoned a friend and told him he was going to wait on line for a chance to pose with the Vice President and then tell him what he thought of the war: “I’m going to ask him [Cheney] how many kids he’s killed today.”

A Secret Service agent overheard him and put out an alert to watch for the man in the green t-shirt. Howards got in line, waited for his turn to pose with Cheney, and when it was his turn he delivered his message, to which Cheney replied, rather stupidly: “Thank you.”

What happened next is in dispute: the Secret Service claims he “pushed off” and even “slapped” the VP: Howards says he was merely patting the war criminal on the shoulder. In any case, Howards at first denied touching Cheney at all, later admitting he might have had a brief contact – and this was the pretext for his arrest. The agents followed Howards as he was looking for his son in the mall, and confronted him, as the Christian Science Monitor reports:

“Agent Virgil Reichle flashed his badge and asked to speak with Howards. Howards refused and attempted to resume the search for his son.

“The agent stepped in front of Howards and accused him of assaulting the vice president.

“Howards pointed his finger at Agent Reichle and said: “If you don’t want other people sharing their opinions, you should have him [Cheney] avoid public places.”

“According to the appeals court: “Agent Reichle became ‘visibly angry’ when Mr. Howards shared his opinion on the Iraq war.”

“The agent asked Howards if he ‘assaulted’ the vice president. Howards denied assaulting the vice president.

“The agent next asked whether Howards ‘touched’ the vice president. Howards, again, denied the agent’s accusation.

“Howards was taken into federal custody for assaulting Cheney. According to the appeals court, four agents ‘assisted in restraining Mr. Howards during his arrest.’”

Read the rest here.

Mankiw: I Follow Keynes and Friedman, and Am Clueless About the Business Cycle

In a comment at NYT, on the 'Occupy Wall Street' students who recently en masse walked out of his Economics 10 class in protest of what he was teaching, Greg Mankiw writes:

The course I teach is a broad survey of mainstream economics. It includes ideas of many greats in the field, like Adam Smith, David Ricardo, Arthur Pigou, John Maynard Keynes and Milton Friedman.

He then follows up with:

That is not to say that economists understand everything. The recent financial crisis, economic downturn and meager recovery are vivid reminders that we still have much to learn.

Uh, duh.Wouldn't it help in understanding financial crises if Mankiw included in his course the teachings of Ludwig von Mises and F.A. Hayek, who developed a theory of the business cycle and whose students were at the forefront in warning about the developing financial crisis?

There is one correct point, though, that Mankiw does make in his columnt:

I applaud the protesters for thinking beyond their own parochial concerns and trying to make society a better place for everyone.

But my second reaction was sadness at how poorly informed the Harvard protesters seemed to be. As with much of the Occupy movement across the country, their complaints seemed to me to be a grab bag of anti-establishment platitudes without much hard-headed analysis or clear policy prescriptions.

This is true. The protesters, for the most part, seem poorly informed. They should have walked out of Mankiw's class because he teaches a course that is nothing but a course in mainstream propaganda. His course apologizes for government interventions in the economy that perpetuate crisis and distortions, and at the same time the course shoves down the black hole the one group of economists, the Austrian school, who tell theory like it is and are not afraid to stand up to the elitist powers that be. That is a really damn good reason to walkout of Mankiw's class and never come back.

Finally, Some Useful Information from an Econometrician: A Tip on How to Beat the College SATs

....but it doesn't have anything to do with economics.

In a profile on recent Nobel Prize winners Thomas J. Sargent and Christopher A. Sims, NYT shows they are pretty confused about economics:

Mr. Sims and Mr. Sargent neither prescribe cures nor forecast the future. Nor do they deal in the sound bites of talking heads on cable TV. They are reluctant celebrities, men whose work can baffle even Ph.D.’s.

So it comes as a surprise, not least to Mr. Sims and Mr. Sargent, that these two now find themselves thrust into an uncomfortable spotlight. Conservative voices, like the editorial page of The Wall Street Journal, have claimed them as their own. The men’s work on economic cause and effect and the theory of rational expectations — which maintains that people use all the information available in making economic decisions — proves that Keynes had it wrong, these commentators say.

It would be a provocative thesis — if it were true. But Mr. Sims and Mr. Sargent say their work is being misread. Both, in fact, are longtime Democrats who maintain that government can, and should, play a role in economic affairs. They stand behind many recent policies of the Obama administration and the Federal Reserve...

They won their Nobel for “their empirical research on cause and effect in the macroeconomy,” in the academy’s words. What that means, in part, is that they have done some serious math

Since there are no constants in the field of human action (which includes mathematics) there is no correct "empirical research on cause and effect in the macroeconomy" that can be conducted.

As Ludwig von Mises put it:

Every quantity that we can observe is a historical event, a fact which cannot be fully described without specifying the time and geographical point. The econometrician is unable to disprove this fact, which cuts the ground from under his reasoning. He cannot help admitting that there are no behavior constants.

But, their mathematical work can be of value in relatively static environments, card counting in blackjack comes to mind, or in static creations such as SAT tests. And here Sims shines and becomes of value to any college student who has to suffer through the test. Because of his elitist connection and his skill in math, we learn:

His [Sims']parents were exceptional, too. His father, Albert, was a diplomat, and young Chris lived in Germany a few years as a child. The family later moved to the Washington suburbs before settling in Greenwich. His father became an executive at the Institute of International Education and at the College Entrance Examination Board in New York. During the Kennedy administration, he helped start the Peace Corps

Because of his father’s College Board connections, Mr. Sims got hold of an old SAT exam, which he and Mr. Willoughby used to conduct a statistical analysis. They found that on multiple-choice questions in English and social studies, the “longer answers tended to be correct.” In math, they determined that the number that was “closest to all of the other numerical choices” was probably the right one. Willoughby says Mr. Sims got perfect scores on SATs...

.

The Political and Bureaucratic Elites Don't Get It

The elite will ultimately fail because they don't understand basic economics.

FT's Tony Barber observes:

One reason why the eurozone is sliding into ever deeper trouble is because its political and bureaucratic elites do not like, do not understand and have no wish to understand financial markets. This is an attitude embedded in European history and culture. Think of the 1793 Law of the General Maximum, an arbitrary attempt to fix prices at the height of the French Revolution. Or think of the social status attached for the past 150 years to being a state-employed soldier, teacher, office clerk or railway worker rather than a banker in Germany.

Since the world financial crisis started in summer 2007, the European Union’s authorities have tried to pin all the blame on “the markets” - often a codeword for the US and Britain, or at least their financial sectors. No one doubts that subprime mortgages, exotic financial instruments, reckless risk-taking and the like caused the trouble - but the EU took matters further. First, they said it was the fault of the hedge funds - all evidence to the contrary. Then the EU fired its popguns at sovereign wealth funds - although what they had to do with the crisis was a mystery to everyone outside Europe. Now it’s the turn of the reviled credit ratings agencies....Now there is talk - not for the first time in recent years - of setting up a European credit ratings agency. Chancellor Angela Merkel of Germany favours the proposal, as does Michel Barnier, the EU internal markets commissioner. The idea is to ensure that sovereign debt is “appropriately rated”.

Well, here we go again - it’s the same old hostility to the markets. Don’t Europe’s leaders get it? If a European credit ratings agency is established and there is even a hint that its decisions are influenced by political pressures, it won’t possess and it won’t deserve the slightest respect in the real world of real investors who handle real people’s money - yours and mine.

The elite create structures, including the EU and the Federal Reserve Bank, that have failure built into them. These constructs are no safer from collapse than the old Soviet Union was. We are seeing the collapse of the EU in front of our eyes.

Here's how the Federal Reserve will collapse.

The Fed was set up as an attempt to circumvent real money, such as gold. The banksters idea was to be able to print money at will and when things get out of hand to pull back a bit.

The plan is ultimately set up for failure because when the bankster tools at the Federal Reserve try to tighten the reigns, the system begins to collapse and government deficits skyrocket. The Fed then steps in to buy up the government debt. And so, while the Fed will talk a good game, they will ultimately print money to protect the elitist regime.

Fritz Machlup observed this elitist problem during the Great Depression:

...should..... bank deposits begin to rise, then the only available offset would be an open
market policy of the Federal Reserve banks which would endeavor to
reduce bank resources through selling securities from the Federal Re-
serve portfolio. Credit control in the discussed sense works therefore
only if the Federal Reserve banks do not buy any government bonds,
because this would increase excess reserves of member banks, and if
the Federal Reserve banks are prepared to start a sale of government
bonds at any moment that it should become neces ary.

What are the Federal Reserve banks doing instead? They are not
preparing for a sale, but showing readiness to purchase government
bonds in order to support the market for these bonds, the market for
new bonds which the government issues in order to finance its budget
deficit. As long as the government has a budget deficit and as long as
the Federal Reserve banks have to support the price of bonds by pur-
chases, no control can be effective. Thus, even if we know how we
might do something toward controlling the boom, we are not able to
apply our knowledge at the time being

In the current cycle, the government has attempted to prop up the collapsing distorted economic structure of the elites by (surprise) pumping money into the elite banks. This is just step one.

The huge deficits in the United States of  many cities, states and the federal government are the next problem on the horizon. Patch jobs will be tried here in the U.S., as they are being tried in Europe, but ultimately it will come down to, as it did during the Great Depression, the Federal Reserve buying debt, huge, huge mounds of debt.

The problem is that this time the debt overhang in the U.S. is so great that to absorb it the Federal Reserve will likely destroy the dolla,r because it will print so many of them to support the elitist structure.

Keep in mind that the Social Security Trust Fund just became a net seller of Treasury debt. Every year it will be selling more and more Treasury securities to meet retirement obligations. For all practical purposes, it will be competing with the Treasury to sell the stuff.

Times are changin'. It used to be that the SS Trust Fund BOUGHT 25% of all Treasury debt issued in a given year.

On top of the SS problem, we have wars that suck up billions upon billions. And in the White House, I am convinced we have a man who when he first heard the words "supply and demand" thought it was some kind of whitey rock group and never looked further into the matter, at least it appears that way, given his healthcare plan, his bailouts, etc. They all ignore basic economics and will add even more to the deficit.

This will all result on huge pressures on the Fed to inflate and, again, bailout the bankster elite who hold much of the debt. The Fed will respond by doing as pressured and buy and buy debt. At some point, the dollar will collapse on international markets and inflation will gallop. At that time, the masses will vaguely recall from the back of their heads some guy who warned about all this in a book called End the Fed, and they will put an end to the Fed quicker than you can say "the collapse of Keynesian economics."