If you wend your mind back to the ancient Halcyon days of August, you might remember that the American Newspaper industry was in a tailspin, and people assumed it would collapse within a few years. As a thought-experiment, consider the likelihood that a moderate recession is being spun into a full-fledged depression by negativistic Newspapermen? What kind of logic trusts people in a vanishing industry to report on the state of the country?

Samuelson, Summers, and other made men

Obama's staffing choices to deal with the current market failure are part of the academic mafia that monopolized economic credentials to prevent the emergence a viable critique of the Efficient Market Hypothesis until quite recently. If you doubt this, check up on Samuelson's war on the Kelley criterion -- it violated his theological precepts, leading to outsized profits for trading companies that eschewed a Harvard pedigree.

Rethinking Universities, Part 2

And what if the wild inflation of academic salaries were caused by the same expansion of credit that caused the housing bubble? Will the tuition bubble be the next to burst, or will Washington accept outsized professorial compensation as a given, and increase federal programs to subsidize it at current levels?

The real reason that our economy will collapse is not because the middle class will start saving, but rather -- in instinctive self-preservation -- the ultra-rich will avoid conspicuous consumption to dodge the political consequences of calling attention to the their ill-gotten wealth.

Bismark was right. There is nothing better than owning trees.

So, with real estate prices returning to historically normal levels, the ratio between the cost of, say, a restaurant meal and and the cost of an acre of land in Alabama has doubled, so the relative value of money, judged against major purchases is a cause of consumer deflation.

It's not the dirt you see!

Madoff's fifty billion dollar loss will ultimately cost the United States more than a trillion dollars, by decreasing international faith in our markets.

There is something touching when I read plans for the stimulus package:

a) improve the transportation infrastructure
b) improve the educational system
c) build a solid export driven economy
d) develop new technologies
e) reform the financial system

It is a one-size fits all wish list -- every place on earth would be delighted to receive it for Christmas, so I have to wonder why the Chinese would lend us the money for a systematic transformation of our society rather than, say, spending it to systematically transform their own? Or Indonesia, for that matter?

And how do Romanians feel when they read about these wish-lists? Why doesn't the world economy lend them a trillion dollars? The stock answer is that America is more trustworthy and has a mature financial system, but reforming our financial system will surely be more expensive than building one from scratch.

Maybe the stock market is being supported by the idea that Obama is a magic negro? It is easy to see Barack as the deus ex machina who will liberate us from economics, politics and history -- because the writers weren't paying attention and now there is no other way to provide a happy ending.

Another argument against Government backed mortgage securities

And the latest wrinkle in the housing crisis is that almost all of America's housing stock will need to be torn down in the next twenty years.

Since our political system requires money to operate, political success is predicated on appealing to people with money.

What is the difference between the two parties?

The Democrats want to kick the ladder away, while the Republicans want to grease the ladder to make it harder to climb.

Democrats are the party of inherited wealth, and they promote a static society which preserves the advantages of money and the education that was bought with that money;

Republicans are the party of corporate wealth, and they promote a static society which preserves the advantages of whatever economic conjuncture has conferred advantages on whichever group is currently buying the Republican Party;

Libertarians underestimate the need for a strong central government to prevent the monopolies, oligopolies, and oligarchies that undermine the libertarian ideal, and that the swiftest will be outnumbered by the very fast, so allowing the swiftest to win every race is political suicide.

Socialists don't get that humans like to organize themselves in packs of around sixty or eighty, and that a socialist government usually trades the corruption of an oligopoly for the inefficiencies of a monopoly.

So now they are finding a biological basis for deconstruction and dialectics.

CDSes on Treasuries have quintupled in cost, but -- as any student of political science would tell you -- the United States Government could not default on its debt without overturning Marbury versus Madison. That is to say, that even as interest rates are falling, the CDS markets are suggesting a bimodal distribution where the most likely outcome is grinding dull penury, but the possibility of a wild constitutional collapse is skyrocketing.

The Dialectic in Action!

Could the destabilizing excesses of the past two decades only have been possible because of the collapse of world socialism? Did the existence of a flawed competition is curb the essential nature of capitalism? If this financial crisis had happened during the cold war, the people who destroyed our economy would have been guilty of treason, and deserving the death penalty.

Change from the inside?

It is unsurprising that the people who have benefited from "the system" do everything in their power to preserve "the system". The structural mistake of the last century was to consolidate economic power in a few corporate institutions and then staff the upper levels of those institutions with products of a tiny number of educational institutions. This created a level of centralization where an intellectual error among a small cadre of individuals at the top of the pyramid would have ramifications to the entire base. Add the fact that once power was centralized into organizations with enormous social clout, those organizations would inevitably use their social position to enhance their power. However -- as a question of history -- those institutions are trying to collapse in order to prepare the way for something new, but the government intervention is simply preserving inefficient mechanisms for operating in the economy.

The problem is a consequence of centralization, and the collapse of the current system leads to an obvious solution: nationalize the banks and re-privatize them as collections of much smaller financial institutions, to create the natural benefits of a market that represents the broad diversity of human nature rather than one dominated by a few hundred Ivy League alums with outsized senses of entitlement. However, our entire civilization rewards those at the pinnacle of the pyramid, and there is a strong disincentive for the people at the top to rethink the structure of an economy that has been so "berry berry good" to them. Consequently, the bailout money is used to further consolidate economic power inside a few institutions rather than rethink the structure that created this.

But don't get me started on the idea that the systemic collapse brought about by regulatory advantages that Ivy Leaguers were able to weasel from their former classmates in their quest to increase their power is somehow proof that we need more regulation. The only law we need is the Sherman act -- allowing multiple institutions creates more diversification in the economy, and "spreads the wealth around" rather than concentrating it in the hands of the super-rich.

With Obama's policy of saying yes to everybody, our future is a basketball, and Obama is trying to make a basket from half-court. So much has to line up perfectly for the combination of bank bailouts, corporate bailouts, massive infrastructure spending and trillion dollar deficits to succeed. Obama's desire to "jolt" the economy back into health is telling: the economy probably wants some bedrest, and extra activity after out bedtime will only prolong our recovery.

It is clear why the Chinese would lend us money to do genuinely stupid things -- to fight wars that alienate us all of over the world, or even a bailout plan that preserves paper profits on their bond portfolio while ultimately burdening the American economy with obligations that will deprive any incipient recovery of necessary oxygen -- but why would they sponsor American investment in infrastructure and education, and might pose a threat to China's plans for Millenial hegemony?

This looks like good news, but watch for the symmetric study showing the contagiousness of gloom, with the implicit prescription of socially isolating the already socially isolated.

The idea of concentration camps was simply to concentrate undesirable elements and prevent them from contaminating the others. Will it be a matter of public health to set up concentration camps for the mentally ill? The standard for commitment is that a person is a "danger to himself or to others", and these epidemiological studies will, in fact, show that a bad mood is a danger to others.