i face a steady choice here
play mephisto or merlin 

today its merlin



my good guy baby face side has a suggestion on the  good bank bad bank front



lets hack these hybrids apart where they came together in the 90's

lets saw off the depository systems from the loan operations

create

good depository banks and bad loaner  banks

ie do again what we did in the fdr era only better



spin out the depository hunks of these recently merged freak lab goliaths



the part that ran our vast depository /payment network in america

but now reborn as just that alone …a pure payment and depsitory type outfit

no loans



these reborn pure depository outfits could grow to even bigger proportions without much trouble

i could imagine them  sucking in by price competition all of our nations deposits

and quite easily —-exacting only very trivial transaction charges—

paying for the systems themselves and on top of that

pay depositors  higher then inflation rates on balances

yup

kicker

only these outfits would be federally insured



much as now with the gse 's fanny and freddie few is beautiful

3 or 4 federally backed agglomerations could provide the services and

generate enough internal gains from  comparative efficiency

to pay incentives to ”mangement teams ” that first discover those efficiencies…etc etc



the old commercial banks used a one trick pony act

to attract deposits but its quite a pony trick

commercial banks and similar depository “institutions” 

thrived thanks to the magic of fractional cash reserves

they could loan long and borrow short and still as whole system at least

keep it up indefinately …errrr so long as uncle sugar  stood ready to cover any necessary cash calls

on the system as a whole ie net society wide moves from demand deposits to cash

they played the rate arbitrage game between on the one hand the low cost of borrowed funds

that demand deposits which stay so near cash pay given their near zero liquidity premium 

and on the other hand  long loans with a necessarily higher liquidity premium

in the past commercial banks after paying their staff and covering the costs of their payment network

used their wonderfully thin layer of equity as a great sump for any net returns err firm profits



obviously we need to s nix that business model eh



on basic principles why mix a decent social service with cheese ball usury if we don't need to



these reborn pure depository outfits could grow to ever bigger proportions

and without much trouble …i could imagine three holding all of our nationally held deposits

and quite easily 

and by only charging very trivial transaction fees

yes dorothy oz has ia banking system

that'll pay for itself and keep all us depositors even with any price level changes

and never risk a dime of anyones money 



biggness a problem ?? simple answer  no

it would operate much as now the gse 's fanny and fred 

given the task of handling our house mortgages could handle them all

and operate smoothly and seemlessly …err not like the postal service amtrack etc

that have legal monopolies (lysander i'm with ya )



i believe the analogous institutional record shows 3 or 4 such agglomerations

could provide enough internal gains from  comparative efficiency gains

to pay incentives to ”mangement teams ” to discover those efficiencies…etc etc

so long as we don't repeat the disaster of allowing the pseudo privatization

like the f twins went thru no  thin layer of private equity

it'll only get used  as a great leverage attractor and arbitrage sump

mischief rises from here obviously

Toward a peoples fed



Note well the asset deflation needs to hit

Product prices to be a full fisher dive so long as product prices and wages—naturally— continue at level or better….

In this light one has to laugh at those raising. Inflation fears

Product wages or lots gents which fear-eth u?

Relief department

subject

Household mortgages

There are about
ten trillion in principal valuoutstanding. On america's home mortgages

I figure Interest payments at a high 7 percent would be
Around 700 billion per annum around 5 percent

Of gdp

Now obs 50 billion plan to modifying the principal on some fragment
—

Maybe 3-4 percent—

of these outstanding loans

Allegedly an estmate of the default flow up aheadmaybe uncle

Would serve us all better

If he makes it go a lot deeper into the troubled waters by

Paying 1/3 of the due damage for a year…on….what… ??

20 percent of all outstanding mortgages

Much closer to the total

underwater mortgages out there

Right now

But why not think bigger
And pull. Off a massive re fi

The federal land bank

The household mortgage
Total is around ten trillion dollars

The interest payments must be under 700 billion

But what if there was a holiday for interest payments

Presenting

the Federal land bank

A gubmint bank that loans money
Equal to one hundred percent of lot value of a primary residence

—- when owner carry costs / rental ratios renormalize. We'll need a housing credit

For renters too but that's another post——-

The key meme here is
lot value not house value

No reason for uncle to get into the house loan biz

Anymore then auto loans

Or domestic robot loans

See a mortgage on the full
Value of a lot

Amounts to capturing the present value of that lots

Estimated

Stream of ground rents

In other words the value of a certain chunk of land

Independent of what's

Built on it

but not

— notice I say not— independent of what governing zone codes Allow to be built on it

Now uncle can borrow for free so he can loan for. Free to
So a zero intro rate teeser oughta snag just about everyone borrowing on their homestead right

Now this would put private lenders eclusively in the

Comparatively Safe biz of house loans

Posted by pinky at 10:58 PM

do u feel like the second shoe don't wanna drop ??
are u up nites wondering where's the final splatter ??

whats kept us suspended here betwixt the devil and the deep blue sea ???

well fans they call em built in stabilizers and they are what's left of the post Great Depression economic structure

these critters increase when all else decreases and decreases when all else increases

and by doing so tweak the market systems inherent dynamics …

buffer and boost in turn both tame the lion and embolden the lamb



and in graver times times like these even in their weakened condition

they may keep collapse at bay

and soften the landing



automatic is the key word here without any discretionary act

a visible modifiable formulaic predictable uber hand





but there's a fearful symmetry here

over all

built in stabilizers

 — at least to the extent their realization
fits their name anyway—-

 not only take the bust out of contraction
they also take the boom out of expansion …

enter the growth pack board room lobby

and the where's my fuckin raise boss

“other” class counterpart

need i say more …

putting a governor on the upside speed
leads to what else ..the inevitable chafing

in times of gathering spontaneous acceleration

…times obivously quite opposite to ours now

but times like the ragin 60's and 70's



over the past 30 year reign of reagonomics

praises for our built ins went unsung …

—-well bug collecting academics
might chant quietly a song of praise now and again —-

but even as discretionary gubmint measures retreated back inside the last bastion of fiat economics …the federal money temple
the built ins did their work undaunted by the slaughter of their brethern

and there was much slaughter and yes the built ins of today are not the built ins of carters day

let alone truman's …” a tattered remnant “


like much else good and bad because the built ins

were by their design

” automatic” ways and means

they tended in public discourse

to fall into the unobserved back ground

when they were “helping ” us

but like uncle's fiscal deficits
and the nasty union rump

the built ins come boom time

were explicitly viewed as part of the systemic tyranny

in the public discourse
the regs and rate structures joined

the rent guzzling monsters uncle grows in his fevered hot houses

to become the mundane micro- makings

of that concious

super imposition on society

of anti-promethean institutions

that cripple the good life and kill the better life

and yet year in year out

scorned and decimated as they were

did their built in job



their quiet dispatch

allowed a shared delusion

to rise among us of greater then normal fortune

“the time before franklin R
was a better time “

-so long as u were white —



back then when only ad hoc communal musterings

countered our household perils

back then where we faced 
one god damn  un co ordinated 

market herd move after another

all alone and even if unafraid

totally without rights to recompense

so we were better off back then ..???

freedom self respect discipline responsiblity

though struck down by forces beyond ourselves

and right there ready but unused

the ability to resurect

ourselves thru our state

we were better off letting be…
keeping the state out of our bidness

subject only to the tender mercy

of the fortunate among us

no wonder the more fortunate pine fpr those days eh ??

not many …back then …while they were

seriously taking

it in the neck actually believed this rot obviously 

— as events now unfolding will likely prove once again—-

but …it was a nice alibi for selfishness eh ??


okay so in sum these critters

these built in stabilizers

now in place for up to 70 years

have born humble witness to the goodness of designed intentional institutionalized progress

like sumps in the cellar



needless to say

as with lots of clio's major developments

this system of built ins has evolved as much thru the on going destruction of received institutions

like

that

universal totality of welfare max

the holy roman catholic church



too often the old must be destroyed

before the new can develop

but that cuts both ways


enter the reagan ites and their mongolian harvest

of all things new dealish hog tieing and Mom-ish

reaganism destroyed the secular welfare state as i knew it ..
bravo

but okay

Clio enough

the snake headed pricks had their deck clearing mission

and they done it

thank u t today suddenly theirs is

the political economy of yesterday



untill a second ago the hegemon among nations

was devoted to freeing itself

and its sister nations large small rich or poor

from the drawing strings of nannydom

but today in a flash we're all
into it and up to it once again

we're suddenly all about each others welfare
we are entering a frenzy of restructuring

all the way from the micro bevy

of market specific quotas bans and other internal

and cross border regs

to credit re-gearings and even job site remakes

—and of course the usual expanded string section
of taxes and subsidies—-

a tidal wave of  mandatory… universal .. for everyone …

” its the law madame ” type
this-ings and that-ings



but relax

whoever u are and from what ever class perch you peer

folks lady's and grooms …its all part of Clio's travelling circus



the market policy reform cycle

is fairly clear to anyone able to count past two

particularly now
at this node

we can look back
at  the last couple three centuries 

of faustian cavorting followed by bovarian suicides



this all is no longer bold conjecture

its now self evident banality



we moderns build new …state induced …

institutional structures over our markets

in times of bust

and remove scads of “old rotten defective “ institutional structures

in times of boom

that's the concious deliberate
inevitably state co ordinated part

of our market economy and its evolution



—-what we allow to institute itself spontaneously within markets themselves in good times

and watch explode spontaneously in bad times is another story of course ——



so how about now ???



well here's a maxim for starters:



product markets may and often do fail 

but asset  markets collapse 



and in the after math of a collapse

the state with its popularly induced compulsions

to “do something….anything ”

becomes the vehicle of innovation

as much as blunder of last resort

not surprising this …eh ??

is there any substitute for the state

when self-rescue requires of us

as close as possible to universal conformity ??

okay
— as one must expect —

where interests are diverse and often rival

whatever we thru our gubmint ” choose “

to impose as the new deliberate mandatory superstructure

can be seen by huge chunks of the polity

as bad bad bad ….naughty naughty naughty …mean mean mean

unlike any non spontaneous social process 

emerging as if by a …whatever

from within civil society itself

state action can't be made to look ..well …
like a rebuke by god or mother nature 

state action's wounds to its society below are we or at least them inflicted
thus evil as in man made un natural

imposed inorganic mechanical rigid artificially induced confining

freedom snatching desire starving rights violating

civil liberty traducing

god playing acts of the Devil's dsciples etc etc etc



come a crisis in the markets

the state supervising those markets

can not only play devil with them

and its “innocent participants “

but usually the state also discovers

in a fluke of victim desperation

it is suddenly empowered

to operate apon its own civil society

with much much more elbow room

ie

more playground to evilize in







well the old moles have been about their work preparing

the path to  our next new jerusalem

—-what Nth stage are we at by now i wonder —-

and just as obviously 

somewhere in our network of ivy basements

the new paradigm exists if only in toy alegbra form

..a model train version 

circling thru its circles 

well i think the chosen one or ones
are circling and looping and over and undering

down  in joe stiglitz's below grade den

and they've been doing so since the late 70's



paine's brassy oracular declaration:





doctor stiglitz  model train sets capture the schein essence of our future popular mind set

the mind set that will sweep all before it

in the next dozen burger reich years

the ” latest ” top selling take on how the whole damn market earth thing works 
whatever  conflicted bevy and briary of figure eight topospheric run arounds

is out there torturing and rewarding us helots

lambot joe S prolly crafted its latest set of id bracelets err if not remedies



to be contuinued





being part two of

from where i'm at this recent massive market failure looks like the end of everything i know





okay lets go back to the post war glory days when my world was entering its suave majority

we find submerged contradictions and patent ones too 

even as folks —like kindly dwarf ken arrow —tried to re-justify our lost faith in the invisible hand

with stupid model tricks and even as the highest level visions of a highest possible social welfare

emerge at least as easily thru the unhampered untutored ungoosed supremacy of the voluntary actions

of stateless spontaneous property based market systems

the freshly born America's earth on street level was playing keynesian catch up

in a phrase

folks of college attainment were learning samuelson

all seemed if not in celestial motion at least “takin care of bidness” thru ike and into the new fronteer

yes by jack time our export boom was on the fizzle but all the new deal rigged built in stabilizers were working

their mild miracles of melioration sooo the wigs that be believed …err so long as our fucking price level  behaved

we could sail on and on and on …

and yet when in the high 60's trouble came in battalions to america's earth

the dred price level demons came too

and dreams of switch back moves spread like wild fire among the board room cowboys

“we gotta get back to the 19th century and fast “



the balls behind this

the let it be …touch nothing … tear down thus regs …remove those stablizers …leave it to kismet 

no policy is the best policy restoration ???

well what else i mean that is besides uncle milty's blind boy of the south side gibbering

18th century old testement moses smith hymns and squeeking his

“i told u sos…freedom is the only choice ” in the face of the wage profit war

besides that the faith was justified by hand waves toward those wonderland proofs by arrow and company

that the surest author of the best of all possible social outcomes was free booting marketeering systems

give or take an occasional debt jubilee that is

needless to say clio ironist to the last had seen to it that this ark of the faith

was about to crumble into its own contradictions



yes that wholey mundane enlightenment substitute  for devine providence

was about to take a wicked savaging at the hands of some ivy wonks



to be continued



next time enter the stiglitz generation

Posted by pinky at 10:25 PM