17, 2013
Crisis: Snowden, Lehman Brothers, more crisis
  "They who can give up essential 
   liberty to obtain a little temporary
   safety, deserve neither liberty
   nor safety."
   -- Benjamin Franklin [1]
   "All governments lie and nothing
   they say should be believed.
   -- I.F. Stone.

Prev- crisis -Next

1. Edward Snowden 'living incognito in Russia'
2. What the Orgy of “Lehman Five Years On” Stories Missed
Global Credit Excess Is WORSE than Before the 2008 Crash
About ME/CFS


There wasn't much today on the crisis. Is it over then? Far from it, but the news is not a reliable indicator of real developments. Anyway, I will restrict myself to three items today, and they all sketch in some background.

1.  Edward Snowden 'living incognito in Russia'

To start with, an item by Shaun Walker from the Guardian, about Snowden:

It is not as if there is much to tell. Here are the first two paragraphs:

Edward Snowden is living under guard at a secret location in Russia, but is able to travel around the country freely without being recognised, according to the Russian lawyer of the former National Security Agency (NSA) contractor.

"We believe the danger remains quite high and, as I see it, it is impossible at the moment to reveal where he's living or to talk openly about it," said Anatoly Kucherena in an interview with the Kremlin-funded television channel Russia Today, excerpts of which were released on Tuesday.

There is more, which you can find by following the last dotted link, but the summary is that according to his lawyer he is well, and is travelling around, and did not get recognized - which a full beard indeed would easily achieve, but that is just my guess. Also, for the moment he appears to be relatively safe.

But that is about it.

2. What the Orgy of “Lehman Five Years On” Stories Missed

Next, an item by Yves Smith from Naked Capitalism:
This starts as follows:

One of the reasons I haven’t weighed in with the obligatory Lehman five year anniversary piece is that so many of them are variations on a limited range of themes, to wit:

The Horror of the Meltdown

Hagiography (and Revisionist History) of the Great Men Who (Allegedly) Saved Us from the Horrors of the Meltdown

Revisionist History on Behalf of Various Parties Who Let the Perps Get Away with Wrecking the Economy for Fun and Profit

How Nothing Much Was Fixed

How/Why All Those Smart People Didn’t See It Coming

Mind you, we’ve been getting a steady diet of these types of stories for years, so a concentrated dose, particularly for someone like yours truly, who was pretty attentive to the events in real time and all the flailing around to deal with the upheaval and engage in reregulation theater, is cloying.

Quite so, and indeed I have not paid any attention to that particular event (Lehman's going down), but then I am not an economist either. (However... there is a nice piece on Dick Fuld, of one and three quarter years ago. And yes, he-or-his-wife are still extremely rich and without any punishment.)

Yves Smith is an economist, and has rather a lot to say that I leave to you, but there are two points that I want to lift from her piece. The first is this:
It’s clear who benefitted from how the crisis was resolved:

Which is to say that the rich got a whole lot richer, mainly because the poor got poorer. (Also, the 6% average income gain in the US is considerably higher than in Holland, but this is an aside.)

Next, it is "because Obama" - and that seems, in this case, a valid explanation:

Big Finance Could Have Been Reformed and Obama is the Reason it Wasn’t. The resigned “the banks were too powerful” meme is convenient and completely untrue. We wrote in 2010:

Recall how we got here. Early in 2009, the banking industry was on the ropes. Both the stock and the credit default swaps markets said that many of the big players were at serious risk of failure. Commentators debated whether to nationalize Citibank, Bank of America, and other large, floundering institutions.
But incoming president Obama failed to act. Whether he failed to see the opportunity, didn’t understand it, or was simply not interested is moot. Rather than bring vested banking interests to heel, the Obama administration instead chose to reconstitute, as much as possible, the very same industry whose reckless pursuit of profit had thrown the world economy off the cliff. There would be no Nixon goes to China moment from the architects of the policies that created the crisis, namely Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, and Director of the National Economic Council Larry Summers.

There is a lot more under the last dotted link. All I wanted to do, here and now, is to register that there really is an economic crisis, and that Obama is responsible for there having so little happened to tame the crisis - in fact, what he did was mostly to the contrary, to which I turn now:

3.   Global Credit Excess Is WORSE than Before the 2008 Crash

This is a bit from Washington's Blog, that published the following:

What I take from this are some warnings by William White. The bolding is not mine:

“This looks like to me like 2007 all over again, but even worse,” said William White, the BIS’s former chief economist, famous for flagging the wild behaviour in the debt markets before the global storm hit in 2008.

“All the previous imbalances are still there. Total public and private debt levels are 30pc higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets that are ending in a boom-bust cycle,” said Mr White, now chairman of the OECD’s Economic Development and Review Committee.


Mr White said the five years since Lehman have largely been wasted, leaving a global system that is even more unbalanced, and may be running out of lifelines. “The ultimate driver for the whole world is the US interest rate and as this goes up there will be fall-out for everybody. The trigger could be Fed tapering but there are a lot of things that can go wrong. I am very worried that Abenomics could go awry in Japan, and Europe remains exceedingly vulnerable to outside shocks.”

Mr White said the world has become addicted to easy money, with rates falling ever lower with each cycle and each crisis. There is little ammunition left if the system buckles again. “I don’t know what they will do: Abenomics for the world I suppose, but this is the last refuge of the scoundrel,” he said.

So... I am not saying Mr White is necessarily right, but he has been right before, in a major way. Also, I am not saying Obama is the only one to blame, but he surely left undone almost everything that he promised to do in order to get the job of president.

We will have to see what the future brings, but I am afraid it will be more crisis, the coming years.

[1] Here it is necessary to insist, with Aristotle, that the governors do not rule, or at least, should not rule: The laws rule, and the government, if good, is part of its executive power. Here I quote Aristotle from my More on stupidity, the rule of law, and Glenn Greenwald:
It is more proper that law should govern than any one of the citizens: upon the same principle, if it is advantageous to place the supreme power in some particular persons, they should be appointed to be only guardians, and the servants of the laws.
(And I note the whole file I quote from is quite pertinent.)

About ME/CFS (that I prefer to call M.E.: The "/CFS" is added to facilitate search machines) which is a disease I have since 1.1.1979:
1. Anthony Komaroff

Ten discoveries about the biology of CFS(pdf)

3. Hillary Johnson

The Why  (currently not available)

4. Consensus (many M.D.s) Canadian Consensus Government Report on ME (pdf - version 2003)
5. Consensus (many M.D.s) Canadian Consensus Government Report on ME (pdf - version 2011)
6. Eleanor Stein

Clinical Guidelines for Psychiatrists (pdf)

7. William Clifford The Ethics of Belief
8. Malcolm Hooper Magical Medicine (pdf)
Maarten Maartensz
Resources about ME/CFS
(more resources, by many)

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