Video: Happy Memorial Day

Memorial Day is a time for Americans to say thank you to those who have served and are serving in the U.S. armed forces, and to remember in particular those who have been killed or injured in the line of duty. If you know someone in the U.S. service it takes just a few moments to say thank you and it really is appreciated by those who serve. 

And even if you don't agree with the Afghanistan war or other U.S. military activities that are currently underway remember that as Vietnam General William Westmoreland said, “The (U.S.) military don’t start wars. Politicians start wars.”

Memorial Day is also a good time to reflect on war in general and the tremendous suffering and destruction it causes. While there is still war we should not stop asking what are its root causes, and what more can we do to try and prevent it? 

The question of why war occurs is no doubt complex with many factors, but one component to keep in mind is the sheer size and business of war, and the affect it has on the livelihoods of millions of people.

Many are familiar with President Eisenhower's 1961 farewell address, and his famous warning about the 'Military-Industrial Complex'. If you haven't watched his full speech it is well worth the 15 minutes of your time.

Ike, a well respected leader with impeccable military credentials, was in a strong position to offer up such a warning.

One wonders if we'll ever see another Ike, or FDR, or TDR or Truman as U.S. President. One has the impression that they just don't make them like that anymore.

Greece QOTD: "Papadreou was clueless. Papademos was complicit. Where does blame really lie?"

Atta boy, AEP.

Greece Can Physically Print Its Own Euros In Spite Of ECB 'Choke' Efforts

Euro printing press

As the long ago predicted Greek 'bank jog' accelerates there is much talk in the econoblogosphere of the Greek banking system being 'choked off' by the ECB.

If this is in fact the Brussels/Frankfurt plan to force Greece out of the euro there is a perhaps not insignificant obstacle to this strategy: as noted in this post last year, Greece has its own euro printing press. 

The ECB does not print any euro banknotes but actually assigns this task to local member country central banks, with the ECB instructing the local central bank how much of which denominations to print.

So what does this mean?

In opinion polls Greeks want two things: a) to default on their sovereign debt less fiscal austerity and b) stay in the Eurozone. However, European elites (read: Germany) are saying to Greece that you can't have both. But is Germany correct?

An important point to keep in mind here is that there is no legal mechanism to force Greece to drop the euro and readopt the drachma. Hence the idea of choking off the Greek banking system and forcing the Greeks to renounce the euro versus organizing some type of formal action, such as a vote to eject Greece from the euro, which would not be allowed under current EU law.

But in the event of a full-fledged run on Greece's banking system, where Greek banks literally have no cash on hand to give to depositors, it would seem reasonable and (crucially) perhaps legal for the Greek central bank to start printing euro notes even if the ECB disavows this action.

If this were to take place is there anything the ECB could do to stop the Greek central bank from printing euros? Probably not.

It's hard to imagine the situation reaching a stage where the Greek central bank openly revolts against the ECB and starts printing euros. However, Greece need only hint at playing this card for it to have the desired effect, which is to force the ECB to continue accepting Greek bank collateral on reasonable terms. In other words, the fact the Greeks can print their own euros nullifies the ECB's ability to choke the Greek banking system into submission and force a 'voluntary' abandonment of the euro.

Your move, Angela.

Young People CAN and ARE Making a Difference in Europe

Getting more young people (and women) into positions of political power is a good thing.

Alexis Tsipras, leader of Syriza

Whether you agree or disagree with the politics of 37-year old Alexis Tsipras, the leader of a leftist-Greek coalition which surprised in the weekend election, he has demonstrated that not every member of the next generation is politically impotent.

While this blog probably would not be characterized as far left-wing, we do celebrate seeing someone under-40 years of age achieving political success.

Bravo, Alexis!

Happy Free Positive PR for UK Banks Day!

One somewhat peculiar difference between the U.S. and UK is how in the UK (and Ireland) official public holidays are referred to as 'bank holidays'. From Wikipedia:

A bank holiday is a public holiday in the United Kingdom or a colloquialism for public holiday in Ireland. The first official bank holidays were the four days named in the Bank Holidays Act 1871, but today the term is colloquially...used for public holidays which are not officially bank holidays, for example Good Friday and Christmas Day.

I have no idea whether Brits on whole form any positive associations towards banks because of this, but if nothing else it strikes me as some nice free, positive advertising for our friendly, neighborhood Too Big to Fail banks.

Here's an idea: perhaps renaming 'bank holiday' to 'public holiday', or something similar, would allow a pol to campaign on a symbolic, anti-banker message that also poses low-to-no risk to the establishment.

Video: A Simple, 8-Minute Explanation of What's Wrong With Mainstream Economics

Below is NOVA's longer but also recommended explanation of what's wrong with mainstream economics.

 

Video: Ferguson, Rattner, Murray, etc. on What's Happened to the American Dream?

Video: Review of 4-Part Frontline Financial Crisis Series 'Money, Power, and Wall St.'

The PolyCapitalist is kicking May off with a number of must watch videos, and this epic 4-part Frontline special follows the crisis from what is arguably its point of genesis: a 1994 JP Morgan retreat in Boca Raton, Florida which of led to the creation of the first credit default swaps.

Frontline has done an incredible job getting many of the key players and insiders, including a number of top Wall St. bankers, to go on record about what happend. Even if you've read all the books, seen the earlier Frontline financial crisis special, and think you know all you need to about the financial crisis, this is still must watch.

The big new item for me, and I'm a bit surprised this has not received more ink, was the March 2009 battle between Larry Summers and Tim Geithner over what to do with the megabanks. My prior understanding was that Summers and Geithner were two peas in a pod. Not always it turns out.

According to Frontline, in March 2009 Summers, along with fellow economist Chritina Romer, pushed for what was called 'Old Testament Justice', meaning firing a bank CEO and or possibly nationalizing one of the megabanks. In contrast, Geithner, who it would appear is more of a protege of Bob Rubin than Summers, fought hard to treat the banks with kid gloves and use stress tests to help instill confidence back into the marketplace.

Obama ultimately sided with Geithner, which seems to contradict earlier reporting that Geithner had ignored Obama's instructions to dissolve Citigroup. Frontline definitely presents Summers in a better light and Geithner and Obama in a worse one.

I have only a minor gripe with this Frontline series, which is the annoying editing. In a multi-part, complex story, reusing clips to aid telling the story is probably unavoidable. However, I felt they recycled too many from within the four part series, as well as from an earlier Frontline special on the financial crisis from a couple years ago. But this is a minor, forgivable quibble given the extraordinary job the Frontline team did to compile and document the crisis up through present day.

Overall, perhaps the key point made in the series - and one I could not agree more with - is that the financial crisis still has not ended. Where it will go from here is as much dependent now on politics as markets or economics.

Video: El-Erian, Buiter, Warsh, etc. on Economic Growth

This is another excellent panel from the Milken Institute Conference. It has a somewhat more investment focus than the previous one posted with discussion/predictions on the Eurozone (Greece in or out), elections, interes rates, etc.

Video: Raghuram Rajan, Niall Ferguson, etc. on The Future of Capitalism

This video from the Milken Institute Conference unfortunately appears to begin after the panel has already begun and cuts abruptly, but still features a very good discussion of economic issues in the U.S., Asia, and Europe.