I twisted my neck.

I can look about 15 degrees to the right of dead ahead. Everything else hurts. I had a bunch of different things I wanted to write about. I got a few things up but it will have to be tomorrow before I can do some real writing.

James Pilant

“Inside Job” The Director Speaks

Charles Ferguson directed the documentary “Inside Job.” He writes about his thoughts and conclusions from creating the documentary.

One of the things he found puzzling (as do I), doesn’t doing serious long term damage to the nation’s infrastructure like roads, bridges and education become a concern for the financial elites since over time it damages their American investments?

Here’s the answer.  (from the article) -

The financial services industry and the most successful American multinational firms now obtain rapidly increasing fractions, often already the majority, of their investment, employees, and revenues from (a) other wealthy individuals and corporations and/or (b) outside the United States. Over the last two decades their political interests, contributions, and lobbying have gradually followed these larger trends. As a result, the political duopoly has overseen a massive disinvestment in the future of the United States and the American people, and a massive transfer of wealth from the bottom 90% of the population to the top 1%. Taxes on dividends, high incomes, capital gains, and estates have sharply declined, while tuition at public universities, hours worked per family, household debt, and government deficits have all increased.

They have no interest in the long term future of the nation. This nation is similar to the Wild West idea of Robbers’ Roost.

Robbers’ Roost is a town hidden in the hills where the outlaws go to hang out. There is no law there. They do what they feel like. They are safe from the sheriff and all those people they took stuff from.

The United States is going to be a great big friendly place for people with lots of money and few morals. One law for them. One law for us.

James Pilant

The trailer –

This Is Not A Recovery

I wrote this back in August. I haven’t changed my mind one bit. Whenever I read this nonsense about an economic recovery, I’m struck by how far away the commentator is from actual American life and how close he is to Washington.

So says Paul Krugman at the New York Times. And he’ right. This is the New Great Depression, the second in American history. It will always be remembered by future generations as Great Depression II, the second great depression. Just like the first world war failed to solve the problems that would eventually lead to the second world war, the same problems bit us a second time. The humiliating thing is that if we had continued with the protections from the first great depression we could have avoided much of the damage. But the claims and promises of an irresponsible and incompetent economic elite have led America and the rest of the world into disaster, a disaster these same creatures do not believe is happening since it has no effect on them except a persistent worry that their profession is being “demonized.” Demons would have had serious difficulty in doing more damage to more innocent lives.

James Pilant

What The Market Will Bear?

I reported a few days ago that David Lazarus of the Los Angeles Times had written a good article explaining the dispute between banks and retailers over the higher costs of credit cards as opposed to cash. He has a new column today explaining the strange phenomena of a poll backing the bank’s side of the argument happily presented to all and sundry as consumer opposition to any change in the current system. Strangely enough I worked on a doctorate for a while and I remember a few scant traces of my survey research teaching. The methods used in the Visa card survey are completely useless for getting statistically accurate data. They essentially did push polling where you ask loaded questions to get the answers you want. A properly phrased set of questions can get you positive numbers for the proposition that there are too many mothers and we should thin the herd.

Lazarus reports that credit card fees on a retail transaction might be as little as a few pennies per purchase. Lazarus also points out that retailers wonder why larger transactions cost more than smaller ones. Its a computer process, just numbers. Does a computer seemed more fatigued after a seven digit transaction than a three digit transaction? Does it demand overtime or organize a protest or form a union? Does it take longer breaks? Where’s the pain justifying higher fees for a hundred as opposed to ten dollar transaction? But there’s more.

Let me quote from the article -

Ken Clayton, senior vice president of the American Bankers Assn., said the cost of processing credit card transactions should be whatever the market will bear.

“Who puts the value on the price of a ticket Jack Nicholson pays to watch the Lakers?” he asked. “It’s however much Jack Nicholson wants to pay to sit in the front row.”

Whatever the market will bear! Wow! You know if I can recall my Adam Smith (and I can), the free market is based on a free exchange of information about such things as pricing and he had a strong preference for small economic units that would actually compete. Strangely enough we have no idea what it costs banks to do these transactions. So, they deliberately withhold the knowledge of their costs and charge us whatever they want. Then, they pronounce with the certainty of a prophet from a vindictive and very strict religion that they can charge as much as the market will bear. Wow, doesn’t that strike you as a little unethical? I mean doesn’t it seem to you that if businesses can band together and claim that every transaction they process costs them up to 3% regardless of the advances in the speed and computing power of their operation, that they might be deceiving you and acting unfairly. Shouldn’t they be competing with each other? You know, that weird funny thing called the free market? What they are doing here sounds a lot like a monopoly. But it couldn’t be because that would be domination by a singly entity or cooperation by a number to control pricing and eliminate competition. Surely we don’t see any large economic units all practicing the same policies and withholding the same information. Right?

From wiki:

In economics, a monopoly …  exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.

Goodness? That must be one of those inaccuracies I hear when people criticize wikipedia. I better go to a better source.

From Black’s Law Dictionary -

“A privilege or peculiar advantage vested in one or more persons or companies consisting in the exclusive right (or power) to carry on a particular business or trade, manufacture a particular article or control the whole supply of a particular commodity. A form of market structure in which one or only a few firms dominate the total sales of a product or service.”
Black’s Law Dictionary, 5th edition, page 908.

You can’t trust anybody. That one must be wrong too.

Well, I wouldn’t worry the fees on retail transaction because our interests are being watched over the men running the banks. Who, you all know are honorable men. I will not wrong such honorable men.

I will not suggest that their business practices place a cruel burden on retailers. I will not argue that their interpretation of the free market is simplified child like understanding that wouldn’t get the a B in the fifth grade. I would never intimate that creating a push poll justifying their position suggests that they are in weak or vulnerable position with their argument.

Well, best wishes. I’ll try and make more concrete arguments the next time.

James Pilant