June 29, 2012

Weekend Economists Review When Harry Whacked Sally June 29-July 1, 2012

In order to divert ourselves from the horrors of crumbling globalization and decline and fall of the American empire, we are sponsoring a contest. We are combining bits from the Romantic Comedy film genre (of which Nora Ephron was the reigning queen) and from the voluminous gangster genre. Hence our Weekend Thread title...

The world lost a great woman of observation, perhaps our generation's Jane Austen, when Nora Ephron departed this world of woe on Tuesday. She engaged in the family trade: writing and screen writing, one of 4 children who took after their parents. She died after a long battle with leukemia, in NYC.





Many an obituary celebrated her life and work...here are some samples:

Nora Ephron dies at 71; writer of sharp-edged romances

http://www.latimes.com/news/obituaries/la-me-nora-ephron-20120627,0,7311425,full.story

An author and the screenwriter of the smart, romantic comedies 'Sleepless in Seattle' and 'When Harry Met Sally,' Nora Ephron ...who cast an acerbic eye on relationships, metropolitan living and aging in essays, books, plays and hit movies including "Sleepless in Seattle," "When Harry Met Sally..." and "Julie & Julia," died Tuesday in New York. She was 71. Ephron died at New York Presbyterian Hospital, where she was being treated for acute myeloid leukemia and pneumonia, said her close friend and Washington Post columnist Richard Cohen. A rare author and screenwriter whose works appealed to highbrow readers and mainstream moviegoers, Ephron wrote fiction that was distinguished by characters who seemed simultaneously normal and extraordinary. Like many people, they wrestled with commitment, principles and fame, but often exhibited keen, comic insights about their predicaments.

Her protagonists, who included the chef Julia Child and the whistle-blower Karen Silkwood, were often women and typically were just as capable as the men around them, if not more so. Ephron directed eight feature films, including "Sleepless in Seattle" and "You've Got Mail" (both featuring Tom Hanks and Meg Ryan) and had screenplay credits on more than a dozen productions. She earned three Oscar nominations — for writing "Sleepless in Seattle," "When Harry Met Sally..." and "Silkwood." As a playwright, she wrote "Imaginary Friends" and, with her sister Delia, "Love, Loss, and What I Wore." Ephron also wrote extensively about her own life, often in a sly, self-deprecating style. Her books included "I Feel Bad About My Neck: And Other Thoughts on Being a Woman," "I Remember Nothing: And Other Reflections," "Crazy Salad: Some Things About Women," "Wallflower at the Orgy" and "Heartburn," a roman à clef about her marriage to Watergate journalist Carl Bernstein. The 1983 novel was so withering in its depiction of her former husband (the loosely fictionalized book character was "capable of having sex with a Venetian blind&quot that Bernstein threatened legal action.

Even though she wrote strong female characters and said male filmmakers had little interest in women besides "girlfriends or wives," Ephron's brand of feminism was winking rather than strident. At a Hollywood awards event several years ago, she looked about the room and said, "When they write the history of the feminist struggle in America, I always wonder how this lunch will exactly fit in. We are definitely the best-dressed oppressed group." In a business that seems to have little room for women past middle age, Ephron continued to work steadily. "Julie & Julia," a film biography of chef Julia Child told through the eyes of a young admirer, was released when she was 68. Adapted from Child's autobiography and a cooking memoir by Julie Powell, the film was the best-reviewed of her career, and took in nearly $95 million at the U.S. box office. At the time of her death, she was writing and hoped to direct a movie about a Jane Austen fan who switches places with one of the British author's fictional characters. She also had been developing a movie about the singer Peggy Lee and the play "Lucky Guy" about crime reporter Mike McAlary for frequent collaborator Hanks...Ephron firmly established herself as Hollywood's mother of the modern romantic comedy, carrying the escapist, fast-paced style of 1930s screwball comedies into the 20th century by tackling subjects like divorce and email. She said that all romantic comedies were essentially mash-ups of Shakespeare's "The Taming of the Shrew" and Austen's "Pride and Prejudice," but Ephron injected the formula with a populist, somewhat sentimental flavor...

THIS MAY BE THE BEST ONE, WORTH READING IN FULL, BUT THERE ARE MORE...

http://www.trbimg.com/img-4fea28d3/turbine/la-et-mn-nora-ephron-a-life-in-pictures-201206-005/600

The Best Mailgirl Ever By GAIL COLLINS

http://www.nytimes.com/2012/06/28/opinion/nora-ephron-the-best-mailgirl-ever.html



When Nora Ephron graduated from college in 1962, she applied for a job as a writer at Newsweek, was told women weren’t allowed to be writers there, and settled for mailgirl. I used that story as a kind of centerpiece in a book I wrote about American women because it reminded me of one of those old movies about a Broadway musical with pompous stars played by actors you’ve never heard of, plus Judy Garland in the back of the chorus.

We talked about the grand saga of how the bad old days gave way to the women’s movement one afternoon while she was cooking lunch in the apartment on the East Side where she lived with her husband, Nick Pileggi. (She famously said that the secret to life was marrying an Italian, but, obviously, she meant the secret was marrying Nick.) When she worked as an intern at the White House, she recalled, she took a man who was her then-fiancé on a tour of the White House “past one fabulous room named after what color it was painted after another,” until at the end he looked at her and said: “No wife of mine is going to work in a place like this.”

The whole world is going to remember Nora for her books and essays and scripts and blogs and, of course, movie directing. A rather hefty chunk of the world is going to remember her as a dear friend, because she had armies and armies of friends. Really, you are talking Normandy Invasion of friendship. (Are there still going to be book parties in New York? It seems inconceivable. Nora defined New York book parties. She was really more the point than the actual books.)

I’m pretty sure she would also want somebody to point out that she was an ardent feminist. She could get a little wry about the more self-obsessed aspects of the movement at its height, like the meetings where everyone was required to bring mirrors and examine their private parts. (“It is hard not to long for the days when an evening with the girls meant bridge,” she wrote.) But she was a proud defender of the cause, supporter of younger women’s careers, and fearless in an industry that was not particularly welcoming of women in the director’s chair. Also, since she was so glamorous and stupendously witty, she was an excellent life lesson for some of the people who have been insisting for the last 90 years that feminists are dour and wear unattractive shoes...


Screenwriter Nora Ephron Dies at 71

http://www.alternet.org/newsandviews/article/992216/screenwriter_nora_ephron_dies_at_71/#paragraph4

...New York Mayor Michael Bloomberg said: "The loss of Nora Ephron is a devastating one for New York City's arts and cultural community.

"From her earliest days at New York City's newspapers to her biggest Hollywood successes, Nora always loved a good New York story, and she could tell them like no one else."....Bloomberg hailed Ephron's works as "classics that will be enjoyed for generations."

CLICK FOR VIDEO TRIBUTE:

http://www.washingtonpost.com/remembering-nora-ephrons-life-and-career/2012/06/27/gJQA6Jhs6V_inline.html"></iframe>

The second clip on the above video is our second aspect to chew on this weekend, the recently Supreme Court vetted ACA.

Have at it!

June 29, 2012

Conservative Southern Values Revived: How a Brutal Strain of American Aristocrats Have Come to Rule

http://www.alternet.org/story/156071/conservative_southern_values_revived%3A_how_a_brutal_strain_of_american_aristocrats_have_come_to_rule_america_?page=entire


It's been said that the rich are different than you and me. What most Americans don't know is that they're also quite different from each other, and that which faction is currently running the show ultimately makes a vast difference in the kind of country we are. Right now, a lot of our problems stem directly from the fact that the wrong sort has finally gotten the upper hand; a particularly brutal and anti-democratic strain of American aristocrat that the other elites have mostly managed to keep away from the levers of power since the Revolution. Worse: this bunch has set a very ugly tone that's corrupted how people with power and money behave in every corner of our culture. Here's what happened, and how it happened, and what it means for America now.

North versus South: Two Definitions of Liberty

Michael Lind first called out the existence of this conflict in his 2006 book, Made In Texas: George W. Bush and the Southern Takeover of American Politics. He argued that much of American history has been characterized by a struggle between two historical factions among the American elite -- and that the election of George W. Bush was a definitive sign that the wrong side was winning. For most of our history, American economics, culture and politics have been dominated by a New England-based Yankee aristocracy that was rooted in Puritan communitarian values, educated at the Ivies and marinated in an ethic of noblesse oblige (the conviction that those who possess wealth and power are morally bound to use it for the betterment of society). While they've done their share of damage to the notion of democracy in the name of profit (as all financial elites inevitably do), this group has, for the most part, tempered its predatory instincts with a code that valued mass education and human rights; held up public service as both a duty and an honor; and imbued them with the belief that once you made your nut, you had a moral duty to do something positive with it for the betterment of mankind. Your own legacy depended on this. Among the presidents, this strain gave us both Roosevelts, Woodrow Wilson, John F. Kennedy, and Poppy Bush -- nerdy, wonky intellectuals who, for all their faults, at least took the business of good government seriously. Among financial elites, Bill Gates and Warren Buffet still both partake strongly of this traditional view of wealth as power to be used for good. Even if we don't like their specific choices, the core impulse to improve the world is a good one -- and one that's been conspicuously absent in other aristocratic cultures.

Which brings us to that other great historical American nobility -- the plantation aristocracy of the lowland South, which has been notable throughout its 400-year history for its utter lack of civic interest, its hostility to the very ideas of democracy and human rights, its love of hierarchy, its fear of technology and progress, its reliance on brutality and violence to maintain “order,” and its outright celebration of inequality as an order divinely ordained by God. As described by Colin Woodard in American Nations: The Eleven Rival Regional Cultures of North America, the elites of the Deep South are descended mainly from the owners of sugar, rum and cotton plantations from Barbados -- the younger sons of the British nobility who'd farmed up the Caribbean islands, and then came ashore to the southern coasts seeking more land. Woodward described the culture they created in the crescent stretching from Charleston, SC around to New Orleans this way:



David Hackett Fischer, whose Albion's Seed: Four British Folkways In America informs both Lind's and Woodard's work, described just how deeply undemocratic the Southern aristocracy was, and still is. He documents how these elites have always feared and opposed universal literacy, public schools and libraries, and a free press. (Lind adds that they have historically been profoundly anti-technology as well, far preferring solutions that involve finding more serfs and throwing them at a problem whenever possible. Why buy a bulldozer when 150 convicts on a chain gang can grade your road instead?) Unlike the Puritan elites, who wore their wealth modestly and dedicated themselves to the common good, Southern elites sank their money into ostentatious homes and clothing and the pursuit of pleasure -- including lavish parties, games of fortune, predatory sexual conquests, and blood sports involving ritualized animal abuse spectacles. But perhaps the most destructive piece of the Southern elites' worldview is the extremely anti-democratic way it defined the very idea of liberty. In Yankee Puritan culture, both liberty and authority resided mostly with the community, and not so much with individuals. Communities had both the freedom and the duty to govern themselves as they wished (through town meetings and so on), to invest in their collective good, and to favor or punish individuals whose behavior enhanced or threatened the whole (historically, through community rewards such as elevation to positions of public authority and trust; or community punishments like shaming, shunning or banishing). Individuals were expected to balance their personal needs and desires against the greater good of the collective -- and, occasionally, to make sacrifices for the betterment of everyone. (This is why the Puritan wealthy tended to dutifully pay their taxes, tithe in their churches and donate generously to create hospitals, parks and universities.) In return, the community had a solemn and inescapable moral duty to care for its sick, educate its young and provide for its needy -- the kind of support that maximizes each person's liberty to live in dignity and achieve his or her potential. A Yankee community that failed to provide such support brought shame upon itself. To this day, our progressive politics are deeply informed by this Puritan view of ordered liberty.

In the old South, on the other hand, the degree of liberty you enjoyed was a direct function of your God-given place in the social hierarchy. The higher your status, the more authority you had, and the more "liberty" you could exercise -- which meant, in practical terms, that you had the right to take more "liberties" with the lives, rights and property of other people. Like an English lord unfettered from the Magna Carta, nobody had the authority to tell a Southern gentleman what to do with resources under his control. In this model, that's what liberty is. If you don't have the freedom to rape, beat, torture, kill, enslave, or exploit your underlings (including your wife and children) with impunity -- or abuse the land, or enforce rules on others that you will never have to answer to yourself -- then you can't really call yourself a free man. When a Southern conservative talks about "losing his liberty," the loss of this absolute domination over the people and property under his control -- and, worse, the loss of status and the resulting risk of being held accountable for laws that he was once exempt from -- is what he's really talking about. In this view, freedom is a zero-sum game. Anything that gives more freedom and rights to lower-status people can't help but put serious limits on the freedom of the upper classes to use those people as they please. It cannot be any other way. So they find Yankee-style rights expansions absolutely intolerable, to the point where they're willing to fight and die to preserve their divine right to rule.

Once we understand the two different definitions of "liberty" at work here, a lot of other things suddenly make much more sense...MORE, INCLUDING:

The Battle Between the Elites IT IS A HORRIFYING, TRUE ACCOUNT OF HOW WE GOT HERE, AND WHERE WE ARE GOING, ABSENT ANY OPPOSITION FROM WE THE PEOPLE...

MUST READ!

June 29, 2012

The Sharp, Sudden Decline of America's Middle Class By Jeff Tietz

http://www.rollingstone.com/culture/news/the-sharp-sudden-decline-of-americas-middle-class-20120622

They had good, stable jobs - until the recession hit. Now they're living out of their cars in parking lots...Each evening, 150 people in 113 vehicles spend the night in 23 parking lots in Santa Barbara. The lots are part of Safe Parking, a program that offers overnight permits to people living in their vehicles. The nonprofit that runs the program, New Beginnings Counseling Center, requires participants to have a valid driver's license and current registration and insurance. The number of vehicles per lot ranges from one to 15, and lot hours are generally from 7 p.m. to 7 a.m. Fraternization among those who sleep in the lots is implicitly discouraged – the fainter the program's presence, the less likely it will provoke complaints from neighboring homes and churches and businesses.

The Safe Parking program is not the product of a benevolent government. Santa Barbara's mild climate and sheltered beachfront have long attracted the homeless, and the city has sometimes responded with punitive measures. (An appeals court compared one city ordinance forbidding overnight RV parking to anti-Okie laws in the 1930s.) To aid Santa Barbara's large homeless population, local activists launched the Safe Parking program in 2003. But since the Great Recession began, the number of lots and participants in the program has doubled. By 2009, formerly middle-class people like Janis Adkins had begun turning up – teachers and computer repairmen and yoga instructors seeking refuge in the city's parking­ lots. Safe-parking programs in other cities have experienced a similar influx of middle-class exiles, and their numbers are not expected to decrease anytime soon. It can take years for unemployed workers from the middle class to burn through their resources – savings, credit, salable belongings, home equity, loans from family and friends. Some 5.4 million Americans have been without work for at least six months, and an estimated 750,000 of them are completely broke or heading inexorably toward destitution. In California, where unemployment remains at 11 percent, middle-class refugees like Janis Adkins are only the earliest arrivals. "She's the tip of the iceberg," says Nancy Kapp, the coordinator of the Safe Parking program. "There are many people out there who haven't hit bottom yet, but they're on their way – they're on their way."

..."When you come to me, you've hit rock bottom," Kapp says. "You've already done everything you possibly could to avoid being homeless. You maybe have a teeny bit of savings left. People are crying, they're saying, 'I've never experienced this before. I've never been homeless.' They don't want to mix with homeless people. They're like, 'I'm not going over to those people' – sometimes they call them 'those people.' So now they're lost, they're humiliated, they're rejected, they're scared, and they're very ashamed. I'm worried about the psychological damage it does when you have a place and then, all of a sudden, you're in your car. You have to be depressed just from the fall itself, from losing everything and not understanding how it could happen."

...However long it takes to lose everything, to get to the point where you're driving away from your repossessed home, the final unraveling seems eye-blink fast, because there is no way to imagine it. Even if you've been unemployed for a year and are months-delinquent on your mortgage, you still won't have a mental category for your own homelessness; it's impossible to project yourself into the scenario. The reality, when it occurs and endures, seems to have sprung from nowhere...


IT GOES ON FOR 5 PAGES...

June 27, 2012

Well, I Guess I Have a 2nd Theme for the Weekend

Author-screenwriter Nora Ephron dies at 71

http://www.latimes.com/news/breaking-nora-ephron-dies-20120626,0,4350695.story?track=rss

Nora Ephron, the author, screenwriter and playwright whose wry take on life, love and loss informed the hit films "When Harry Met Sally" and "Sleepless in Seattle" as well as the novel "Heartburn," about the breakup of her marriage to journalist Carl Bernstein, died Tuesday at age 71 in New York.

Through her writing and filmmaking, Ephron was a fixture at the crossroads of New York City, where she was born, and Hollywood, around which she was raised by her screenwriter parents. Starting with a post-college job in the mailroom at Newsweek, Ephron rose swiftly in journalism, writing for the New York Post and New York magazine and landing a column in Esquire.

Unsentimental and cynical in much of her early writing, she found fame in romantic comedies for the big screen. "When Harry Met Sally" (1989) starred Billy Crystal and Meg Ryan as two friends finally drawn into love. Ryan paired with Tom Hanks for "Sleepless in Seattle" (1993) and "You've Got Mail" (1998), which likewise end with attraction conquering obstacles.

Ephron was nominated for the Academy Award for screenwriting for "When Harry Met Sally" and "Sleepless in Seattle," as well as for "Silkwood" (1983), written with Alice Arlen. She directed "Sleepless in Seattle" and "You've Got Mail." She also wrote and directed "Michael" (1996) and "Julie & Julia" (2009), among other films....

June 26, 2012

Horrific Unemployment, Stagnation, Inflation Seen In Euro Zone Collapse AS COMPARED TO WHAT?

http://www.ibtimes.com/articles/356178/20120625/euro-crisis-inflation-unemployment-graphic.htm



By Eleazar David Meléndez

A graphic published by Der Spiegel, Germany's top newsweekly, is making the rounds among global financial blogs and Facebook walls, succinctly putting into numbers the horrific economic carnage a collapse of the common currency union would entail. The image, based on calculations commissioned by the magazine and Dutch financial giant ING, suggests, as the article accompanying it states, that if the euro collapses "a monetary disaster would spread across the entire economy like a tidal wave." According to Der Spiegel, ING believes the first two years after the collapse of the euro zone would spur a contraction of one-eighth of the total economic activity in the union, making "the recession that followed the bankruptcy of investment bank Lehman Brothers seem like a minor industrial accident by comparison." The economies of Europe would remain depressed for over five years.

According to the newsmagazine, internal projections at the German Finance Ministry were even more dire. "The officials were so horrified by their conclusions that they kept all of their analyses under lock and key," the publication states, citing an unidentified Finance Ministry official. Indeed, the graphic shows how, ironically, the richer, healthier economies of Europe might be the ones that suffer the most from a collapse of the euro zone.

Unemployment would rise 2 to 3 percentage points in countries like Portugal, Spain and Greece, of course, but Germany, Finland and France would see unemployment soar more than 4 percentage points. That's because a devaluation of the currency in southern European countries would kill a huge amount of the exports of consumer goods from northern Europe, destroying industrial bases in Stuttgart, Helsinki and Reims.



http://www.spiegel.de/international/europe/fears-grow-of-consequences-of-potential-euro-collapse-a-840634.html

SEE SPIEGEL ARTICLE FOR MORE

June 22, 2012

Weekend Economists and the Lazy, Hazy, Crazy Days June 22-24, 2012

HAPPY SOLSTICE EVERYBODY! Summer is here. Ignore all those 80+F days of March, the 90+ days of May and early June. It's now official, as of SUMMER SOLSTICE, June 20, 7:09 P.M. EDT.

Of course, because the earth wobbles so much, the "longest day" is more like several days, almost a week. And then we start the inexorable path to darkness and cold and...


But where was I? Oh yes, summer.



Kick back, pour yourself a cool one, and lets eviscerate the fools, knaves and scoundrels.

MAKE HAY (HEY!) WHILE THE SUN SHINES!

June 22, 2012

Cupcakes?

I don't catch your drift...I'm all at sea!

June 21, 2012

Natural Gas: Where Endless Money Went to Die

http://www.zerohedge.com/contributed/2012-06-20/natural-gas-where-endless-money-went-die

The fiasco that is playing out in the natural gas industry doesn’t happen often in a free market, and when it does happen, it’s usually short—and brutal for all involved: namely, prices that are way below production costs. In most industries, hedging strategies might get market participants through the period, while unhedged production, a money-losing activity, gets slashed. If it lasts long enough, it causes a shakeout where less efficient or poorly capitalized producers, and their investors, get wiped out. It’s all part of the capitalist system that weeds out weaker elements through occasional sweeps of creative destruction. As shortages crop up on the horizon, prices return to sustainable levels, and occasionally spike to once again unsustainable levels. For the survivors, or for lucky new entrants, the next step in the cycle has begun.

Alas, thanks to the Fed’s zero-interest-rate policy and the trillions it has handed over to its cronies since late 2008, the sweeps of creative destruction have broken down. Instead, boundless sums of money have been searching for a place to go, and they’re chasing yield when there is none, and so they’re taking risks, any kind of risks, in their vain battle to come out ahead. The result is a stunning misallocation of capital to the tune of tens of billions of dollars to an economic activity—drilling for dry natural gas—that has been highly unprofitable for years. It’s where money has gone to die. What’s left is debt, and wells that will never produce enough to make their investors whole. For that whole debacle, read.... Capital Destruction in Natural Gas.

But the money has dried up. And drilling for natural gas is collapsing. Last week, there were only 562 rigs drilling for dry natural gas—the lowest number since September 1999. A dizzying downward trajectory:


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Producers, if at all possible, are switching to drilling for oil and natural gas liquids (priced like oil), still a profitable activity. Thus, capital is now being channeled to where it can make money. Drilling for dry natural gas will continue to decline as the long delayed sweep of creative destruction is scouring the industry. The largest producer, ExxonMobil, given its monumental size and worldwide focus on oil, will weather the fallout just fine. But the second largest producer, Chesapeake Energy, is struggling. It’s trying to dump assets to raise cash to deal with its mountain of decomposing debt. Other producers that haven’t diversified away from dry natural gas are in a similar quandary. And at current prices, it’s going to be bloody.

At $2.53 per million Btu at the Henry Hub, the price of natural gas is up 33% from the April low of $1.90 per million Btu—a number not seen in a decade. But even if it doubled, it would still be below the cost of production. And if it tripled, it might still be below the cost of production for most producers. That’s how mispriced the commodity has become.

BUT WAIT! THERE'S MORE!

June 20, 2012

CAST YOUR VOTE: NC Crowdsourcing: Will the Euro Survive?

...The leading (and right wing) German paper FAZ reports that the ECB was fighting over whether to turn off the money supply to Greece. One has to assume the intent is to tell the Greeks that the rest of Europe is unwilling to negotiate with them (New Democracy has signaled that it won’t push hard; Syriza is taking a bolder stance, but since it has said it thinks leaving the euro would be really bad for Greece, its ability to negotiate effectively depends on being able to project the sort of vengeful unpredictability that Kissinger cultivated on behalf of Nixon {note that Kissinger merely had to tart up reality a bit...]).

Since many NC regulars read the European press, I’ll throw it out to you: what do you deem the odds of Euro breakup to be (with “breakup” defined as at least one country exiting the Eurozone) in the next month? In the next six months? And if you think it will come apart, but later, guesstimate how much later and why you think it will occur later rather than sooner.

POST THOUGHTS IN COMMENT SECTION AT: http://www.nakedcapitalism.com/2012/06/nc-crowdsourcing-will-the-euro-survive.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

June 20, 2012

Why the Senate Won't Touch Jamie Dimon: How JPMorgan Props Up US Debt

http://truth-out.org/news/item/9876-the-jpmorgan-derivatives-propping-up-us-debt-why-the-senate-wont-touch-jamie-dimon

...financial analysts Jim Willie and Rob Kirby... contend that the $3 billion-plus losses in London hedging transactions that were the subject of the hearing can be traced, not to European sovereign debt (as alleged), but to the record low interest rates maintained on US government bonds.

The national debt is growing at $1.5 trillion per year. Ultra-low interest rates MUST be maintained to prevent the debt from overwhelming the government budget. Near-zero rates also need to be maintained because even a moderate rise would cause multitrillion dollar derivative losses for the banks and would remove the banks' chief income stream, the arbitrage afforded by borrowing at 0 percent and investing at higher rates. The low rates are maintained by interest rate swaps, called by Willie a "derivative tool which controls the bond market in a devious artificial manner." How they control it is complicated and is explored in detail in the Willie piece here and Kirby piece here. SEE LINKS AT ORIGIN

Kirby contended that the only organization large enough to act as counterparty to some of these trades is the US Treasury itself. He suspected the Treasury's Exchange Stabilization Fund, a covert entity without oversight and accountable to no one. Kirby also noted that if publicly traded companies (including JPM, Goldman Sachs and Morgan Stanley) are deemed to be integral to US national security (meaning protecting the integrity of the dollar), they can legally be excused from reporting their true financial condition. They are allowed to keep two sets of books. Interest rate swaps are now over 80 percent of the massive derivatives market and JPM holds about $57.5 trillion of them. Without the protective JPM swaps, interest rates on US debt could follow those of Greece and climb to 30 percent. CEO Dimon could, then, indeed be "the guy in charge": he could be controlling the lever propping up the whole US financial system.

Hero or Felon?

So, should Dimon be regarded as a national hero? Not if past conduct is any gauge. Besides the recent $3 billion in JPM losses, which look more like illegal speculation than legal hedging, there is JPM's use of its conflicting positions as clearing house and creditor of MF Global to siphon off funds that should have gone into customer accounts and its responsibility in dooming Lehman Brothers by withholding $7 billion in cash and collateral. There is also the fact that Dimon sat on the board of the New York Federal Reserve when it lent $55 billion to JPM] in 2008 to buy Bear Stearns for pennies on the dollar. Dimon then owned nearly three million shares of JPM stock and options, in clear violation of 18 USC Section 208, which makes that sort of conflict of interest a felony. Financial analyst John Olagues, a former stock options market maker, pointed out that the loan was guaranteed by $55 billion of Bear Stearns assets. If Bear had that much in assets, the Fed could have given it the loan directly, saving it from being swallowed up by JPM. But Bear did not have a director on the board of the New York Fed. Olagues also noted that JPM received an additional $25 billion in TARP payments from the Treasury, which were evidently paid off by borrowing from the New York Fed at a very low 0.5 percent; and that JPM executives received some very large and highly suspicious bonuses called Stock Appreciation Rights and Restricted Stock Units (complicated variants of employee stock options and restricted stock). In 2009, these bonuses were granted on the day JPM stock reached its lowest value in five years. The stock quickly rebounded thereafter, substantially increasing the value of the bonuses. This pattern recurred in 2008 and 2012. Olagues has evidence of systematic computer-generated selling of JPM stock immediately prior to and on the dates of the granted equity compensation. Collusion to manipulate the stock to accommodate the grant of options is called "spring-loading" and is a violation of SEC Rule 10 b-5 and tax laws, with criminal and civil penalties.

All of which suggests we could actually have a felon at the helm of our ship of state....Is there no alternative but to succumb to the Mafia-like Wall Street protection racket of a covert derivatives trade in interest rate swaps? As Willie and Kirby observed, that scheme itself must ultimately fail and may have failed already. They pointed to evidence that the JPM losses are not just $3 billion, but $30 billion or more and that JPM is actually bankrupt. The derivatives casino itself is just a last-ditch attempt to prop up a private pyramid scheme in fractional-reserve money creation, one that has progressed over several centuries through a series of "reserves" - from gold, to Fed-created "base money," to mortgage-backed securities, to sovereign debt ostensibly protected with derivatives. We've seen that the only real guarantor in all this is the government itself, first with FDIC insurance and then with government bailouts of too-big-to-fail banks. If we, the people, are funding the banks, we should own them; and our national currency should be issued, not through banks at interest, but through our own sovereign government.

MORE

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Ellen BROWN is an attorney and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com and ellenbrown.com. She is also chairman of the Public Banking Institute.