Monday
Aug162010
The WSJ Big Interview With David Rosenberg (VIDEO)
Video: Former Merrill Lynch Chief Economist David Rosenberg
- "How can we have a double-dip if the recession never ended?"
Outstanding interview. Set aside a few minutes.
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Screenshot
Aug 16, 2010 at 2:27 PM
Reader Comments (15)
Economics is not a hard science.
Economics is a science just as nutrition is a science because we use scientific methods to form theories and then test them by performing experiments.
The trouble is, when performing nutritional experiments on a human beings, it takes about 70 years to get the results and the same is true for economic experiments performed on societies. That's probably one reason economics is called The Dismal Science. Even short term studies require chunks of five and ten years to get results.
Rosenberg was fired from Merill Lynch because he refused to be an ideological cheer leader for the company and now he is refusing to be an ideological cheer leader for the economics profession.
I don't care if you are a Keynesian, an Austrian school economist or a Marxist, it's mostly smoke and mirrors and no one can predict the economic future with more certainty than they can predict the weather or the outcome of a basketball game. All three are as much an art as a science.
However, at this point in American and world economic history Rosenberg is basically telling us that the Lakers are probably going to beat the local community college in spite of what the home team crowd is telling us and in spite of their 7 foot center.
Like the weatherman, economists are always asked to make predictions, but their predictions are right about fifty percent of the time if they are lucky.
Economics is not a hard science.
I think that David Rosenberg may be one of the few people left doing real accounting. He made some great points and the specifics shows that little gets by this guy.
As far as her question on Krugman, he jumps to Bernanke and gives Ben a passing grade. That might have something to do with his wealth in this financial storm. As Jim Rogers keeps pointing out, for the people who are finding the money (Helicopter Ben’s QE) things seem okay. This guy has the financial knowledge and knows the right people. I have no doubt that he has parked his Brinks truck right at the thalweg.
JIM ROGERS: The idea that you can solve a problem of too much debt and too much consumption with more debt are more consumption – please, miss (laughs). I mean that’s just defies logic if you ask me.
I think the video of William Black on Max Keiser was amazing. Here it is again…
http://www.youtube.com/watch?v=faHcCalkSag
What do we do? 1000 bankers found themselves in jail after the S&L crisis. Doing the math, this crisis is close to 40 times larger, I would expect 40,000 bankers to be in jail by now. As they say, the least ethically inclined are still in charge. The perverse incentives are still there for the stealing. William Black has pointed out some key problems. I while back, I asked a guy with a big time MBA what he knew about accounting and he said, not much. He took one class to get his MBA and said to me that he was more of a problem solver than an accountant. Yikes. Back to the interview, William Black hits the big accounting cover-up points I keep talking about here at the DB and explains how the auditors were part of the racket. As Max Keiser points out, this is organized crime. Since nobody is investigating the extent of the losses, the figure remains elusive. The last part of the video, Keiser and Black start doing the math on what is yet to be revealed in the “debt vortex”. Well, you need a lot of honest and ethical accountants and some attorneys pursuing the answers and the culprits. Just as you can’t hide your own personal debt for long, the banks, the stock market and the U.S. economy can run but it can’t hide. Those losses and debts are still there lurking and waiting for the opportunity to reemerge.
I watched the Tavakoli interview also. Great stuff!!!
My guess is that Obama will remain too arrogant to even scratch the surface of understanding the financial mess he is making. I am not a fan of Christina Romer but maybe just maybe she had to quit because she was hitting her head against the wall behind the scenes in Obama’s inner sanctum. When she spoke to us, she seemed to only propagate the bullshit coming out of Washington and Wall Street. Maybe she is saving it for her book. I could come up with a few titles she wouldn’t like, how about Moronic Obamanomics or Barry the Community Organizer takes on Wall Street. Romer was and always will be more of a product of academia and not the real world so most likely she was dead weight and will not be missed. That is the caliber of the people Obama likes and hires. Why hasn’t Obama hired the dream team? They just might be willing to consult and help build dream team worker bees to fix the problems and turn things around. I know a few that would be leading the dream team, Rogers, Tavakoli and Black.
And if the "science" of economics didn't exist, we would have to invent it.
But none of that means that governments don't spy on each other, corporations never fire big shots or economists are usually worth listening to.
Basically, America has turned into a giant Ponzi scheme and advertising-legal-lying machine, the same way the Soviet Union turned into a organized crime state based on propaganda-lies. The Soviet Union collapsed and the United States might collapse also. History provides many examples of empires that collapsed within a generation.
But we don't need (can't use) solutions based on warmed over Puritan ethics disguised as Puritan economics. Our real founding father, John Winthrop told us, after much disillusionment with the City on a Hill which he tried to build in Massachusetts after 1620 (people came to church naked, fucked in the streets and, basically believed that the Bible told them they could do any god dammed thing they wanted to):
“Riches are a Signe that a Man is of the Chosen by God but Povertee that Hee walks with the Damned.”
This has been America's philosophy ever since. Don't forget that George Washington married Martha Custis so that he could become and remain the richest man in America, not for the content of her character or her good looks.
I don't mean to take a cheap shot at Black, Rogers, Tavokoli and others like them, but they all sound like old time Bible thumpers to me. They see thousands of naked financial emperors walking around without any clothes but all they do is stand around pointing fingers and clucking their tongues.
We know from elementary school and history that the strongest, smartest and most ambitious people of every country have always screwed the stupid, ethical and weak. Sooner or later the wounded, fleeced and oppressed find a group of strong armed men and women, and a tyrant to help them rise to power, and kill these people in their beds the way Stalin, Hitler, Mussolini, Mao, Franco, Pol Pot the other tyrants throughout history have always done.
When that time comes, words will get you killed or put in jail if they aren't flattering to one or the other sides. Now we have the luxury of being laughed at or ignored for telling the truth.
A long time ago I learned not to try to predict the future based on what I WANT to happen but based on what I THINK will happen.
When you buy a million dollars worth of gold your opinion is that gold is going to go up in value but most people aren't interested in your opinion.
And even if you factor out your desires you still can't predict with perfect accuracy.
But, history is prologue.
And here is what I think is true:
Liberals, whining or otherwise, rarely accomplish anything (Black, Tavakoli and Rogers.)
America has turned into a giant Ponzi scheme and advertising-legal-lying machine.
The average CEO makes around 400 times what the average worker does. In 1970 it was closer to 30 times as much.
The working class has been decimated by Hispanic and Asian immigrants.
Almost all American manufacturing jobs have been moved off-shore.
You, or someone else on this site, said that at least 20,000 bankers and their friends and allies are criminals and should be in jail. Whoever said it, I agree.
America is bogged down in a Middle East invasion, to secure our oil interests, that can't be won. It is a war that has put yet another hole in the American Titanic.
I could add ten more items to the list.
History teaches that problems like these are rarely solved without wars, revolutions and social chaos.
What I want right now is to go outside into my peaceful backyard and have a drink and I would like to be able to do it in the future also, without smelling teargas in the air and hearing the noise of helicopters.
All my self interest (gold) wants me to think that America will NOT have a revolution or war on its own soil, but things don't look good.
I can tell you with almost mathematical certainty (history) that liberal reformers almost never accomplish anything and that bloody, revolutionary mobs and armies almost always put dictators into power.
What do you think will happen?
it seems to me...and i read or see just about everything from all 3 of them...that none of them focus very much on politics...just on finance, markets, banks and corruption...i'm not sure where you are getting their politics...
I think Jim Rogers is a Ron Paul supporter and to my knowledge thinks a lot like DB...Roger's once said... "They wouldn't be politicians if they knew what they were doing," he says, far from flippantly. He is opposed to any and all government intervention in the economy. He was/is opposed to the wars as far as I know. I tried to find out what he thinks of nationalizing healthcare but it can't be much different from what he thinks about the other big industries (see quote below).
Rogers: America Bordering On Communism
http://www.moneynews.com/StreetTalk/jim-rogers/2009/07/15/id/331565
Investor extraordinaire Jim Rogers has harsh words for the government’s interventionist economic policy.
That policy, which he dates back to the Bush administration, verges on communism, he told Moneynews's Dan Mangru in an interview.
“America now owns the car industry. America owns the mortgage industry. America owns a lot of the insurance industry,” Rogers said.
“Karl Marx must be somewhere standing up in his grave cheering.” And why is that? “America has become a socialist and maybe even communist nation in many ways,” Rogers said.
I don't know much about William Black.
They include communists in the Russia of 1985, royalists in the America of 1775 and most members of the American oligarchy of 2010.
Liberals are people who want to reform the system to prevent a revolution/ social chaos. They include people like Michael Gorbachev, Franklin Roosevelt (a member of the American oligarchy and called "a traitor to his class") and Ralph Nader.
In history, liberals often precede revolutions and social chaos such as the liberals of Weimar Germany who preceded the Nazi takeover and the liberals in Russia who preceded the collapse of the Soviet Union.
Conservatism and liberalism have nothing to do with government control or free enterprise. Recent proof is that the American oligarchy welcomed and even engineered the takeover of the banksters to preserve the system. History is full of similar examples.
What you see on television is a side show. It has nothing to do with liberalism and conservatism except for social conservatism (religion and homosexuality, for example.)
American conservatism is about preserving the American oligarchy and Glenn Beck, Bill O'Reilly, Anderson Cooper and Rachel Maddow are all conservative spokespersons for the corporate elite who own the news agencies they work for and are their bosses.
Amy Goodman's Democracy Now is one of the few liberal news programs in America. There are no left wing, socialist news programs in America as there are in almost every European and Latin American country.
Rodgers is a would be billionaire but he is a liberal in the sense that he sees big trouble for the oligarchy and wants to preserve it from complete financial meltdown and self-destruction.
Black is an academic who wants to save the oligarchic system with adequate government regulations. He too is worried about a complete meltdown of the American oligarchic system which he wants to preserve.
It makes sense that Janet Tavakoli would support John Kerry who is a certified member of the American oligarchy and a billionaire. She is a wannabe billionaire also, which her business and business associates and friends prove.
Liberals are not necessarily intellectuals either, as Jim Rodgers proves. But that is another story. Rogers is too busy making money to know how to do anything else and he has virtually no knowledge of history and politics which most of his shotgun remarks prove.
James, you have jumped the tracks of logic and reason. Put more simply, you are talking out of your ass. You are saying a lot but most of it is complete rubbish. DB is a nice guy, so he won’t tell you like it is. He is calling what you write semantics and labels which is not quite hitting the nail on the head with regard to your post.
“It is better to keep your mouth shut and appear stupid than to open it and remove all doubt.”
Mark Twain
Sorry to be so harsh but, really, I am think you are saying things to get a reaction. I see that you are taking things, bits and pieces, from the articles on the www. I think you need to broaden your horizons and start reading some hardcore history books or educational texts. You are talking to two people that see very clearly that you are writing about things you know little about.
If you are being serious, slow down man. Form some of your own thoughts and rethink the foundation of your arguments. If you are being serious, stop making assumptions with little to no basis in fact or reality. You are assuming to know things that you can’t possible know. Stop speaking in absolutes. It is not working for you.
I don’t think you are serious so I will not be responding to your points. No harm no foul I hope.
The American word Liberal has a different definition in Britain and Europe.
America uses it to mean social progressive and reformer while in Britain and Europe it means libertarian or laissez-faire economics.
This difference has existed for a long time. It goes back to John Stuart Mill and Adam Smith before him and, as far as I know, possibly even before that. However, it was also used by the Spanish and English during the Elizabethan period in the way we use it now.
Obviously, I was using the American definition of liberal.
Z.
I'm not offended at all. I don't like being treated as an authority figure. When I was a kid I was a star athlete and everyone treated me like a hero. No one can completely resist that kind of hero worshiping, as we can see every day when we read about famous actors and athletes. But a part of me hated it and I've avoided the temptation to be made into a hero ever since.
Your attitude is a healthy one. Most people your age pretend to be respectful of authority and then snicker when the "authority" figure leaves the room. Don't bother to do either with me. I don't want to lead a revolutionary army, be an investment guru or anything similar.
I'm provocative because I don't want followers and the best way to assure that is to offend people by exaggerating and throwing in controversial ideas along with conservative ones and letting people figure out what I really believe. I use a lot of irony also, in case you haven't noticed.
Ideas come in three parts. First the idea itself. Second, is the messenger and third the person that the message is directed towards.
Ideas are sugar coated, spun and wrapped in rhetoric and made into advertisements or propaganda.
They are directed to specific audiences with specific interests. And they are delivered with knowledge that if they fall into the wrong hands they will be misunderstood.
If you don't like my tone just think of Sir Charles B. giving game post mortems. To an outsider he sounds like an arrogant, insensitive, megalomaniac. But if you are a basketball player/fan you take everything he says with a grain of salt and grin when he gets too far out of line.
If you can't learn to do that with my posts, just skim over them and then change the channel.