Desiderata

Ireland, or, What Not to do With Your Economy – Ireland adopted a fairly strong version of the supply side/trickle down approach to their national economy. The cornerstone to this approach is to gut taxes. A common accompaniment is lax regulation, especially in the financial sector. Two results were achieved. First, lots and lots of foreign multinationals showed up to take advantage of the low tax rates. They hired lots of well educated locals and were a major contributor to the “Celtic Tiger”. Second, the banks went on a rampage and pretty much did whatever they wanted. One thing they apparently wanted to do was to loan way too much money to real estate developers.

Wait, three things happened. The third being that the economy hit a wall, even harder than everyone else, and the country is on the verge of bankruptcy. And here’s a great quote from one of the multinational companies that showed up: “HP is very clear,” Lionel Alexander, head of Hewlett-Packard’s Irish operations, told Bloomberg Television. “If the tax rate increased, we would be relooking at our investment in Ireland.” The standard business press mantra when faced with quotes like this is that HP has an obligation to its shareholders. True. And if Ireland is the cheap whore, rider her. But I wonder if Lionel Alexander said something like, “we don’t give a fuck about Ireland or the Irish people, but if we can locate a facility this close to Europe AND pay almost no taxes (12.5% v. approx. 28% in other parts of Europe), we’re in. No, he didn’t

The point: Every time you hear someone talking about how we have to keep lowering taxes here, ask them how it worked in Ireland. This is also relevant to the Bush tax cuts.

$100 Million Here, $100 Million There…It Starts to Add Up – Goldman Sachs trader Fabrice Tourre is facing additional charges in an ongoing battle with the SEC over Goldman misleading investors in products related to subprime mortgages. For its part, Goldman settled for $550 Million. Put another way, Goldman settle for $550,000,000! You don’t do that if you’re innocent. I know it’s a big organization. I know they don’t want bad press. I know they make a lot of money. But you don’t willingly part with more than HALF A BILLION DOLLARS unless you thought you might be compelled to part with more.

The point: Goldman was ripping off everyone they could during the height of the real estate bubble. They may not have broken too many laws, but they were fucking everyone they could. They were lying to anyone they had to. They were doing anything at all to make obscene amounts of money. They are NOT just sophisticated players in a major international marketplace. They are parasites.

Corporate Profits – Logged in at $1.66 trillion. Yes, trillion. That’s on an annualized basis. Unemployment hovers just below 10%. Suck it.

The point: I thought Obama was killing business (I’m not a fan of the current Chief Magistrate for what it’s worth). I thought the economy was teetering on the brink of the abyss. I thought the huge government debt was sucking the life out of the economy. No, the economy, as measured by profits, is soaring. Don’t believe any macroeconomic argument you hear from a politician on the left OR the right.

Ben Bernanke is a Drug Dealer – This is the takeaway from an utterly moronic column written by Shaun Rein at Forbes. See, Shaun had a friend (“Johnny” was his name…surprise, surprise) who was a junkie. When his parents ran out of love, all they could give him was money. But Johnny was an addict, so THAT DIDN’T HELP. Similarly, Bernanke “giving money” to US businesses won’t help (yes, Shaun’s boiled QE down to that). Why won’t it help? Here’s why: “Low interest rates and an increased money supply are worthless tools if companies don’t think there are ways to make money.” Maybe Shaun didn’t see that US businesses just clocked in with record profits.

The point: this really doesn’t have anything to do with business. The point is that when a column purporting to be serious is so poorly conceived and so stupidly written, you should just ignore whatever it’s saying. If someone else provides a reasonable basis to disagree with QE, give them a listen. But if it’s this clown, don’t bother.