Davos World Economic Forum – For Bloggers, Davos WEF 2012 for Economic Bloggers

“The world is a dangerous place to live; not because of the people who are evil, but because of the people who don’t do anything about it.”~Albert Einstein

Pareto’s Principle

When I began seriously researching for the book I’m working on, “Psychopathic Economics,” two principles really surprised me.

The first was a mich deeper review of the is the ’80/20 Rule’, which states that 80 percent percent of the profits come from just 20 percent of the product line.  Most often, 80 percent of the business generated is created by 20 percent of the work force (usually the sales team).  In many cases 80 percent of the product line is purchased by 20 percent of the customer base.  When  businesses wind up on the ropes—8o percent of the time they cut into that 20 percent muscle.

But what really floored me was the second principle.  Social scientists revealed that with herds it only takes 5 percent of the herd to create a “social tipping point”.  This 5 percent is actually large enough to nudge the herd in a different direction.  Which brings to focus the point of this article, Einstein’s quote;

“The world is a dangerous place to live; not because of the people who are evil, but because of the people who don’t do anything about it.”

Sheeple Meet Cliff

Herds exhibit strange and often suicidal tendencies: “450 sheep jump to their deaths in Turkey”

First one sheep jumped to its death. Then stunned Turkish shepherds, who had left the herd to graze while they had breakfast, watched as nearly 1,500 others followed, each leaping off the same cliff, Turkish media reported.

Momentum in a herd is hard for one creature to resist without being  trampled.  In order to change the herds direction a new critical mass, a “tipping point” of 5% must first be developed first.

Economic Tipping Points

Economic tipping points are easily noticed—after the sheeple go cliff diving.

The tech bubble was a classic example of this.  Greenspan flooded the economy with dollars in the late 1990s.

Soon people I knew were quitting their day jobs, borrowing from their HELOCs at 6.x percent and looking for the 100-”baggers.”  Stocks like Yahoo which opened under $5 in 1997 and brushed $120 by 2000 inspired them (and many fund managers).  Sadly many picked companies like IPET (Pets.com) which opened at $11 rose to $14 and soon tanked to 22 cents.

“Because pets can’t drive,” and because IPET amassed a customer base of 570,000 customers, Amazon became interested in them and bought a 30 percent share of the company.  Of course IPET’s power point presentation had impressive growth  sounds—”boing”—and charts that dazzled them.  Steve Jobs said that if you need a PowerPoint presentation then it means that you don’t know what you’re talking about.

As Mike Daisey’s incredibly hysterical book “21 Dog Years, Doing Time @ Amazon.com”, describes: The rub was in the shopping cart during checkout when those 570,000 customers (and Amazon) came to the startling realization Pets.com was in the gravel-shipping business.  $5.00 for a bag of cat litter and $45.00 for UPS ground shipping.

People soon came to their senses and realized that pets had survived before the internet—even though they couldn’t drive.

The herd moved again.

…This time into the housing bubble.

The Edge of the Abyss

Matt Taibbi did, as usual, a phenomenal piece, “Why Isn’t Wall Street in Jail?”

“Everything’s f*cked up [edit mine], and nobody goes to jail,” he said. “That’s your whole story right there. Hell, you don’t even have to write the rest of it. Just write that.”

We’re up against the abyss and the psychopaths who ran us over the ledge in 2008 are still doing the shepherding.  They’re the 5% controlling the herd.  Even if the current group of psychopaths went to jail there’d just be another group of Wall Street psychopaths filling their shoes.  That’s the problem with Corporatocracy, there is a revolving door between these corporations and our government.  I’ve written about it here, “Why We Are Totally Finished”, and recently 60 Minutes did a piece on the corruption on the hill, link here.

The past Chief of Staffs in the White House have been: Donald Regan for Ronald Reagan, in the above link you can watch the ex-CEO of Merril Lynch tell Ronnie to “speed it up”, “it” being his speech.  It’s not President “Xyz”, it is President Wall Street Psychopath, pulling the strings of the two puppets in the White House.

Let’s not humanize puppets with human names: Recently Citigroup has replaced JP Morgan as Chief of Staff in the White House.

Congress and the Senate have their own puppeteers, they’re called lobbyist.

Is it about no one going to jail or why isn’t there a collective movement to reach that 5% critical mass it takes to achieve a tipping point capable of moving the herd away from the cliff and into green pastures?

Why, as a herd, are we letting the a$$holes that “sh#t the economic bed” to stay in it?

And one more thing: That revolving door; the one between corporations and government; you know; the one that let Hank Paulson go from Goldman Sachs CEO to Treasurer and then give his ex-buddies well over $10 trillion dressed up as a $700 billion dollar pig—well, that indicates that we need to look at the number of stark raving mad psychopaths that exists within our corporations.

While the documentary, “The Corporation” described how corporations were structured to resemble psychopaths, this fantastic documentary “I Am Fishead” reveals how a professor  interviewed 203 executives at Fortune 100 companies.  It is the first “Corporate Psychopath” study that has been conducted.

While the percent of psychopaths was what you’d find among the regular population, 8-9 that rated had really high scores of 30 out of 40.  We’re talking batshit crazy with scores like that.  Many high scores over 25.  The entire film is well worth the watch but this section starts at about 23 minutes.

Getting back to my point, is jail really the answer?  Aren’t we just going to wind up with just a group of different psychopaths?

The movie also talks about the conditioning we get as kids from school and from our parents.  The “MYOB” (mind your own business) and don’t get involved.  ”I Am Fishead” talks about our Prozac nation also, how meds remove anger.  It missed the fact that a lot of city water has a high level of meds after they remove the waste from the toilet water and send it back with chlorine and fluoride in it for you to drink.

No prescriptions required and if you want to know the side-effects just catch the 20 minutes of big-pharma commercials with your 10 minutes of news when you watch Brian Williams on MSNBS.  Nothing like preparing dinner and listening for instructions on what you should do if you start bleeding from your eyes.  And the best part is when your elementary school kid is doing their homework at the kitchen bar he or she gets to hear about erections lasting more than 4 hours.

There are traces of sedatives in New York City’s water. Ibuprofen and naproxen in Washington, D.C. Anti-epileptic and anti-anxiety drugs in southern California. 

A 2,550 word article from The Associated Press is drawing attention to the widespread problem of trace amounts of pharmaceutical chemicals turning up in the drinking water supply of millions of Americans, but no one seems to know how to react. The report itself culminated with a doctor offering a tried-and-true deduction for the Ages: “That can’t be good.”

Another section worth catching was the shock study, where Milgram’s work revealed that people obey out of fear or out of a desire to appear cooperative, even when acting against their own better judgement and desires.

It’ll be interesting to see if the gang of 5% below runs us off the cliff, or if some sort of social tipping point changes the herds direction.

How many of us do you think are on well water? Five percent? Good times for the 5% “leaders” in this country.

The “Leadership” 5%

“Our high priest and priestesses of money are in danger of being revealed as powerless frauds”~Chris Martenson & Charles Eisenstein

Ben S. Bernanke

Education: Harvard Bachelor of Arts in economics, roomed with CEO of Goldman Sachs-”Doing God’s Work”-Blankfein,  PdD economics MIT.

Employment: Visiting professor at NYU, Tenured Princeton Economics Professor, Board of Governors Federal Reserve System 2002-2005, Chairman of Bush’s Council of Economic Advisers, Chairman of the Fed 2006-present.

Failures: Helped blow the biggest bubble in economic history, the bubble that has decimated the economy and tossed us into the Second Great Depression.  Failed to regulate the banks with regard to derivatives.  Lied that housing wasn’t in a bubble, lied that  housing prices had never have fallen on a nationwide basis (2005), then laughed about the impending bubble at the December 2005 FOMC meeting.  Lied and continues to lie about inflation (it is 11% not 2.2%), lies about unemployment being 8-9% when it is 23%.  Worst of all he is leading us over the financial repression cliff, which wont work this time.  Ninety-nine percent of all the countries are, for the first time in history—all broke at the same point and time.

Bottom line: The Fed has 2 mandates, maximum employment and stable prices.  Unemployment is 23% and inflation is running at 11% a year.  It is obvious that Bernanke’s mandate is to support his Harvard roommate and the member banks that own the Fed, link.

His biggest failure: His inability to acknowledge we’re in the Second Great Depression.  His inability and and failure to correct the total and absolute insolvency of the banks and the country by implementing an overt and immediate currency revaluation backed to gold.  With 7 billion people on the planet our economy can not be modeled on that of limited resources mined and sold to pay the always expanding interest on money the banksters loan into existence.  Money must be anchored.  Exponential with limited resources doesn’t equate.  Anyone who taught themselves Calculus is smart enough to know this and has to be a psychopath to continue herding sheeple towards the economic cliff.

Alan Greenspan

Education: Julliard School.  Hitler taught us the world needs more artists, even if their art sucks.  N.Y.U. B.S. economics, M.A. economics, dropped out of Columbia (to follow Burns to DC to learn how to chase power and powerful positions). PhD N.Y.U.  His NYU dissertation—removed upon his request when in 1987 he became Chairman of the Fed.  One copy remains out there and it includes a discussion of soaring housing prices and their positive effect on consumer spending. It even anticipates a housing bubble and collapse.  He noted that homeowners were refinancing for larger amounts than their original mortgages, monetizing their appreciation and then spending the excess cash on goods and services.  Economists had missed this trend.  He also wrote in his now secret dissertation,

“There is no perpetual motion machine which generates an ever-rising path for the prices of homes.” …”break in prices of existing homes would pull down the prices of new homes to the level of construction costs or below, inducing a sharp contraction in building.”

In his 1966 Objectivist article “Gold and Economic Freedom”, which stated (link),

“In the absence of a gold standard, there is no way to protect savings from confiscation through inflation.”

Which makes it clear that he knew what was going to happen when created massive inflation as we saw in the housing bubble.  In the 2000s he signed the original article and told Congressman Dr. Ron Paul that he still believed in everything in it.  Greenspan is, without a doubt an economic terrorist.

Employment: Worked for Dr. Marc Faber who had to re-write Greenspan’s crap, Faber later said Greenspan should have never been Chairman of the Board of Governors Federal Reserve System, which he was from 1987-2006.  From Sheehan’s fantastic book, “Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession”

Mark Faber, Hong-based investor and author of the monthly Gloom, Boom & Doom Report, could see far enough ahead to move to Asia in the 1970s.  He remembers his meetings with Alan Greenspan (when Faber still worked in New York): I was put in charge of research liaison for White, Weld’s overseas offices…My job entailed…attending the monthly economic presentations [by Alan Greenspan]…When Mr. Greenspan first came on board at White, Weld as a consultant, 30 or 40 people from the firm’s various departments would attend the meetings.  Within a few months, however, attendance had dropped to just a handful of White, Weld employees.  By then I had also learned that the easiest way for me to communicate the (to me) incomprehensible remarks of [Greenspan] to our overseas offices was smply to summarize the previous day’s news from the front page of the Wall Street Journal”.

Failures & Collateral Damage: Flooded the world with dollars during the Asian financial crisis of 1997-1998 which contributed to the two biggest bubbles in the world, the Dot-Com bubble and the Housing bubble.  Muzzled Brooksley Born (who headed the CFTC from 1996-1999) when she wanted the CFTC to regulate derivatives before they became a household word, admitted to Congress in October 2008 that his free-market ideology shunning regulation was flawed, this after his dissertation lambasted the Fed for allowing any one psychopath to have too much control of the monetary system.  Ramrodded the Gramm-Leach Bliley Act (1999) wich obliterated the Glass-Steagall Act put in place after the last depression to prevent banks from gambling deposits on risky investments. Link.

Larry-”I Lost $1,800,000,000.00 for Harvard Betting on Derivatives”-Summers:  He’s got some other serious claims to fame, Obama is considering him for the top post at the World Bank, he helped Alan Greenspan muzzle Brooksley Born and fell asleep at White House Economic meetings during this, our Second Great Depression. Link.

Our “Administration” who admits that the Obama Administration asked Jon Corzine for Economic Advice. Why not Madoff?:  Right after Obama & Biden got in the White house these economic imbeciles faced with a financial crisis called—drum roll please—MF Global’s Jon-”I Bet My Clients’ Money on Greece”-Corzine for advice on what do do.  You can watch the short YouTube video here.  

While Clinton went with Rubin who was an ex co-chairman of Goldman Sachs for his Treasury Secretary he later developed strong ties with Jon Corzine of MF Global.  Rubin was cut out of the same cloth, he told Clinton not to regulate derivatives and sent Summers barking after Born.   Another Harvard and London School of Economics genius.

GE’s CEO (Who Obama has as its head as his Council on Jobs) took money in bailouts, owns MSNBS and CNBS and GE Capital slashed about 11,000 jobs or 10% of its workforce, you can read about it here.

Hank Paulson $10 maybe up to $34 trillion given to his buddies for blowing up the economy and blasting us back into the Second Great Depression.  Ex Goldman CEO.  Dartmouth and Harvard.  He and Bernanke proved clueless about UK BK laws when they forced Lehman into BK. Link & link & link.

Paulson and Bernanke had not consulted with other governments and didn’t understand the consequences of foreign bankruptcy laws. Under British law Lehman’s London office had to be closed immediately.  

The “Financial Media, Experts and Professors” 5%

Maria Bartiromo who lets Bernanke slide with his “I don’t agree with your premise, housing prices have never declined on a nationwide basis,” “answer” to her “Is housing in a bubble?” question.  $1 million a year for a salary and she lets the most important question in economic history fail.  People who relied on “uneducated angry economic bloggers” soon realized who the uneducated economic morons really were. Link and link.  This is critically important also because Bernanke’s book had been out for quite some time (2000) and in it he lists states across the country with declines of up to 60% in housing.  But, more importantly, Von Mises is clear on how a bubble of this magnitude ends, link.  And then the FOMC minutes were released showing the Fed as klouns laughing about housing being in a bubble.

 Cramer was on YouTube explaining how, when he was a hedge fund runner he manipulated the market.  CNBS really picks them. Link.

 Dr. Nouriel Roubini who decorates and sculptures his walls with female private parts, (the ones below the waist), whose economic research firm is on the block after losing $2 million dollars and is famous for calling gold a barbarous relic as it doubled and out performs virtually every other asset class. Link, wonder why his economic research firm is 8 figures in the red?

Mishkin who teaches Economics at Columbia got paid $124,000 to write a report on praising derivatives in Iceland, after the Icelandic crash caused by derivatives he renamed his report on his CV from “Financial Stability in Iceland” to Financial Instability in Iceland.” Link.

…And the list goes on and on.