Aristotle on Political Cycles; Who Influenced the ECB; Why Governments Favor Large Businesses

September 24, 2012

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"The more laws and order are made prominent, the more thieves and robbers there will be." ~ Lao-tzu, father of Taoism

"Republics decline into democracies and democracies degenerate into despotisms." ~ Aristotle

“Despotism is a form of government in which a single entity rules with absolute power.” ~ wiki

"We don’t see things as they are, we see things as we are." – Anais Nin, French author

Research:

"The average hiring mistake costs fifteen times an employee’s base salary in hard costs and productivity loss."

‘Credit driven processes can end in either hyperinflation or deflation, but is indeterminate prior to its realization’ Leijonhufvud (2012)

Skeptical one can not differentiate; it’s pretty clear the path chose for the U.S. is inflating away the debt. I have full faith in Bernanke’s ability and willingness. He’s the world’s foremost expert in these black arts.  

U.S.

U.S. household debt posts largest rise since 2008 ~ Reuters

Regulation now tops tax concerns for small businesses, but concerns over both are rising ~ John Mauldin

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Many politicians favor granting more power to large companies, since a single entity is easier to coerce and exchange favorable policies for gratuities and political concessions. For example, FDR allowed large companies to engage in price fixing in exchange for promises to maintain union jobs and wages.

For every dollar of "wealth" created, consumer spending rises just 4 cents ~ David Greenlaw, Morgan Stanley ~ bloomberg

Economy diverging from stock prices in the age of printing ~ Zerohedge

Managed Futures and Hedge Funds ~ SSRN

World:

Former ECB board member Jergen Stark: “[The ECB] gave in to outside pressure … pressure from outside Europe."

Likelihood, in order, who this “outside force” is: the Treasury, Federal Reserve, and the IMF. Central bank independence is a myth; central banks are independent and unaccountable to citizens, but not to governments.

Global Protectionist Trade Measures since 2008 ~ global trade alert

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"The food revolution is the biggest revolution of our times, and the industry is panicking" ~ Al Jazeera

Europe’s payroll taxes highlight structural problems ~ Grumpy Economist

Not said, but the ECB is preventing these structural problems from being fixed.

China:

Balance Sheet Reset – China ~ Caixin

‘Inside [China's] corporate assets bubble is financial leverage. A collapse for asset valuations would lead to a financial system collapse.’

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