Reuters continues its tremendous investigation into natural gas giant Chesapeake Energy and its CEO Aubrey McClendon. Brian Grow and Joshua Schneyer report on yet more Chesapeake emails between it and its competitor Encana:
The emails show the competitors traded information about whether Encana was halting new land leasing in Michigan in 2010, and the information prompted Chesapeake to dramatically change its leasing strategy in subsequent weeks and helped send Michigan land prices tumbling from record highs.
In the days after learning that Encana was paring back, Chesapeake CEO Aubrey McClendon ordered Chesapeake to renegotiate or delay closing on at least 10 deals that his company was negotiating with major land lease holders in Michigan, documents reviewed by Reuters show…
That same day, July 19, McClendon told top deputies and agents in Michigan: “With Encana pulling away we should be able to be very aggressive in extending some extension dates and not risk losing the deals, agree?” By that, he apparently meant Chesapeake would delay lease-signings even further into the future than they already had been pushed. McClendon now had reason to believe that his top competitor for land in Michigan - Encana - wouldn’t swoop in to make the deals in the meantime.
I’d still love to know how Reuters is getting hold of these high-level emails. I’m sure Chesapeake would too.
— You have to wonder what was going through Paul Krugman’s mind on CNBC’s Squawk Box after thirteen minutes of zombie lies moderated by his NYT colleague Andrew Ross Sorkin. My guess:
See 13:04 to 13:09 of the video amidst the end-of-segment prattle:
Here were Krugman’s thoughts a couple of hours later:
Among other things, people getting their news from sources like that are probably getting terrible advice about any kind of investment that depends on macroeconomics. But it’s amazing just how skewed the policy views are too.
Meantime, check out Felix Salmon on Martin Wolf’s appearance on CNBC last month.
— Steve Randy Waldman asks “What is a bank loan?” in a thought-provoking piece at his blog interfluidity.
Suppose I go to my local bank and ask for a loan. The bank says yes, and suddenly there is “money in my account” where there was not before. Am I now a “borrower” and the bank a “creditor”?
No. Not at all. The transaction that has occurred is fully symmetrical. It is as accurate to say that the bank is in my debt as it is is to say that I am in debt to the bank. The most important thing one must understand about banking is that “money in the bank” also known as “deposits” are nothing more or less than bank IOUs. When a bank “makes a loan”, all it does is issue some IOUs to a borrower. The borrower, for her part, issues some IOUs to the bank, a promise to repay the loan. A “bank loan” is simply a liability swap: I promise something to you, you promise something of equal value to me. Neither party is in any meaningful sense a creditor or a borrower when a loan is initiated…
The bank is just a bunch of assholes with spreadsheets, it has nothing real that anyone wants to borrow. The bank’s role is to transform questionable promises into sound promises. It is a kind of adapter of promises, or alternatively, a guarantor.
Go read the whole thing.
How low is your IQ? I saw the interview. Holy crap, talk about a blind partisan hack.
#1 Posted by Brian Durocher, CJR on Thu 12 Jul 2012 at 08:58 AM
If anyone is spreading "zombie lies," it's Krugman the genius.
"See 13:04 to 13:09 of the video amidst the end-of-segment prattle."
Oh, you mean where Krugman sweats his contradictions of the previous 13 minutes?
"I'm a free-market welfare-state guy," he says.
Uh huh.
#2 Posted by Dan A., CJR on Thu 12 Jul 2012 at 05:38 PM
Ugh. Yeah, Paul wrote about a "whole financial mess -- this destruction of $8 trillion, $9 trillion, $10 trillion of wealth, this complete bursting of the Internet bubble" and theorized that Alan Greenspan would have to inflate a housing bubble to lessen the shock, but he didn't counsel Greenspan and other financial regulators to lessen leverage limits, take the underwritting reins off, allow ratings agencies to be bribed into rating risky securities as AAA, to take the FBI off the mortgage fraud beat in 2004, to have the federal government overide state predatory lending laws for national banks, and to near systematically enable a criminogenic environment for the purpose of defrauding and stealing the wealth of homeowners and investors so that wall street bankers could stuff their pockets. Oh, and neither did Fannie Mae or Freddy Mac in case you were wondering.
Next. Peter Schiff? Really? And the best you can do is rageface about the babysitting co-op?
Last. Yeah, krugman was one of those free market economists until the people in the markets started acting like a-holes and lying all over the place. Before Enron's California market manipulation, Bush's blatant budget lying, the packs of war contractors going to the Iraqi trough, etc.. Paul was a guy who studied free trade and the liquidity traps in Japan. Evidence changes the open mind. Krugman accepts the government is bad at doing many things and, at certain things, the market is worse. He believes in the mixed economy model which has proven it can work and that it is stable when dumb ass free market zealots like Greenspan and co don't screw it all up. Paul used to be a moderate on the spectrum, the guy who made fun of radicals like William Greider and the rest. He was the reasonable free market, free trade guy.
But you people moved. Now he's 'the leftist'.
#3 Posted by Thimbles, CJR on Thu 12 Jul 2012 at 09:53 PM
All that stuff you wrote does not disprove that Krugman is fibbing his way out of his pro-bubble position. He advised the creation of a real estate bubble on more than one occasion; never was it apparent that he was "joking" at the time.
"Peter Schiff? Really? And the best you can do is rageface about the babysitting co-op?"
Care to dispute Schiff's analysis? Krugman was easily and irreparably exposed as a quack there as well.
#4 Posted by Dan A., CJR on Fri 13 Jul 2012 at 12:26 AM
Paul in his own words:
http://krugman.blogs.nytimes.com/2009/06/17/and-i-was-on-the-grassy-knoll-too/
Note, it was when that Paul McCaulley guy retired from Pimco that Bill Gross started talking like an Austrian and losing big money. Good analysts are missed when they leave because they're right most of the time. Schiff, on the other hand, is a crank who got lucky •once• because he managed once to be smarter than the CNBC/FOX crews. He's lost money since.
And, just for fun, let's remind people what radicalized Paul's speech which, 10 years ago, most of you conservatives were silent if not aggressively defending:
http://www.nytimes.com/2003/06/03/opinion/standard-operating-procedure.html
"And the bald-faced misrepresentation of an elitist tax cut offering little or nothing to most Americans is only the latest in a long string of blatant misstatements. Misleading the public has been a consistent strategy for the Bush team on issues ranging from tax policy and Social Security reform to energy and the environment. So why should we give the administration the benefit of the doubt on foreign policy?
It's long past time for this administration to be held accountable. Over the last two years we've become accustomed to the pattern. Each time the administration comes up with another whopper, partisan supporters -- a group that includes a large segment of the news media -- obediently insist that black is white and up is down. Meanwhile the ''liberal'' media report only that some people say that black is black and up is up. And some Democratic politicians offer the administration invaluable cover by making excuses and playing down the extent of the lies...
It's no answer to say that Saddam was a murderous tyrant. I could point out that many of the neoconservatives who fomented this war were nonchalant, or worse, about mass murders by Central American death squads in the 1980's. But the important point is that this isn't about Saddam: it's about us. The public was told that Saddam posed an imminent threat. If that claim was fraudulent, the selling of the war is arguably the worst scandal in American political history -- worse than Watergate, worse than Iran-contra. Indeed, the idea that we were deceived into war makes many commentators so uncomfortable that they refuse to admit the possibility.
But here's the thought that should make those commentators really uncomfortable. Suppose that this administration did con us into war. And suppose that it is not held accountable for its deceptions, so Mr. Bush can fight what Mr. Hastings calls a ''khaki election'' next year. In that case, our political system has become utterly, and perhaps irrevocably, corrupted."
#5 Posted by Thimbles, CJR on Fri 13 Jul 2012 at 12:45 AM
So here's an interesting question, what made the Pauls conclude that Greenspan would move to inflate the housing market?
Answer? The type of Fed we've had over the last 30 years. We aren't aware of it because most of us have dim memories of the Fed's work pre-Carter, but the Fed has radically changed under Greenspan (mainly) and Volcker (who's considered a leftist these days).
This paper is from 2005, and he nailed the bubble long before Schiff.
http://www.thomaspalley.com/docs/articles/selected/Legacy%20of%20Greenspan.pdf
"[T]he most important change under Greenspan has concerned the conduct of monetary policy. In the post–World War II era, the Fed’s macroeconomic policy goals have always been a combination of full employment and price stability, and all Federal Reserve chairmen have wrestled with the problem of inflation. However, under Greenspan there has been a significant shift of policy weight toward concern with inflation. Between 1945 and 1979 the shadow of the Great Depression ensured that the weight placed on full employment was far greater than the weight placed on price stability, and attention to full employment concerns helped ensure that productivity gains were shared and supported rising real wages and a rising popular standard of living. Across the board, White House, Congress, and Federal Reserve policymakers felt the need to react to labor market weakness, an approach that was formally enshrined in the 1946 Employment Act that mandated that all branches of government work together toward full employment. In effect, the era was characterized by a labor market–centered policy regime that put a floor under employment and real wages.
The Greenspan era has seen a significant shift in policy focus. Whereas the earlier regime aimed at putting a floor under labor markets, the new regime aims at putting a floor under financial markets. The new regime manifests itself in several ways, the most noticeable feature of which is the prominence given to combating inflation.
This objective has replaced the earlier regime’s policy goals of full employment, easy job availability, and rising real wages. Indeed, rising wages are actively fought on the grounds that they are inflationary, but the same logic is never applied to rising profit rates.
This policy transformation has been justified by appeal to the theory of the natural rate of unemployment, a theory developed by Milton Friedman and his Chicago school colleagues. The theory maintains that there is a minimum unemployment rate below which the economy cannot go without producing ever-accelerating inflation...
The new regime has momentous consequences. In the real economy, it has meant that full employment, robust real-wage growth, and a healthy manufacturing sector are no longer explicit policy priorities.
In the financial economy, it has created a moral hazard among investors that generates asset price inflation. Since investors increasingly realize that the stability of the system is configured around asset prices, they realize the Fed cannot afford to let asset prices go to hell in a hand basket, and they have an incentive to put everything in stocks and other such assets. Moreover, this incentive also encourages debt bubbles, since economic agents have an incentive to finance their asset purchases with debt, thereby maximizing their gain from asset price inflation."
We have spent 30 years building assets, repressing wages, and ignoring the debt required to purchase inflated assets with deflated wages. You want to find a place where the Fed is accountable for the crash? The way it has empowered finance while ignoring workers is where to start, and yes, Bernanke has continued in tha
#6 Posted by Thimbles, CJR on Fri 13 Jul 2012 at 01:21 AM
Krugman is sappy but the CNBC employees are all fugitives from The Weather Channel. They are just plain dumb.
#7 Posted by Mike Robbins, CJR on Fri 13 Jul 2012 at 08:01 PM
As long as we're talking about what Paul Krugman has said in the past... this alone should discredit Paul Krugman's expertise on anything economic:
"Unemployment is currently about 7 percent, and heading much higher; Obama himself says that absent stimulus it could go into double digits. Suppose that we’re looking at an economy that, absent stimulus, would have an average unemployment rate of 9 percent over the next two years; this plan would cut that to 7.3 percent, which would be a help but could easily be spun by critics as a failure."
Krugman, January 2009
http://krugman.blogs.nytimes.com/2009/01/06/stimulus-arithmetic-wonkish-but-important/
#8 Posted by John Abbott, CJR on Mon 16 Jul 2012 at 02:56 AM
"this alone should discredit Paul Krugman's expertise on anything economic:"
Quick question for you: how? Indulge us and go into detail.
#9 Posted by Thimbles, CJR on Mon 16 Jul 2012 at 11:36 AM
On the topic of fracking, something's happening here- what it is ain't exactly clear:
http://mobile.businessweek.com/articles/2012-07-12/the-fight-over-fracking-in-colorados-north-fork-valley
"U.S. Senator Mark Udall (D.-Colo.) made an equally anodyne statement: “No one disputes our country’s need to develop domestic energy resources, but that has to be balanced with the economic and quality-of-life considerations of those whose lives and livelihoods will have to exist alongside the energy development.”
In the weeks that followed, the marshaled force of outrage along the river shocked even the environmental groups. It felt peculiarly American. It reminded me of one of those Westerns where the homesteaders get all fired up to beat back the rich and unscrupulous rancher. On the groups’ behalf, the Western Environmental Law Center in Taos, N.M., filed a Freedom of Information Act request for the name of the entity that nominated the parcels. It was still mid-January. Mitchell Gershten, a local physician, said: “This is our land. If someone wants to come onto my land with a shovel, I want to know who it is.”
The government responded promptly and released the nomination form. The name was blacked out. Public anger was so great that Gunnison Energy, Koch’s company, announced that it had nominated the three parcels near the Paonia Reservoir but had not nominated the other 19. Brad Robinson, Gunnison’s president, said that he had “no interest” in the other parcels. This was followed by a similar statement from SG Interests, another oil and gas company active in the area, which denied nominating any parcel. Maybe the companies really were sensitive to bad PR. (In mid-February, the two companies would settle an antitrust lawsuit with the U.S. Department of Justice that alleged that they had colluded on bidding for BLM mineral leases.)
The BLM’s Uncompahgre Field Office in nearby Montrose, responsible for the resource management plan and for making recommendations on the parcels, received thousands of letters. In the next few weeks dozens of commercial organizations, government entities, and environmental groups wrote letters to the BLM. Realtors across the board emphatically opposed the lease sale, citing a real estate economy just getting back on its feet and already seeing the negative effects of the drilling threat. The West Elks Winery Association wrote a 15-page letter...
hen, a month later, on May 2, the BLM abruptly announced, in a three-sentence statement, that they were deferring the entire lease sale. The statement said: “BLM has opted to conduct additional analysis of the proposed lease parcels based on public input.” A stay of execution. But for how long?..
On a recent trip to Denver, I stopped in Parachute, west of Rifle, where intensive fracking has been going on for about seven years...
the Colorado ran as it always had, deep green, unhurried. I felt a cold and growing fear. That was it. The reporter had articulated the dread: that once a gas and oil company gets into your valley, they own you. They own the hospital. They own the commissioners. They own your mountains, and they will do what they want."
Citizens have a real fight on their hands.
#10 Posted by Thimbles, CJR on Mon 16 Jul 2012 at 03:33 PM