Daily Archive: 08/05/2011

Aug 05 2011

Congress and Obama Ignore History at Our Peril

One  of the signs of insanity is repeating the same mistake in hopes of a different outcome. Seventy five years ago, the congress and President Franklin D. Roosevelt did exactly the same thing that congress and President Barack Obama did on Wednesday with the same results.

FDR’s Recession

By the spring of 1937, production, profits, and wages had regained their 1929 levels. Unemployment remained high, but it was considerably lower than the 25% rate seen in 1933. In June 1937, some of Roosevelt’s advisors urged spending cuts to balance the budget. WPA rolls were drastically cut and PWA projects were slowed to a standstill. The American economy took a sharp downturn in mid-1937, lasting for 13 months through most of 1938. Industrial production declined almost 30 per cent and production of durable goods fell even faster.

Unemployment jumped from 14.3% in 1937 to 19.0% in 1938, rising from 5 million to more than 12 million in early 1938. Manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels. Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. In most sectors, hourly earnings continued to rise throughout the recession, which partly compensated for the reduction in the number of hours worked. As unemployment rose, consumers’ expenditures declined, leading to further cutbacks in production.

The Roosevelt Administration reacted by launching a rhetorical campaign against monopoly power, which was cast as the cause of the depression, and appointing Thurman Arnold in the anti-trust division of the U.S. Department of Justice to act, but Arnold was not effective. In February 1938, Congress passed a new AAA bill which authorized crop loans, crop insurance against natural disasters, and large subsidies to farmers who cut back production. On April 2, Roosevelt sent a new large-scale spending program to Congress, and received $3.75 billion which was split among PWA, WPA, and various relief agencies. Other appropriations raised the total to $5 billion in the spring of 1938, after which the economy recovered.

The stock market plummeted over 500 points yesterday wiping out any gains from the recovery since 2008. The market is continuing to fluctuate after rather weak jobs report. While the U-3 dropped to 9.1%, it was due mostly to workers who are no longer seeking employment or are now in the ranks of the under-employed and jobs creation was weak. So after the debt ceiling deal and the worsening European banks situation, investors lacked confidence that the US could increase productivity.

But the White House and Congress insist on sticking to their story that if they hadn’t given the hostage takers all they wanted with no jobs stimulus or revenue increases, they wouldn’t have gotten the debt deal and the markets would have crashed. As John Nichols said in The Nation, “Unfortunately, it was wrong. Not just morally wrong. Not just politically wrong. Not just economically wrong. It was wrong with regard to the cherished markets.”

Aug 05 2011

Shrill? Part Deux.

As I assemble this the DOW is once again down over 200 points and the question is whether it will remain above 11,000 at the close.

Rates of Wrath

August 4, 2011, 11:41 am

The US 10-year bond rate is now down to 2.5%. So much for those bond vigilantes. What this rate is saying is that markets are pricing in terrible economic performance, quite possibly a double dip. And it also says that Washington’s deficit obsession has been utterly, totally wrong-headed.

Meanwhile, Italy’s spread against German bonds is soaring even further. What are markets pricing in here? Default as a real possibility; maybe even euro breakup. The latter certainly sounds a lot more plausible now than it did a few months ago.

The Wrong Worries

By PAUL KRUGMAN, The New York Times

Published: August 4, 2011

Consider one crucial measure, the ratio of employment to population. In June 2007, around 63 percent of adults were employed. In June 2009, the official end of the recession, that number was down to 59.4. As of June 2011, two years into the alleged recovery, the number was: 58.2.



And why should we be surprised at this catastrophe? Where was growth supposed to come from? Consumers, still burdened by the debt that they ran up during the housing bubble, aren’t ready to spend. Businesses see no reason to expand given the lack of consumer demand. And thanks to that deficit obsession, government, which could and should be supporting the economy in its time of need, has been pulling back.



Those plunging interest rates and stock prices say that the markets aren’t worried about either U.S. solvency or inflation. They’re worried about U.S. lack of growth. And they’re right, even if on Wednesday the White House press secretary chose, inexplicably, to declare that there’s no threat of a double-dip recession.



The point is that it’s now time – long past time – to get serious about the real crisis the economy faces. The Fed needs to stop making excuses, while the president needs to come up with real job-creation proposals.



This might or might not work. But we already know what isn’t working: the economic policy of the past two years – and the millions of Americans who should have jobs, but don’t.

You know, it’s just a stinking Nobel Prize in Economics.  This guy knows nothing.

Pulling Rank

August 5, 2011, 9:12 am

I’ll pass the specific arguments by, and note another feature of this “debate” that has struck me a lot during recent economic controversies: the way Williamson tries to settle the argument by pulling rank, portraying Quiggin as some kind of obscure and unqualified guy.

It’s funny in this case, because Quiggin is in fact a prominent economist, Williamson not so much. But even if this weren’t true, that’s no way to argue. Which is why it has been so sad to see how common this kind of argument has been in recent years.

I don’t have time right now to track down all the examples, but if you look at how many freshwater macroeconomists have responded to Keynesian arguments in this crisis, you find over and over again that they resort to assertions of privilege – basically, I am a famous macroeconomic expert and you aren’t – rather than really addressing the issues. And this is so ingrained a response, apparently, that they use it in situations where it’s truly ridiculous: Lucas accusing Christy Romer of not understanding basic macro, then demonstrating that he doesn’t understand Ricardian equivalence; Barro belittling the credentials of yours truly, just after forgetting that there was rationing and investment controls during World War II.

Aug 05 2011

Punting the Pundits

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Robert Reich: The Republican’s Double-Dip, and What Must Be Done

John Boehner said Tuesday the Republicans got “90 percent of what we wanted” from the budget deal. So presumably he and his colleagues are willing to take responsibility for some 450 points of today’s mammoth 513-point drop in the Dow Jones Industrial Average.

I’m being a bit facetious – but only a bit. It’s always dangerous to read too much into one day’s move in the stock market.

Yet the stock sell-off – not just today’s, but that of the last days – cannot be easily dismissed. It marks Wall Street’s largest losing streak since 2008.

Republicans repeatedly assured the nation that once the debt-limit deal was done – capping spending, cutting the budget deficit, and getting “90 percent” of what they wanted – the economy would bounce back.

Just the opposite seems to be happening.

Call it the Republican’s double-dip recession.

Mark Weisbrot: What Everyone Should Know About the “Debt Crisis” in the U.S.

There was never any chance that the U.S. would actually default on its debt. The whole “crisis” was manufactured from the beginning, with Republicans in the House of Representatives using a technicality to win unpopular spending cuts that they could not win at the ballot box. It worked: They got an agreement that promises large spending cuts without any tax increases on America’s rich or super-rich, who have vastly increased their share of the national income over the past three decades.

The right won because President Obama chose to collaborate with them, also seeking to take advantage of the manufactured “crisis” to implement cuts that offended and hurt the people who voted for him. Of course he also wanted to increase taxes on the rich, but because he had accepted the legitimacy of the Republicans’ extortion, he lost that too.

New York Times Editorial: End the Debt Limit

It has long been clear that the federal debt limit is far too dangerous and unstable for lawmakers to use as a political weapon. Allowing that to happen in the last few traumatic weeks created an artificial national crisis that put the economy and the savings of Americans at risk and helped produce a loss of confidence that lingered as a cause of Thursday’s stock-market plunge.

None of that, however, has stopped Republican leaders, who announced this week that they intend to repeat this explosive episode over and over, in perpetuity. With the bad memory still fresh, President Obama should quickly seize the opportunity to make clear that he will not allow it even once more, never mind permanently. Instead of raising the debt ceiling every few years, it’s time to eliminate this dangerous game once and for all.

David Sirota: The Bizarro FDR

Barack Obama is a lot of things-eloquent, dissembling, conniving, intelligent and above all, calm. But one thing he is not is weak.

This basic truth is belied by the meager Obama criticism you occasionally hear from liberal pundits and activists. They usually stipulate that the president genuinely wants to enact the progressive agenda he campaigned on, but they gently reprimand him for failing to muster the necessary personal mettle to achieve that goal. In this mythology, he is “President Pushover,” as New York Times columnist Paul Krugman recently labeled him.

This storyline is a logical fallacy. Most agree that today’s imperial presidency almost singularly determines the course of national politics. Additionally, most agree that Obama is a brilliant, Harvard-trained lawyer who understands how to wield political power.

Danny Schechter: As the Dog Days of Summer Approach, Politicians Rest Before Returning to the Fray. The Political War Will Continue

Now that the debt drama is over for the moment, we can all safely retreat in what was once called the “Dog Days Of Summer” and chill out if the volatile weather allows us to. We can think back to that old song, “Summer time and the living is easy” even as we all know that for millions “the living” is anything but.

The House and Senate have become ghost-like chambers because all its members, so filled with strident indignation and inflexible talking points just a week ago, are now off on their paid vacations hyping their political war stories to grandchildren.

Imbued with a sense of triumph, the Tea Party is huddling to come up with ongoing tactics to hold the system hostage while the party leaders plan the new “Super committee” with 12 chosen acolytes (how Biblical, that number 12!) to map the next round of fiscal blood-lettering.

Stanley Kutler: Say It Ain’t So, O!

When Barack Obama began his quest for the presidency more than three years ago, admirers and many opponents alike conceded he was smart, tough and articulate. Well, we are left with one out of three.

snip

One critic, with an eye to history, suggested that Obama declare himself a moderate Republican and seek the nomination of both parties just as in 1820 when James Monroe ran as the only candidate. Then we might replay the “Era of Good Feelings”-which was anything but-with Obama synthesizing Herbert Hoover, Ronald Reagan and Bill Clinton. What political genius!

Joseph S. Nye, Jr.The Right Way to Trim

THE recent debt deal will slash the defense budget over the next decade. And if Congress can’t agree on an additional $1.5 trillion in cuts, the law’s “trigger mechanism” will lead to deeper reductions in military spending. The initial cuts will not imperil America’s national security, but the deeper cuts could.

The administration of George W. Bush nearly doubled the defense budget following 9/11. With the winding down of Mr. Bush’s two wars, we could cut our ground forces to 1990s levels, reduce the planned purchases of F-35 Joint Strike Fighters, make greater use of cheaper drones and other technologies, and deal with the escalating costs of the defense health care system – without serious damage to national security. Indeed, President Obama’s budget had already planned for $400 billion in defense savings by 2023.

Aug 05 2011

BREAKING: This Week In The Dream Antilles

Washington-  President Obama today announced sweeping changes in US economic policy that would guarantee full employment by the end of 2012 and resolution of the nation’s deficit.  The Executive Order, issued while Congress was on summer vacation, was an enormous surprise even though it was apparent that the move had been planned for months.  The extensive, 450 page Executive Order primarily addresses employment and taxation.

Following the announcement, the President’s Press Secretary Jay Carney was overheard to say, “We’re not going to allow Republicans to continue act like two-year olds who have not mastered toilet training. We are not going to let them turn America into an open air septic tank. This is how we have had to do that.”

The stock market responded to the announcement by recording its largest single hourly advances in history.  

Your Bloguero could continue to tell the story.  He could tell you how the President had authorized billions and billions of dollars to be spent immediately on infrastructure, including rail systems and wind power, to stimulate employment.  And how he had required banks immediately to refinance mortgages and to forgive student loan debts.  And your Bloguero could tell you how the President had exercised his emergency powers to restore the income tax rate on America’s wealthiest people to 1955 levels and had restored cuts to food stamps, and welfare and how he had increased and extended unemployment benefits.  And how he had closed Guantanamo and recalled all of the troops from Iraq and Afghanistan.  He could describe for you how the President had thumped his podium and said,

“This is a national emergency in our economy, and I am exercising my executive powers to preserve our Nation.  I am not going to stand idly by. I am enacting these policies now because the nation can no longer depend on this dysfunctional Congress to save its economy from depredation.  To the contrary, Congress’s actions have thrust the nation into this crisis, and they refuse contumaciously to reverse themselves.  No.  The buck stops here. I have acted to end a national emergency.”

Alas.  Tell me lies.  Your Bloguero cannot bare the truth.

This Week In The Dream Antilles is usually a weekly digest. Sometimes, like now, it is not actually a digest of essays posted in the past week.  For that you have to visit The Dream Antilles. Your Bloguero always solicits your support. No, not your money. Just leave a comment so that your Bloguero will know that you stopped by. Or, even easier, just click the “Encouragement jar”. Your Bloguero likes to know that you’re visiting.

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cross posted fromThe Dream Antilles

   

Aug 05 2011

On This Day In History August 5

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

Click on images to enlarge

August 5 is the 217th day of the year (218th in leap years) in the Gregorian calendar. There are 148 days remaining until the end of the year.

On this day in 1957, American Bandstand goes national

Television, rock and roll and teenagers. In the late 1950s, when television and rock and roll were new and when the biggest generation in American history was just about to enter its teens, it took a bit of originality to see the potential power in this now-obvious combination. The man who saw that potential more clearly than any other was a 26-year-old native of upstate New York named Dick Clark, who transformed himself and a local Philadelphia television program into two of the most culturally significant forces of the early rock-and-roll era. His iconic show, American Bandstand, began broadcasting nationally on this day in 1957, beaming images of clean-cut, average teenagers dancing to the not-so-clean-cut Jerry Lee Lewis’ “Whole Lotta Shakin’ Goin’ On” to 67 ABC affiliates across the nation.

The show that evolved into American Bandstand began on Philadephia’s WFIL-TV in 1952, a few years before the popular ascension of rock and roll. Hosted by local radio personality Bob Horn, the original Bandstand nevertheless established much of the basic format of its later incarnation. In the first year after Dick Clark took over as host in the summer of 1956, Bandstand remained a popular local hit, but it took Clark’s ambition to help it break out. When the ABC television network polled its affiliates in 1957 for suggestions to fill its 3:30 p.m. time slot, Clark pushed hard for Bandstand, which network executives picked up and scheduled for an August 5, 1957 premiere.

Aug 05 2011

DocuDharma Digest

Regular Features-

Featured Essays for August 4, 2011-

DocuDharma

Aug 05 2011

Countdown with Keith Olbermann

If you do not get Current TV you can watch Keith here:

Watch live video from CURRENT TV LIVE Countdown Olbermann on www.justin.tv

Aug 05 2011

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

1 US stocks plunge in worst day since crisis

AFP

48 mins ago

The Dow Jones Industrial Average plunged 4.3 percent Thursday, its worst one-day drop since the financial crisis, as global markets melted down over fears of a new economic downturn.

The Dow closed down 512.76 points to 11,383.68. The broader S&P 500 lost 4.8 percent to 1,200.07, while the tech-heavy Nasdaq Composite plunged 5.1 percent to 2,556.39.

More turmoil over sovereign debt problems in Europe and feeble US economic data are stoking “fear that the economy is heading for a double-dip recession,” said Peter Cardillo of Rockwell Global Capital.