State of the Economy

by Ian Welsh

2010 August 23

The key issues are that States and municipalities are essentially bankrupt, and that corporations aren’t hiring.  Corporations aren’t hiring because their profits are fine, and because they don’t see where the sustained growth would come from.  States and municipalities are having income issues because the incomes of median taxpayers have not recovered and the number of employed is not increasing (ignore the “unemployment rate”, what matters is how many people are employed and that hasn’t recovered worth a damn.)  Since States and municipalities have limited ability to borrow and can’t print money, in both cases, unlike the Feds, this means they must cut or raise taxes and in general States are ideologically opposed to raising taxes and municipalities don’t feel they can.  Housing prices remain depressed, which is the main source of money for municipalities.

Since there is no chance of a real stimulus being passed (and if there was, Obama would do it badly, like he did the last one) and since Obama refuses to spend the TARP money on the economy until it’s his reelection on the line rather than Congressional Dems, and since there’s no obvious source of new jobs in the US economy, I see little reason to expect the US economy to recover.  Even if the world economy somehow does, it will route around the US, since the US is a high cost domicile and there is no good reason to produce in the US.  In the old days you produced in the US because that was where the next big tech boom occured, the skills were there, and you needed in.  With the deliberate strangling of innovation in the US due to the oligopolization of the economy, the next tech boom (if there is one) is unlikely to occur in the US.

…

None of this was necessary, but Obama chose to not just ask for too little money in his stimulus, but spent the money very badly even outside of the hugely useless tax cuts.  The money did not give the economy an obvious medium term direction: either a huge telecom build-out or an energy and conservation build-out, and the huge bailouts for financial firms created a more concentrated financial sector full of zombie banks with no intention to lend money.  The failure to create a workable cram down on housing prices which also rescued underwater home owners has left housing prices underwater and credit markets still sclerotic.  With the House either going Republican in the fall, or if it remains Democratic with the Democratic margin being controlled by hard-core Blue Dogs, even if Obama did buy a clue, there is little chance that a decent restructuring stimulus bill could get through Congress and the actions of regulatory bodies like the FCC, the Justice department, as well as Obama’s implicit recognition of the health oligopoly, make it clear that his administration has no intention of challenging, let alone dismantling, the oligopolies which are draining the life blood of the US polity.

Now That’s Rich

By PAUL KRUGMAN, The New York Times

Published: August 22, 2010

We need to pinch pennies these days. Don’t you know we have a budget deficit? For months that has been the word from Republicans and conservative Democrats, who have rejected every suggestion that we do more to avoid deep cuts in public services and help the ailing economy.

But these same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country.

What – you haven’t heard about this proposal? Actually, you have: I’m talking about demands that we make all of the Bush tax cuts, not just those for the middle class, permanent.

…

And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year. But that’s the least of it: the policy center’s estimates say that the majority of the tax cuts would go to the richest one-tenth of 1 percent. … And the average tax break for those lucky few – the poorest members of the group have annual incomes of more than $2 million, and the average member makes more than $7 million a year – would be $3 million over the course of the next decade.

In Striking Shift, Small Investors Flee Stock Market

By GRAHAM BOWLEY, The New York Times

Published: August 21, 2010

One of the phenomena of the last several decades has been the rise of the individual investor. As Americans have become more responsible for their own retirement, they have poured money into stocks with such faith that half of the country’s households now own shares directly or through mutual funds, which are by far the most popular way Americans invest in stocks. So the turnabout is striking.

…

The notion that stocks tend to be safe and profitable investments over time seems to have been dented in much the same way that a decline in home values and in job stability the last few years has altered Americans’ sense of financial security.

…

But then came a grim reassessment of America’s economic prospects as unemployment remained stubbornly high and private sector job growth refused to take off.

Investors’ nerves were also frayed by the “flash crash” on May 6, when the Dow Jones industrial index fell 600 points in a matter of minutes. The authorities still do not know why.

Special BP Blowout Disaster Coverage

1 Gulf claims chief says no-sue rule was his idea

By HARRY R. WEBER, Associated Press Writer

Sun Aug 22, 4:09 pm ET

2 For Gulf tourism, problem is perception – not oil

By NOAKI SCHWARTZ, Associated Press Writer

Sun Aug 22, 1:51 pm ET

Outrageous?  We report…

“We the Parasites” Benefiting from HAMP

By: emptywheel Sunday August 22, 2010 7:58 pm

The guys in charge of our economy actually seem incapable of understanding who they work for-not to mention the additional problems their “qualified success” will cause. (What happens in a decade when large numbers of middle class kids can’t go to college because the government decided it was okay to subject their families to more misery during a foreclosure?)

Or, they don’t give a shit that this program asks homeowners to pay over and over for their mistakes, all to make sure the banksters never have to pay for their own.

Which is the other problem with this attitude. The alternative to HAMP, of course, is cram-down, in which the banksters have to cut the principle owed to them to what was probably more realistic value in the first place. Every time cram-down gets dismissed, the person dismissing it as an option mobilizes the language of morality, the need to make homeowners pay for buying more home than they could afford (assuming, always, they haven’t been laid off because the banksters ruined the economy or run into medical debt). But there seems to be no language of morality to describe the price banksters should have to pay by failing to do any real due diligence on loans or for accepting transparently bogus assessments of value. Heck, even the banksters get the equivalent of cram-down without a big morality play.

Treasury’s attitude about HAMP is not just evidence they’ve lost all track of who they work for and where the benefits of the economy are supposed to be delivered, but it also suggests that these Treasury folks have lost the most basic notion of capitalism, that if businessmen never pay for bad decisions, they’ll continue to make bad decisions.

Well, what I’ll be watching is the Little League World Series on ESPN 2; Fairfield All-Stars vs. Pearland, Texas.  However the games only last 6 innings and there’s a definite possibility things will go badly even though we root, root, root for the home team so you’ll want some viewing alternatives.

There is Throwball, the Farves @ the 49ers.  Might be good for yucks.  TV Guide will be a thin sliver beneath the 16th repeat of Mannequin in 3 days.  Thanks for nothing assholes.

TheMomCat will be watching True Blood because she gets HBO.  I’ll note for the record that the two leads just got married.

• Spike– Die Another Day (Brosnan)
• AMC– New Rubicon and Mad Men (all night long)
• ESPN– Angels @ Twins (yawn, but bad Baseball beats good Throwball all week long and twice on Sundays)
• ABC Family– Harry Potter and the Order of the Phoenix (Swoopy)
• Food– Network Challenge (Roller Derby Cakes) and The Great Food Truck Race (Chile Santa Fe, six trucks remain).  Family Style (Series Premier).
• FX– Made of Honor (again)
• History– Swamp People (Series Premier)
• Lifetime– Drop Dead Diva (premier), Army Wives (Season 4 Finale)
• TBS– Fool’s Gold x 2 (again and again and again)
• Turner Classic– Swiss Family Robinson
• Discovery– Through the Wormhole With Morgan Freeman (an entire night of premiers, repeated so you don’t miss them)

Later-

• USA– Burn Notice (first Season Finale), Royal Pains (this week’s)

Mostly networks are repeating tonight’s premiers, some of which I’ve tried to note above.

MSNBC has To Catch a Predator for you Chris Hansen fans followed by Sex Bunker.  The executives responsible for these abominations are motherfucking perverts.  Literally.

Adult Swim has the Season 3 Premiers of Boondocks It’s a Black President, Huey Freeman and Metalocalypse Renovation Klok (both repeats).  Also the first Season Finale of Dino Stamatopoulos’ new project Mary Shelley’s Frankenhole.

Yahoo TV Listings

Evening Edition is an Open Thread

1 WikiLeaks founder points at Pentagon over rape claims

by Igor Gedilaghine, AFP

2 hrs 7 mins ago

247 Stories served.  35 per day.

This is actually the hardest diary to execute, and yet perhaps the most valuable because it lets you track story trends over time.  It should be a Sunday morning feature.

• Sunday 8/15
• Monday 8/16
• Tuesday 8/17
• Wednesday 8/18
• Thursday 8/19
• Friday 8/20
• Saturday 8/21

More Turn Left Racing, the Irwin Tools Night Race.  SNL repeat- Zach Galifianakis hosts, Vampire Weekend performs.

• Animal– Pit Boss (premier)
• AMC– Rio Bravo (Marion and Dino)
• ESPN– Little League World Series, Auburn, Washington vs. Plymouth, Minnesota (Elimination Game)
• ABC Family– Harry Potter and the Goblet of Fire
• E!– Pride & Prejudice
• Food– Ace of Cakes
• Oxygen– Miss Congeniality 2: Armed and Fabulous x 2
• SciFi– Lake Placid 2 & 3 (World Premier)
• TBS– Fool’s Gold (again)
• Turner Classic– The Sting, Cool Hand Luke (Paul Newman night)
• TLC– Strange Sex marathon
• TNT– Gladiator (Joey, do you like movies about gladiators?)
• USA– Hairspray, Juno

Later-

• AMC– Hondo (more Marion)
• ABC Family– O Brother, Where Art Thou?
• Turner Classic– Rachel, Rachel
• USA– Enchanted
• VH1– Purple Rain

Boondocks Season 3 Finale, GitS: SAC Interceptor and Decoy (episodes 4 & 5 of the Stand Alone Complex series)

Yahoo TV Listings

Evening Edition is an Open Thread

1 Sweden cancels rape arrest warrant for Wikileaks founder

by Igor Gedilaghine, AFP

40 mins ago

Because he is!

EDITORIAL: The first presumed Muslim president

By THE WASHINGTON TIMES, The Washington Times

6:54 p.m., Friday, August 20, 2010

Adding fuel to the fire is Mr. Obama’s family heritage: born of a Muslim father and raised by a Muslim stepfather. Under Shariah law, having a Muslim father makes one a Muslim, though this custom has no legal standing in the United States.

Of course his mother was Jewish which makes him a Jew under Jewish law.

Noted Theologian and Evangelist Franklin ‘Son of Billy’ Graham–

I think the president’s problem is that he was born a Muslim, his father was a Muslim. The seed of Islam is passed through the father like the seed of Judaism is passed through the mother.

“It’s a wise man who knows who his father is.”

Warning, it starts LOUD!

Friday Night Throwball- Eagles @ Bengals.  You might be interested to know the Fairfield All-Stars advanced at Williamsport 3 – 1.  One crack at Keith and Rachel, but at least the Prison Porn is some asshole other than Arpaio.

• ESPN– Turn Left Racing, The Food City 250
• ABC Family– Harry Potter and the Prisoner of Azkaban
• SciFi– Eureka (last week’s and a new), Haven
• TBS– Fool’s Gold
• Turner Classic– Woman of the Year, Without Love (Tracy and Hepburn)
• Discovery– Odd Couple Survival night
• TNT– 3:10 to Yuma (not the superior 1957 version)
• Toon– Ben 10 and Generator Rex premiers, Clone Wars (Cad Bane episodes)
• Disney– Phineas and Ferb block @ 9

I suppose I should be high minded and watch Hepburn and Tracy, but I’ll probably be weak and watch Radcliffe, Watson, and Grint again.

Later-

• Turner Classic– Bringing Up Baby (Hepburn and Grant)
• TNT– Tombstone (Russell, Kilmer)

No Dave or even Jay except repeats.  Alton does squid.  Look Around You– Food, episode 4 including Pam’s special birthday.

ORB– Part 1 of the 3 part Venture Brothers Season 3 Finale, it covers the origins of The Guild of Calamitous Intent.  Oscar Wilde proves once again that he can resist anything except temptation.  Brock’s Dodge Charger tries to kill him twice.

Yahoo TV Listings