Tag: Monday Business Edition

We are governed by motherfucking idiots.

Or amoral greedheads, take your pick; but even the Nazi supporting Henry Ford understood you have to have someone to sell cars to.

Except we don’t sell cars anymore.  What we sell is Ponzi scams, pyramid schemes, and multi-level marketing and all the shouters on CNBC think they got in at the top, but they’re really just bottom feeders like the rest of us.

Perhaps the coming Hindenberg Crash will convince them.

Or maybe they really are stupid.

Forget a Double Dip. We’re Still in One Long Big Dipper.

Robert Reich

Saturday, August 14, 2010

The central problem is lack of demand – and that’s what has to be tackled.

Three of the four sources of demand have stopped working. (1) Consumers can’t and won’t buy because they’re still under a huge debt load, can’t get more credit, are afraid of losing their jobs (or already have), depend on two wage earners at least one of whom is working part-time and pulling in less, or have to save. (2) Businesses won’t invest and spend on creating more jobs if they don’t see consumers willing to buy more. (3) Exports are stalled because the dollar is so high they cost too much, much of the rest of the world is still struggling with recession, and American firms can make things for sale abroad more cheaply abroad.

That leaves only one remaining source of demand – government. We need a giant jobs program to hire people and put money in their pockets that they’ll spend and thereby create more jobs. Put ideology aside and recognize this fact. If it makes you more comfortable call it the National Defense Jobs Act. Call it the WPA. Call it Chopped Liver. Whatever, we have to get the great army of the unemployed and underemployed working again.

…

If we let the deficit hawks and government haters dominate this debate, as they have, the Big Dipper will continue for years. The Great Depression lasted twelve.

Attacking Social Security

By PAUL KRUGMAN, The New York Times

Published: August 15, 2010

So where do claims of crisis come from? To a large extent they rely on bad-faith accounting. In particular, they rely on an exercise in three-card monte in which the surpluses Social Security has been running for a quarter-century don’t count – because hey, the program doesn’t have any independent existence; it’s just part of the general federal budget – while future Social Security deficits are unacceptable – because hey, the program has to stand on its own.

It would be easy to dismiss this bait-and-switch as obvious nonsense, except for one thing: many influential people – including Alan Simpson, co-chairman of the president’s deficit commission – are peddling this nonsense.

…

What’s really going on here? Conservatives hate Social Security for ideological reasons: its success undermines their claim that government is always the problem, never the solution. But they receive crucial support from Washington insiders, for whom a declared willingness to cut Social Security has long served as a badge of fiscal seriousness, never mind the arithmetic.

1 China overshadows Japan economy as growth slows

by David Watkins, AFP

52 mins ago

America Goes Dark

By PAUL KRUGMAN, The New York Times

Published: August 8, 2010

(A) large part of our political class is showing its priorities: given the choice between asking the richest 2 percent or so of Americans to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation’s foundations to crumble – literally in the case of roads, figuratively in the case of education – they’re choosing the latter.

…

But isn’t keeping taxes for the affluent low also a form of stimulus? Not so you’d notice. When we save a schoolteacher’s job, that unambiguously aids employment; when we give millionaires more money instead, there’s a good chance that most of that money will just sit idle.

…

The antigovernment campaign has always been phrased in terms of opposition to waste and fraud – to checks sent to welfare queens driving Cadillacs, to vast armies of bureaucrats uselessly pushing paper around. But those were myths, of course; there was never remotely as much waste and fraud as the right claimed. And now that the campaign has reached fruition, we’re seeing what was actually in the firing line: services that everyone except the very rich need, services that government must provide or nobody will, like lighted streets, drivable roads and decent schooling for the public as a whole.

Monday Business Edition is an Open Thread

1 BP spends $6.1 bln on Gulf spill response

AFP

57 mins ago

Defining Prosperity Down

By PAUL KRUGMAN, The New York Times

Published: August 1, 2010

I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is “structural,” a permanent part of the economic landscape – and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality.

…

We’re told that we can’t afford to help the unemployed – that we must get budget deficits down immediately or the “bond vigilantes” will send U.S. borrowing costs sky-high. Some of us have tried to point out that those bond vigilantes are, as far as anyone can tell, figments of the deficit hawks’ imagination – far from fleeing U.S. debt, investors have been buying it eagerly, driving interest rates to historic lows. But the fearmongers are unmoved: fighting deficits, they insist, must take priority over everything else – everything else, that is, except tax cuts for the rich, which must be extended, no matter how much red ink they create.

The point is that a large part of Congress – large enough to block any action on jobs – cares a lot about taxes on the richest 1 percent of the population, but very little about the plight of Americans who can’t find work.

Monday Business Edition is an Open Thread

1 Greek truckers end week-long strike

by John Hadoulis, AFP

Sun Aug 1, 3:48 pm ET

Remember, the reason they deserve this kind of money is that they are better and brighter than you or I.

They know things.  They work hard.

For the Calivinists among them their material prosperity is the manifestation on earth of their elect status in heaven.

Because luck and connections had nothing to do with it.

(also worth reading is Why Conservatives Hate Keynes By: masaccio Sunday July 25, 2010 10:30 am)

1 Hayward payoff ignites new BP controversy

AFP

6 mins ago

It’s a very good country for the rich man. Chauffeurs, servants, big houses. The question is, who is suffering? The common man.

This is the tax policy that DC elites, Republicans and Democrats, want to see adopted.

I on the other hand favor moderate, mainstream, FDR tax rates of 90% on marginal income; and if corporations have the right to speak like individuals they have the right to be taxed like them too.

Who wants to be long on a July weekend anyway sucker?

1 Moody’s downgrades Ireland debt rating

AFP

2 hrs 2 mins ago

Ireland has gladly adopted a strong austerity policy.  This is what happens.

This is the first installment of what I hope is going to be a regular Monday feature.

I always find it instructive to keep track of the money since I think it explains a lot about politics.

There are 2 major interrelated economic stories moving in the background.  One is the question of stimulus and the recovery of the ‘Main Street’ economy and the other is the question of deficit reduction and austerity particularly related to Social Security.

What relates these 2 stories is the abandonment by modern economists of Keynesianism.  If you haven’t already, you should really read Krugman’s How Did Economists Get It So Wrong? from September of 2009 where he describes the irrational theories of the two main trends of academic economics, the salt and freshwater schools.

To me ignoring the proven facts of Keynesian Economics makes about as much sense as a biologist rejecting the ‘Theory’ of Evolution and Genetics.  I suppose it’s possible to do good and rigorously academically grounded work but you’re really rejecting everything that makes your ‘science’ umm… ‘scientific’, which is to say predictive of measurable future results.

Just because your second derivative (in the calculus sense) quant guy can give you a value for the change in the slope of a curve doesn’t make it anything but mathematical masturbation unless your model bears some relation to reality.

Anyway, below you will find some stories I’ve collected from the Business section of Yahoo News.  Just because some of these guys are rich doesn’t mean any of them are smart.

Monday Business Edition is an Open Thread

1 India rocked by strike over fuel prices

by Giles Hewitt, AFP

1 hr 14 mins ago