Robert Reich Observes: Red State Welfare Queens

Queen of All the Red States!

The tenthers are secret liberals (Rick Perry included!), they want the Blue States to prosper at the expense of the Red States!  Where do I sign up for that?  Robert Reich writes,

On average, citizens of states with strong Republican majorities get back more from the federal government than they pay in. Kentucky receives $1.51 from Washington for every dollar its citizens pay in federal taxes. Alabama gets back $1.66. Louisiana receives $1.78. Alaska, $1.84. Mississippi, $2.02. Arizona, $1.19. Idaho, $1.21. South Carolina, $1.35. Oklahoma, $1.36. Arkansas, $1.41. Montana, $1.47, Nebraska, $1.10. Wyoming, $1.11. Kansas, $1.12.

On the other hand, fiscal secession would be a boon to most blue states. The citizens of California – harder hit by the recession than most – receive from Washington only 78 cents for every tax dollar they send to Washington. New Yorkers get back only 79 cents on every tax dollar they send in. Massachusetts, 82 cents. Michigan, 92 cents. Oregon, 98 cents.

Significant Impact on Worker Wages from Offshoring

In a new working paper, Estimating the Impact of Trade and Offshoring on American Workers Using the Current Population Surveys, authors Avraham Ebenstein, Ann Harrison, Margaret McMillan, and Shannon Phillips demonstrate that previous research into the relatively benign effects of outsourcing and offshoring were masking the true nature of the impact. By studying the impact across sectors rather than within sectors, the authors identify a significant negative impact on worker's wages, especially those who are forced to move from the manufacturing sector into the service sector. While this should come as no surprise to anyone, these data provide concrete evidence of that impact.

We then examine the mechanisms behind the contrast between the small positive wage effects of globalization within manufacturing and the relatively large negative wage effects we observe at the occupational level. We begin by showing that trade and offshoring are associated with a contraction in the manufacturing workforce. Then, using a large panel of CPS workers who are matched across surveys, we demonstrate that workers who switch industries within manufacturing experience almost no decline in wages. However, when workers relocate to the service sector, they experience a significant wage loss. The negative wage impact is particularly large among displaced workers who also switch occupations. We estimate wage losses of 2 to 4 percent among workers leaving manufacturing and an additional 4 to 11 percent wage loss among workers who also switch occupations. These effects are most pronounced for workers who perform routine tasks. This downward pressure on wages due to import competition and offshoring has been overlooked because it operates between and not within sectors.

This provides compelling evidence that the negative consequence of trade on workers is mediated through a reallocation of labor across sectors and into different occupations. While many models of trade posit that workers can move in a costless manner to new jobs in the face of pressure from foreign labor, we identify large and significant wage declines among workers forced to leave manufacturing, and the wage decline is particularly pronounced for those who are forced to switch occupations.

With the recent reports of slowdowns in the remaining manufacturing base, this effect will only get worse.

But WHY?

Kevin Drum asks the important question: Why do Teabagger conservatives like Rick Perry and Michelle Bachmann get a free pass from the media when they spout the most insane (and inane) things on the campaign trail?

I'm not quite sure what the left-wing equivalent of this would be, but it would be something along the lines of Hillary Clinton writing a book that proposed repealing the 2nd Amendment and adding one that banned hate speech; limiting defense spending to 2% of GDP; raising the top marginal tax rate back to 90% on millionaires and 100% on anything above, say, $10 million; instituting British-style national healthcare; and spending half a trillion dollars on new programs for universal preschool, two-year paid leaves for new parents, and an increase in the minimum wage to $15 per hour. But in real life, Dennis Kucinich wouldn't support a platform like this, let alone a frontrunner for the presidential nomination. And if one did, they'd be instantly tarred as an insane nutball and would never see the business end of a TV camera again.

But when Republicans say the mirror image of stuff like this, it just gets a shrug. Sure, Perry apparently wants to roll things back to about 1900 or so. But hey — it's just a way of firing up the troops. Nothing to be taken seriously.

But why not?

Because the mainstream media is a wholly owned subsidiary of Corporate America, that's why.

The Presidential Fantasies

Martin Wolf:

Mr Obama wishes to be president of a country that does not exist. In his fantasy US, politicians bury differences in bipartisan harmony. In fact, he faces an opposition that would prefer their country to fail than their president to succeed. Ms Merkel, similarly, seeks a non-existent middle way between the German desire for its partners to abide by its disciplines and their inability to do any such thing.

A Funny for Labor Day!

Oh look, the GOP got to be in the parade after all!

New Research: Decline in Unions and Rise in Inequality are Linked

In a new paper entitled Unions, Norms, and the Rise in U.S. Wage Inequality by Bruce Western and Jake Rosenfeld and published in the American Sociological Review the authors find that unions help drive wage equality not just for their members, but for all people in the surrounding area as well.

Institutionally, U.S. industrial relations often extend union conditions to nonunion workers. When a third of the male labor force was organized, unions were national economic actors who shaped centralized wage policy. During World War Two, government boards with business and labor leaders helped set wage standards to control inflation and assist wartime production. Centralized wage policy continued during the Korean War. The tripartite Wage Standardization Board monitored wage increases among key firms and aimed to narrow inter-firm wage differentials and reduce wage inequality in the wider econ- omy (Ross and Rothbaum 1954). In the 1960s, unions influenced national pay policy when the Kennedy and Johnson administra- tions set wage and price targets to stabilize prices and promote the “distributional equity” of wages (Ulman 1998:170). The Nixon administration also adopted a tripartite wage policy. Concluding that “no program works without labor cooperation,” (Matusow 1998:160), Nixon’s national pay board urged wage restraint in major contract negotiations but also examined executive pay levels, sup- ported raises for low-wage workers, and monitored merit pay increases (Mitchell and Weber 1998). In the 1970s, President Carter pursued a national wage policy with union representation in a Pay Advisory Committee that set industry wage and price guidelines.

The paper draws the following conclusion from an extensive analysis of the available data:

More generally, the analysis contributes to a political account of rising economic inequality in the United States. The analysis suggests that unions helped shape the allocation of wages not just for their members, but across the labor market. The decline of U.S. labor and the associated increase in wage inequality signaled the deterioration of the labor market as a political institution. Workers became less connected to each other in their organizational lives and less connected in their economic fortunes. The de-politicization of the U.S. labor market appears self-reinforcing: as organized labor’s political power dissipates, economic interests in the labor market are dispersed and policymakers have fewer incentives to strengthen unions or otherwise equalize economic rewards.

"We are SO Screwed!"

Funny animation set to Mitt Romney's "Corporations are people TOO!" gaffe.


Actual Audio: Mitt Romney & Corporations from scottbateman on Vimeo.

Our Blue Future

Wow...  No wonder the Tea Party GOP are laser-focused on voter suppression! They've seen the future and they no longer matter. (h/t Crooks and Liars)

Now if we could just get those fuckers to vote!!!!

Will the real Ron Paul Please Stand Up!

Matt Yglesias:

As I’ve been saying, a lot of progressives seem to be slightly confused as to who Ron Paul is. They think he’s like that one rich uncle you have, shares a lot of your basic values but hates paying taxes and seems to take a dim view of poor people. The reality is that Paul is much closer to Pat Buchanan, a socially conservative nationalist whose idea of nationalist foreign policy is to withdraw troops from South Korea and deploy them to the Mexican border. Given what a strong force nationalism is in American life, I do wish that we had more nationalist isolationism and less nationalist enthusiasm for global contrast. But Paul’s view is that the quest to ban abortion is “the most important issue of our age,” his signature economic policy idea (“End the Fed!”) is a crank slogan that has nothing to do with free market economics, etc. Fortunately, in Paultopia there won’t be any public schools, federal funding of scientific research, etc., so it probably doesn’t matter what he believes in evolution.

Doing Nothing Better than Following Tea Party Over the Cliff

It appears, based on data from the CBO, that doing nothing about the medium-term debt is better than doing what the Tea Party is demanding.  Who's surprised, here? When your entire existence is predicated on the denial of reality, this is what happens.

Governor Walker Imperils Wisconsin Competitiveness!

As part of the draconian budget rammed through the rubber-stamp legislature, Governor Walker is risking the competitiveness of Wisconsin's workforce by passing on significant educational costs to students in higher-education.

UW-Milwaukee undergraduates and faculty will bear the brunt of Governor Scott Walker’s controversial biennial budget cuts to the UW System this semester, paying 51 percent of the $16.8 million dollars lost annually in state revenue.

Undergraduate Wisconsin residents can expect a 5.5 percent increase in tuition this semester, approximately $400 per student, with the possibility of another increase next year.

Increasing the burdon on already overburdened students and faculty will drive the best and brightest students out of the state and to other states which value public education.  Walker is doing everything he can to dumb down the Wisconsin electorate to ensure he and his Teabagger stormtroopers in the legislature will enjoy the fruits of a thousand-year Reich.

Call them Crazy, but JUST CALL THEM!

Pierson's Puppeteer

And tell them what you think.  The current GOP field (aside from the Hindmost, Jon Huntsman) is a collection of cowardly, Neanderthal twits the likes of which the world has never seen.

I could point out that Mr. Perry is buying into a truly crazy conspiracy theory, which asserts that thousands of scientists all around the world are on the take, with not one willing to break the code of silence. I could also point out that multiple investigations into charges of intellectual malpractice on the part of climate scientists have ended up exonerating the accused researchers of all accusations. But never mind: Mr. Perry and those who think like him know what they want to believe, and their response to anyone who contradicts them is to start a witch hunt.

So how has Mr. Romney, the other leading contender for the G.O.P. nomination, responded to Mr. Perry’s challenge? In trademark fashion: By running away. In the past, Mr. Romney, a former governor of Massachusetts, has strongly endorsed the notion that man-made climate change is a real concern. But, last week, he softened that to a statement that he thinks the world is getting hotter, but “I don’t know that” and “I don’t know if it’s mostly caused by humans.” Moral courage!

When did becoming anti-science become cool?  Oh yeah, in 1980 when we elected our first Jesus-in-Chief, Saint Ronald Reagan.

The History of Voodoo Economics

A great video on the history of voodoo economics

Depressing Employment Statistics

We're becoming an #EPICFAIL nation

There are more unemployed people in the U.S. than there are people in the state of Illinois, the fifth largest state.

In fact there, there are more unemployed people in the U.S. than there are people in 46 of the 50 states, all but Florida, New York, Texas and California.

There are more unemployed than the combined populations of Wyoming, Vermont, North Dakota, Alaska, South Dakota, Delaware, Montana, Rhode Island, Hawaii, Maine, New Hampshire, Idaho and the District of Columbia.

If they were a country, the 13.9 million unemployed Americans would be the 68th largest country in the world, bigger than the population of Greece or Portugal (each of which has 10.8 million people) and more than twice the population of Norway (4.7 million.)

Director of the IMF Kicks Ass in Jackson Hole

In a bold and wide ranging speech, Christine Lagarde, former French Finance Minister, laid out a series of steps governments must take to ensure the world doesn't slide back into recession or even depression.  She is by far the most direct and honest speaker at Jackson Hole so far. Her prescription for the United States is simple.  Stop fucking around and get to work.

In the United States, policymakers must strike the right balance between reducing public debt and sustaining the recovery—especially by making a serious dent in long-term unemployment. A fair amount has been done to restore financial sector health, but house price declines continue to weaken household balance sheets. With falling house prices still holding down consumption and creating economic uncertainty, there is simply no room for half-measures or delay.

So the United States needs to move on two specific fronts.

First—the nexus of fiscal consolidation and growth. At first blush, these challenges seem contradictory. But they are actually mutually reinforcing. Credible decisions on future consolidation—involving both revenue and expenditure—create space for policies that support growth and jobs today. At the same time, growth is necessary for fiscal credibility—after all, who will believe that commitments to cut spending can survive a lengthy stagnation with prolonged high unemployment and social dissatisfaction?

Second—halting the downward spiral of foreclosures, falling house prices and deteriorating household spending. This could involve more aggressive principal reduction programs for homeowners, stronger intervention by the government housing finance agencies, or steps to help homeowners take advantage of the low interest rate environment.

While I disagree with her veiled reference to expansionary austerity ("the nexus of fiscal consolidation and growth"), she is correct that growth is the key to the crisis.  Managing the long-term debt falls into the classic Keynesian case of "in the long run, we're all dead."  Manage the short and medium term problems, and the long-term problems with take care of themselves.

2011 is 5 Years Beyond Peak Oil

We're on the downslope now...

From EnergyWatch:

For quite some time, a hot debate is going on regarding peak oil. Institutions close to the energy industry, like CERA, are engaging in a campaign trying to “debunk” the “peak oil theory”. This paper is one of many by authors inside and outside ASPO (the Organisation for the Study of Peak Oil) showing that peak oil is anything but a “theory”, it is real and we are witnessing it already. According to the scenario projections, the peak of world oil production was in 2006.

The Poor are The Problem

"Many Of Them Have Things, What They Lack Is The Richness Of Spirit"

What an asshole.

Adios, Tea Party!

It's not looking good for the nearly all-white Tea Party.  And we're a better nation for it!

The latest wave of 2010 Census data, released this week, confirms what earlier surveys have strongly hinted: virtually half of recent births in the U.S. are minorities. We are becoming a more globalized nation than most Americans have experienced in their lifetimes. The great demographic change has potential long term benefits for our population growth in terms of our economic competitiveness in the international marketplace. But these changes, coming so quickly and evolving from the “bottom up” of our age structure, may exacerbate existing cultural generation gaps, as older, largely white generations may be slow to recognize the promise of this change.

The new Census results show 49.8 percent of infants under age one are members of a race-ethnic minority – up from 42.4 percent in 2000. Given this trajectory, and the fact that the Census was taken well over a year ago, it is almost certain we have now “tipped” racially, and more than half of all national births are minorities. More than a quarter of infants are Hispanic, Blacks and Asians comprise 13.6 and 4.2 percent, respectively. Nearly one in twenty births were reported to be two or more races.

The "under 5" and "5-17" cohorts are extraordinarily diverse.  Much more so than my own.  The face of America is changing forever.  And the racist Tea Party can't deal.  That's why we've had a rash of voter disenfranchisement legislation recently.  They can't stand that the world is turning browner.

"It was the best of times, it was the worst of times..."

To be clear, it was best if you're reliant on portfolio, worst if you're reliant on a paycheck.  Yet another view of income inequality in America.

Source: BEA (via Jared Bernstein)

Jared Bernstein:

You can also see in these data the resurgence of income and wealth inequality. There’s quite a lag to the inequality data, so no one knows what the trends in income or wealth disparities look like post-2008, e.g. What with high unemployment and weak middle-class earnings, along with solid corporate profits, one assumes that after taking a hit in the downturn, wealth accumulation is “back on track” as it were. That’s certainly been the pattern of the last two recessions/recoveries.

Stop Waiting for Godot

Timothy Egan:

As president, he’s been a sober, cautious, tongue-shackled realist — a moderate Republican of the pre-crazy, pre-Tea Party era. Having failed to come up with a Big Idea to guide his presidency, he will sink or swim now on strengths that don’t lend themselves to large rallies or passionate enthusiasm. Sobriety and moderation, by definition, are boring.

Urban liberals, labor, blacks and Hispanics, environmentalists, the young – the core of Obama’s army in 2008 — are disappointed in the president of August, 2011. They’re right when they say he caved on the debt talks: the evidence is House Speaker John Boehner’s boast that he got 98 percent of what he wanted from the president.

But instead of waiting for an arm-flapping populist to emerge from the genteel summer redoubt on Martha’s Vineyard, the left should focus on the coming ground war, and try to fill Congress with new people who can at least tell fact from fiction.

It's GOT to be in there somewhere...

I'm looking for the word "jobs" in the wordcloud from Bernanke's Jackson Hole speech this morning and I'm not having any luck.  Maybe someone else can find it.

It's an amazing collection of words, none of which seem to address the number one problem in America  Unemployment.  In case anyone forgets, "full employment" is a key piece of the Fed's charter.

Remember, the end goals of monetary policy are sustainable economic growth, full employment and stable prices. Through monetary policy, therefore, the Fed attempts to tweak the economy to the right levels.

It's hard to do that when you refuse to even talk about it.

On the Craven Obama Administration

Angry Bear is angry:

A few weeks ago, going into the Wisconsin recall elections, there were rumors that Tim Geithner would resign.

That's not going to be true now. So Barack Obama is going to go into a re-election campaign running what John Hempton astutely described as "the cravenly pro-finance Obama administration."

Not pro-economy: that would involve employment and GDP growth, neither of which has been happening for so long that Sensible Centrist Brad DeLong is sounding more and more and more like me.

The center isn't holding.

Don't Look Now, but the Affordable Care Act is Working for America

Teabagger Logic FAIL

Despite the teabagger cries of "death panels" and other predictions of the end of America, the Affordable Care Act appears to be working as advertised.  While not as dramatic a change as a real single-payer system could have been, it is nonetheless flattening out the cost growth curve of healthcare in America.

And now for some good news: Medicare spending growth has been slowing noticeably. So far this fiscal year, expenditures have actually declined slightly, according to the Congressional Budget Office.

Part of the decline this year reflects timing shifts in certain Medicare payments, which will soon be reversed. Even adjusting for these shifts, though, Medicare spending is still up less than 4 percent so far this year.

The 2011 numbers come on the heels of relatively slow growth in 2010 as well. Last year, Medicare spending rose just a little more than 4 percent.

Compare this with an almost 12 percent average annual growth rate in Medicare spending since the early 1970s. During those four decades, there were only four years in which costs rose by less than 5 percent -- and three of those four years were in the late 1990s, when payments were cut back as part of the 1997 budget deal.

Finding the Poor

In many developing nations, there is a lack of information to help determine who is poor and who is not so poor.  One study identifies a novel way to identify those most in need: Ask the neighbors!

There are two striking results in the new paper, to be published in the American Economic Review later this year. First, when citizens are asked to make collective judgments about the relative wealth of their neighbors, the outcomes are very close to those produced by objective measures. Second, citizens are far more satisfied by the results when they are consulted than when they are left out of the process.

Bridge to Nowhere

The Financial Times:

The time has come for the American policy narrative to be much more explicit about the structural challenges facing the country and, critically, set the stage for proposing to Congress a comprehensive package of self-reinforcing reforms. Mr Bernanke can facilitate this by using his Jackson Hole remarks as the warm-up act for Mr Obama’s critical speech on the economy next month. Anything beyond this would run the risk of the Fed building another costly bridge to nowhere.

Why Keynes is Right

Someone needs to explain why this is wrong... (h/t to Krugsandra for the quote)

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

I'm open to other suggestions to stimulate the economy...  Frankly, I'd rather use the banknotes to build roads, bridges, dams, houses and the like, but if this is what it will take to get things moving again, I say bury the money!

"Our human spirit is corrupted..."

I love this scene from the 1988 SciFi John Carpenter classic They Live.  When asked what They Live was really about, he responded with one word: "Republicans."



Of course this film came out during the depths of the Reagan recession when the rich were getting richer and the poor and working class were left to rot.  Sounds kind of familiar, doesn't it?

If you've never seen it, They Live is campy, good fun.  It stars Roddy Piper (yes, "Rowdy" Roddy Piper the pro wrestler) and Keith David, a long-time character actor.  Piper's character starts out as a down-on-his-luck but basically upbeat conformist but through the course of the movie, he realizes the power elites are more than just rich guys.  There's something else going on.  And it's not good.  And he's gonna kick ass and chew bubblegum.  And he's all out of bubblegum.

Carpenter recently taped a video introduction to the film for a showing at The Alamo Drafthouse.  In it, he talks about his inspiration for the film and why it's so relevant today.

Failure is our Only Option apparently

Krugsandra:

At this point the entire advanced world is doing exactly what basic macroeconomics says it shouldn’t be doing: slashing spending in the face of high unemployment, slow growth, and a liquidity trap. It’s a global 1937. And if the result is another recession, the witch-doctors will just demand more bleeding.

Running Scared...

The Tea Party is afraid... of the public.  Oh, and facts too.  Watch this town hall in Florida.

As the video makes quite clear, a lot of Floridians aren't too pleased with freshman GOP Rep. Dan Webster. He thinks it's a good idea to savagely cut government spending when the economy is struggling and unemployment is rising. But Floridians have already gotten a taste of austerity. Once Gov. Pink Slip Rick Scott's "Jobs Budget," took effect, the state's shallow economic recovery went into reverse. Florida lost 22,100 jobs in July, about half of them government jobs.

Stay Classy, Tea Party GOP! Stay Classy!

A Tea Party GOP candidate in Texas, Roger "Mr. Compassion" Williams compares TANF recipients to donkeys.  The Tea Party GOP are always a class act, aren't they?  Lest we forget what the acronym TANF stands for: Temporary Assistance for Needy Families.  Yes, once again it's the poor and needy who are the subject of Tea Party GOP chastisement.  Not the banksters and financiers who created the economic catastrophe, no, it's the poor and needy.  They're to blame.  How the fuck do these people get elected???

Wall Street Rocks!

'We still get our bonuses, right?"

Compare and Contrast!

Cheers and Jeers this morning (over at DailyNaziStalinistMarxistLibtardAmericaHatingKos DailyKos):

From the GREAT STATE OF MAINE…

Contrast

What the Democratic-controlled House under Speaker Nancy Pelosi is responsible for:

• Health insurance reform: Initial bill had public option, before Senate stripped it out; Kids can stay on parents' insurance 'til age 26; Closes Medicare "Doughnut Hole"; Eliminates pre-existing conditions; Expands coverage to tens of millions
• Repeal of Don't Ask, Don’t Tell
• Ethics reform
• Lily Ledbetter Fair Pay Act
• American Clean Energy and Security Act
• Extension of Childrens Health Insurance Program
• Raising the minimum wage
• Food Safety Enhancement Act
• Credit Card Accountability Responsibility and Disclosure Act
• Small Business Jobs Act
• The Healthy, Hunger-Free Kids Act
• Injecting resources into the economy to prevent the Bush recession from sliding into a second Great Depression, saving/creating millions of jobs in the process
• Dodd-Frank financial regulation reform
• James Zadroga 9/11 Health and Compensation Act
• Helping America maintain a sterling AAA credit rating
• Working long hours for long stretches doing the people's business during a very difficult time

What the Republican-controlled House under Speaker John Boehner is responsible for so far:

• Voting to repeal the "Job-Killing Health Care Law Act." (The repeal would have little, if any, effect on jobs but would add to the deficit, says the CBO.)
• Attempting to dismantle Medicare by voting to pass a budget that turns it into a coupon program
• Voting for unnecessary anti-abortion bills and...more unnecessary anti-abortion bills!
• Panicking world financial markets by holding the debt ceiling hostage; causing S&P to downgrade the U.S. credit rating by convincing them that the "party of fiscal discipline" wouldn't think twice about defaulting on our debts
• Naming some Post Offices
• Holding the FAA---and tens of thousands of jobs---hostage for the sake of weakening unions
• Refusing to consider an extension of the payroll tax cut
• A breezy, leisurely work pace with lots and lots of days off during a very difficult time
• A promise to create "Jobs, Jobs, Jobs" during election season, but ignoring job creation completely once elected

So, uh, this is what it means to "take our country back," huh? Awesome.

You Know what Cheap Debt Gets You?

If you answer "more debt" then you're right.  Unlike the macroeconomy where there are numerous levers to pull to manage deficit and debt, on the micro side (i.e. household) the levers to manage deficit and debt are quite limited.  If you run up a debt, you have limited choices:

1. Suck it up and pay it
2. Renegotiate the debt with the rentier
3. Default on the debt and go into credit exile

Not much else is open to you as an individual.  Unless you have a rich relative die and leave you a fortune, I suppose.  So when you see a chart like this, the nature of the "debt overhang" becomes clear.

The Debt of Damocles - From Kevin Drum

What the government needs to do is to create jobs, jobs, jobs.  Not give more money to the misnamed "job creators" who are busy laying people off while paying no income taxes.  Rather, commence a WPA-level public works program that puts the unemployed to work doing things the nation needs done. Build bridges, roads and dams.  Build a national high-speed rail system.  Build a national high-speed wireless Internet infrastructure.  Do something with the millions of unemployed American workers.  Give them some hope, some dignity and a paycheck they'll use to buy goods and services and get the economy moving again.

Nothing Fails like Failure!!

Barry Ritholtz:

The US banking sector is not healthy.

There is a fundamental misunderstanding about the Wall Street bailouts amongst the public, and quite a few policy makers at Treasury and the Federal Reserve: Somehow, they “fixed” the banking system. All it took was few trillion dollars in liquidity and a few $100 billion dollars in recapitalization, and all is now fine (I suspect some people at the Fed know the Truth).

In fact, they did nothing of the sort. The banking system was not saved; The massive injection of liquidity temporarily salved the day-to-day operations of banks, but they did not repair what ailed our financial institutions. Indeed, pouring billions into nearly identical management teams that mismanaged the risk, over-leveraged exposure, and drove banks off the cliff in the first place was an invitation for another crisis.

And that crisis now appears to be arriving. And, its our own fault.

Liberals are More Intelligent than Conservatives

So says science.

Analyses of large representative samples, from both the United States and the United Kingdom, confirm this prediction. In both countries, more intelligent children are more likely to grow up to be liberals than less intelligent children. For example, among the American sample, those who identify themselves as “very liberal” in early adulthood have a mean childhood IQ of 106.4, whereas those who identify themselves as “very conservative” in early adulthood have a mean childhood IQ of 94.8.

On the Origins of Lager

Apparently it's Argentina... Who knew?

How did lager beer come to be? After pondering the question for decades, scientists have found that an elusive species of yeast isolated in the forests of Argentina was key to the invention of the crisp-tasting German beer 600 years ago.

It took a five-year search around the world before a scientific team discovered, identified and named the organism, a species of wild yeast called Saccharomyces eubayanus that lives on beech trees.

"We knew it had to be out there somewhere," said Chris Todd Hittinger, an evolutionary geneticist at the University of Wisconsin-Madison and a coauthor of the report published Monday in the Proceedings of the National Academies of Sciences.

Their best bet is that centuries ago, S. eubayanus somehow found its way to Europe and hybridized with the domestic yeast used to brew ale, creating an organism that can ferment at the lower temperatures used to make lager.

Truth

Break out your smart phone's barcode reader and have at it!

A Concise History of Modern Debt

"You Must Respect my Authority!"

I've never seen a better summary of how we got here and what it means.

The debt crisis confronting the Obama administration is the product of war and taxes. There is little dispute that the origins of the crisis predate Obama’s election. When George W. Bush took office in 2001, the US had a $2 trillion budget surplus. Many believed that if the country merely continued on the path set by Bill Clinton, the national debt, then $5.7 trillion, would be eliminated by the end of the decade. Bush chose a different way. He cut taxes, reducing revenues by $1.8 trillion. He declared a general war on terror and waged two specific wars. Financed entirely by borrowing – a first in American history – the wars and related increases in defence spending added $1.5 trillion to the debt. The financial crisis and ensuing recession further reduced revenues. By the time he left office, Bush had squandered the surplus and nearly doubled the size of the debt, adding more to it than any president in US history.

While I don't believe we have a "debt crisis," we clearly have a politically-driven crisis that is exacerbating the weakness in the economy.

If there’s a master text for this moment, it’s Marx’s Eighteenth Brumaire. Not the over-cited first time as tragedy, second time as farce line, but his astonishingly prescient analysis of the reactionary behaviour of the French peasantry during the Bourbon and July monarchies. Though the 1789 Revolution and Napoleon had liberated the peasants from their landlords, the next generation of peasants was left to confront the agricultural market from small private holdings that could not sustain them. They no longer had to pay their feudal dues, but now they had to pay their mortgages and taxes to a state that seemed to do little for them. What the state did provide, under Napoleon III, was imperial spectacle. That wasn’t nothing, as Marx noted, for in and through the army the peasants were ‘transformed into heroes, defending their new possessions against the outer world, glorifying their recently won nationality, plundering and revolutionising the world. The uniform was their own state dress; war was their poetry.’ This Marx called ‘the imperialism of the peasant class’.

In Marx’s analysis we see the populist underbelly of the debt crisis, indeed of the last four decades of the right-wing tax revolt, from Howard Jarvis’s Proposition 13 of 1978, which destroyed California’s finances by putting strict limits on property tax increases, to the Tea Party. Liberals often have a difficult time making sense of these movements – don’t taxes support good things? – because they don’t see how little the American state directly provides to its citizens, relative to their economic circumstances. Since the early 1970s, with a few brief exceptions, workers’ wages have stagnated. What has the state offered in response? Public transport is virtually non-existent. Even with Obama’s reforms, the state does not provide healthcare or insurance to most people. Outside wealthy communities, state schools often fail to deliver a real education. In such circumstances, is it any wonder ordinary citizens want their taxes cut? That at least is change they can believe in.

And here Democrats like Obama and his defenders, who bemoan the stranglehold of the Tea Party on American politics, have only themselves to blame. For decades, Democrats have collaborated in stripping back the American state in the vain hope that the market would work its magic. For a time it did, though mostly through debt; workers could compensate for stagnating wages with easy credit and low-interest mortgages. Now the debt’s due to be repaid, and wages – if people are lucky enough to be working – aren’t enough to cover the bills. The only thing that’s left for them is cutting taxes. And the imperialism of the peasants.

Red-State Parasites

Another awesome plotting by Calamities of Nature.  This one is of the tax data showing that blue states contribute to the economy while red states suck off the productivity of the blue states.

Let the Recession Begin?

Looks like it's on... We're likely headed for the 2nd recession, or so the data from the Philly Fed seems to indicate.

According to our calculations, the current index level translates into a recession probability of 82½% (see chart). It is interesting, though, that the Philadelphia Fed itself apparently tried to downplay the weakness of its own index, by emphasizing that “the collection period for this month’s survey ran from August 8-16, overlapping a week of unusually high volatility in both domestic and international financial markets.”1 Along the same lines, Dallas Fed President Richard Fisher told CNBC last night that while the Philly Fed Index is “a wonderful index” the stock market has in his view overreacted to the drop (“I think there’s a bit of an overreaction there.”)2 We agree and think that the move should be taken with a pinch of salt. The latest hard numbers – initial jobless claims or weekly chain store sales – do, after all, not suggest at all that the economic situation between July and August deteriorated as much as between September and October 2008.

The question is, how accurate are these predictions for the current situation?  UniCredit seems to think they're not terribly accurate a this moment but time will tell.

Jaw-Dropping Headlines

Holy... Fucking... Shit...  We can bailout the gentry with out tax dollars to the tune of $1.2 trillion but we can't pay for unemployment insurance? Or Medicaid? Or Social Security?

Wall Street Aristocracy Got $1.2 Trillion From Fed

From Bloomberg:

Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress.

“These are all whopping numbers,” said Robert Litan, a former Justice Department official who in the 1990s served on a commission probing the causes of the savings and loan crisis. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.”

Our Galtian overlords didn't just suckle at the teat of the Federal government, they fucking bit it off and ate it.  But wait, it gets better!

While the Fed’s last-resort lending programs generally charge above-market interest rates to deter routine borrowing, that practice sometimes flipped during the crisis. On Oct. 20, 2008, for example, the central bank agreed to make $113.3 billion of 28-day loans through its Term Auction Facility at a rate of 1.1 percent, according to a press release at the time.

The rate was less than a third of the 3.8 percent that banks were charging each other to make one-month loans on that day. Bank of America and Wachovia Corp. each got $15 billion of the 1.1 percent TAF loans, followed by Royal Bank of Scotland’s RBS Citizens NA unit with $10 billion, Fed data show.

League of Women Voters Ride to the Rescue of Wisconsin Voters!

The non-partisan League of Women Voters is challenging Wisconsin's draconian new voter disenfranchisement law.

A lawsuit being prepared by the League of Women Voters of Wisconsin will allege that the law violates right to vote provisions of the state constitution not present in the U.S. Constitution. The group plans to file its lawsuit in Dane County Circuit Court, its attorney Lester Pines said.

"It is absolutely clear that the Legislature paid no attention to the (right to vote) provisions of the Wisconsin Constitution when it passed voter ID," Pines said. "I'm not aware of any point in which they came up."

Pines said that requiring a photo ID amounts to another restriction on voting that isn't authorized by the state constitution. He said that small numbers of state residents are citizens but lack a birth certificate because of unusual circumstances in their lives, making it difficult to obtain an ID.

You go, girl! 

Image of the Day!

It doesn't get any better than this!

Go Brewers!!!!

Keeping the Crazy Free!

(h/t @KatieAnnieOakly)

More Data: George "Dubya" Bush - Worst President Ever

This time it's from that bastion of socialism, The Wall Street Journal: Bush On Jobs: The Worst Track Record On Record

President George W. Bush entered office in 2001 just as a recession was starting, and is preparing to leave in the middle of a long one. That’s almost 22 months of recession during his 96 months in office.

His job-creation record won’t look much better. The Bush administration created about three million jobs (net) over its eight years, a fraction of the 23 million jobs created under President Bill Clinton‘s administration....

Isn't one dumb-ass Texan President enough, don't you think?

For Drummers Only

Neil Peart playing at the Buddy Rich Memorial Scholarship Concert. Ritz Theater in New York City on April 8, 1991 Awesome...

Corruption: The Texas Edition

Amazing levels of graft in the Perry administration:

Over three terms in office, Mr. Perry’s administration has doled out grants, tax breaks, contracts and appointments to hundreds of his most generous supporters and their businesses. And they have helped Mr. Perry raise more money than any politician in Texas history, donations that have periodically raised eyebrows but, thanks to loose campaign finance laws and a business-friendly political culture dominated in recent years by Republicans, have only fueled Mr. Perry’s ascent.

More "Founding Father" Nonsense from the Right

I don't know how I missed this one, but William Hogeland over at New Deal 2.0 penned an excellent piece entitled Why Debt Ceilings and Balanced-Budget Requirements Violate the Original Intent of the Constitution:

That the Constitution came into existence to keep taxes low, the federal government small, and national debt at zero is an article of faith among many who, like Michele Bachmann, have taken to calling themselves “constitutional conservatives.” And faith is required to believe it, as the Norquist interview shows. To make his supposedly constitutional argument, Norquist cites the first amendment on freedom of religion and the second on the right to keep and bear arms, and then goes on to cite absolutely nothing, in either the articles or the amendments, that so much as hints at a constitutional requirement to balance the federal budget, avoid debt, tax no more than people like Norquist deem appropriate, and keep government small.

He can’t cite anything to that effect because while balancing budgets, restraining borrowing, and keeping taxes low and government small might be good goals, depending on what you mean by them, it is impossible to locate in the founding national law any requirement to accomplish them. Indeed, the reality of founding history leads to the reverse conclusion.

As usual with the "common sense" approach of the right, this turns out to be quite false.  Hogeland outlines how the founders counted on taxes and debt to operate the national economy.

Hence the all-important provisions of the Constitution giving Congress very broad powers to tax and acquire debt. To 18th-century American nationalists across the political spectrum — to our founders and framers, that is, from Hamilton to Madison, from Morris to Randolph, from the financiers to the planters — national taxing and borrowing were ineluctably connected to the very purpose of national government.

When you Lay Down with Teabagger Dogs...

Don't complain when you get fleas...  Business leaders are suffering at the hands of the beast they created.  The Astroturf teabaggers are destroying any hope of economic recovery and it's not just the unemployed who are suffering.  Businesses are at the mercy of the teabagger instane stupidity too.  I can't say I'm terribly surprised.  Fostering the political whims of the know-nothing teabaggers isn't good for anyone, especially business.  So forgive me if I have a little schadenfreude moment here.  When you learned economics from back of a matchbook, these results are hardly surprising.

When the federal government was on the brink of default and the economy hung in the balance, the nation’s business leaders had a chance to step forward and push for a long-term solution. They could have supported a grand bargain that cut spending and raised tax revenue. They could have warned House Republicans that it was far too risky to use the debt ceiling for political leverage.

Instead, the United States Chamber of Commerce, the Financial Services Forum and other important players wrote a series of weak letters to the White House and Congress saying, in essence, “just don’t default.”

It will be difficult for business leaders to change the minds of the Tea Party lawmakers, even those who rode to office on ads paid for by the chamber and similar groups, but that doesn’t mean they shouldn’t try. A responsible argument by business for a balanced approach to reviving the economy and reducing the deficit could change the debate in Washington. President Obama is moving — although too slowly — in the right direction; the American public knows that jobs, not tax cuts, are the No. 1 priority; and the House leadership may even be willing to compromise if business leaders give them cover.

Even When They Try To Use Data... They FAIL

Tea and Blindfolds

Even when the radical right attempt to use data, they fail.  They're so wedded to ideology they cannot allow any evidence to contradict their "common sense" assumptions about how the world is ordered.  And even when the evidence is weak, they continue to push their arguments as if they were based in utter, irrefutable fact.  In Sara Mosle's New York Times Book Review of Steven Brill's thinly veiled attack on public education, Class Warfare (get it? Aren't Yalies clever???), Brill comes up very short on several  of his key points.

Yet Brill wants us to believe that unions are the primary — even sole — cause of failing public schools. But hard evidence for this is scarce. Many of the nation’s worst-performing schools (according to the National Assessment of Educational Progress) are concentrated in Southern and Western right-to-work states, where public sector unions are weakest and collective bargaining enjoys little or no protection. Also, if unions are the primary cause of bad schools, why isn’t labor’s pernicious effect similarly felt in many middle-­class suburbs, like Pelham, N.Y., or Montclair, N.J., which have good schools — and strong unions?

More problematic for Brill’s thesis, charter schools, which are typically freed from union rules, haven’t succeeded in the ways their champions once hoped. A small percentage are undeniably superb. But most are not. One particularly rigorous 2009 study, which surveyed approximately half of all charters nationwide and was financed by the pro-­charter Walton Family and Michael and Susan Dell Foundations, found that more than 80 percent either do no better, or actually perform substantially worse, than traditional public schools, a dismal record. The study concluded that “tremendous variation in academic quality among charters is the norm, not the exception.”

Honesty is not the right-wing's strong suit.  Never has been, never will be.  Ideology trumps reality in their sad, little world.

Last (sensible) Man Standing (in the GOP)

Jon Huntsman Opens Fire on the Teabagging wing of the GOP

That would be Jon Huntsman...

"I think there’s a serious problem. The minute that the Republican Party becomes the party – the anti-science party, we have a huge problem. We lose a whole lot of people who would otherwise allow us to win the election in 2012. When we take a position that isn’t willing to embrace evolution, when we take a position that basically runs counter to what 98 of 100 climate scientists have said, what the National Academy of Science – Sciences has said about what is causing climate change and man’s contribution to it, I think we find ourselves on the wrong side of science, and, therefore, in a losing position.

The Republican Party has to remember that we’re drawing from traditions that go back as far as Abraham Lincoln, Theodore Roosevelt, President Eisenhower, Nixon, Reagan and Bush. And we’ve got a lot of traditions to draw upon. But I can’t remember a time in our history where we actually were willing to shun science and become a – a party that – that was antithetical to science. I’m not sure that’s good for our future and it’s not a winning formula."

More Lies the Right-Wing Wants You to Believe

Data's a bitch.  Seriously.  Kevin Drum takes the Teabag GOP to task over the assertion that capital gains taxes must be kept low to encourage investment.  Turns out there's no correlation between capital gains tax rates and rates of investment.

In the context we're using here, capital formation refers to capital used for investment purposes, so in its nickel version the argument for low capital gains rates is that it encourages capital to be invested. This is a good thing, and if it were true it would be a powerful argument for low taxes on capital gains. But it's not. Jared Bernstein provides the chart below, which shows the growth of investment over time (blue line) and the capital gains tax rate (red line):

Facts are such inconvenient things...

David Frum Awakens!

David Frum Awakens and Rejects the Tea Party Implants

Much like Neo in The Matrix, David Frum is finally aware of the fantasy world he has inhabited for many years.  Living an unquestioning life enshrouded by the lies and malfeasance of the Tea Party GOP, Frum is now cognizant of the real nature of the world he inhabited so unquestioningly for years.  And, like Neo, he's come out fighting.  Recognizing the utter insanity of the Teabgging GOP right-wing, he's advocating a more sensible approach to our economic problems.  And he's taking to task the enablers of the Teabagger fantasy worldview of economics at the Wall Street Journal.

In a pair of blog posts, "Time to Downgrade the Journal’s Editorial Page" and "The Journal’s Memory Hole" he takes the editors of the Wall Street Journal to task for their disingenuous financial analysis and failure to recognize the causes of the current crisis.  Frum is no liberal, but he recognizes the futility of partisan hackery in the face of the worst financial crisis since 1930.

Taking on the WSJ straw-man that the fed simply wants to crank up the printing presses to solve the financial crisis, Frum writes

Nobody – literally nobody – suggests that prosperity can be conjured from printing presses. The question before us is: what to do in the face of the worst economic collapse since the 1930s? Of course long-term growth comes from savings, innovation, and raising society’s skill level. (The Journal, with its indifference to deficits and its advocacy of open borders, is on the wrong side of at least two of those issues.) But when a crisis comes, what do you do then? In 1934 as in 2009, an accommodating monetary policy can mitigate the crisis and open the way for the drivers of longer-term growth to resume operation. Milton Friedman got that two generations ago. Almost every working business economist on the planet gets it today.

Clearly no liberal he, but sensible monetary policy is more important that Koch-fueled hackery.

Further on, the Journal's hack editors imply that the entire financial crisis can be attributed to the mortgage market and Fed "loose money policy" in the early 2000s.  Frum counters

The insinuation here is that the Fed’s (non-existent) loose money policy, having first created the bubble, must bear responsibility for the crash.

This is an especially important insinuation for the Journal, because the page has its own guilty conscience on the subject to quell. The financial crisis of 2008-2009 destroyed trillions of dollars in real-estate and financial wealth. As has been pointed out by every expert to study the question, from the Financial Crisis Inquiry Commission on down, there is just no way that the US housing bubble alone could have triggered such a global cataclysm. The cataclysm was too big relative to the size of the mortgage market.

We have a real-world example of the point: the failure of the Savings & Loan industry in the late 1980s. The collapse of this entire banking sector, then about a $200 billion industry, pushed the US into a mild recession that lasted for less than a year. Four years after the recession’s end, the US shifted into one of the most roaring expansions of the post-World War II period.

If the US could so easily shake off a $200 billion financial loss in 1990, how is it that the collapse of the not-very-much-bigger subprime market–$1 trillion at its peak–could threaten to wreck the entire financial system of the western world in 2008? How could it cause a market plunge that wiped away at least $13 trillion in wealth? How could it trigger the biggest and steepest plunge in economic activity since the 1930s, extending into a mini-depression that has lasted now almost three years and looks likely to last for at least three more?

The story as told by the Journal makes no sense.

Guilty consciences all around at the Journal.  And serious analytical problems abound.

Coco Chanel: Nazi agent?

Coco Chanel, the inventor of the
Little Black Dress

It appears as though fashion icon Coco Chanel may well have been a Nazi agent during the occupation of France.  She clearly benefited from Nazi policies (she was able to take over the entire Chanel Perfume line from a Jewish family who owned the rights to manufacture her fragrances), but now it seems that she may have been an active asset of the Nazi intelligence apparatus.

Like many luminaries, including the singers Edith Piaf and Maurice Chevalier, the writer Jean Cocteau and the late president Francois Mitterrand, Chanel remained in her native country following its occupation by German forces in the summer of 1940.

And since the war's end, rumours have abounded about the real nature of her association with the Nazis.

Now according to Hal Vaughan, author of the new book, Sleeping with the Enemy, Chanel is revealed as having actually worked for German military intelligence during the war.

Being a Nazi agent was "part of her daily life" in Paris during the occupation, he says.

"Chanel was a consummate opportunist. The Nazis were in power, and Chanel gravitated to power. It was the story of her life."

I'm so disillusioned...

Stress and Early Childhood Poverty

Equal opportunity to succeed is a huge assumption for the loony right, but we have nothing like that in America.  Equality exists in the minds of the Teabaggers and nowhere else.  The correlation of achievement and socioeconomic class is stark and a new study explores another factor exacerbating this achievement gap: stress.

Childhood socioeconomic disadvantage leads to deficits in academic achievement and occupational attainment. It’s long been argued that such deficits arise because poor children are exposed to inadequate cognitive stimulation and to parenting styles that don’t encourage achievement. We don’t dispute the important role of these two variables. But we have outlined here evidence for a new, complementary pathway that links early childhood poverty to high levels of exposure to multiple risks, which in turn elevates chronic toxic stress. This cascade can begin very early in life. Even young babies growing up in low-income neighborhoods already evidence elevated chronic stress. This stress then accounts for a significant portion of the association between poverty and working memory, a critical cognitive skill involved in language and reading acquisition.

Tragedy Meets Farce

Science... It Works, Bitches!

Thank goodness the idiot teabaggers haven't managed to completely destroy our ability to do basic scientific research in this country in favor of Bible-inspired crap like the Creation Museum.  No, as long as real science exists, we'll continue to see (and ultimately benefit from) breakthroughs like this:

[A]team of researchers at MIT’s Lincoln Laboratory has designed a drug that can identify cells that have been infected by any type of virus, then kill those cells to terminate the infection.

In a paper published July 27 in the journal PLoS One, the researchers tested their drug against 15 viruses, and found it was effective against all of them — including rhinoviruses that cause the common cold, H1N1 influenza, a stomach virus, a polio virus, dengue fever and several other types of hemorrhagic fever.

The drug works by targeting a type of RNA produced only in cells that have been infected by viruses. “In theory, it should work against all viruses,” says Todd Rider, a senior staff scientist in Lincoln Laboratory’s Chemical, Biological, and Nanoscale Technologies Group who invented the new technology.

Because the technology is so broad-spectrum, it could potentially also be used to combat outbreaks of new viruses, such as the 2003 SARS (severe acute respiratory syndrome) outbreak, Rider says.

Other members of the research team are Lincoln Lab staff members Scott Wick, Christina Zook, Tara Boettcher, Jennifer Pancoast and Benjamin Zusman.

Fuckin'-A... Kiss my ass, viruses.  "All your base are belong to us!!!!"

Cats in Space!

Well, not quite space, but zero-gravity at any rate!  Why, you ask?  Because science demands it!!!