"It is the policy that dare not speak its name: the printing press"

Martin Wolf in The Socialist People's Worker's Daily Financial Times:

The time has come to employ this nuclear option on a grand scale. The alternative is likely to be a lost decade. The waste is more than unnecessary; it is cruel. Sadists seem to revel in that cruelty. Sane people should reject it. It is wrong, intellectually and morally.

Personally, I would favour the “helicopter money”, recommended by that radical economist, Milton Friedman. This would be a quasi-fiscal operation. Central bank money could pass via the government to the public at large. Alternatively, the government could fund itself from the central bank, directly. Better still, the government could increase its deficits, perhaps by slashing taxes, and taking needed funds from the central bank. Under any of these alternatives, the central bank would be behaving like any other bank, creating money in the act of lending.

Hispanics and Obama: One Bright Spot!

All is not so bleak... Public Policy Polling reports

Obama's approval numbers with Hispanics are down. But Hispanic voters absolutely hate the GOP field. And because of that Obama's winning margins with Hispanics would be as large or even larger than they were in 2008 if the election was today and they'd be one of the key groups propelling him to reelection.

Obama's falling popularity perhaps gives Republicans an opening with Hispanics- but the current front runners aren't very well positioned to take advantage of it. Because of that Obama's likely to win Hispanics by similarly overwhelming margins to 2008 and that's going to make it very hard for Republicans in states where they are a key segment of the electorate.

Hispanics, like African-Americans, recognize that the GOP field is an Insane Clown Posse of haters who will do nothing for them and quite a bit to them if one of these jokers is elected President.

Externalities

Externalities? EXTERNALITIES? We don't need no steenkin' externalities!

Externalities like pollution are one of the classic forms of market failure, and Econ 101 says that this failure should be remedied through pollution taxes or tradable emissions permits that get the price right. What Muller et al are doing is putting numbers to this basic proposition — and the numbers turn out to be big. So if you really believed in the logic of free markets, you’d be all in favor of pollution taxes, right?

Hahahahaha. Today’s American right doesn’t believe in externalities, or correcting market failures; it believes that there are no market failures, that capitalism unregulated is always right. Faced with evidence that market prices are in fact wrong, they simply attack the science.

Baseball and the Study of Institutional Racism

People may not realize how instrumented the modern MLB ballpark can be.  QuesTec, a company that provides the Umpire Information System at several MLB parks, collectes statistical information on every pitch thrown.  Now, scientists at Southern Methodist University have analyzed these piles of data and come to a startling conclusion: Race plays a statistically significant part in the calls of balls and strikes. David Sirota reports.

Today, Major League Baseball games using the QuesTec computerized pitch-monitoring system are the most statistically quantifiable workplaces in America. Match up QuesTec’s accumulated data with demographic information about who is pitching and who is calling balls and strikes, and you get the indisputable proof of how ethnicity does indeed play a part in discretionary decisions of those in power positions.

[H]ome-plate umpires call disproportionately more strikes for pitchers in their same ethnic group. Because most home-plate umpires are white, this has been a big form of racial privilege for white pitchers, who researchers show are, on average, getting disproportionately more of the benefit of the doubt on close calls.

“[M]inority pitchers reacted to umpire bias by playing it safe with the pitches they threw in a way that actually harmed their performance and statistics.” Basically, these hurlers adjusted to the white umpires’ artificially narrower strike zone by throwing pitches down the heart of the plate, where they were easier for batters to hit.

[T]he data suggest that racial bias is probably operating at a subconscious level, where the umpire doesn’t even recognize it.

I suppose it was foolish to believe that it could be any other way.  Racism is in our cultural DNA.

What Impact did the New Deal have on Demand?

A lot, actually.  This chart (h/t Brad DeLong & Matt Yglasias) makes this clear.

You can see that the depression-era policies of FDR drove up the demand for labor thereby injecting much-needed liquidity into the economy.  In fact, it drove up demand by nearly 40%.  The sloppy, ideologically-driven "research" by Cole/Ohanian is disproven yet again.

More Right-Wing Hypocrisy

Friedrich Hayek

Unbelievable...  The Nation reports.

This extraordinary correspondence regarding Social Security began in early June 1973, weeks after Koch was appointed president of the Institute for Humane Studies. Along with his brothers, Koch inherited his father’s privately held oil company in 1967, becoming one of the richest men in America. He used this fortune to help turn the IHS, then based in Menlo Park, California, into one of the world’s foremost libertarian think tanks. Soon after taking over as president, Koch invited Hayek to serve as the institute’s “distinguished senior scholar” in preparation for its first conference on Austrian economics, to be held in June 1974.

Hayek initially declined Koch’s offer. In a letter to IHS secretary Kenneth Templeton Jr., dated June 16, 1973, Hayek explains that he underwent gall bladder surgery in Austria earlier that year, which only heightened his fear of “the problems (and costs) of falling ill away from home.” (Thanks to waves of progressive reforms, postwar Austria had near universal healthcare and robust social insurance plans that Hayek would have been eligible for.)

The private correspondence between two of the most important figures shaping the Republican Party’s economic policies—billionaire libertarian Charles Koch and Nobel Prize–winning economist Friedrich Hayek, godfather of today’s free-market movement—were obtained by Yasha Levine from the Hayek archives at the Hoover Institution at Stanford University. This is the first time the content of these letters has been reported on.

The documents offer a rare glimpse into how these two major free-market apostles privately felt about government assistance programs—revealing a shocking degree of cynicism and an unimaginable betrayal of the ideas they sold to the American public and the rest of the world.

America the Tax Haven?

Compared to other OECD nations, America is a low-tax country for high-income individuals.  Only Russia and the UAE have lower tax rates.  From The Economist:

Brad DeLong Teaches Us about the Magic Multiplier

It's funny, but we just studied about the multiplier effect of fiscal stimulus in my Economics class.  It says that increased spending (either through tax-cuts that drive up consumer demand or through increased government spending) will have a ripple effect through the economy that is greater than the initial increase in demand.

UCLA economist Brad DeLong explains how America can, in fact, spend our way to prosperity.

The US government can currently borrow for 30 years at a real (inflation-adjusted) interest rate of 1% per year. Suppose that the US government were to borrow an extra $500 billion over the next two years and spend it on infrastructure – even unproductively, on projects for which the social rate of return is a measly 25% per year. Suppose that – as seems to be the case – the simple Keynesian government-expenditure multiplier on this spending is only two.

In that case, the $500 billion of extra federal infrastructure spending over the next two years would produce $1 trillion of extra output of goods and services, generate approximately seven million person-years of extra employment, and push down the unemployment rate by two percentage points in each of those years. And, with tighter labor-force attachment on the part of those who have jobs, the unemployment rate thereafter would likely be about 0.1 percentage points lower in the indefinite future.

So, what are the likely costs of an extra $500 billion in infrastructure spending over the next two years?

For starters, the $500 billion of extra government spending would likely be offset by $300 billion of increased tax collections from higher economic activity. So the net result would be a $200 billion increase in the national debt. American taxpayers would then have to pay $2 billion a year in real interest on that extra national debt over the next 30 years, and then pay off or roll over the entire $200 billion.

The $40 billion a year of higher economic activity would, however, generate roughly $10 billion a year in additional tax revenue. Using some of it to pay the real interest on the debt and saving the rest would mean that when the bill comes due, the tax-financed reserves generated by the healthier economy would be more than enough to pay off the additional national debt.

In other words, taxpayers win, because the benefits from the healthier economy would more than compensate for the costs of servicing the higher national debt, enabling the government to provide more services without raising tax rates. Households win, too, because they get to buy more and nicer things with their incomes. Companies win, because goods and workers get to use the improved infrastructure. The unemployed win, because some of them get jobs. And even bond investors win, because they get their money back, with the interest for which they contracted.

With the Teabaggers in control of congress, none of those options will even be considered.  Instead, the Pain Caucus will reign supreme and our economy will continue it's death spiral.  Doomed to repeat the past, we'll slide into irrelevance as the Chinese Dragon ascends.

NaNoWriMo Approaches!

Yes, kids, it's just about that time.  November is National Novel Writing Month and I do believe I'll be participating in NaNoWriMo 2011.  I have an awsome idea for a novel along the lines of The Children of Men and Contagion.  Should be fun!

Hitting the Batter!

The smartest thing you'll read today.  From a long thread in response to Representative James Sensenbrenner's aimless Obama-bashing screed on Patch:

@Jaye; the Tea Party and Republicans - if I can use a baseball analogue - prefer to hit the batter: bean-balls, deliberately removing the possibility of success, being the equivalent to their braying "No's!". Get out of his way. As Lyle (I think it was you) suggested, let's get out of the President's way. Fully fund the repairs, the infrastructure rebuilding. All we get instead is shouting "no's!" followed by a trickling of funds released to prevent shut-down. Just get out of the way and let's get back to business and the potential of a future.

Baseball analogies are as American as apple pie!

Not one candidate...

Spoke up.  Not one candidate displayed any kind of leadership.  The modern Tea Party GOP.

The Tale of the Too-Small Stimulus and the Demand-Side Prince

A good question from a conservative Twitter friend...

I think there is a common misunderstanding that stimulus goes on forever.  It doesn't.  It has a finite life that is intended to "stimulate" the demand-side of the economy.

Things that Make Me Happy!

RedSox Nation in Mourning!  BWAHAHAHAHAHA!  See 'ya next year!

From September Collapse of Red Sox Could Be Worst Ever.  Oh yeah...

GO YANKEES!

"The Euro is Finished..."

A trader on BBC says it's crash time...  The guy's a huge prick (he's hoping for a crash so he and his friends can make money) but he's not wrong about the state of the global economy...

Quote of the piece: "Governments don't run the world, Goldman-Sachs runs the world."  He's not wrong...

It Gets Better

From MoveOn.org

Citizens United a boon for Labor Too

Looks like labor is going to be taking advantage of the Citizen's United ruling:

Labor unions had initially assailed the ruling, known as Citizens United, for allowing corporations and wealthy donors to vastly expand their spending on campaigns. That has indeed happened, with the proliferation of a new generation of political action committees, known as Super PACs, that can accept unlimited donations.

But the ruling also changed the rules for unions, effectively ending a prohibition on outreach to nonunion households. Now, unions can use their formidable numbers to reach out to sympathetic nonunion voters by knocking on doors, calling them at home and trying to get them to polling places. They can also create their own Super PACs to underwrite bigger voter identification and get-out-the-vote operations than ever before.

While unions don't have nearly the spending power of ultra-right-wing companies like Koch Industries, they do have the ability to create Super PACs and move money into the process to try and counteract some of the influence these despicable corporate interests are wielding.

In an interview, Mr. Trumka said the A.F.L.-C.I.O. would initially inject $10 million into its still unnamed Super PAC — far less than the $100 million that some conservative Super PACs have — in large part to build a year-round political structure for labor.

“The way we used to do politics is we’d set up a structure six months before the election, and after Election Day we’d dismantle it,” Mr. Trumka said. “Now we’re going to have a full-time campaign, and that campaign will be able to move, hopefully, from electoral politics to issue advocacy and accountability,” meaning holding union-backed lawmakers accountable.

One nice thing about this process is that the unions are going to force Democrats to come to them, both financially and politically.  No longer will unions contribute blindly to the Democratic party, instead, they will use their money to support the interests of their members.

Hyper-objectivity and a Failure of American Journalism

The events in New York this weekend where already restrained demonstrators were maced for no apparent reason have prompted a re-examination by at least one journalist of the role of journalists in reporting the news not just objectively, but fairly.

New York Times reporter Brian Stelter tweeted that a "battle" was underway on the streets.  Reporter Michael Tracey took exception to this characterization.

As I understand it, if a “battle” is taking place, that means at least two aggressors are “battling” one another. Which would seem to be an odd characterization of yesterday’s events. I wasn’t there, but all the first-hand reports, news stories, video, and eyewitness testimonies suggest that the NYPD was quite clearly responsible for escalating tension, at least in certain instances — such as when several female protesters were indiscriminately maced in the face.

So I had a question for Stelter — what evidence indicated to him that a “battle” had taken place yesterday, or in other words, what evidence indicated that protestors had “battled” police? Again, the term “battle” implies the participation at least two parties, but there is no reason (as yet) to believe that protestors attacked police. Here’s what Stelter said in response: “I used the word “battle” in an attempt not to judge either side.”

Let’s think about this. “In an attempt not to judge either side,” Stelter characterized both sides as “battlers.” How is that not a judgement in of itself? There is clear evidence that police attacked protestors, but no evidence that protestors attacked police, yet Stelter casts both in exactly the same light because he presumably feels that upholding a sacred standard of impartiality is his prime journalistic duty. Even with video evidence available, Stelter shies away from accurately conveying what transpired, because it’s of paramount importance to remain “impartial,” no matter what, always.

This is a perfect manifestation of the pathology of objectivity. Stelter evidently was not interested in accurately portraying the facts. Rather, he obscured them.

Spraying mace into a crowd of captive demonstrators isn't a battle, it's torture.

Lower Paid State Workers Sacrifice More

In keeping with the Tea Party GOP's mantra of "fuck the poor," the changes in contributions towards healthcare and pensions for Wisconsin state workers are, as usual, skewed to ensure the poor pay a higher percentage that the wealthier employees (nobody gets rich working for state government, but some are more comfortable than others).

In a report to Democratic lawmakers, the Legislative Fiscal Bureau finds that

a state worker earning $25,000 a year will see their total pension and health care costs increase from 4.5 percent of their salary to 11.3 percent. A worker earning $50,000 a year will see their share increase from 2.3 percent to 8.5 percent.

And workers earning $100,000 will see their cost increase from 1.1 percent to 6.7 percent.

A link to the report can be found here.  So the people who can least afford it, get hit the hardest.  Well done, GOP, well done! Once again, elections have consequences.

Holding your Nose to Vote in 2012

That's what it's going to take.

It certainly does clear up any thought we might have had about whether or not the president is a real fiscal conservative or whether he was just flogging this deficit obsession for political effect. He's a true believer. And we know this because of his reliance on other deficit hawks and because when the political bloodbath the jobless recovery had predicted came true, his first move was to validate the Republicans' manufactured narrative about what had motivated their voters and launch his program of budget cuts and deficit reduction.

I have thought that his fetish for a Grand Bargain was mostly born of a delusional belief that he was someone who could bridge unbridgeable differences and be remembered as the man who brought cats and dogs together. But it looks as though he was just as motivated by the fact that he's a true blue, Concord Coalition, Pete Peterson deficit hawk.

My Father by Charles Bukowski

In honor of the Republican Party. They fooled people then and they fool people now.

(h/t to my new buddy @shoutcacophony who sent this to me, quite appropriately, at the start of the Insane Clown Posse "debate" last night!)

My Father

was a truly amazing man
he pretended to be
rich
even though we lived on beans and mush and weenies
when we sat down to eat, he said,
"not everybody can eat like this."

and because he wanted to be rich or because he actually
thought he was rich
he always voted Republican
and he voted for Hoover against Roosevelt
and he lost
and then he voted for Alf Landon against Roosevelt
and he lost again
saying, "I don't know what this world is coming to,
now we've got that god damned Red in there again
and the Russians will be in our backyard next!"

I think it was my father who made me decide to
become a bum.
I decided that if a man like that wants to be rich
then I want to be poor.

and I became a bum.
I lived on nickles and dimes and in cheap rooms and
on park benches.
I thought maybe the bums knew something.

but I found out that most of the bums wanted to be
rich too.
they had just failed at that.

so caught between my father and the bums
I had no place to go
and I went there fast and slow.
never voted Republican
never voted.

buried him
like an oddity of the earth
like a hundred thousand oddities
like millions of other oddities,
wasted.

Dialog with a A RealEconomist(tm)

The Unknown Economist!

I had a really interesting e-mail exchange with a "famous" economist (although he would, no doubt, dispute the epithet) on the logic behind the Republican Party's lunatic economic policies.  In order to preserve his privacy, I'm not going to reveal his name, but here is the substantive parts of our discussion.

Me:

I'm just staggered by the ongoing failure of policy in Washington. How did we get to a place where facts don't matter and ideology rules over all? America has become like a Kafka novel, only scarier.

Someone, somewhere, is making money at this somehow and I don't get how. But as "Deep Throat" said in All the President's Men, "Follow the money!"

-P

A RealEconomist(tm):

Well, there's money in proving that a guy who inherited money is a self-made man. And if you tax that guy, you are interfering with one of the key components of the economy.

Me:

Other than ego for the supposed "self-made man," how does that make him money? I get that the ridiculous chants of "class war" by the millionaires is all about taxes (nobody making more than $100,000/year should be allowed to use the phrase "class war"), but that's wealth preservation, not wealth creation. What does destabilizing the global economy do to make people money?

Is there not something more nefarious at work here? Disruption and disassembly of the Federal government (especially agencies like the EPA and the FDA) and the commensurate lessening for regulations across a broad range of product spaces represents a big opportunity. The carbon extraction industry is especially interested.

I'm not normally a paranoid person (believe it or not), and I generally laugh at conspiracy theories (the "truthers" in particular) but I really, really, really think they're out to get us. All of us.

Wouldn't it be depressing if the survivalists were right all along???

:-)

-P

A RealEconomist(tm):

In my experience, you can never underestimate the power of ego. Yes, there are financial benefits (worth paying for) to getting people to explain why getting to dump coal ash in the neighboring preschool is a good idea. But in the end, a lot of what happens in life depends on luck and on where one started. (Even the "self-made billionaires" like Bill Gates and Warren Buffett come from wealthy families.) But it bothers a lot of people to no end that they aren't viewed as having made it themselves.

I have a friend - a liberal Democrat. His father is worth in the neighborhood of $100 million. His father actually is self made, as in, coming from a middle class upbringing. He will also tell you that he was extremely lucky - a fledgling client of the small engineering firm he started couldn't afford to pay its bills and gave him a share of the business instead. Eventually he sold his piece of [a company you've heard of], about $40 from the all time high. My friend actually didn't want to work for his father's company, afraid people wouldn't see him as being his own man. I kept telling him, "the only reason I don't go to work for my Dad's company is that my Dad doesn't have a company. Screw what other people think."

My wife has a friend whose father started a company (I won't name it, but I guarantee you know the company as does every other sentient adult in the US and my guess is about 10% of the rest of the world's population would recognize the name too). She's Vice Chair of the company. But she just upped and left to NYC to start her own business. People who have enough money to have the freedom to think about it start to think that other people don't look up to them unless they're self made. The hard way is to up and leave and start on your own. The easy way is to pay for someone tell the right story. (I've noticed that the liberals that I know that fall into that category go off and start their own bus, the conservatives follow in their predecessor's footsteps and pay for the right story to be told.)

Ego is the powerful force destroying the global economy (well, at least the US economy)... Wow.  Most of the liberals I know recognize the force of luck and coincidence in their success, being at the right place at the right time, knowing the right person or reading the right sequence of papers and achieving a scientific breakthrough.  Most conservatives seem to believe that they are solely responsible for their success, the "self-made man" who conquers obstacles (like the EPA) in their quest for greatness.  Elizabeth Warren put that idea to bed quite handily.  "Nobody got rich on his own..."

Ego.  It's all about ego.

This article in Scientific American, How Math Whizzes Helped Sink the Economy, an excerpt from the book The Quants by Scott Patterson (a reporter for the Wall Street Journal), gives us another excruciating example of ego destroying the markets.  The book spins a tale of hubris, ego and math.  The Quants shows how a small cabal of "smart guys," known collectively as "quants" for their quantitative analytic capabilities, trashed the world economy:

The quants created a name for the Truth, a name that smacked of cabalistic studies of magical formulas: alpha. Alpha is a code word for an elusive skill certain individuals are endowed with that gives them the ability to consistently beat the market. It is used in contrast with another Greek term, beta, which is shorthand for plain-vanilla market returns anyone with half a brain can achieve.

To the quants, beta is bad, alpha is good. Alpha is the Truth. If you have it, you can be rich beyond your wildest dreams.

The notion of alpha, and its ephemeral promise of vast riches, was everywhere in the hedge fund world. The trade magazine of choice for hedge funds was called Alpha. A popular website frequented by the hedge fund community was called Seeking Alpha. Several of the quants in the room had already laid claim, in some form or another, to the possession of alpha. Asness named his first hedge fund, hatched inside Goldman in the mid-1990s, Global Alpha. Before moving on to Morgan in 1992, Muller had helped construct a computerized investing system called Alphabuilder for a quant farm in Berkeley called BARRA. An old poster from a 1960s film noir by Jean-Luc Godard called Alphaville hung on the walls of PDT's office in Morgan's midtown Manhattan headquarters.

But there was always a worry haunting the beauty of the quants' algorithms. Perhaps their successes weren't due to skill at all. Perhaps it was all just dumb luck, fool's gold, a good run that could come to an end on any given day. What if the markets weren't predictable? What if their computer models didn't always work? What if the truth wasn't knowable? Worse, what if there wasn't any Truth?

[Q]uants, such as Griffin, Asness, Muller, Weinstein, Simons, and the rest of the math wizards who had taken over Wall Street, had helped tame the market's volatility. Out of chaos they had created order through their ever-increasing knowledge of the Truth.

For providing this service to society, the quants were paid handsomely. But who could complain?

Then the bubble popped and everyone... everyone lost.

Amazingly, not one of the quants, despite their chart-topping IQs, their walls of degrees, their impressive Ph.D.'s, their billions of wealth earned by anticipating every bob and weave the market threw their way, their decades studying every statistical quirk of the market under the sun, saw the train wreck coming.

How could they have missed it? What went wrong?

A hint to the answer was captured centuries ago by a man whose name emblazoned the poker chips the quants wagered with that night: Isaac Newton. After losing £20,000 on a vast Ponzi scheme known as the South Sea Bubble in 1720, Newton observed: "I can calculate the motion of heavenly bodies but not the madness of people."

Ugh, we're so screwed.

An Early Halloween Gift from the Frothy Mixture!

Rick Santorum (aka The Frothy Mixture) is far stranger than anyone seems to realize.  He is a truly twisted and warped individual and Child Protective Services should be made aware of what he does to his children. This story from 2005 is creepy beyond measure (h/t @Tortured_Verse):

In his Senate office, on a shelf next to an autographed baseball, Sen. Rick Santorum keeps a framed photo of his son Gabriel Michael, the fourth of his seven children. Named for two archangels, Gabriel Michael was born prematurely, at 20 weeks, on Oct. 11, 1996, and lived two hours outside the womb.

Upon their son's death, Rick and Karen Santorum opted not to bring his body to a funeral home. Instead, they bundled him in a blanket and drove him to Karen's parents' home in Pittsburgh. There, they spent several hours kissing and cuddling Gabriel with his three siblings, ages 6, 4 and 1 1/2. They took photos, sang lullabies in his ear and held a private Mass.

"That's my little guy," Santorum says, pointing to the photo of Gabriel, in which his tiny physique is framed by his father's hand. The senator often speaks of his late son in the present tense. It is a rare instance in which he talks softly.

He and Karen brought Gabriel's body home so their children could "absorb and understand that they had a brother," Santorum says. "We wanted them to see that he was real," not an abstraction, he says. Not a "fetus," either, as Rick and Karen were appalled to see him described -- "a 20-week-old fetus" -- on a hospital form. They changed the form to read "20-week-old baby."

They brought the corpse of their dead premie home so their kids could cuddle with it.  Cuddling with a corpse. These are not normal people.  This is right out of a Wes Craven movie.

Elizabeth Warren: "Nobody got rich on his own..."

Elizabeth Warren kicks ass and takes names.

I hear all this, you know, “Well, this is class warfare, this is whatever.”—No!

There is nobody in this country who got rich on his own. Nobody.

You built a factory out there—good for you! But I want to be clear.

You moved your goods to market on the roads the rest of us paid for.

You hired workers the rest of us paid to educate.

You were safe in your factory because of police forces and fire forces that the rest of us paid for.

You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it.

But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

Transcript via Rumproast.

The Endangered Rich!

Jon Stewart was on fire....

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Treason!

Two of the Four Clowns of the Apocalypse!

Scott Sumner, political and economic conservative, calls what the 4 Clowns of the Apocalypse did to try and influence the Fed an outright act of treason:

I think Congressmen have the right to speak out on monetary policy. As long as their advice is not politically motivated. Ask yourself the following question: Would these men be pressuring the Fed to adopt a tighter monetary policy if:

1. Unemployment were over 9%.

2. Inflation had averaged 1% over the past three years.

3. George Bush were president.

Were these men criticizing monetary policy under Bush, when inflation was higher than today? I don’t recall that happening.

Unlike Rick Perry, I don’t think it is treasonous to advocate easy money or tight money. Treason is advocating policies that you know will hurt the country, because you hope you can derive political gain from America’s misfortune. I’ll leave it to my readers to decide who should be charged with treason.

Wingnut Science Encapsulated for Easy Consumption!

Dennis Prager (WARNING: Link goes to townhall.com, your IQ may experience a measurable drop if you click the link!):

Ever since I attended college, I have been convinced that either "studies" confirm what common sense suggests or that they are mistaken.

Wait... WHAT?  Oh. My. God...

What Would Friedman Do?

The GOP braintrust have opened up their big box of Crayolas and scribbled a letter to Fed Chairman Bernanke expressing their displeasure in the very existence of the Fed and the mandate to manage inflation and employment (i.e. the economy):

Dear Chairman Bernanke,

It is our understanding that the Board Members of the Federal Reserve will meet later this week to consider additional monetary stimulus proposals. We write to express our reservations about any such measures. Respectfully, we submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people.

It is not clear that the recent round of quantitative easing undertaken by the Federal Reserve has facilitated economic growth or reduced the unemployment rate. To the contrary, there has been significant concern expressed by Federal Reserve Board Members, academics, business leaders, Members of Congress and the public. Although the goal of quantitative easing was, in part, to stabilize the price level against deflationary fears, the Federal Reserve’s actions have likely led to more fluctuations and uncertainty in our already weak economy.

We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy. Such steps may erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers. To date, we have seen no evidence that further monetary stimulus will create jobs or provide a sustainable path towards economic recovery.

Ultimately, the American economy is driven by the confidence of consumers and investors and the innovations of its workers. The American people have reason to be skeptical of the Federal Reserve vastly increasing its role in the economy if measurable outcomes cannot be demonstrated.

We respectfully request that a copy of this letter be shared with each Member of the Board.

Sincerely,

Sen. Mitch McConnell, Rep. John Boehner, Sen. Jon Kyl, Rep. Eric Cantor

• Unfounded assertions?  Check!
• No confusing data? Check!
• Unnamed academics? Check!
• Blame the Fed? Check!
• Confidence Fairy? CHECK-A-ROONEY! 

BINGO!

These are the Best and Brightest the GOP have.  The pinacle of Conservative economic thought.  The Do-Nothing-Party indeed.  Let's just leave it be and see what happens.  Heads in the sand on the count of three!  One... Two... THREE!

We're all doomed.  Doomed!

Music for the Masses: Far Cry

Rush is an acquired taste, I agree.  But you can't deny their musicality or their lyrical finesse.  This one struck me this morning for these lyrics...

Pariah dogs and wandering madmen
Barking at strangers and speaking in tongues
The ebb and flow of tidal fortune
Electrical changes are charging up the young


It's a far cry from the world we thought we'd inherit
It's a far cry from the way we thought we'd share it
You can almost feel the current flowing
You can almost see the circuits blowing

Enjoy!

Puts and Sells for Jesus! Did You Just Short the Holy Ghost???

This is thoroughly and utterly vile.

About one in five Americans combine a view of God as actively engaged in daily workings of the world with an economic conservative view that opposes government regulation and champions the free market as a matter of faith.

"They say the invisible hand of the free market is really God at work," says sociologist Paul Froese, co-author of the Baylor Religion Survey, released today by Baylor University in Waco, Texas.

And you can't teach these self-anointed morons anything new, because they already "know" all the answers.

Most (81%) political conservatives say there is one "ultimate truth in the world, and new economic information of cost-benefit analysis is not going to change their mind about how the economy should work," Froese says.

So God is out there steering the economy.  Really.  God loves money does she?  Let me ask these fucksticks a question.  What part of this passage in the Bible do you not understand?

And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves, And said unto them, "It is written, My house shall be called the house of prayer; but ye have made it a den of thieves." And the blind and the lame came to him in the temple; and he healed them. (Matthew 21:12-14, King James Edition)

So these conservative assholes think Jesus was a free-marketeer?  That the "invisible hand" of the market is God at work?  And they think that Jesus would work to get rid of "Obamacare?"  Was Jesus a moneylender in the temple himself? Is that how you interpret this passage???

 I think not, fucksticks. I THINK NOT!!!!  READ HIS ACTUAL WORDS AS THEY ARE WRITTEN!!!!  What do you think Jesus was saying about economics there?  What do you think he was doing casting the moneylenders out?  I'm an atheist and even I know that the words and deeds of Jesus, whether they happened or not historically, were words of peace and comfort, not economic greed and selfishness.

You're sick and twisted vision of the words of the man you regard most highly is something you have projected onto him.  They are not his words, his thoughts or his deeds.  They are yours, fucksticks.  They are yours.

Google Ngram Tracks the Failure in our Economic Thinking

Noodling around with Google Ngram tonight.  This is a look at all books tracked by nGram in English as they refer to four reportedly famous economists: Freidrich Hayek, John Maynard Keynes, Milton Friedman and Paul Krugman.

Here is the breakdown for English overall.

Friedman dominates the 80s and into the early 90s but then Keynes makes a comeback.  Hayek never makes much of a difference.

Here is the breakdown of American English

Milton Friedman peaks after 1980 with the implementation of Reaganomics (aka Voodoo Economics).  This is such a clear picture of how our our economic thinking transformed from a technocratic, government-managed market economy to the so-called "free market" where capitalism came off the rails.

Keynes maintains a steady state throughout it all, Paul Krugman is a rising star after 1990 and finally, poor, sad-clown Hayek is basically flatlined in his heterodoxy.  But I'm sure the zealots at the Von Mises Institute can explain that away somehow.

Let's look at British English now

The British never lost their love of Keynes, though Friedman gives him a run for his money during the Thatcher years in the 1980s.  And Hayek shows some life in the 80s, more so than in the US.  Probably due to the creation of "think" tanks in the UK that focused on his "ideas" and the penetration of these ideas into the Thatcher administration.

Cool tool.

We Need to Claim the Gasden Flag for Our Own!

Wait... What do you mean that's not the Gasden Flag???

We need to take back the flags, all of them.  For no other reason than to draw attention to the crisis facing our nation, and the world.  Unemployment, rampant financial corruption, inequality, these are all contributing to the riots in London, Spain and Greece and now to the occupation of Wall Street.

If 2,000 tea-party activists descended on Wall Street, you would probably have an equal number of reporters there covering them. Yet 2,000 people did occupy Wall Street last Saturday. They weren’t carrying the banner of the tea party, the Gadsden flag with its coiled snake and the threat “Don’t Tread on Me.” Yet their message was clear: “We are the 99 percent that will no longer tolerate the greed and corruption of the 1 percent.” They were there, mostly young, protesting the virtually unregulated speculation of Wall Street that caused the global financial meltdown.

Like the failure of the mainstream media to cover the occupation of the capital in Madison earlier this year, the occupation of Wall Street is notable for it's absence from the annals of the media.  Ironically, one of the few outlets to cover the occupation is Al Jazeera.  Shame on us.

The Old Fraud that was Freidrich Hayek

Freidrich Hayek teaching at the L.S.E. in 1948

In a thoroughly fascinating tale of the rise of right-wing "think" tanks (they were really propaganda tanks, unlike the actual think tanks like the RAND Corporation or the Brookings Institute) in the UK based on the fraudulent economic hackery of Freidrich Hayek, champion of the Austrian school of economics, comes this delightful summary of Hayek's thinking.

Friedrich Hayek ... wasn't really trying to bring back an old, unpredictable, turbulent laissez-faire system - he wanted to create a new, technocratic system of managed competition that didn't in anyway threaten the existing structure of power.

Historians of the resurgence of economic liberalism have pointed out that, despite his rhetoric, Hayek's theories are very different from laissez-faire, because he wants governments to use their power to enforce and manage what he called "a competitive order" - driven by millions of rational consumers sending abstract signals to each other. And in this way, although his disciples like Fisher and Smedley would hate it, Hayek's vision shared a great deal with the "scientific" planners on the left that he thought were destroying Britain.

It's a fabulous tale of economic quackery, counterfactual thinking, economic devastation and pirate radio.  And while it's clearly centered (or should I say centred) on the UK's experience with Austrian fraudulent economic "thought," the parallels with the US are striking.  The rise of the Propaganda Tanks like the Heritage Foundation, the American Enterprise Institute and others is in keeping with Hayek's vision.

When Fisher and Smedley set up their original Think Tank in 1955 they were practically alone. Now politics in Britain is dominated by Think Tanks, and almost all of them are copies of what Fisher and Smedley first invented. They are ideologically motivated PR organisations masquerading as the sort of scholarly institute that Hayek first suggested to Antony Fisher.

Doom

That's the title of a new article in The New Republic this week.

During the next year of campaigning, we are going to hear lots of uplifting slogans about America’s can-do spirit and the bright prospects for our national future. That is the way politicians talk, and there is nothing wrong with that. But such optimistic rhetoric should not fool anyone about the underlying reality: Unless there is a fundamental—and difficult-to-imagine—change in the way our politics interacts with our economy, the United States and much of the world are headed for a very grim future.

During the typical recession, a country suffering a downturn might hope to revive itself by cutting its spending. That might temporarily increase unemployment, but it would also depress wages and prices, simultaneously cutting the demand for imports and making a country’s exports more competitive against those of its rivals. But, when the recession is global, you get what John Maynard Keynes called the “paradox of thrift” writ large: As all nations cut their spending and attempt to devalue their currencies (which makes their exports cheaper), global demand shrinks still more, and the recession deepens.

Go read the article, it's an excellent analysis of the lead up to the Great Depression and how many parallels there are to our circumstances today.  And why we're so screwed by our ignorant and feckless political elites.

Maybe the End IS Nigh... for Neoliberalism!

See you all on the other side of the Revolution!

Neoliberalism: A market-driven approach to economic and social policy based on neoclassical theories of economics that stresses the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the political and economic priorities of the state. The term is typically used by opponents of the policy and rarely by supporters.

Neoliberalism is the bastard child of Ronald Reagan and Milton Friedman.  It's on life-support now and it's time to remove the feeding tube and shut down the ventilator.  "It's dead, Jim."

We have reached the structural limits of neoliberal capitalism's ability to manage the inherent contradictions of the capital accumulation system. Can Karl Marx help us understand?  He was (and in ways still is) the foremost scholar on the nature of capitalism and his analysis of the system is still invaluable

We should remember that there were two Karl Marx's. The first, a revolutionary and radical who penned, along with English colleague Freidrich Engels, The Communist Manifesto, his plan for global revolution at a time when "Marxism" and "Communism" were not considered pejorative.

But the more interesting Karl Marx was the one who was the analyst of political economy. Studying the ebb and flow of the capitalist system, Marx teased out the inherent contradictions in the capitalist system and identified the form and nature of crisis. You don't have to be a dyed-in-the-wool Red to recognize the quality and value of his analysis.

In a 2009 paper, David Kotz of UMass Amherst looked at the current economic crisis with a set of Karl Marx Ray-Bans and found some troubling developments.

Marxist analysts generally agree that capitalism produces two qualitatively different kinds of economic crisis. One is the periodic business cycle recession, which is resolved after a relatively short period by the normal mechanisms of a capitalist economy, although since World War II government monetary and fiscal policy have often been employed to speed the end of the recession. The second is a long-lasting economic crisis that requires significant restructuring -- that is, institutional change -- if the crisis is to be resolved within capitalism and the capital accumulation process restored. Despite the widespread recognition that these are two different types of crisis, there is not an agreed-upon terminology to distinguish them. Here the term "structural crisis of accumulation" will be used for the second type of economic crisis and "business cycle recession" for the first type.

What we're experiencing isn't the normal business cycle, but rather a structural shift due to the change away from a "fairer" form of capitalism post-WWII which was destroyed by the neoliberal "Reagan Revolution" of 1980.  The growth of obscene inequality in our society is pushing the capitalist system to the brink of collapse.  People can now see how unfair the system has become and that presents a significant problem to the powers-that-be.

Rapidly rising inequality tends to create a realization problem -- that is, an insufficiency of aggregate demand relative to output. Rising profits stimulate rapid accumulation and growing output, but stagnating or falling wages limit demand growth. Increasing concentration of income at the very top also limits demand growth, since the very rich do not spend a large share of their vast income on consumption.

These three developments -- rising inequality, big asset bubbles, and a speculative, risk- seeking financial sector -- are not inherent features of capitalism-in-general. For example, in the US during the period of a regulated [social structure of accumulation] in 1948-73, wages rose at approximately the same rate as labor productivity, while the distribution of household income became slightly less unequal (Kotz, 2009a). During that period there were no asset bubbles, and the major financial institutions engaged mainly in the traditional financial activities of making and holding loans, selling stock and bonds, and offering conventional insurance. There were no major bank failures or financial panics in that period.

Those three developments are features of the liberal institutional form of capitalism. The weak bargaining position of labor in a liberal form of capitalism tends to cause wages to stagnate or fall while profits rise rapidly. The limited state intervention in the market allows the strong to grab, and keep, a rising share of social output.

So the shift away from a more "managed" form of capitalism to one that is unregulated and uncontroled resulted in a catastrophic, systemic failure.  Now where have I read that before... Hmmmmm....

The major capitalist states appear at this time to be trying to resuscitate neoliberal capitalism, but the analysis presented here suggests that it cannot be resuscitated as a viable based for renewed capital accumulation at this time. A new state regulated capitalism could form the basis for renewed accumulation, but it would require a lengthy period to construct such a new form of capitalism. This crisis presents an opportunity, which may last for some years, for the left to organize for a real alternative to capitalism.

 Time to put neoliberalism in the ground and return to an economic infrastructure that works.

The Worst of the Worst of the Worst

Andrew Breitbart:

Perhaps Mr. Breitbart would care to review the Smith Act:

"...with intent to cause the overthrow or destruction of any such government, prints, publishes, edits, issues, circulates, sells, distributes, or publicly displays any written or printed matter advocating, advising, or teaching the duty, necessity, desirability, or propriety of overthrowing or destroying any government in the United States by force or violence, or attempts to do so; or...organizes or helps or attempts to organize any society, group, or assembly of persons who teach, advocate, or encourage the overthrow or destruction of any such government by force or violence; or becomes or is a member of, or affiliates with, any such society, group, or assembly of persons, knowing the purposes thereof."

I'm sure the FBI can handle whatever this little pissant has to throw at them. Like all schoolyard bullies, he's got a big mouth and a glass jaw.  One punch, out go the lights.

Breaking up the Trusts

Standard Oil started it all.  Founded in 1870, it was finally broken up by the Supreme Court in 1911 under the Sherman Anti-Trust act which was passed in order to break the power of the giant capitalist enterprises which were choking the economy.

But this is not a question about big company wealth, but rather about big individual wealth.  If corporations are people, and corporations can be broken up for being too rich or too powerful, why can't we break up the fortunes of big capitalists in the same way?  If corporations can be people, then we can treat people like corporations, right?

Just wondering...

Is It Just Me or Does the New Windows 8 Interface Suck?

I mean seriously... Doesn't the Windows 8 User Interface

Remind you of this hospital console from Idiocracy?

I'm just sayin'...

Out-of-Whack

Here's an interesting look at how out-of-whack the US healthcare system is.

On a chart like this, it's never good to be at either end of the chart.  Look where we are, nestled up agains the left side.  And who's on the right side? Turkey!

Near-Record Poverty Levels Sparks New Debate

President Johnson signs the Medicaid Bill,
a key component of the War on Poverty

Should we rekindle the highly-successful War on Poverty?

“To have hit 15.1 per cent is truly extraordinary,” said Alice O’Connor, a professor who studies poverty at the University of California, Santa Barbara [and is the author of the definitive work on 20th century poverty abatement, Poverty Knowledge: Social Science, Social Policy, and the Poor in Twentieth-Century U.S. History.]

“We are entering territory which looks like the period before we even started fighting a ‘War on Poverty’ in the 1960s. It’s quite stunning. This is a terrible statement about the depths of the Great Recession but, even more, about the recovery, which has clearly left the poorest out completely.”

The End is Nigh!

Was Rorschach right?

Apocalypse Now, Eurozone Edition!

The most scathing report describing in exquisite detail the coming financial apocalypse in Europe comes not from some fringe blogger or soundbite striving politician, but from perpetual bulge bracket wannabe, Jefferies and specifically its chief market strategist David Zervos. "The bottom line is that it looks like a Lehman like event is about to be unleashed on Europe WITHOUT an effective TARP like structure fully in place. Now maybe, just maybe, they can do what the US did and build one on the fly - wiping out a few institutions and then using an expanded EFSF/Eurobond structure to prevent systemic collapse. But politically that is increasingly feeling like a long shot. Rather it looks like we will get 17 TARPs - one for each country. That is going to require a US style socialization of each banking system - with many WAMUs, Wachovias, AIGs and IndyMacs along the way. The road map for Europe is still 2008 in the US, with the end game a country by country socialization of their commercial banks. The fact is that the Germans are NOT going to pay for pan European structure to recap French and Italian banks - even though it is probably a more cost effective solution for both the German banks and taxpayers....Expect a massive policy response in Europe and a move towards financial market nationlaization that will make the US experience look like a walk in the park. " Must read for anyone who wants a glimpse of the endgame. Oh, good luck China. You'll need it.

"The horror... the horror..."

Macroadvisors is Bullish on Jobs Bill

Not that the bill will ever become law, not with the know-nothing, do-nothing GOP Tea Party in control of Congress, but the highly respected macroeconomic advisory firm Macroadvisors is quite impressed with President Obama's plan for jobs and growth:

We estimate that if enacted promptly and assuming no monetary offset, the plan will:

• Boost GDP growth roughly 11⁄4 percentage points in 2012 by pulling growth forward, mostly from 2013.
• Raise payroll employment 1.3 million by the end 2012, 0.8 million by the end of 2013, and progressively smaller amounts thereafter.
• These estimates do not reflect jobs that might be created in response to tax incentives for hiring included in the plan. While an argument can be made for such effects, we believe them to be modest (more below).
• Our simulation does not include the effects of an initiative, under consideration by the Administration, to direct federal housing agencies to facilitate mortgage refinancing. We will publish a piece on this shortly.
• The President will recommend offsetting the cost of AJA 2011 over the coming decade. The “pay-fors” imply fiscal drag not included in the simulation, but this will be modest and most likely occur after 2013 when the economy is stronger and the Federal Reserve is better positioned to accommodate it.
• Our published forecast already assumes a one-year extension of the current employee payroll tax holiday. Hence, if the President’s plan was enacted in its entirety, we would revise up our forecast for GDP growth in 2012 by about a percentage point, not the full amount shown in this analysis.

The package is intended to deliver stimulus that is timely, temporary, and targeted to areas of immediate need, while promising to pay for stimulus when the economy is stronger and the FOMC better poised to offset any drag associated with the payback. On these grounds the plan seems reasonable to us. It is not, however, a panacea that will put the unemployment rate on a notably steeper descent towards full employment. Rather, it shifts growth from the future, when we hope the economy will be stronger, to today when we know it remains mired in a sub-par expansion.

Impressive.  Certainly more impressive than I had originally given it credit for.

Screaming at the TV Last Night

The Tea Party GOP Braintrust

I share The Incidental Economist's shock and horror...

Let’s start here with the moment I screamed at the TV. I’m sorry, but the audience cheering the idea of letting a thirty-year old who got sick without insurance die is appalling. You can dislike the moral hazard, you can bemoan the fact that people don’t take enough personal responsibility, you can even wish that society wouldn’t have to be on the hook when uninsured people get sick. But don’t take pleasure in that fact. Right now, there are thirty-year olds who don’t have jobs, can’t find work, and can’t afford insurance. Letting them die if they get sick is not “good”. It’s not even “freedom”. Applauding that is depressing.

This was a good glimpse into the heart of darkness that lies inside every Teabagger.  These are abhorrent people.  Aberrant people. People without compassion or feeling.  Dare I say it... evil people.  They are judgemental fucksticks who think that they know the way to "freedom," the same way they know the path to heaven.  And that path leads over the bodies of uninsured Americans.

The death of the uninsured is simply the fault of the uninsured in their world.  Circumstances be damned. The poor are poor because they chose to be poor.  Just like the rich are rich because they all work hard.  This is their vision of America.  An America where the sick can just die.  Well fuck them, that is not my America.

The Myth of the Small Business in America

America, as it turns out, it lousy at creating small business opportunities compared to our European friends:

We're much better at the whole "big business" thing.

The disparity is easy to explain: healthcare.  European and other OECD nations have sensible, national health insurance of one form or another.  Us? Not so much.

Defending Paul Krugman Redux

David Weigel rises to Paul Krugman's defense:

On a day when everyone else was flashing back to 9/11/2001, I was flashing back to the days and months later, when criticism of the Bush administration returned, and the practioners of it became, briefly, Emmanuel Goldsteins. Remember Susan Sontag? Remember the Dixie Chicks? Remember the campaign to "revoke the Oscar" from Michael Moore? There hasn't been much criticism of the substance of Krugman's remarks; denying that 9/11 and counterterrorism strategy became "wedge issues" is denying a few years of political history. The criticism is of Krugman for expressing it. He brushes the criticism right off.

"I'm not saying anything in that post that I wasn't saying back in 2002, when people like him were riding high," says Krugman. "And isn't Rumsfeld 'sweep everything up, related and not' the poster child for 9/11 exploitation?"

Too late...

I do believe that even if Obama grasps the true nature of the enemy confronting him (the Tea Party GOP), it's too late for him to survive.  He's tried for far too long to apease them and, like Neville Chamberlin before him, he will not endure.  Let's look at the jobs bill he's proposed.  It's a conservative wet dream of a package.

But there was nothing remotely radical (or even particularly liberal) about Obama’s ideas: tax cuts, many of them business-friendly, and new spending for such exotic projects as, well, schools and roads. As the president said, his proposals had all drawn Republican support in the past.

He was, however, talking about a Republican Party that existed before it was taken over by a new sensibility linking radical individualism with a loathing for government that would shock Hamilton, Clay, Lincoln and, for goodness’ sake, Robert Taft.

Thus, the GOP sees the solution to the crisis in the measures its right wing has always favored: gutting regulation, keeping taxes on the affluent low, cutting government programs, and stopping Ben Bernanke and the Fed from doing anything to put the unemployed back to work that might risk the tiniest bit of inflation and thus dilute, even momentarily, the wealth of the already wealthy.

Too little, too late and against an implacable foe that will not yield one inch of their ideological ground. They will die fighting for every scrap of land.

The president seems to have awoken to the danger he faces. In his speech to Congress, he pointedly addressed those who believe “that the only thing we can do to restore prosperity is just dismantle government, refund everybody’s money, and let everyone write their own rules, and tell everyone they’re on their own.” He added: “That’s not who we are. That’s not the story of America.”

But that is precisely who most of the Republican Party now thinks we are.