Basic Job Qualifications for Politicians: Stupidity and/or Ability to Lie

Posted: November 2, 2011 | Author: | Filed under: The Bonus Class, Voter Ignorance, We are so F'd | Tags: , | 27 Comments

Something tells me I need to step away from the political news for awhile.  I’m just blown away by all the information out there about today’s crop of political leaders that appears to be met with insouciance by many voters.  How can you support people that clearly don’t have their facts straight? First, I read that Herman Cain seems to be blissfully unaware that China has had nuclear capabilities for some time.  He seems to think they are “trying to develop nuclear capability”. Then, I watched parts of a speech given by Texas Governor Rick Perry Thursday night that was characterized by CBS as “giddy”    I can say that “giddy” wasn’t exactly the first word that came to my mind from having spent tons of time in the French Quarter happily surrounded by drunk gay men. Is giddy some new code word that means your gaydar has gone off big time? While Perry was talking about his ‘brother in Christ”, I had a feeling that there was a different sentiment stirring some where beneath his belt.   This speech made me believe ” THE  rumor”.

Then there was this “awful comment” yesterday by Mayor Bloomberg that I just can’t forget.  Bloomberg wants to forget about any role that the commercial and investment banks played in the financial crisis and blame the entire thing on Fannie and Freddie and the 1994 Community Reinvestment Act.  Fannie and Freddie exacerbated the entire problem but there is no way that poor people can be blamed for a speculative bubble.  Bloomberg simply ignores so many facts and studies that all I can say is that it was shameful to watch some one try to defer blame for incredibly high social costs on their political donor base.  He should be embarrassed at being so transparent or ignorant or capable of lying so badly.  I still can’t figure out which one is most applicable.

Here’s Bloomberg’s faulty analysis of the financial crisis:

This link from Rortybomb’s Mike Konczal has a lot of good information that debunks the obvious canards.  It uses peer reviewed studies not right wing canards and memes meant to promote the interests of the financial services industry.

The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market.  The GSEs were not behind them.  That whole fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the 2000s mortgage market was a Wall Street creation, and that is what drove all those risky mortgages.

For some data, start here: ”More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions….Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.”

As Center For American Progress’ David Min pointed out to me, the timing doesn’t work at all: “But from 2002-2005, [GSEs] saw a fairly precipitous drop in market share, going from about 50% to just under 30% of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10% to about 40% over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans.”

The source of that bolded quote was the Federal Reserve Board, btw.  It clearly showed through reported data that the majority of bad loans came from the private sector, not Fannie and Freddie.  That’s not to say that Fannie and Freddied didn’t jump on board and add to the problem. It just shows that the clear motivator was not the Affordable Housing Act which was supported by both the Clinton and the Bush administrations.  Here’s some additional data that’s germane to the analysis.

  • Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
  • Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that’s being lambasted by conservative critics.

The numbers on subprime lending are extremely clear. The loans that were offered to the weakest borrowers–including NINJA or zombie loans–basically showed up during the housing bubble.  Most economists date that period from 2001 to 2007. The worst of the subprime lending occurred during 2004 to 2006 which is around ten years after the affordable housing laws were passed. Ten years is way too long of a window to try to connect bad lending behaviors to the bill.  The bad lending behaviors clearly came from institutions trying to profit from the speculative bubble.  There’s a really good graphic at McClatchey that shows exactly which 15 private lenders were most responsible for the problem.  I’m sure you’ll recognize the usual suspects.

The other thing that the Bloomberg diatribe ignores is the number of legal inquiries being made into the practices meant to speed up both securitization and foreclosure practices by private lenders.  There are many, many studies in the legal journals that show that the banks were quick to do both of these thing to earn fee income. Why would you foreclose on people if you wanted to have a huge portfolio of loans to poor and minorities to show the government?  Also, why would you sell them off?  Wouldn’t you want to keep them on your books to show you weren’t redlining?  The rush to foreclosure with inadequate documentation is just one example.  Mortgage appraisal fraud was another problem during the peak of the crisis. It just makes absolutely no sense that so many laws could be broken in the name of pleasing a government with an affordable housing agenda.  Clearly, these moves were profit-motivated because most of the banks securitized the loans to get rid of them from their books plus, the holders of the loans and the securities sought insurance to guard against default. They were moving the assets off their balance sheet and betting they all would default at the same time.

Economists and financial analysts are taking on Bloomberg’s comments all over the place.   Here’s one such article from Forbes. Barry Ritholtz characterizes Bloomberg’s comments as “extremely disappointing” and Bloomberg himself as “clueless” and “empty headed ideologue”.   The Forbes article points to further research indicating that Bloomberg’s comments fly in the face of the data.

In a February article for the Journal of Urban Affairs, Dan Immergluck shows how the Federal Housing Authority (FHA) hit the lending accelerator after the housing bubble burst. As the real estate market roared, FHA lending dropped to historic lows, only to rev back up once the subprime mortgage market bottomed out.

This clearly represents the ongoing break with reality that  characterizes the thinking and words of so many elected officials. It’s disheartening because I know that this seems more motivated by protecting ‘evil doers’ than the public.  It’s deliberately false, deliberating misleading, and creates an atmosphere where it will be impossible to correct laws and regulations that could prevent this from recurring.

I’m beginning to think that a requisite for running for office is the ability to lie or to deliberately remain ignorant of the facts.  I can look at politicians like Rick Perry, Herman Cain, Michelle Bachmann, and Sarah Palin fully realizing that they’ve only got primary colors in their school box and that they really have no desire to look for the rest of the rainbow.  However, Mayor Bloomberg can only be characterized as up to something because he has never struck me as stupid.

I call shenanigans!


Memes and Damned Lies

Posted: October 11, 2011 | Author: | Filed under: The Media SUCKS, the villagers, U.S. Economy, We are so F'd | Tags: , | 28 Comments

I posted a group of statistics in the Monday Morning Reads to offset one of the most specious memes  floating around the right wing these days.  I think it first gained some traction when Michelle Bachmann introduced it in one of the debates right after Obama introduced the idea that millionaires need to pay their fair share of taxes. It’s basically billionaire blowback for some one suggesting they pay for the roads they drive on, the schools they attend, the police and fire fighters they call when they are in trouble, and the soldiers–yes even the gay ones–that protect their assets here and abroad.  The little whiny boys think they pay more than their fair share and it’s the damned poor that are getting off easy!  Poor little babies!

There’s this incredibly misleading statistic being bandied about that over half of the taxpayers don’t pay federal taxes. I also talked about the fuzzy math and logic in this post about 10 days ago.  It keeps popping up in response to the so-called Buffett rule that would ensure that billionaires don’t pay lower effective tax rates than their secretaries.  Well, it’s now turned into an Astroturf movement called “We are the 53%” that turns the class war back to one between the poor and working class that includes the Dread Pirate Eric Ericson among others.  All this is based on an anomaly for the 2009 tax year and ignoring all taxes but the income tax. There are memes and then there are out and out lies.  My Monday post linked to this analysis at the CBPP.  Here’s a highlight if you don’t want to follow this link.

A recent finding by Congress’ Joint Committee on Taxation that 51 percent of households owed no federal income tax in 2009 [1] is being used to advance the argument that low- and moderate-income families do not pay sufficient taxes. Apart from the fact that most of those who make this argument also call for maintaining or increasing all of the tax cuts of recent years for people at the top of the income scale, the 51 percent figure, its significance, and its policy implications are widely misunderstood.

  • The 51 percent figure is an anomaly that reflects the unique circumstances of 2009, when the recession greatly swelled the number of Americans with low incomes and when temporary tax cuts created by the 2009 Recovery Act — including the “Making Work Pay” tax credit and an exclusion from tax of the first $2,400 in unemployment benefits — were in effect. Together, these developments removed millions of Americans from the federal income tax rolls. Both of these temporary tax measures have since expired.In a more typical year, 35 percent to 40 percent of households owe no federal income tax. In 2007, the figure was 37.9 percent. [2]
  • The 51 percent figure covers only the federal income tax and ignores the substantial amounts of other federal taxes — especially the payroll tax — that many of these households pay . As a result, it greatly overstates the share of households that do not pay any federal taxes. Data from the Urban Institute-Brookings Tax Policy Center show only about 14 percent of households paid neither federal income tax nor payroll tax in 2009, despite the high unemployment and temporary tax cuts that marked that year.[3]
  • This percentage would be even lower if federal excise taxes on gasoline and other items were taken into account.

The bottom line is that it’s an outlier created by the recession, the “Making Work Pay” tax credit, and ignoring all the other taxes people get socked with including the highly regressive FICA taxes.  Cannonfire has a great post up today that summarizes exactly how a group of extreme narcissists with antisocial personality disorder (e.g. Libertarians) are using this misleading statistic to draw attention away from Occupy.  Of course, there are the other usual right wing memes floating about the Occupy protestors as you’ve read here and many other places.  They are “paid union thugs”. They are spoiled kids who don’t want to pay their credit cards. They are poor because they are lazy.  They are Marxists. They are Leninists.  They are anti-American. It’s an Obama plot!  It’s a DNCC plot!   It’s just been one canard after another.  I’m sure well be buried chin deep in the lies by the end of the next Republican Debate Debacle tonight.  I’m just wondering what hard working American they’re going to boo or send the die sucker love to tonight.

I could spend all day ranting about this and I guess I have given that it’s my third post of disgust in about 10 days but I wanted mostly to frame that current meme in terms of a MoJo post on 6 Big Economic Myths.  It’s got so many nifty graphs that my legs actually tingled!  It also outlines some of the worst economic lies that we’ve been fed since the Reagan years and the ones that have been specifically invented now to keep congress rigging the economic system to benefit the most wealthy and powerful.    If you can stomach watching that debate tonight, keep these myths in mind.  Also, go read the article for the full effect.  There’s no need for me to reproduce it here for you.

Myth #1:  The Stimulus Failed

Short explanation: It wasn’t Max’s Miracle Pill but the economy would’ve been worse without out.

Myth #2: The deficit is our biggest problem right now

Short explanation:  The unresolved leftovers from the financial crisis are the problem and are creating deficits, joblessness, and all kinds of problems. That’s the overarching problem!  Undoing everything the Dubya administration did is the solution!

Myth#3: Lower taxes are the best way to grow an economy

Short explanation:  No way no how.  No empirical data supports this at all.

Myth#4: Regulatory uncertainty is clogging the economy

Short explanation:  Deregulation did this to us.  Good Regulation of financial markets leads to reduce information asymmetry and leads to better outcomes.  Also, the number one concern of businesses is lack of customers if you believe them when you ask them.

Myth #5: Obama is debasing the dollar

Short explanation: Devaluation of the dollar is a good way to beef up exports and stop the outflow of jobs to other countries.

Myth #6: If you unshackle the rich, they’ll rev up the economy

Short explanation:  No way.  No how.  If anything they take their money and create speculative bubbles in markets.  They also use their money to invest in other countries and vacation there.  Evidence is contrary to that.

The one thing that Republicans and their libertarian buddies never run out of are out and out lies.  I am a pragmatist.  I follow the scientific method and the data.  An ideologue creates a narrative around what they want to believe and then wraps it up in whatever it takes to make it sound appealing and plausible.  You can call it a meme or a canard.  You can call them opinions or ideologies.  I just call them damned lies.

Today’s Successful Economies

Posted: September 30, 2011 | Author: | Filed under: Economic Develpment, Economy, U.S. Economy, We are so F'd | Tags: , , , | 6 Comments

Swedes are happier and more globally competitive than the US. Is this the real secret of blondes having more fun?

I wrote a blog post a while back about heaven having fjords. I’m very much interested in economics from a development standpoint so it’s always worthwhile checking out the top performers in the world for lessons.  It is also quite apparent when you do that Libertarian and Republican memes fail and fail badly.  It’s probably why we never hear these things in corporate media.

Societies are better when the pull together instead of pull apart.  The best performing countries in economics are the same countries that have a high commitment to public education and society at large.   The high performers–in economics, in health, and in education–are the Scandavian countries with their highly progressive tax rates, intense regulation of commerce and harmful activities and emphasis on making sure the rising tide rises all the boats rather than sinking a huge number of them to the benefit of the mega yachts.  These are also countries with parliamentary systems which makes them highly democratic. They’ve been winning consistently with the advent of the global economy.  The US has lost its position as leader of the developed nations and is moving way down into the losing positions below still developing nations. We could learn some lessons from Scandinavia.

Here’s Jeffrey Sachs at Project Syndicate with some things to think about in that vein. He has written a new book called The Price of Civilization which basically outlines the missteps that we’ve taken that were primarily started as a result of the election of Ronald Reagan. For some reason, many Americans don’t want to pay for some very simple modern facilities like roads, electric grids, airports, and railways.  They prefer to buy junk from China they probably don’t need in search of happiness in the form of hoarding and consuming.

Rather than respond to globalization with more government spending on education, infrastructure, and technology, Ronald Reagan won the presidency in 1980 by pledging to slash government spending and cut taxes.

For 30 years, the US has been going in the wrong direction, cutting the role of government in the domestic economy rather than promoting the investments needed to modernize the economy and workforce. The rich have benefited in the short run, by getting massive tax breaks. The poor have suffered from job losses and cuts in government services. Economic inequality has reached a high not seen since the Great Depression.

These adverse trends have been exacerbated by domestic politics. The rich have used their wealth to strengthen their grip on power. They pay for the expensive campaigns of presidents and congressmen, so presidents and congressmen help the rich – often at the expense of the rest of society.  The same syndrome – in which the rich have gained control of the political system (or strengthened their control of it) – now afflicts many other countries.

Sweden–as an example other than Norway who can use their oil to leverage their improvements–has been called an economic miracle.  After feeling the global recession, they are now growing GDP at rates that are twice to three times the averages of most industrial countries.  They are growing 5 times fasting than the US.   So, look at their numbers  there on the CIA Factbook and marvel where under the poverty rate comes the label: not applicable. Sweden blends capitalism with a social democracy in a way that makes the swedes the 6th most prosperous country on the planet.  They are above the US who is number 10.  They are behind  Norway, Denmark, Finland, Australia and New Zealand.  They are number 23 in GDP per capita  The US is number 11. They are also highly globally competitive ranking #3 in Global Competitiveness Index after Finland and Switzerland. The US is number 1o.

The Swedes are number 9  on the human development index.  We are number 4.  Norway is  number 1.  Sweden has high marginal tax rates (sometimes over 70%), very powerful unions, immigrants, and generous vacations and work weeks.  Under Republican fairy tales, Sweden and Norway should be worse off than Haiti.  Rather than looking at countries that are achieving great things and leaving us in the dust, we are grasping at a rigid ideology that is designed to tank us.

I haven’t read the Sachs book but I’m definitely putting it on my reading list. You may recall that this is also something Fareed Zakaria examines in his TV show, in books, and at TIME magazine. Here’s a good summary from a recent Time article.

The following rankings come from various lists, but they all tell the same story. According to the Organisation for Economic Co-operation and Development (OECD), our 15-year-olds rank 17th in the world in science and 25th in math. We rank 12th among developed countries in college graduation (down from No. 1 for decades). We come in 79th in elementary-school enrollment. Our infrastructure is ranked 23rd in the world, well behind that of every other major advanced economy. American health numbers are stunning for a rich country: based on studies by the OECD and the World Health Organization, we’re 27th in life expectancy, 18th in diabetes and first in obesity. Only a few decades ago, the U.S. stood tall in such rankings. No more. There are some areas in which we are still clearly No. 1, but they’re not ones we usually brag about. We have the most guns. We have the most crime among rich countries. And, of course, we have by far the largest amount of debt in the world.

We’re in the process of watching the Cat Food Commission Redux set our priorities for our future and its basically an agenda meant to downsize the American Dream for every one except the Mega Wealthy.  I hope that the Cheddar Revolution and the Occupy Wall Street movement turn into an American Spring Movement.  We have to regain the positive momentum towards modernity before the powers that be force us all back into a pre-civil war paradigm of laws, economic servitude, and society.

Meanwhile, as I write about these healthy economies, 90% of US citizens say our economy stinks and they are pretty unhappy about it. Its time to look at some best practices of other countries and dump the ideologues that keeping making the wrong decisions for us.

Tuesday Late Afternoon Blues

Posted: September 20, 2011 | Author: | Filed under: 2012 presidential campaign, Bailout Blues, Barack Obama, Congress, DADT, Democratic Politics, Domestic Policy, Economy, Elections, Equity Markets, Federal Budget, Federal Budget and Budget deficit, GLBT Rights, Main Stream Media, Politics as Usual, The Media SUCKS, the villagers, U.S. Politics, We are so F'd | Tags: , , , , , , , , , , , , , , | 25 Comments

Minxy’s out surfing samsara this afternoon.  I’m trying to muster up some good vibes today for her as she faces all the “it’s a short life” kind’ve stuff that goes on with the early passing of a friend. As for me, I seem to be entering my blue period. Maybe it’s because I just get cannot this friggin’ gravity model specified correctly and maybe it’s just my parameters that are tangled up and BLUE.  Okay, you won’t know what BLUE means for a regression estimator (Best Linear Unbiased Estimator  e.g. BLUE) unless you’re as steeped in econometrics as I am but it’s a good play on words.  REALLY. Chuckle sympathetically because I need it today.  I wish I could like football like normal people.  Instead, I follow the bloodsport of politics and its inherent nastiness these days and I have way too many degrees in the dismal science.  The results are bound to get to you one way or another.

So this little piece is about the U.S. and blue to match my mood.   I’m going to start out with some blue estimators of a different sort.

There was a bit of poll that showed a glimmer of true hope instead of the manufactured sort out today.  Recent entrant into the Massachusetts Senate Race, Elizabeth Warren, is polling ahead of glamor boy Republican Scott Brown who replaced the late Ted Kennedy.

Elizabeth Warren has had an incredibly successful launch to her Senate campaign and actually leads Scott Brown now by a 46-44 margin, erasing what was a 15 point deficit the last time we polled the state in early June.

Warren’s gone from 38% name recognition to 62% over the last three months and she’s made a good first impression on pretty much everyone who’s developed an opinion about her during that period of time.  What was a 21/17 favorability rating in June is now 40/22- in other words she’s increased the voters with a positive opinion of her by 19% while her negatives have risen only 5%.

The surprising movement toward Warren has a lot to do with her but it also has a lot to do with Scott Brown.  We now find a slight plurality of voters in the state disapproving of him- 45%, compared to only 44% approving.  We have seen a steady decline in Brown’s numbers over the last 9 months.  In early December his approval was a +24 spread at 53/29.  By June it had declined to a +12 spread at a 48/36.  And now it’s continued that fall to its current place.

Meanwhile, the mixed up mess of Republican presidential candidates is shaking up to a two white man race.  Gallup reports that Perry has a better chance than Romney of sealing the nomination at this point, but Romney has a better chance than Perry to beat Obama.  No surprises there.

Rick Perry leads Mitt Romney by 31% to 24% in a new USA Today/Gallup poll of Republican presidential nomination preferences. The two are well ahead of the rest of the GOP field, with Ron Paul the only other candidate in double figures.

…

Perry seems to have momentum, but that could be slowed in the coming weeks if Republicans start to perceive that Romney is more electable in the general election. The new poll finds the slight majority of Republicans, 53%, prefer to see their party nominate the person who has the best chance of beating Obama, even if that person does not agree with them on almost all of the issues they care about. Forty-three percent would prefer a candidate who does agree with them on almost all of the issues, even if that person does not have the best chance of winning in November 2012.

Romney currently edges out President Barack Obama by 49% to 47% in national registered-voter preferences for the November election, while Perry trails Obama by 45% to 50%. However, neither Romney nor Obama is ahead by a statistically significant margin.

It’s no wonder Perry wants out of Texas.  This poll should direct Perry into the Even Cowgirls get the Blues line.  Texans do not like Governor Goodhair if you believe PPP’s numbers.

The poll, released Tuesday, showed Perry with a negative approval in Texas: while 45 percent of the state’s voters approve of Perry’s job performance, 48 percent of Texas voters say they don’t approve.

Obama should have The Blues over this poll from Marist.  Will this lead to calls for a primary challenger on calls on him to pull an LBJ?

President Barack Obama faces a litany of bad news.  The president’s job approval rating, his favorability, and his rating on the economy have hit all-time lows.  To compound matters, three in four Americans still believe the nation is in a recession and the proportion who thinks the country is moving in the wrong direction is at its highest point in more than a decade.

According to this McClatchy-Marist Poll, the president’s approval rating is at 39% among registered voters nationally, an all-time low for Mr. Obama.  For the first time a majority — 52% — disapproves of the job he is doing in office, and 9% are unsure.

You’ve always known that Wall Street is only True Blue to profits and not the country right?  Grok this headline at Politico via the WSJ.  It looks like a lot of hedge funds were betting the US to lose its AAA standing with S&P.  The SEC is launching insider trading probes.  Can we please get some perp walks now, please?

Securities and Exchange Commission officials have sent subpoenas to financial firms in a probe of whether there was insider trading — betting on a market crash — before the United States’ long-term credit rating was cut by S&P last month, reports The Wall Street Journal.

At issue are trades that were made by hedge funds and other firms shortly before the rating agency Standard & Poor’s downgraded U.S. debt from triple-A to double-A-plus on Aug. 5 and cited the dysfunctional political climate in Washington as one of the reasons.

The Dow Jones Industrial Average dropped 635 points, or 5.5 percent, on Aug. 8, the first day of trading after the downgrade. This was the sharpest one-day decline since the financial crisis in 2008, but it also made bets against the market very profitable.

Securities regulators are looking for firms that bet the stock market would drop — in particular, bearish trades that seem unusually large or were made by firms that typically do not make them.

An SEC spokesman declined to tell The Wall Street Journal which investment firms have received subpoenas.

My guess is it’s the usual vampire squid suspects and all the rest of the guys whose blue balls we pulled out of the bankruptcy fire with TARP and tax dollars. Bets any one?

So here’s the a nifty chart from Paul Krugman–with blue bars–that will make you scream until you’re blue in the face.  Look whose been winning the class war since 1979.  So the deal is not only is their share of income and assets way up, but their after tax income has gone way up too.

Changes in tax rates have strongly favored the very, very rich.

Now, they’re only a fairly small part of the huge growth in the after-tax inequality of income. But tax policy has very much leaned into that growing inequality, not against it — and anyone who says otherwise should not be trusted on this issue, or any other.

So, of course the moment we get a whiff of anything slightly Democratic coming from the President we experience blue dogs howling at the blue moon and the beltway press.

Centrist Democrats, a dwindling breed on Capitol Hill, were quickly faced with another rough choice once Obama went public with his plans: Reject their president or back what Republicans are already calling the largest tax increase in the nation’s history.

Florida Sen. Bill Nelson, who is up for reelection in 2012, has supported raising taxes on millionaires but was still weighing whether he’d support higher taxes on those who make more than $200,000 a year, said spokesman Dan McLaughlin.

Sen. Ben Nelson (D-Neb.), a key moderate who’s up for reelection next year, didn’t mince words: “There’s too much discussion about raising taxes right now, not enough focus on cutting spending.”

But Sen. Jon Tester (D-Mont.), who likely will face GOP Rep. Denny Rehberg in next year’s reelection bid, hedged a bit, saying he backs provisions in Obama’s plan that call for closing tax loopholes that benefit millionaires and corporations

“This plan isn’t the one I would have written, nor is it the one that will end up passing Congress,” Tester said. “But I welcome all ideas to the table so Congress can work together to create jobs, cut debt and cut spending.”

Blue blooded villager David Brooks admits to being an Obama sap and refers to Beltway Bob as “appreciative”.  I prefer the term deep-throating, but hey, there’s a glint of recognition, right? It’s a two for one villager idiot piece! Look! I’ve managed to use some blue language.

Yes, I’m a sap. I believed Obama when he said he wanted to move beyond the stale ideological debates that have paralyzed this country. I always believe that Obama is on the verge of breaking out of the conventional categories and embracing one of the many bipartisan reform packages that are floating around.

But remember, I’m a sap. The White House has clearly decided that in a town of intransigent Republicans and mean ideologues, it has to be mean and intransigent too. The president was stung by the liberal charge that he was outmaneuvered during the debt-ceiling fight. So the White House has moved away from the Reasonable Man approach or the centrist Clinton approach.

It has gone back, as an appreciative Ezra Klein of The Washington Post conceded, to politics as usual. The president is sounding like the Al Gore for President campaign, but without the earth tones. Tax increases for the rich! Protect entitlements! People versus the powerful! I was hoping the president would give a cynical nation something unconventional, but, as you know, I’m a sap.

Being a sap, I still believe that the president’s soul would like to do something about the country’s structural problems. I keep thinking he’s a few weeks away from proposing serious tax reform and entitlement reform. But each time he gets close, he rips the football away. He whispered about seriously reforming Medicare but then opted for changes that are worthy but small. He talks about fundamental tax reform, but I keep forgetting that he has promised never to raise taxes on people in the bottom 98 percent of the income scale.

I nearly had to stop reading the damned thing since I was about to pass out from putting my palm to my forehead just a few too many times.  Yes, it’s turning black and blue. How are we supposed to get grown up discussions about policy when the two largest newspapers in the country insist posting self serving drivel on a near daily basis.

Okay, here’s my last offering which really does show the best of the Red, White and Blue.  Today is the formal removal of DADT.  0penly Gay and lesbian members of our military no longer have to live double lives or be subject to dismissal.

With Tuesday’s repeal of the military’s “don’t ask, don’t tell” policy, gays and lesbians are now free to serve openly in the U.S. armed services.

The U.S. military has spent months preparing for the repeal, updating regulations and training to reflect the impending change, and the Pentagon has already begun accepting applications from openly gay men and women.

It’s events like this that give you a sense that in some way, it’s still

WE THE PEOPLE of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity

I’m going to get some iced tea and head back to my trade and foreign direct investment research. But, here’s two of my favorites: Dylan’s Tangled up and Blue done by the Indigo Girls for you on this afternoon in New Orleans under a blue sky.

and every one of them words rang true

and glowed like a burning coal

pourin off every page

Like it was written in my soul from me to you

Tangled up and Blue

I lived with them on Montague Street

In a basement down the stairs

There was music in the cafes at night

And revolution in the air …

Monday Reads

Posted: September 12, 2011 | Author: | Filed under: morning reads, We are so F'd | Tags: , , | 11 Comments

Good Morning!

Well, it’s yet another Monday.  I’ve been busy checking out the jobs listings for next academic year and one Hawaii posting is looking pretty interesting right now. Anyway, I’ve got a little more writing on stuff to do before I go full force on that in a few weeks.  I spent all weekend with my nose in numbers and didn’t even turn on the TV once.   Let’s start with an academic post at VOXEU on “What caused the recession of 1937- 1938?” for a good start.  It’s on monetary policy and gold.  It shows how worrying about inflation when a recovery hasn’t really taken hold yet can create further problems.  It also is an area that was investigated by economist Christine Romer who showed how tight fiscal policy (i.e. less government spending) and a tightening of monetary policy led to a recession within the Depression.  Sounds familiar!

The recession of 1937-38 is sometimes called “the recession within the Depression.” It came at a time when the recovery from the Great Depression was far from complete and the unemployment rate was still very high. In fact, it was a disastrous setback to the recovery. Real GDP fell 11% and industrial production fell 32%, making it the third-worst US recession in the 20th century (after 1929-32 and 1920-21).

The recession is often attributed to a tightening of fiscal and monetary policy. Christina Romer (2009) and others have argued that it is relevant to today’s situation because it illustrates the dangers of a premature withdrawal of stimulus when the economy is still weak.

But the recession remains somewhat of a mystery because the two most frequently mentioned causes – the reduction in the fiscal deficit and the Federal Reserve’s decision to double reserve requirements – do not appear to have been powerful enough to generate a recession of the magnitude seen. For example, Romer (1992) herself has argued that “it would be very difficult” to attribute much of the decline in output to changes in fiscal policy.1 And most studies of the Fed’s doubling of reserve requirements – most recently, Calomiris et al (2011) – have concluded that it had little impact on banks because they held abundant excess reserves, which they did not seek to rebuild after the new requirements took effect.

If fiscal retrenchment and higher reserve requirements cannot fully explain the recession, then what can? There is no doubt that there was a severe monetary shock. As Figure 1 shows, the money supply (M2) grew at a consistent rate of about 12% a year from 1934 to 1936, but then suddenly stopped growing in early 1937 and even fell later in the year. The monetary shock, however, was not the Federal Reserve’s decision to increase reserve requirements, but the often overlooked Treasury Department decision to sterilise all gold inflows starting in December 1936.

Historian Julian Zelizer is wondering about Obama becoming a one-term President.   Minx sent me this link and I found it interesting.  Zelizer seems to think that the midterm election created a timid Obama.  It seems like every where I turn I read an article on Obama plus one term president these days.

With waning approval ratings and a stagnant economy, the possibility that Mr. Obama will not be re-elected has entered the political bloodstream. Suddenly, the opposition party envisions a scenario in which its presidential candidate could defeat Mr. Obama in a referendum on his job performance. Mr. Obama needs to think hard about his own statement and consider what it takes to be a successful one-term president, in the light of history.

One-term presidents usually leave office with their parties divided, the economy in crisis, wars unresolved, approval ratings in the tank and a sullen public rejecting them. Becoming a one-term president means joining a gallery of dashed hopes and crushed ambitions. Among those who were elected for just one term were men who, like Mr. Obama, came to the White House with enormous promise.

Interestingly enough, it may just be the Republicans that defend Social Security in an effort to stop the momentum of Governor Goodhair.  First up, a bit of  ass-kicking on the subject from Mittens.  Romney knows where to play the Social Security card; FLORIDA!

Mitt Romney didn’t wait long to begin his attack on Rick Perry over Social Security—his campaign is doing door-to-door distribution of a flier attacking Perry on the issue.

The flier, which a campagn spokesman said is being left at the doors of Florida GOP primary voters, portrays the GOP primary as a two-candidate race—“Two candidates. Only one will protect what’s important to you,” is the headline.

Of those two, it says, Perry is “reckless and wrong on Social Security.” The bold-face tagline: “Rick Perry: How can we trust anyone who wants to kill Social Security?”

Romney, it says, favors “entitlement reform,” but “wants to save Social Security.”

Perry has not directly advocated abolishing Social Security, although he has called it a “Ponzi scheme” and questioned whether it’s constitutional. In last week’s candidates debate at the Reagan Library debate, the two clashed on the issue, and Romney accused Perry of being “committed to abolishing Social Security. But during the debate, Perry promised emphatically that he wouldn’t do anything to affect the benefits of current retirees or those nearing retirement.

Romney isn’t paying attention to the nuances, however. In the nation’s biggest swing state, which happens to have the second-largest population of 65-plus residents, he clearly hopes to put Perry’s views into question.

Bachmann is not about to be left out of the situation.  She’s got plans in the work to attack Goodhair on Social Security too.

“Bernie Madoff deals with Ponzi schemes, not the grandparents of America,” says a Bachmann adviser.  “Clearly she feels differently about the value of Social Security than Gov. Perry does.  She believes Social Security needs to be saved, that it’s an important safety net for Americans who have paid into it all their lives.”

Bachmann is in Florida for private meetings and to prepare for Monday night’s GOP debate in Tampa.  It’s no secret the Bachmann camp was unhappy with the moderators of last Wednesday’s Republican debate at the Reagan Library, a debate which began as a Perry-Romney showdown and gave less time to other candidates.  This time, in Tampa, it seems safe to predict that moderators will ask at least some other candidates whether they agree with Perry’s characterization of Social Security.

“Certainly not,” the adviser says.  “She strongly disagrees with his position on that, and it’s clearly not something that’s going to sit well with the people of Florida and Iowa and South Carolina and many of the early states, where there is a large population of seniors who rely heavily on Social Security.  For [Perry] to scare them is wrong.”

This should get interesting.  Oh, a friend and I were having a conversation on Michelle and Marcus last night.  I really though they should be part of a Tennessee Williams like play with John Goodman cast as Marcus.  I think Goodman could stretch his chops enough to do a Blanche Dubois like character, don’t you?

Steve Pearlstein at WAPO has come up with the newest Republican slogan and I like it.  “Repeal the 20th century”.  Actually, it’s more like repeal everything prior to the civil war but what’s a few decades between friends?

It’s not just the 21st century they want to turn the clock back on — health-care reform, global warming and the financial regulations passed in the wake of the recent financial crises and accounting scandals.

These folks are actually talking about repealing the Clean Air Act, the Clean Water Act and the Environmental Protection Agency, created in 1970s.

They’re talking about abolishing Medicare and Medicaid, which passed in the 1960s, and Social Security, created in the 1930s.

They reject as thoroughly discredited all of Keynesian economics, including the efficacy of fiscal stimulus, preferring the budget-balancing economic policies that turned the 1929 stock market crash into the Great Depression.

They also reject the efficacy of monetary stimulus to fight recession, and give the strong impression they wouldn’t mind abolishing the Federal Reserve and putting the country back on the gold standard.

They refuse to embrace Darwin’s theory of evolution, which has been widely accepted since the Scopes Trial of the 1920s.

One of them is even talking about repealing the 16th and 17th amendments to the Constitution, allowing for a federal income tax and the direct election of senators — landmarks of the Progressive Era.

What’s next — repeal of quantum physics?

Cannonfire has an excellent analysis up of a NYT piece on Obama and covert activities. Cannon talks about Obama’s entire background as being spookier than a gothic novel, with Halloween coming up, you could read all the links to his past posts and get in the mood or read his summary at that link.

In 1981, Obama was allegedly an ill-to-do student at Occidental University in L.A. Yet he chose to make a covert trip to Pakistan — his first trip out of the country — at a time when the place was under martial law; the State Department was advising Americans not to travel to that part of the world. Pakistan was, of course, a key part of the covert resupply effort for the anti-Soviet effort in Afghanistan.

There, a local “diplomat” at the U.S. embassy (obviously CIA) set up a meeting with one of the most powerful players in Pakistan — Ahmadmian Soomro. We are given no explanation as to why a poor student would meet with the nation’s most powerful banker and deputy speaker of the Assembly.

At Oxy, Obama took classes in politics, and one of his likely professors (whom I have never named) has a “former” CIA background. (With the CIA, you always have to put the “former” in quotes.) This man was also close to Zbigniew Brzezinski — who later became a key adviser to and influence on Barack Obama.

At the time, young Obama had an Indonesian passport. It’s known that the Agency likes to recruit young men with multiple passports, which can aid in plausible deniability. (For example: Obama’s passport would not have a Pakistan stamp.)

Obama never seemed to have any trouble paying for his expensive university career. After college, he went to work for a firm which was later exposed as offering cover for CIA personnel oversees.

His mother, Ann Dunham, had a remarkably spooky background, working for AID and the Ford Foundation, both well-known for offering cover for the CIA. Although an alleged leftist, she married a man who was the key liaison between Mobil oil and the CIA-installed Suharto regime, which came to power on the backs of some 500,000 corpses. I think it is fair to posit that no real leftist would even have lunch with a guy like that. (Ann made her own mystery trip to Pakistan in 1981 — and was even learning Urdu!)

Pardon me while I get my shoe phone …

Okay, well, that’s a start to the morning for me.  So, what’s on your reading and blogging list today?

 

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