Monday Reads

april fishToday is April Fool’s Day so watch out for those sadistic tricksters!! It’s known as April Fish Day in France.  I found a vintage French postcard for you so you will know that I’m not April Foolin’ you!!

The origins of April Fools’ Day are obscure. The most commonly cited theory holds that it dates from 1582, the year France adopted the Gregorian Calendar, which shifted the observance of New Year’s Day from the end of March (around the time of the vernal equinox) to the first of January.
According to popular lore some folks, out of ignorance, stubbornness, or both, continued to ring in the New Year on April 1 and were made the butt of jokes and pranks on account of their foolishness. This became an annual tradition, according to this version of events, which ultimately spread throughout Europe.A major weakness of the calendar-change theory is that it fails to account for an historical record replete with traditions linking this time of year to merriment and tomfoolery dating all the way back to antiquity.

The Romans, for example, celebrated a festival on March 25 called Hilaria, marking the occasion with masquerades and “general good cheer.”Holi, the Hindu “festival of colors” observed in early March with “general merrymaking” and the “loosening of social norms,” is at least as old.

It’s not unreasonable to suppose that the calendrical changes of the 16th and 17th centuries served more as an excuse to codify a general spirit of frivolity already associated with the advent of spring than as a direct inspiration for April Fools’ Day.

Here’s one of my favorite April Fool’s hoax of all times.  It’s from the BBC an it’s broadcast of the Swiss Spaghetti Harvest of 1957.

As for Le Poisson d’Avril, here are some ways to celebrate April 1st comme la France!  Fish-shaped chocolate pastries sound wonderful! But, be sure to check your back frequently!

Today in France, those who are fooled on April 1 are called the “Poisson d’Avril” (the April Fish). A common prank (especially among school-aged children) is to place a paper fish on the back of an unsuspecting person. When the paper fish is discovered, the victim is declared a “Poisson d’Avril.”

While it is not clear of the origins of fish being associated with April 1, many think the correlation is related to zodiac sign of Pisces (a fish), which falls near April.

If you are looking for an easy way to prank your friends or family, doodling or cutting out a paper fish and sticking it on the back of an unsuspecting victim is an easy (though admittedly juvenile) way of commemorating the origins of April Fools’ Day.

Of course as someone who enjoys France in large part because of all the amazing food, my personal favorite part about Poisson d’Avril are the plethora of bakeries and cholocatiers that make fish shaped French pastries and chocolates in honor of the holiday. Carol Gillot, who writes the blog Paris Breakfasts, has a great collection of such fish-shaped treats on her blog.

So, I do have  few economics links today to share with you.  BB sent me a link to this David Stockman op-ed.  I frankly thought it an April Fool’s Day prank by the NYT but it seems Mr. Stockman has been bitten by the gold bug.  He appears to be having public fits.

The future is bleak. The greatest construction boom in recorded history — China’s money dump on infrastructure over the last 15 years — is slowing. Brazil, India, Russia, Turkey, South Africa and all the other growing middle-income nations cannot make up for the shortfall in demand. The American machinery of monetary and fiscal stimulus has reached its limits. Japan is sinking into old-age bankruptcy and Europe into welfare-state senescence. The new rulers enthroned in Beijing last year know that after two decades of wild lending, speculation and building, even they will face a day of reckoning, too.

THE state-wreck ahead is a far cry from the “Great Moderation” proclaimed in 2004 by Mr. Bernanke, who predicted that prosperity would be everlasting because the Fed had tamed the business cycle and, as late as March 2007, testified that the impact of the subprime meltdown “seems likely to be contained.” Instead of moderation, what’s at hand is a Great Deformation, arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices — a form of inflation that the Fed fecklessly disregards in calculating inflation.

These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen. It would necessitate a sweeping divorce of the state and the market economy. It would require a renunciation of crony capitalism and its first cousin: Keynesian economics in all its forms. The state would need to get out of the business of imperial hubris, economic uplift and social insurance and shift its focus to managing and financing an effective, affordable, means-tested safety net.

So, what are economists saying about this full on meltdown?  Business Insider calls the four page essay an “unhinged screed”.1er avril

Former Reagan budget director David Stockman has a new book coming out on Tuesday, and he’s warming up the public with a massive piece in today’s New York Times titled Sundown in America, which basically says the future of America bleak because of massive government debts, crony capitalism, bailouts, megabanks, the removal of the gold standard, and even green energy.

The piece can truly be characterized as Hard Money Buzzword Bingo, as Stockman tries to get in as many  scare lines as possible.

Check out this one sentence where he talks about bubbles, Wall Street casinos, the Crucifixion of savers, commodities Main Street, a “Great Deformation”, and a rogue central bank:

Instead of moderation, what’s at hand is a Great Deformation, arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices — a form of inflation that the Fed fecklessly disregards in calculating inflation.

It just goes on and on like this, but his final suggestion is to run for the hills:

The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest bubble pops, there will be nothing to stop the collapse. If this sounds like advice to get out of the markets and hide out in cash, it is.

It’s hard to know where to begin poking holes in the whole thing, but probably the most telling and self-contradicting aspect, is the fact that he traces the original sin of the economy back to FDR taking the US off of the gold standard.

 Paul Krugman calls him a “cranky old man” which I frankly think should be the new moniker for the republican party.  Give up GOP.  Take up COM.

Shorter David Stockman:

We’ve been doomed, yes doomed, ever since FDR took us off the gold standard and introduced unemployment insurance. What about those 80 years of non-doom? Just a series of lucky accidents. Now we’re really doomed. I mean it!

Actually, I was disappointed in Stockman’s piece. I thought there would be some kind of real argument, some presentation, however tendentious, of evidence. Instead it’s just a series of gee-whiz, context- and model-free numbers embedded in a rant — and not even an interesting rant. It’s cranky old man stuff, the kind of thing you get from people who read Investors Business Daily, listen to Rush Limbaugh, and maybe, if they’re unusually teched up, get investment advice from Zero Hedge.

avrilPaul Thoma just gives him the wingnut of the day award.  Kids Prefer Cheese actually provide some wonky responses and says he’s thrown a massive hissy fit.  Stockman really does appear to have views totally disconnected from economic history and reality.  I give up everything nice I’ve ever said about him.  This one op-ed shows he’s really off his rocker.   My favorite characteristic comes from the ever mild mannered Jared Bernstein.  Now remember, I’ve been quoting economists only here.

He has a featured piece in today’s NYT which, while about 11.8% absolutely and totally on target, is mostly a horrific screed, an ahistorical, dystopic, Hunger-Games vision of America based on debt obsession and willful ignorance of macroeconomics and the impact of market failure.

The first sign of a problem here comes from a mash-up of statistics in the introduction that looked wrong.  I’m not sure what he did, but business investment is up 1.4% per year since early 2000, not 0.8% as Stockman claims, and why start there anyway (he seems to do so because that’s when the stock market last peaked—whatever…)?  Actually, business investment has been a pretty strong performer over this expansion, up 6.6% per year since 2009Q3.  To measure payroll growth from the early 2000s also masks huge variation.   Stockman claims almost no growth annually, but private payrolls are up over 2% per year since they started growing in early 2010.

But here’s the challenge with a piece like this: despite the better statistics you get when you chose different dates, there’s no question that the American economy is seriously underperforming and that bad policy is implicated.  It’s just that the culprits aren’t the ones he thinks they are.

In fact, like most crazed rants, it’s hard to pick out the argument, but I think it’s this: for almost a century, economic policy makers have…um…made policy, and that’s led to cheap money, high indebtedness, crony capitalism, and econo-moral-turpitude.

Everyone’s implicated, left and right.  Keynes didn’t understand macro, Nixon abandoned the discipline of the gold standard, Bush II spent recklessly, Greenspan and Bernanke’s were and are reckless monetary hippies, even Paul Ryan’s a big spender (!), Obama’s policies are “hopelessly glib” (whatever that means), and the central banks of China and Japan are “monetary roach motels.”

Eisenhower gets some love, presumably for running some budget surpluses, though Clinton’s larger surpluses (as a share of GDP) are not mentioned.

Like I said, I thought the NYT’s as playing April Fool’s Day one day early in not only printing this but giving it so much space!

Read the rest of this entry »


Fiscal Jabberwocky

"Beware the Jabberwock, my son! The jaws that bite, the claws that catch!"

It’s not often I get to post pictures of mythical beasts for a few days in a row but here I go again. Plus, I’ve gotten another chance to use one of those wonderful Alice in Wonderland book illustrations.  Too bad they’re attached to posts where the perverse wonderland rules.  It seems to be a year for fictional monsters in Op-Eds and real ones in congress.

David Stockman, Budget Director for Ronald Reagan, has joined the ranks of Republican advisers calling shenanigans on the Boehner/Tea Party Republicans AND the dithering Obama Dems.   He must be very financial and professionally secure.  His op-ed in the New York Times draws blood on all sides.  He starts out telling President Obama what is what then moves on to hammering that petulant ninny from Wisconsin, Paul Ryan.  Go read it if only for the creative use of words like that in the heading above.

On the other side, Representative Ryan fails to recognize that we are not in an era of old-time enterprise capitalism in which the gospel of low tax rates and incentives to create wealth might have had relevance. A quasi-bankrupt nation saddled with rampant casino capitalism on Wall Street and a disemboweled, offshored economy on Main Street requires practical and equitable ways to pay its bills.

Ingratiating himself with the neo-cons, Mr. Ryan has put the $700 billion defense and security budget off limits; and caving to pusillanimous Republican politicians, he also exempts $17 trillion of Social Security and Medicare spending over the next decade. What is left, then, is $7 trillion in baseline spending for Medicaid and the social safety net — to which Mr. Ryan applies a meat cleaver, reducing outlays by $1.5 trillion, or 20 percent.

Trapped between the religion of low taxes and the reality of huge deficits, the Ryan plan appears to be an attack on the poor in order to coddle the rich. To the Democrats’ invitation to class war, the Republicans have seemingly sent an R.S.V.P.

Stockman call the entire situation “fiscal jabberwocky”. Good turn of phrase that.  He then moves to skewering the FED and adds Chinese currency pegging into the villain mix.  I guess there’s nothing like a good rant when you can get primetime ink.  This seems to be an interesting foray into harsh policy critique for economists with a republican bent.

Stockman, like Bruce Barlett and even David Frum are yet more Republicans who are pointing out the current GOP leaders are no more serious about budget reform than the Democrats are. The main difference is the GOP has better slogans and marketing, and slides into full blow demagoguery more easily.

But in terms of actual strategies for intelligently addressing the issue? The most glaring truth is the lack of leadership on both sides of the aisle.

The Barry Ritholtz blog post  on Stockman’s op ed does score some points on mentioning the leadership chasm, but, even more telling is the absolute adherence to fairy tales over reality in policy making these days. Is there an economist in the House?  Joe Wiesenthal says that Stockman is suffering from “fatalistic populism”.   Here’s Stockman’s ending barb to prove that point.  It’s also the two sentences that offer up the policy solution.

So the Ryan plan worsens our trillion-dollar structural deficit and the Obama plan amounts to small potatoes, at best. Worse, we are about to descend into class war because the Obama plan picks on the rich when it should be pushing tax increases for all, while the Ryan plan attacks the poor when it should be addressing middle-class entitlements and defense.

I’ve said many times that the Bush tax cuts just need to expire.  I’ve also said that since the Reagan years we’ve basically started chumming our economy by jumping into interventions wherever and whenever.  Afghanistan and Iraq are two such adventures that need to be de-funded and ended.  We also need to reign in the congressional and pentagon weapons fetish which is basically whipped into a frenzy by free spending lobbyists for companies like Halliburton, GE, and Boeing.  I can only image what they all want the drone budget to look like.  MENA appears to be filled with hives these days.

So many of our fiscal problems would go away if we would just put things back to the where they were 10 years ago.  This includes putting  Wall Street back in its box instead of letting it go completely gaga  with nonstandard, unregulated financial innovations. We can’t afford Obama’s muddling policies that seem like voting present while Republicans go wild with his inability to stand any firm ground.  I believe he got elected to undo the Dubya years. Instead, he’s put the Dubya policies on steroids.  So, if most of us–that would be voters–are saying let’s take it all back to the Clinton years, what I’d like to know is who are the real conservatives and who are the real radicals?


Tuesday Reads: The Anniversary of FDR’s Second Bill of Rights

Good Morning!!

History Reads

Ever so often, we need to be reminded of history.  I read a tweet yesterday by one of our long time news anchors down here in New Orleans.

normanrobinson1 norman robinson

Wondering if we as Americans really value what we have and whether we really care about leaving a future for the generations to follow.

This started me thinking about what future was left to me by the generations directly before me.    Of course, we’re living in a world mostly free of NAZIs and Fascists because of the greatest generation.  We’re living in a world where the Jim Crow Laws of Separate-But-Equal were torn down by the generation after that with the sacrifice of the heroic leaders of the civil rights movement.   I have the right to vote because of my grandmother’s generation and her mother’s generation and what they did for us.  I’ve also had consistent access to family planning and birth control because the first women of the baby boom generation and several generations of women before them worked hard for it.  Stonewall made a tremendous difference in the lives of GLBTs.  Then, there are programs like Social Security and institutions like the United Nations that came from the vision and leadership of  FDR and the people who served in his cabinets like Francis Perkins, Henry Wallace, Cordell Hull and many others.  They cared enough to build us quite a legacy.

Today is the 67th anniversary of a speech that was to convey that vision of a post-war America.  The Second Bill of Rights was part of a State of the Union speech.  I’m bringing this up for two reasons.  First, because it clearly provides a road map–even today–for “what Americans really value”. I say that because poll after poll shows that the majority of American’s agree with these values even though our government doesn’t seem to reflect that at the moment.   For that reason, I share with you today, the words of a leader with a vision and a gift for elocution.

From the FDR American Heritage Center Museum’s Website:

On January 11, 1944, in the midst of World War II, President Roosevelt spoke forcefully and eloquently about the greater meaning and higher purpose of American security in a post-war America. The principles and ideas conveyed by FDR’s words matter as much now as they did over sixty years ago, and the Franklin D. Roosevelt American Heritage Center is proud to reprint a selection of FDR’s vision for the security and economic liberty of the American people in war and peace.

The second reason I want to share this is that we’re coming close to President Obama’s third State of the Union Address. It is scheduled for January 25th.  My guess is that FDR’s Second Bill of Rights and the vision he elucidated will officially die on that day. I am not expecting any thing close to the utterance of ‘Necessitous men are not free men’ or “People who are hungry and out of a job are the stuff of which dictatorships are made”.

Despite the obvious parallels between right now and  the Great Depression–the high unemployment rates, the incredible number of foreclosures, and the breadth of necessitous men and women and children–I’m expectting many of the vestiges of FDR’s vision that prevent future calamities to be assaulted during Obama’s third State of the Union Address.  Look closely at the list I put up top because so much of what was handed us has been trickling away.

As Norman Robinson contemplated via tweet, do we really value what we have today? Will we witness the destruction of what was handed to us and hand our children and grandchildren broken infrastructure, no hope for upward mobility, and useless institutions drained of funds by the greedy?  Will any shell of what was envisioned for us in both the first bill of rights and the second remain? Frankly, I am expecting an ‘austerity’ speech that endorses the findings of the cat food commission. I also expect we will hear nothing of overreaching intrusion by the Patriot Act into our internet and cell phones. We are expected to diligently watch Football and bail out billionaires while everything else trickles up and away.

Read the rest of this entry »


Morphing the Conversation

One of the things that I’ve found profoundly upsetting about the last several decades is how successfully movement conservatism has confused and morphed policy conversation into a mishmash of labels which in no way describe what used to be general understanding of policy. Movement conservatism has reframed many definitions that were used as the basis for policy discourse. In a reaction to this, movement progressivism has reframed the reframe rather than try to shift the conversation back to what used to be common ground and common definitions. The terms “socialism”, “liberal”, and “Keynesian” are now completely divorced from reality–if I can use that word–and from their traditional meanings. Shared definitions and discussion of one’s assumptions are important for civil debate. Civil debate is necessary for successful policy implementation. Our discourse is so inflamed these day that we no longer even share the process by which we have historically entered into dialogue. Screaming ill-defined frames is now de rigueur.

Movement conservatism–its media outlets and thinktanks– has moved the Overton Window so far off the ruler that even former Reagan officials are coming forward to press the reset button. Movement progressivism has borrowed from their play book and is now doing the same. Several TC readers have brought up some really good examples recently.

My personal hypothesis is that both Democrats and Republicans have the same agenda which is to feed the hand of the industries and interests that can keep them in power. They play on different teams with different sponsors but their basic goals are the same. That would be to return money to people that provide money to them. The rhetoric we see in ads and speeches are positioned to keep us on the hook and tagging along. Ever so often they throw us a few things like a study on getting rid of DADT or a law that looks like it may get rid of job place discrimination. These are mostly symbolic and have very little real effect. The right does the same thing. They throw a few restrictions on abortion rights or pull together funds for an government agency that lets churches proselytize through social services. Nothing changes in the big policy realm except the continuation of laws that concentrate media, economic, and political power into the power brokers of each party’s choice. This is something that many of the ‘tea-partiers’ as well as those drawn to the move-on movement share; a sense that government moves when one set of interests that fund politicians asks it to do so. We get wars when the Oil industry needs its interests protected. We get bail outs when the finance industry needs its interests protected. Meanwhile, the rest of us get fed hype that something is happening in our best interests as they reframe discourse with their best Madison Avenue gestalt.

Yesterday, I tried to approach this problem from the sociopolitical concepts. Today, because of some down thread links folks pointed out, I’m going to switch to the socioeconomic. I tag these things with ‘socio’ on the front, because I do believe that most of this comes from differences in class more than differences in anything else. Today’s populists are spewing the words ‘elite’ when I think what they are really sensing is they are far removed from the bonus class of Wall Street, the political class in Washington, and the cultural class in Hollywood. There is nothing elite about them other than their ability to attract money and power through a velvet schmooze and a public platform.

Read the rest of this entry »