I am enjoying the cooling effects of the new AC condenser. The last days of summer heat will be with us here in New Orleans for awhile so I am glad I could replace it. There are a bunch of other things that I will now go without but the AC is one thing you cannot forgo down here any more.
It’s difficult to find some things that aren’t about Syria, but I did find a few things just to give us a break. I am going to start one with item that broke late last night.
The WSJ has says the US has intercepted a message that states that Iran will attack Iraq if the US attacks Syria.
The U.S. has intercepted an order from Iran to Shiite militants in Iraq to attack the U.S. Embassy and other American interests in Baghdad in the event of a strike on Syria, officials said, amid an expanding array of reprisal threats across the region.
Military officials have been trying to predict the range of possible responses from Syria, Iran and their allies. U.S. officials said they are on alert for Iran’s fleet of small, fast boats in the Persian Gulf, where American warships are positioned. U.S. officials also fear Hezbollah could attack the U.S. Embassy in Beirut.
While the U.S. has positioned military resources in the region for a possible strike, it has other assets in the area that would be ready to respond to any reprisals by Syria, Iran or its allies.
Those deployments include a strike group of an aircraft carrier and three destroyers in the Red Sea, and an amphibious ship, the USS San Antonio, in the Eastern Mediterranean, which would help with any evacuations.
The U.S. military has also readied Marines and other assets to aid evacuation of diplomatic compounds if needed, and the State Department began making preparations last week for potential retaliation against U.S. embassies and other interests in the Middle East and North Africa.
I think we all can agree on the level of skepticism felt here–both writers and discussants–on the weird cult of libertarians. Here’s an interesting thought. Are Libertarians the New Communists?
Most people would consider radical libertarianism and communism polar opposites: The first glorifies personal freedom. The second would obliterate it. Yet the ideologies are simply mirror images. Both attempt to answer the same questions, and fail to do so in similar ways. Where communism was adopted, the result was misery, poverty and tyranny. If extremist libertarians ever translated their beliefs into policy, it would lead to the same kinds of catastrophe.
Let’s start with some definitions. By radical libertarianism, we mean the ideology that holds that individual liberty trumps all other values. By communism, we mean the ideology of extreme state domination of private and economic life.
Some of the radical libertarians are Ayn Rand fans who divide their fellow citizens into makers, in the mold of John Galt, and takers, in the mold of anyone not John Galt.
Some, such as the Koch brothers, are economic royalists who repackage trickle-down economics as “libertarian populism.” Some are followers of Texas Senator Ted Cruz, whose highest aspiration is to shut down government. Some resemble the anti-tax activist Grover Norquist, who has made a career out of trying to drown, stifle or strangle government.
Yes, liberty is a core American value, and an overweening state can be unhealthy. And there are plenty of self-described libertarians who have adopted the label mainly because they support same-sex marriage or decry government surveillance. These social libertarians aren’t the problem. It is the nihilist anti-state libertarians of the Koch-Cruz-Norquist-Paul (Ron and Rand alike) school who should worry us.
Economics Policy Wonk Jared Bernstein has a great narrative on how fiscal policy gets so mixed up. He attempts to explain how our economic knowledge in theory has warped into something unrecognizable in the beltway.
I identify three reasons why fiscal policy became so backwards in recent years. First, a strategy by Democrats to block the GW Bush tax cuts morphed from strategy to ideology. Second, a misunderstanding of the Clinton surpluses in ways explained below. And third, the use of deficit fear-mongering to achieve the goal of significantly shrinking the government sector.
During the early years of the GW Bush administration, the President proposed and Congress passed two tax-cut packages that quite sharply lowered the revenues flowing to the Treasury. During those debates, opponents of the cuts raised their negative impact on deficits and debt as a major concern. Such concerns proved to be justified. As Ruffing and Friedman show (2013), instead of its actual slowly rising path, the debt ratio would have been falling in the latter 2000s but for the Bush tax cuts (war spending played a much smaller role). In my terminology, GW Bush fiscal policy was that of an SD (structural dove), adding to the debt ratio throughout the expansion of the 2000s.
Many who were making those anti-tax-cut arguments cited the Clinton years as an instructive counter-example. The lesson of those years, they argued, was that by increasing taxes and restraining spending, the Clinton budgets both led to surpluses and assuaged bond markets leading to lowering borrowing costs, more investment, and faster growth. In fact, while fiscal policy in Clinton’s first budget did lower projected deficits, as discussed above [earlier in the paper I point out that if you track the swing from deficit to surplus from 1993-2000, Clinton fiscal policies explain one-third of the change; even once these changes were in the baseline, in 1996, CBO still projected deficits a few years later, when in fact the budget went into surplus, so Clinton fiscal policy cannot get credit for that part of the swing], economic growth was far the larger factor (the fact that much of this growth was a function of a dot.com bubble is a separate issue).
Together, this line of attack against the Bush tax cuts in tandem with the over-emphasis on Clinton fiscal policy as the factor that led to surpluses, raised the budget deficit to a new level in the national debate. Deficit hawkish pundits, editorial pages, and policy makers knew two things: Clinton raised taxes, cut spending, and balanced the budget; Bush cut taxes, failed to restrain spending, and added to the debt ratio.
Again, reality was more complex. Economic growth was the major factor behind the Clinton surpluses, and while GW Bush’s tax cuts clearly added to the deficit and debt, even under his quite profligate fiscal policy, the deficit-to-GDP ratio fell to about 1% in 2007 (below primary balance). To be clear, this is no endorsement of his structural dovishness. That was the last year of that business cycle expansion, and as I argue later in the paper, it’s important to get the debt ratio on a downward path much sooner than that. But the collision of these two different approaches to fiscal policy in two back-to-back decades helped to construct a conventional wisdom about budget deficits as a national scourge that had more to do with cursory observation than economic analysis.
Another important factor, perhaps the most consequential, in the evolution of these wrong-headed ideas was the partisan ideology that government should be much smaller as a share of the economy. For conservatives who shared this vision, elevating the issue of the budget deficit as a major national problem was and remains a highly effective strategy. If they could convince the public and their representatives that deficits had to be reduced no matter what, than cutting the federal budget should be a short step away.
I’ve studied game theory as part of my graduate program and taught game theory as part of my classes. This study shows why author Julie Beck of The Atlantic Magazine says it’s the gift that keeps on giving. A new study shows that generosity is more advantageous than selfishness.
Results: In the long term, extorting, selfish strategies did not work as well as more generous strategies. Players who defected instead of cooperating suffered more over time than players who recognized the value of cooperation–though extortion might provide an advantage in a single head-to-head matchup, in the context of a whole population, over time, it pays to be generous. Sometimes cooperative players would even forgive those who defected and cooperate with them again.
The researchers created a mathematical proof that shows, as study co-author Joshua B. Plotkin said in an email, “why generosity abounds in nature, despite the fact that it may appear self-detrimental in the short-term.”
Implications: Now we have some mathematical evidence that there is an evolutionary advantage to generosity, other than just good karma. With Darwin’s “survival of the fittest” ingrained in our brains, it often seems like every man for himself is the best strategy, and kindness is just an anomaly. But it’s an uplifting surprise to see a study that says that’s not the case, that we evolve best when we help each other.
This seems like an argument for the feminine and against the masculine to me.
Anyway, that’s my offerings today. What’s on your reading and blogging list?
There are so many elegant things about my chosen field that I do, in fact, still get excited when I introduce huge numbers of undergraduates to Economics. I don’t do much of that anymore given that I am better paid and easier employed as a graduate finance teacher churning out hapless MBAs. But, part of me still knows that we have lots of answers to the big policy questions. The problem is that Republican Revisionism and Big Money from Big Finance has totally overwhelmed the main stories and theories that we all know well. The worst situation is that the cult of the Austrian School is being taken seriously by a select group of young, white male journalists and getting more virtual ink than it truly deserves. Then, there is the absolute fail of the urgency of fiscal policy when unemployment is this high and this pervasive. The one bright light–despite the howling of goldbugs and Birchers–has been the FED. There are still economists over there in that outfit. If you’re used to deconstructing markets like I am, you can see that the markets trust the FED’s policy. It’s not that the FED directly benefits them any more. Those days of buying up nasty assets are behind us. It’s that the Fed understands its priorities are stable financial markets and banking systems and tackling either inflation or unemployment depending on the priority.
Inflation is the thing that is most directly impacted by FED policy. It hasn’t been an issue since Paul Volcker got rid of it and the FED announced its Taylor Rule boundaries. It’s the legacy of Milton Friedman and the monetarists which is actually the school that I most fit as a financial economist of a certain age. That legacy and the legacy of fiscal policy as established by the models and hypotheses first provided by J.M. Keyenes and later proved and improved by a slew of brainy economists with computers and databases–like Paul Samuelson–has been under attack with no theoretical or empirical basis. It is all political and screed journalist based. The nonsense has been amplified by a President who seems completely unwilling to trust real economists and relies on lawyers with emphasis on economic policy. That’s like having a biologist that watches bears in the woods go over your blood work imho. I don’t care how much freaking experience you have writing policy law, it’s not the same as being grounded in the theory and totally aware of the empirical proofs and disproofs.
So, as the speculation about a possible new fed chair pops up, we get stuff like this. Obama is defending Larry Summers. The man is an economist but the man is also not what you would call a particularly skillful leader as witnessed by his tenure at Harvard. He also has said some things about women and science and math that are not very artful and certainly not very helpful to those of us that struggle to be credible despite our obvious genitalia.
Barack Obama has strongly defended Larry Summers against opposition from the left to the possible appointment of the president’s former economic adviser as the next chair of the Federal Reserve.
Mr Obama, speaking at a closed meeting of the Democratic caucus of the House of Representatives, reacted strongly at an otherwise friendly meeting when Ed Perlmutter, a congressman from Colorado, urged him not to appoint Mr Summers.
According to members of Congress present at the meeting on Capitol Hill, Mr Obama urged Democrats to give Mr Summers a “fair shake” and said he had been a loyal and important adviser when the president took office in the midst of a deep recession in 2008.
Mr Summers, a former Treasury Secretary and president of Harvard University, and Janet Yellen, the vice-chair of the Fed, are the leading contenders for the job.
Mr Obama also mentioned by name a third person, Don Kohn, as a possible candidate. He said he had yet to make up his mind on whom he would nominate for the job.
The president said there was little in the nature of policy differences between them, saying you “would have to slice the salami very thin” to find areas in which they diverged.
Don Kohn is a Fed insider and pretty well known as a monetary policy dove just as Obama appears to be a fiscal policy dove. Let me qualify that description. They both come from the let people suffer unnecessarily and let the markets work things out school of thought. In good economic times, that’s an okay stand. In the face of persistent unemployment that is basically looking at a huge number of people and saying let them eat cake. That last option is unnecessary because the bottom line is that we know better and can do better by these folks. It kills me to know what I know and watch the passivity of Obama and the retch-inducing ignorance of Republicans in the face of great suffering. If, in the long run we are all dead, in the short run we all suffer and face economic and personal devastation in the face of incremental steps and not whole-hearted policy wars on dire economic situations. Frankly, I think Obama has a problem with the Janet Yellen because she’s likely to tell him to off if she doesn’t like what he has to say. I really do. She’s a hard boiled economist with a no nonsense approach.
It’s not that we’re doing badly. It’s that we’re creeping along and not growing fast enough in the face of all this deep, long, persistent unemployment and no one’s hair is on fire that can do anything about it.
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.7 percent in the second quarter of 2013 (that is, from the first quarter to the second quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.1 percent (revised).
The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3 and “Comparisons of Revisions to GDP” on page 18). The “second” estimate for the second quarter, based on more complete data, will be released on August 29, 2013.
The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, private inventory investment, and residential investment that were partly offset by a negative contribution from federalgovernment spending. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP in the second quarter primarily reflected upturns in nonresidential fixed investment and in exports, a smaller decrease in federal government spending, and an upturn in state and local government spending that were partly offset by an acceleration in imports and decelerations in private inventory investment and in PCE.
We cannot creep our way back to prosperity.
The fact that the donor class and corporate profits are doing well is what’s driving this anemic policy response. The people most effected by the inactivity are either fighting it out with racial resentment or feeling the usual helplessness that goes with being a picked-on out class. That infighting is helping those at the top ignore the plight of the folks that find they are quickly losing ground. That is why any of these FED appointments is basically a win for the status quo. It is also why the though of Larry Summers as FED chair gives me the heebiejeebies.
Like I said, real economists reacted to this news today like this: Economists React: Better GDP, but Trend Still Sluggish. Here’s some examples.
While this is a better than expected report, it isn’t very strong. If you look at the past three quarters, the economy has not done very much. That is the economic environment facing the Fed as it meets today. –Joel Naroff, Naroff Economic Advisors
The fact that declining federal spending continues to be a drag on economic growth is another reminder that now is not the time for Washington to impose self-inflicted wounds on the economy. The Administration continues to urge Congress to replace the sequester with balanced deficit reduction, and promote the investments our economy needs to put more Americans back to work, such as by rebuilding our roads and bridges. –Alan Krueger, White House Council of Economic Advisers
–The U.S. economy grew modestly in the second quarter because of hefty fiscal restraint, but growth exceeded expectations and looks to turn convincingly higher in the second half of the year. Sequestration chopped federal nondefense spending 3.2% annualized in the quarter, and civic worker furloughs slowed consumer spending to 1.8%, despite motor vehicle sales hitting five-year highs. On the plus side, residential construction clocked in with a fourth consecutive double-digit gain, exports bounced back strongly, and state and local government expenditure rose for the first time in a year. Most importantly, businesses appeared less concerned about the knock-on effects of sequestration. –Sal Guatieri, BMO Capital Markets Economics
All during this economic bust up we’ve had government as a drag on the economy. This has been at every level of government. It is a massive fail on the part of our modern democracy.
Again, we cannot creep our way back to prosperity. This is especially true if all levels of government are holding back everything but the profits of a few large corporations and the taxes of the people who have gained so much over the last three decades. It just ain’t right and it just isn’t good economic policy.
What happens to your bank when you overlook due diligence in lending, borrow money from the Fed at near zero interest rates but lend it out to very few people at 10 to 20 times the inflation rate, slack off on renegotiating loans, charge customers fees on everything, and engage in practices that basically drain resources from your clientele? Well, your customers eventually suffer so much economic destress they start bringing you down with them by defaulting. Big US banks are suffering because their customers are suffering. Kind’ve Karmic isn’t it? Well, it’s karmic in the sense that that’s what you get from engaging in really short-sighted bad business practices made to enrich your executives and prop your stock prices up over actually doing your core business intelligently.
Fears about the health of US consumer balance sheets grew on Monday as Citigroup and Wells Fargo joined JPMorgan Chase in reporting new signs that homeowners and credit-card borrowers are falling behind on their payments.
The banks’ third-quarter results were hit by expected declines in investment banking, reflecting turbulence in global markets. But the reports also revealed weakness in the consumer side of their businesses – with mortgage delinquency numbers suggesting that record low mortgage rates and government loan modification programmes are failing to help a large swathe of homeowners.
Overall revenues fell 8 per cent at Citigroup year-on-year and 6 per cent at Wells, sending their shares down 1.7 per cent and 8.4 per cent, respectively. The S&P 500 index fell 1.9 per cent.
Wells said delinquencies of more than 90 days in its main portfolio of consumer loans – including mortgages and credit cards – rose 4 per cent to $1.5bn, the first increase since 2009. Early stage delinquencies in its retail business remained flat at 6.13 per cent after falling for three quarters. The bank increased its provision for consumer-banking losses for the first time in two years.
“The economic recovery has been more sluggish and uneven than anyone anticipated,” said John Stumpf, Wells chief executive
Federal policy that emphasizes bailing out failing businesses while leaving their customers high and dry with extremely high unemployment rates and costs of borrowing and living is having ongoing effects. Here’s some more info on banks beefing up their loan loss reserves from that FT article.
JPMorgan last week increased its provision for losses on consumer loans to $2.3bn from $1.9bn in the previous quarter. JPMorgan said delinquencies on goverment-insured mortgages hit $9.5bn, up from $9.1bn in the second quarter and $9.2bn a year ago.
“The residential mortgage problems are unprecedented,” said Gerard Cassidy, analyst at RBC Capital. “The rate of improvement in the delinquencies has slowed down dramatically in the last two years and even over the more recent quarters.” He said the problems were no longer in “subprime” but “prime” mortgages.
Capital One, among the top six US card issuers, reported rising 30-day delinquencies in June and July. “Defaults on credit card debt are certain to rise from here,” said James Friedman at Susquehanna Capital Group.
So, what’s not to be surprised about given that the unemployment rate has been sitting around 9% now for three years in a row? All of these really bad metrics on consumer finances should be signalling policymakers to act. But, that’s not happening. Well, not unless you count all the finger pointing at Ben Bernanke. I am continually flummoxed by the inability of every one in policy circles to get the basic economics right. The obsession with austerity is killing this country and it’s doing the same in others. The data just screams ongoing murder.
Here’s some thoughts on the absolute disconnect of policy from reality from Josh Bivens at the Economic Policy Institute Blog who also can’t figure out why nuts and bolts economics has suddenly been termed radical. If we’d have done something differently about three years ago, these statistics that indicate horrible stress on US households could’ve been dealt with by now. It’s odd that the very policymakers that were so concerned about Banks and Businesses have no problem slowly killing their customers.
There is nothing inherent in the economics of financial crises that makes slow recovery inevitable – they just require that policymakers figure out how to engineer more spending in their wake, same as in response to all other recessions.
Rather, the real problem they pose to policymakers is that engineering such spending increases in the wake of financial crises often requires policy responses that seem unorthodox or radical relative to the very narrow range of macroeconomic stabilization tools that enjoy support across the ideological spectrum. To put this more simply – they require policymakers do more than watch the Federal Reserve pull down short-term interest rates. For decades, all recession-fighting was outsourced to the Fed’s control of short-term “policy” interest rates – this despite the fact that in the U.S. this recession-fighting tool hasn’t actually been all that successful since the 1980s (see Table 2 in this paper).
The best response to a recession that is either so deep or so infected by debt-overhangs that conventional monetary policy is not sufficient, is simply to engage in lots of fiscal support – think the American Recovery and Reinvestment Act (ARRA) – but (as Ezra notes) much, much bigger in the case of the Great Recession.
But, this kind of discretionary fiscal policy response to recession-fighting (and jobless-recovery fighting) had fallen deeply out of favor in the same decades that saw increasing reliance on conventional monetary policy. In fact, advocating fiscal policy that was up to the task of providing a full recovery in the wake of crises that defanged conventional monetary policy somewhere along the way got labeled radical, rather than simply nuts-and-bolts economics.
Further, this rejection of discretionary fiscal policy was done on very thin analytical reeds – essentially the fear was that it took too long to debate, pass, and see an effect from fiscal policy – and that if the recession was “missed” in real-time by policymakers, we would end up providing lots of fiscal support to an already-recovered economy – and might even cause economic overheating that would lead to runaway inflation and interest rate spikes.
This fear led to the strange mantra in the debate over fiscal stimulus in 2008 that policy had to be targeted, temporary and timely – which basically ruled out most things but tax cuts. But, given that the last three recessions have seen extraordinarily sluggish return to job-creation in their wake, this timely obsession was clearly misplaced (and, plenty argued so in real-time).
What we’ve been experiencing the last three years is the fall out of a financial crisis exacerbated by extremely bad policy. It’s easy to pin the blame on the recalcitrant republicans who are willing to tank all of us to regain the White House, but there’s definitely some blame to pin on the Obama White House. It’s clear that the White House simply did not manage the situation well at all. The question that keeps me up nights is this. Has the Obama administration learned its lessons? I’m not certain on that. But, I am certain that if some one like a Herman Cain gets in, there will be more hell to pay in terms of inexperience and bad policy than if we muddle through with more Obama incompetency. I’m not sure if Romney will be about as inept as we’ve seen the current occupant or will be lead to worse policies of the sort put forth by the Cains and Bachmanns.
Bivens wonders who the Democrats are that suddenly decided that that nothing could be done about recessions except to dither and hope for the best efforts by the FED. Hoping for miracles from the Fed at the zero bound is delusional. There is no historical or theoretical argument for any of this silly behavior. We continue to see the deficit hawk arguments on all sides to the point that one can only assume that there’s very little difference between Republican and Democratic orthodoxy on voodoo economics any more. This includes shilling for useless tax cuts.
But, I would also want to make sure to include much of the policymaking apparatus of the Democratic Party, who became far too enamored of the unalloyed virtues of deficit-cutting in the past two decades. The excellent labor market performance of the late 1990s, for example, is labeled a pure result rather than an important cause of substantially lower budget deficits during that time. And the regressive and stupid tax cuts pursued under the Bush Administration were generally not fought on the grounds that they were regressive and stupid, but that they would lead to intolerably large deficits – deficits so large they might even lead to Greek-like financial crises when, in fact, deficits as a share of GDP averaged less than 2 percent in 2006 and 2007. To be clear – the Bush tax cuts were expensive as well as regressive and stupid, and letting them (or at the very least the most regressive set of them) expire would be a real policy victory, freeing up public resources for much more valuable ends. But they did not cause deficits in the 2000s to reach terrifying levels.
Sadly, this same Democratic policy apparatus seems to be repeating many of these mistakes, by continually insisting that aggressive maneuvers to help alleviate the jobs-crisis must be done simultaneously with efforts to close what are actually pretty non-scary medium term deficits. Would the “very-big-stimulus-now-cum-progressive-measures-to-bring-medium/long-term-spending-and-revenues -in-balance-when-we-get-back-to-full-employment” plan be the best of all worlds? Sure.
So, what changed between the Reagan legacy of huge deficits “as far as the eye can see” or the “deficits don’t matter” mantra of old Dick Cheney to the mantra now that only deficits matter? What’s caused this idea that you can spend hugely on unjustifiable wars, bailing out failing banks and businesses, and giving tax cuts and credits to every one under the sun with no real rationale but you have to say no now to stopping macroeconomic seppuku? To a certain extent, we have Robert Rubin to thank for that. Many of Rubin’s acolytes are still planted in the Treasury and were sent to the Obama White House early on. Here’s a brief bit on that from an Allan Blinder Working Paper at Princeton that gives a good overview on how our approach to fiscal policy went completely off the track.
The fact that the Clinton boom started almost immediately after Congress passed a budget reduction package gave rise to some rethinking—some of it serious, some of it muddled—of even the sign of the fiscal-policy multiplier. Among politicians and media types, the notion that raising taxes and/or cutting spending would expand (rather than contract) the economy took hold rapidly and uncritically—with seemingly little thought about exactly how this was supposed to happen. Quicker than you can say “Robert Rubin,” the idea that reducing the budget deficit (or increasing the surplus) is the way to “grow” the U.S. economy—even in the short run—came to dominate thinking in Washington. This thinking was, of course, profoundly anti-Keynesian.
Is this why no longer seem to be able to get our act together and just do the basic right thing when it comes to helping US consumers deal with the Great Recession and its ongoing aftermath? That would seem feasible except that right after 2001, George W Bush and and Allan Greenspan went right back on the stimulation on steroids policy of previous administrations. Both parties want happily along with that. So, I continue not to get it and the policy continues not to get it right and if you look measurements of economic health like defaults and unemployment, it’s pretty clear that US Households aren’t going to get any thing either. It’s no wonder people are starting to take to the streets.
We’ve talked about the earthquake in Virginia some. This is one of the most interesting op eds I’ve seen for some time and it’s written by Dr. Stuart Jeanne Bramhall who is actually a psychologist but has done some research on the subject. She argues that fracking in neaby West Virginia could’ve been responsible for the unusual and unusually large quake. I know there’s a lot of controversy about fracking but I had no idea it could cause earthquakes. Actually, fracking itself doesn’t, its another step in the process and it’s happened before in Arkansas.
According to geologists, it isn’t the fracking itself that is linked to earthquakes, but the re-injection of waste salt water (as much as 3 million gallons per well) deep into rock beds.
Braxton County West Virginia (160 miles from Mineral) has experienced a rash of freak earthquakes (eight in 2010) since fracking operations started there several years ago. According to geologists fracking also caused an outbreak of thousands of minor earthquakes in Arkansas (as many as two dozen in a single day). It’s also linked to freak earthquakes in Texas, western New York, Oklahoma and Blackpool, England (which had never recorded an earthquake before).
Industry scientists deny the link to earthquakes, arguing that energy companies have been fracking for nearly sixty years. However it’s only a dozen years ago that “slick-water fracks” were introduced. This form of fracking uses huge amounts of water mixed with sand and dozens of toxic chemicals like benzene, all of which is injected under extreme pressure to shatter the underground rock reservoir and release gas trapped in the rock pores. Not only does the practice utilize millions of gallons of freshwater per frack (taken from lakes, rivers, or municipal water supplies), the toxic chemicals mixed in the water to make it “slick” endanger groundwater aquifers and threaten to pollute nearby water-wells.
Horizontal drilling and multi-stage fracking (which extend fractures across several kilometres) were introduced in 2004.
The op ed provides links and information on the the related research and information on the prior quake experience in Arkansas.
Mitt Romney lost his cool last night in a New Hampshire Town Meeting. The dust-up was over Romney’s support of a balanced budget amendment which is basically anathema to economists. You can watch the video and the resultant hair malfunction that results. Also, interesting to note is Mediate’s use of the word “former” in front of front runner.
Former GOP presidential frontrunner Mitt Romney got into a heated exchange with a voter at a New Hampshire town hall event Wednesday over his support for a balanced budget amendment, and by the mainstream media’s selective standards, lost his cool when she tried to engage him. In clips played on MSNBC’s The Daily Rundownthis morning, Romney certainly appeared angry by those standards, and the full exchange, while slightly less damning, demonstrated a marked contrast with how President Obamadealt with an aggressive questioner recently.
The snippets that MSNBC played, of Romney snippily asking the town hall attendee to let him answer her question, were obviously designed to show the candidate as impatient and besieged, but placing them in context doesn’t change things all that much. Romney aggressively interrupts the woman’s calm, if rambling, question by asking her, “Did somebody in the room say that we don’t need any government?”
When she tries to engage his question, calling the balanced budget amendment “irresponsible,” he interrupts her again, abruptly asking, “Do you have a question, and let me answer your question.”
“Yes, how do you think the government can not provide funds for the people, its citizens?”
Romney begins to answer the question, and from there, you can’t hear what the woman is saying, but Romney reacts angrily to her attempts to follow up, saying, “You had your turn madam, now let me have mine!”
Frum Forum mentions the number of economists that think a double dip recession is inevitable. I want to bring this up now so that when you hear the villagers say most economists didn’t think that it was going to happen that you’ll see that a lot–if not most–of us do think that. Also, note that the majority of us have been saying that the Federal government has been doing the wrong Fiscal Policy things since about 2007 too. Paul Krugman mentions that the fiscal policy response has just been gunning for another recession tool.
At this point the entire advanced world is doing exactly what basic macroeconomics says it shouldn’t be doing: slashing spending in the face of high unemployment, slow growth, and a liquidity trap. It’s a global 1937. And if the result is another recession, the witch-doctors will just demand more bleeding.
Yup, the austerity demons will undoubtedly howl for more budget cuts and more tax cuts for the unjob creators.
The U.N., U.S. and NATO have unfroze Libyan assets so the transitional government can provide critical humanitarian aid to the Libyan People. This news comes from the US State Department.
The UN Security Council’s Libya Sanctions Committee approved a U.S. proposal to unfreeze $1.5 billion of Libyan assets to be used to provide critical humanitarian and other assistance to the Libyan people. The U.S. request to unfreeze Libyan assets is divided into three key portions:
Transfers to International Humanitarian Organizations (up to $500 million):
- Up to $120 million will be transferred quickly to meet unfulfilled United Nations Appeal requests responding to the needs of the Libyan people (including critical assistance to displaced Libyans). Up to $380 million will be used for the revised UN Appeals for Libya and other humanitarian needs as they are identified by the UN or other international or humanitarian organizations.
Transfers to suppliers for fuel and other goods for strictly civilian purposes (up to $500 million):
- Up to $500 million will be used to pay for fuel costs for strictly civilian needs (e.g., hospitals, electricity and desalinization) and for other humanitarian purchases.
Transfers to the Temporary Financial Mechanism established by the Contact Group to assist the Libyan people (up to $500 million):
- Up to $400 million will be used for providing key social services, including education and health. Up to $100 million will be used to address food and other humanitarian needs.
The United States crafted this proposal in close coordination with the Transitional National Council, as they assessed the needs of the Libyan people throughout the country. It responds to humanitarian concerns in a diversified way that prioritizes key needs. The United States will work urgently with the Transitional National Council to facilitate the release of these funds within days.
The President of the AFL-CIO continues his harsh criticism of President Obama. This should be interesting since labor unions provide a lot of GOTV work for elections at all levels.
The most powerful union official in the country offered reporters his harshest critique of President Obama to date Thursday, questioning Obama’s policy and strategic decisions, and claiming he aligned himself with the Tea Party in the debt limit fight.
“This is a moment that working people and quite frankly history will judge President Obama on his presidency; will he commit all his energy and focus on bold solutions on the job crisis or will he continue to work with the Tea Party to offer cuts to middle class programs like Social Security all the while pretending the deficit is where our economic problems really lie,” AFL-CIO President Richard Trumka told reporters at a breakfast roundtable hosted by the Christian Science Monitor.
Trumka dismissed Obama’s recent job creation proposals — an extended payroll tax cut, patent reform, free trade deals — as “nibbly things that aren’t going to make a difference,” and said the AFL-CIO might sit out the Democratic convention if he and the party don’t get serious.
“If they don’t have a jobs program I think we’d better use our money doing other things,” Trumka said.
The editors of Bloomberg are down on monetary policy and are asking for more relevant fiscal policy in this op ed: The U.S. Needs a Jobs Policy, Not More Cheap Money. Well, at least some body gets it. The Federal Government can create jobs. Some one just needs to get the President to believe that and fight for it.
While the Fed can only print money, the government has the power to create jobs directly. And jobs are what the economy needs now, to break the chain in which high unemployment, weak consumer demand and low business confidence reinforce one another. Bloomberg View has laid out some of the best options available for a national jobs policy:
— Public-works spending can lift demand and put people to work in capital-intensive industries such as construction.
— A tax credit for companies that increase their headcount can encourage hesitant employers to hire at minimal cost to taxpayers.
— Programs that pay the wages of new hires as they gain on-the-job training can efficiently target the long-term unemployed.
— Allowing the unemployed to collect benefits while starting up new businesses can prompt older, better-educated people to create their own opportunities.
— For some entry-level jobs, scrapping the reporting of criminal records on applications can help qualified workers get a foot in the door and stay out of prison.
— And to make the spending more palatable to congressional opponents, President Barack Obama could offer to cut some of the red tape holding back hiring and economic growth, such as the outdated Davis-Bacon Act, which artificially raises the cost of public-works projects.
Altogether, a meaningful jobs package might cost taxpayers more than $200 billion over a couple years. To provide the government the leeway it needs to support the economy in the short term, it’s crucial that the congressional supercommittee, which must find $1.5 trillion in deficit reduction over the next 10 years, recommend a combination of new revenue, spending cuts, tax reforms and entitlement changes that would put the government’s long-term finances on a sustainable path.
Whatever Bernanke says today, he can’t rescue the economy alone
Yup. But, we’ve been talking about that here for a long time. I feel a bit blue in the face, do you?
So, here’s some news from North Dakota where seven oil companies are charged with killing birds.
Seven oil companies have been charged in federal court with illegally killing 28 migratory birds in Williams County.
Slawson Exploration Company of Kansas, ConocoPhillips Company, Petro Hunt, LLC and Newfield Production Company, all of Texas, Brigham Oil and Gas, LP of Williston, Continental Resources, Inc. of Oklahoma, Fidelity Exploration and Production Company of Colorado face charges of violating the Migratory Bird Treaty Act.
Most of the dead birds were found in un-netted oil reserve pits in May. An employee of one company alerted the Fish and Wildlife service to some of the dead birds. Others were found by inspectors.
In one case, an oil spill leaked into a nearby wetland, where several ducks died as a result of exposure to the oil.
The U.S. Fish and Wildlife Service says netting is the most effective way of keeping birds from entering waste pits.
The maximum sentence they face is six months in federal prison and a $15,000 fine.
So corporations have all these people rights now, how do we get them into prison for those six months? Perhaps Uncle Clarence Thomas has a suggestion?
What’s on your reading and blogging list today?
Susie was taken to the hospital early this morning for a possible heart attack and is being kept there for observation and testing until tomorrow morning.
I never thought I’d ever hear an economic adviser to a Democratic administration justify taking a natural path to recovery when the US economy is reeling from a basic lack of aggregate demand. The comments were just about as Chicago school as you could get. It was just another reheated bowl of smoking green shoots.
“Our effort now as a government should be to get the private sector to help them stand up and lead the recovery,” Goolsbee told “This Week” anchor Christiane Amanpour, citing efforts on regulatory review, while maintaining policies such as reduced payroll taxes through the end of the year. “We’ve got to rely on policies that are trying to leverage the private sector and give incentives to private sector to be doing the growth.”
I didn’t catch Obama economist Austan Goolsbee with Christian Amanpour on ABC which is where I got that quote. I caught up with him on Candy Crowley’s Sunday show. From what I can tell, the story line was about the same. According to Goolsbee, whatever recovery we’re experiencing from the worst financial crisis we’ve had since The Great Depression is in the hands of the private sector who just needs to appreciate the gentle nudge they’ve already gotten. Goolsbee conveniently ignored every thing going on in the recent economy except a small window’s worth of job creation. He declared that there was no downward trend in the economy. I felt like I was watching a big ol’ flaming head tell me to ignore the man behind the curtain. But, I musn’t be the only one that was watching the little man behind the curtain given that the one month’s worth of data turned into “DOW plunges into longest weekly losing streak since 2004” last week. I don’t think that’s the end of that either.
Scarecrow at FDL calls it the best speech evah given by President Romney’s chief economic adviser.
Goolsbee correctly told us that a smart economist wouldn’t get overly excited about one month’s jobs and growth numbers but would instead look at the overall trend. Of course what he wouldn’t want to concede is that GDP grew at a meager annual rate of 1.8 percent over the first three months of 2011 and so far was predicted to grow at only 2.8 percent for the next three. And the overall trend for job growth was still not enough to make a serious dent in unemployment unless you believe taking 5-10 years to get back to full employment is okay.
So Goolsbee was in denial from the opening moment because he didn’t have a decent story to tell even in his own framework. When Amanpour asked him what the Administration could or should be doing to improve conditions, he ticked off items you’d expect to hear from a typical GOP Presidential adviser: we’ve got to get the debt under control; we have a White House effort to identify and get rid of governmental regulations that are preventing the private sector from growing the economy; we should pass “free trade” agreements backed by the Chamber of Commerce; and we should leverage limited public dollars to release billions in private funding for investments.
Goolsbee’s bottom line: “It’s now up to the private sector.” That’s exactly what you’d expect from President Romney’s economic adviser.
It took Paul Krugman and Chrystia Freeland, over the absurd denials by Martin Regalia of the Chamber of Commerce, to remind ABC’s audience that business confidence and concerns about taxes and regulations aren’t the problem: business polls repeatedly show businesses aren’t expanding/hiring much because the demand for their products is weak. Demand is weak because the recession and the housing market crash depleted consumers’ wealth and they’re worried about losing their homes and jobs. You don’t need a degree in economics to grasp the logic of that. When private spending is still depressed, only government spending is keeping the economy afloat, and the stimulus is phasing out.
Now, I hate to keep writing about the same things over and over again. I know I’m not the only one. Brad DeLong has finally discovered there is no Plan B. There is only full speed ahead with deficit reduction which is a great long term goal but a disastrous short term strategy. Mark Thoma is even more straightforward.
Policymakers have been telling us to have patience for some time now, but patience ran thin long ago. We need action, not excuses to do nothing based upon Republican talking points. We have millions of people out of work, we face the prospect of a five to ten year recovery for employment, yet the administration has no plans to even try to push Congress to do more.
The percent of owners planning capital outlays in the next three to six months fell 3 points to 21 percent, a recession level reading. Money is cheap, but most owners are not interested in a loan to finance equipment they don’t need. Prospects are still uncertain enough to discourage any but the most profitable and promising investments. Four percent characterized the current period as a good time to expand facilities (seasonally adjusted), down 1 point from March and 4 points lower than January. The net percent of owners expecting better business conditions in 6 months slipped another 3 points to negative 8 percent, 18 percentage points worse than in January. Uncertainty is the enemy, and there is plenty of it to convince owners to “keep their powder dry”. Apparently consumers feel much the same way, as more customers spending more money would overcome the reluctance of owners to hire and make capital outlays. One in four still cite “weak sales” as their top business problem.
There is nothing mysterious about the fiscal policy solution to your basic lack of aggregate demand. What’s mysterious is the complete lack of concern about the significantly high unemployment rates, the continued foreclosure crisis, and the downward trends in both consumer and business confidence.
I guess I know what happens with the phone rings at 3 a.m.
No one picks it up and then some one goes on TV the next day and says we’ve done all we can do. For this they expect re-election?
Good Morning!! WTH is going on with the weather? When I got up yesterday, the temperature was -9 degrees! It got up to about 10 degrees during the day and back into the below zero numbers last night. On top of that, we have another nor’easter coming on Wednesday and Thursday. How much more of this can we take? Even southern states have been getting snow and cold this winter. Meanwhile, it’s way warmer than usual in the Arctic regions.
According to this article by Justin Gillis in The New York Times,
The immediate cause of the topsy-turvy weather is clear enough. A pattern of atmospheric circulation that tends to keep frigid air penned in the Arctic has weakened during the last two winters, allowing big tongues of cold air to descend far to the south, while masses of warmer air have moved north.
The deeper issue is whether this pattern is linked to the rapid changes that global warming is causing in the Arctic, particularly the drastic loss of sea ice. At least two prominent climate scientists have offered theories suggesting that it is. But others are doubtful, saying the recent events are unexceptional, or that more evidence over a longer period would be needed to establish a link.
Since satellites began tracking it in 1979, the ice on the Arctic Ocean’s surface in the bellwether month of September has declined by more than 30 percent. It is the most striking change in the terrain of the planet in recent decades, and a major question is whether it is starting to have an effect on broad weather patterns.
Ice reflects sunlight, and scientists say the loss of ice is causing the Arctic Ocean to absorb more heat in the summer. A handful of scientists point to that extra heat as a possible culprit in the recent harsh winters in Europe and the United States.
Apparently it’s all related to the jet stream being too “weak” and something called the “arctic fence.” Interesting article, check it out.
The Chicago Sun-Times is raising some questions about one of the judges who may have to decide what to do about Rahm Emanuel’s appeal of the ruling yesterday that he cannot run for Mayor of Chicago. The Illinois Supreme Court Judge in question is Anne M. Burke, who is married to a powerful Chicago Alderman–one who doesn’t support Rahm’s candidacy.
Now that Rahm Emanuel has been tossed off the mayoral ballot by an appeals court, Ald. Edward M. Burke (14th) and his wife, Illinois Supreme Court Justice Anne M. Burke, will each have a role in Chicago’s mayoral election.
Ed Burke, the city’s most powerful alderman, has said he’s backing Gery Chico — a former staff member for Burke and Mayor Daley who’s trailed Emanuel in every poll on the mayor’s race.
In the past Justice Burke has recused herself from cases involving Chicago politics. What will she do this time?
Dakinikat will probably like Paul Krugman’s latest blog post: The War on Demand.
Something really strange has happened to the debate over economic policy in the face of the Great Recession and its aftermath — or maybe the real point is that events have revealed the true nature of the debate, stripping away some of the illusions. It’s a bigger story than any one point of dispute — say, over the size of the multiplier, or the effects of quantitative easing — might suggest. Basically, in the face of what I would have said is obviously a massive shortfall of aggregate demand, we’re seeing on all-out attack on the very notion that the demand side matters.
This isn’t entirely new, of course. Real business cycle theory has been a powerful force within academic economics for three decades. But my sense is that the RBC guys had very little impact on public or policy discussion, simply because what they said seemed (and was) so disconnected from actual experience.
Now, however, we’re seeing a much more widespread attack on demand-side economics. More than that, it’s becoming clear that many people don’t so much disagree with the idea that demand matters as find it abhorrent, incomprehensible, or both. I fairly often get comments to the effect that I can’t possibly believe what I’m saying about monetary or fiscal policy, that no sensible person could believe that printing money or engaging in deficit spending will increase output and employment — never mind that all I’m saying is what Econ 101 textbooks have been saying for the last 62 years.
It seems the powers that be are determined to put us into a deep depression by basing policy decisions on Reaganite voodoo economics. And no matter how hard Krugman tries, I don’t think the guys in charge are going to wake up to reality.
There was a terrible suicide bomb attack at Domodedovo airport in Moscow yesterday.
Russian President Dmitry Medvedev has vowed to track down and punish those behind an apparent suicide bomb attack at Moscow’s Domodedovo airport killed 35 people and injured more than 100.
Unnamed officials said three suspects were being sought over the attack.
Suspicion has fallen on Russia’s restive North Caucasus region.
Last March the Russian capital’s underground system was rocked by two female suicide bombers from Russia’s volatile Dagestan region, who detonated their explosives on the busy metro system during rush hour, killing 40 people and injuring more than 80.
But the airport was up and running again very soon after the attack, according to The New York Times.
Just hours after a suicide bomber struck at the international arrivals terminal at Moscow’s busiest airport on Monday afternoon, passengers coming off flights from abroad were being ushered through the very same terminal where bodies had only just been removed.
Some inbound flights had to circle for a time after the bombing, and some arriving passengers had to wait on the tarmac before being asked to make their way through the terminal. But Domodedovo Airport is an important transport hub for Moscow, the capital, and the authorities decided to keep it open.
Sheets of blue plastic had simply been hung to block out the scene.
Meanwhile, people continued to arrive to pick up loved ones and to embark on flights out of the city. It was as if officials, passengers and Muscovites in general were displaying a particular brand of Russian stoicism, if not fatalism.
The bipartisan panel appointed by Congress to investigate the financial crisis has concluded that several financial industry figures appear to have broken the law and has referred multiple cases to state or federal authorities for potential prosecution, according to two sources directly involved in the deliberations.
The sources, who spoke on condition they not be named, declined to identify the people implicated or the names of their institutions. But they characterized the panel’s decision to make referrals to prosecutors as a significant escalation in the government’s response to the financial crisis. The panel plans to release its final report in Washington on Thursday morning.
In the three years since major lenders teetered on the brink of collapse, prompting huge taxpayer rescues and amplifying an already painful recession into the most punishing downturn since the Depression, public indignation has swelled while few people who played prominent roles in the crisis have faced legal consequences.
That may be about to change. According to the law that created the Financial Crisis Inquiry Commission, the panel has a responsibility to refer for prosecution any evidence of lawbreaking. The offices that have received the referrals — the Justice Department, state attorneys general, and perhaps both — must now determine whether to prosecute cases and, if so, whether to pursue criminal or civil charges.
Very interesting. Will Obama’s Justice Department act? Stay tuned….
I know I should be linking to stories about the SOTU, but I just can’t bear to do it. I’m already bored with the whole thing. So I’ll end with this story about new research on what is making the honey bees sick.
Ecologist Colin Henderson co-authored a study that may have identified the cause of the honeybee illness that has plagued U.S. bees since 2006. Henderson, 59, is an associate professor of biology at the University of Montana. He and colleagues there found a correlation between colony collapse disorder (CCD) and a lethal combination of a parasite and a virus.
The study, on which Army scientists at the Edgewood Chemical Biological Center near Baltimore also collaborated, has been called groundbreaking (though also controversial because one of the study’s lead authors previously received funding from a maker of pesticides that some blame for CCD). By the way, for an overall house pest control service, consider having bed bug treatment lexington ky at premierpests.com. The honeybee die-off strikes about 20 to 40 percent of commercial beekeepers in a good year, Henderson says, and up to 60 percent in a bad one. When it hits a beekeeping operation, it can take out up to 70 percent of its colonies.
There’s an interesting interview of Henderson in the article.
So….. What are you reading this morning?