I’ve spent the last few days editing tables, proofreading, and formatting bibliography, cross checking table of contents and lists of tables to make sure page numbers match. It’s the kind of work that makes you want to pull out every last thread of hair on your head. I’m hopefully at the end of the road to chasing down about a dozen signatures for forms too. It’s driving me nuts!! I’m going to be so glad when this stupid dissertation gets published and I don’t have to mess with the thing ever again!
Given that I”m doing this mind numbing frustrating detail work, it’s probably contributing to some things that are making me really mad. I cannot–for one–imagine any one having any reasons to defend a football coach who didn’t report horrible instances of child sexual assault. I don’t understand the riots on campus that occurred the other night. I certainly don’t understand glib tweets defending said coach sent out to millions of fans by celebrities either. How many little boys were assaulted and how many people around them will be hurt as they spend their lives trying to overcome the trauma? How on earth do you defend some who who was covering up and not reporting a series of heinous felonies?
Demonstrators tore down two lampposts, one falling into a crowd. They also threw rocks and fireworks at the police, who responded with pepper spray. The crowd undulated like an accordion, with the students crowding the police and the officers pushing them back.
“We got rowdy, and we got Maced,” said Jeff Heim, 19, rubbing his red, teary eyes. “But make no mistake, the board started this riot by firing our coach. They tarnished a legend.”
An orderly crowd first filled the lawn in front of Old Main when news of Mr. Paterno’s firing came via students’ cellphones. When the crowd took to the downtown streets, its anger and intensity swelled. Students shouted, “We are Penn State.”
Some blew vuvuzelas, others air horns. One young man sounded reveille on a trumpet. Four girls in heels danced on the roof of a parked sport utility vehicle and dented it when they fell after a group of men shook the vehicle. A few, like Justin Muir, 20, a junior studying hotel and restaurant management, threw rolls of toilet paper into the trees.
“It’s not fair,” said Mr. Muir, hurling a white ribbon. “The board is an embarrassment to our school and a disservice to the student population.”
Just before midnight, the police lost control of the crowd. Chanting, “Tip the van,” the students toppled the news vehicle and then brought down a nearby lamppost. When the police opened up with pepper spray, some in the crowd responded by hurling rocks, cans of soda and flares. They also tore down street signs, tipped over trash cans and newspaper vending boxes and shattered car windows.
The irony of all this is that the right wing noise machine has less to say about this violence and mayhem than it ever has about the Occupy Protests. Most disappointing is that Assistant Coach Mike McQueary will not be attending the game because he’s gotten death threats for doing the right thing after witnessing the sodomy of an approximately ten year old boy by then Assistant Coach Sandusky.
Raw Story has an interesting piece up about Romney who seems to have an itchy missile finger trained on Iran. Just what we need; more entanglements in the Middle East.
Accusing President Barack Obama of naivete on Iran, Republican presidential challenger Mitt Romney promised Thursday that if elected president he would “prepare for war” with the Islamic republic.
In a commentary published in the Wall Street Journal, Romney said he would back up US diplomacy “with a very real and very credible military option,” deploying carrier battle groups to the Gulf and boosting military aid to Israel.
“These actions will send an unequivocal signal to Iran that the United States, acting in concert with allies, will never permit Iran to obtain nuclear weapons,” he wrote.
Nouriel Roubini has some interesting choices to lay at the feet of European Community leaders. It’s really worth a read. For some reason leaders here and in the US are obsessed with austerity. They should be obsessed with way promoting economic growth.
First of all, without economic growth, you have a dual problem: a) The socio-political backlash against fiscal austerity and reforms becomes overwhelming as no society can accept year after year of economic contraction to deal with its imbalances; b) more importantly, to attain sustainability, flow deficits (fiscal and current account) and excessive debt stocks (private and public, domestic and foreign) need to be stabilized and reduced, but if output keeps on falling, such deficit and debt ratios keep on rising to unsustainable levels.
Second, restoring growth is also important because, without growth, absolute fiscal deficits become larger rather than smaller (given automatic stabilizers). Third, restoring external competitiveness is key as that loss of competitiveness led—in the first place—to current account deficits and the accumulation of foreign debt and to lower economic growth as the trade balance detracts from GDP growth when it is in a large and growing deficit. So, unless growth and external competitiveness are restored, flow imbalances (fiscal and current account deficits) persist and stabilizing domestic and external deficits becomes “mission impossible.” Finally, note that, unless growth and competitiveness are restored, even dealing with stock problems via debt reduction will not work as flow deficits (fiscal and current account) will continue and, eventually, even reduced debt ratios will rise again if the denominator of the debt ratio (debt to GDP), i.e. GDP, keeps on falling. Growth also matters as credit risk—measured by real interest rates on public, private and external debt, which measures the default risk—will be higher the lower the economic growth rate. So, for any given debt level, a lower GDP growth rate that leads to a higher credit spread makes those debt dynamics more unsustainable (as sustainability depends on the differential between real interest rates and growth rates times the initial debt ratio).
Switching to US problems, Morgan Stanley has its knickers in a knot about potential failure of the super committee. They anticipate more downgrades of US soverign debt.
Now Morgan Stanley is weighing in on this question, as part of a broder note about the impact of the super-committee on the economy.
From MS’ Christine Tan:
S&P reminded market observers in October that the US remains on negative watch due to its unsustainable fiscal outlook, which implies a 1 in 3 chance of further downgrade from its current
AA+ rating. If the Super Committee fails to reach a $1.2trn deficit reduction deal, if such a deal relies more upon accounting changes than real deficit reduction, or if Congressional action lessens the impact of the $1.2trn automatic trigger, we believe this could potentially provide S&P with a pretext to downgrade the US further from AA+ to AA. The initial S&P downgrade of the US’s AAA rating on
August 5, 2011 roiled the markets into severe risk-aversion mode and the GRDI, Morgan Stanley’s proprietary risk appetite indicator fell to an all-time low of -5.13.
So it’s important to bear in mind that the consequence of a downgrade would be an economic slowdown, not anything on the cost of borrowing side.
It sure is a crazy mixed-up world. What is on your reading and blogging list today?
It’s another one of those holidays where we’re heels if we don’t go out and spend some cash on cards, bad food, and overpriced flowers. If all else fails, you can celebrate birthdays of dead presidents and buy a mattress! So, I did one thing dealing with a ‘heart’ last night and I didn’t even have to pay. I watched Masterpiece Theatre. This is something I’ve done for decades. My mother and I conspired to tape all the Upstairs Downstairs when I had a Beta player. What a valuable collection that’s turned out to be!! Anyway, this new one is by William Boyd who chronicles the life of writer Logan Gonzago Mountstuart. It’s called ‘Any Human Heart’. I enjoyed the first part so I’ll undoubtedly watch more. It included Hemingway reading poetry and Edward and Mrs. Simpson playing through during a game of golf. It was introduced by the usual announcement of the attempt by the Republicans to kill this type of programming and Big Bird. I already know the Louisiana contingent of Republicans will all say yes to offing Big Bird and the two remaining Democrats will say no. No point in my writing any of them. I’d like to have my own version of the Hyde amendment where I get to defund the department of defense and the pentagon and fund anything PBS and planned parenthood want to do. Wanna join my movement to pass the Big Bird Amendment?
So, my fear of future food prices has been matched by that of Nouriel Roubini. I just read today that food inflation in India was reaching somewhere between 18-19% annually. I guess it’s getting worse for food importing Japan.
Yes, rising costs for commodities such as wheat, corn and coffee might do what trillions of dollars of central-bank liquidity couldn’t.
Yet the economic consequences of food prices pale in comparison with the social ones. Nowhere could the fallout be greater than Asia, where a critical mass of those living on less than $2 dollars a day reside. It might have major implications for Asia’s debt outlook. It may have even bigger ones for leaders hoping to keep the peace and avoid mass protests.
What a difference a few months can make. Back in, say, October, the chatter was about Asia’s invulnerability to Wall Street’s woes. Now, governments in Jakarta, Manila and New Delhi are grappling with their own subprime crisis of sorts. This one reflects a toxic mix of suboptimal food stocks, exploding demand, wacky weather and zero interest rates around the globe.
It’s not hyperbole when Nouriel Roubini, the New York University economist who predicted the U.S. financial crisis, says surging food and energy costs are stoking emerging-market inflation that’s serious enough to topple governments. Hosni Mubarak over in Egypt can attest to that.
Revolution any one? Since it’s hitting 70 this week, it’s time to start up the garden and the green house again. The frost really did the banana trees in so I’ll likely be out in the back with a machete and odd straw hat while you’re reading this. Hopefully, this time I won’t be buzzed by spy planes and stealth choppers. I still haven’t forgotten the black Apache helicopters overhead two years ago–way too close to my martial law Katrina experience–testing out a more of the same thing drill. That will stay with me for some time. I guarantee. That was the same time congress introduced a law to set up FEMA camps too. (See all the links.) I wonder how long before they try a few more of those ideas out again.
The NYT shared ‘The Dirty Little Secrets of Search’ yesterday. I thought I’d share them today.
The New York Times asked an expert in online search, Doug Pierce of Blue Fountain Media in New York, to study this question, as well as Penney’s astoundingly strong search-term performance in recent months. What he found suggests that the digital age’s most mundane act, the Google search, often represents layer upon layer of intrigue. And the intrigue starts in the sprawling, subterranean world of “black hat” optimization, the dark art of raising the profile of a Web site with methods that Google considers tantamount to cheating.
Despite the cowboy outlaw connotations, black-hat services are not illegal, but trafficking in them risks the wrath of Google. The company draws a pretty thick line between techniques it considers deceptive and “white hat” approaches, which are offered by hundreds of consulting firms and are legitimate ways to increase a site’s visibility. Penney’s results were derived from methods on the wrong side of that line, says Mr. Pierce. He described the optimization as the most ambitious attempt to game Google’s search results that he has ever seen.
“Actually, it’s the most ambitious attempt I’ve ever heard of,” he said. “This whole thing just blew me away. Especially for such a major brand. You’d think they would have people around them that would know better.”
Media Matters reports that Shirely Sherrod will sue Andrew Brietbart for his role in her firing at the U.S. Department of Agriculture. You may recall that his organization significantly edited a speech she gave to make her sound racist. Sherrod’s attorneys are arguing that he damaged her reputation. She needs to sue him down here in New Orleans where we don’t cap damages and she’s likely to find a sympathetic jury. Breitbart one bit of pond scum I’d like to see drained from the pool.
Breitbart, who first posted the clip on July 19, 2010, at his BigGovernment.com site, had been under scrutiny after it was revealed the clip misrepresented Sherrod’s message during a speech in March 2010 before a group of NAACP members.
Fox then posted an online article reporting on the clip, linking to Breitbart’s video. Breitbart did not seek comment from Sherrod prior to his report; Fox News also gave no indication that they had done so. She was forced to resign later that day.
Breitbart has recently claimed that Sherrod was not fired because of his video but because of her part in the 11-year-old Pigford case, in which black farmers sued for discrimination against the Agriculture Department.
He stated such a claim again on Thursday in an interview with Media Matters, in which he admitted he had no proof of the assertion, revealing it was a theory.
Sigh. He’s also committed my most pet pet peeve. Yet another idiot that doesn’t know the difference between a hypothesis and a theory. Don’t they teach the Scientific method any more? Couldn’t they put out an idiots guide out so folks like this can buy a clue? Hey, Andrew!! Here’s something for Your Idiot’s 3X5 card.
- S: (n) hypothesis, possibility, theory (a tentative insight into the natural world; a concept that is not yet verified but that if true would explain certain facts or phenomena) “a scientific hypothesis that survives experimental testing becomes a scientific theory”; “he proposed a fresh theory of alkalis that later was accepted in chemical practices”
Yes. A Scientific hypothesis that survives experimental testing becomes a scientific theory. Could we please stop using these words as interchangeable please?
So, speaking of a hypothesis and scientific testing, every wonder what kinds of things extra testosterone can do for some one? Science Daily reports that a new study published in Proceedings of the National Academy of Sciences. shows it reduces empathy.
Professor Jack van Honk at the University of Utrecht and Professor Simon Baron-Cohen at the University of Cambridge designed the study that was conducted in Utrecht. They used the ‘Reading the Mind in the Eyes’ task as the test of mind reading, which tests how well someone can infer what a person is thinking or feeling from photographs of facial expressions from around the eyes.
Mind reading is one aspect of empathy, a skill that shows significant sex differences in favour of females. They tested 16 young women from the general population, since women on average have lower levels of testosterone than men. The decision to test just females was to maximize the possibility of seeing a reduction in their levels of empathy.
The researchers not only found that administration of testosterone leads to a significant reduction in mind reading, but that this effect is powerfully predicted by the 2D:4D digit ratio, a marker of prenatal testosterone. Those people with the most masculinized 2D:4D ratios showed the most pronounced reduction in the ability to mind read.
Jack van Honk said: “We are excited by this finding because it suggests testosterone levels prenatally prime later testosterone effects on the mind.”
Simon Baron-Cohen commented: “This study contributes to our knowledge of how small hormonal differences can have far-reaching effects on empathy.”
I wonder what impact that will have on those new drugs pushing for testosterone therapy? How many women and gay men may want the men in their lives to just say no?
Okay, so I saved the worst for last. I was watching Candy Crowley yesterday sorta, kinda. When I got back from making another cup of coffee there was this face on the screen on the screen blathering one of my other pet peeves. (See picture on the right.) Within about 2 minutes, I was mumbling to myself wondering where these dumba$$ republicans get their complete and total lack of information on the economy. He was on about the usual STUPIDa$$ meme that the federal government has to get its budget in order like a household. So, completely stupid! Households can go bankrupt. Their debts come due. Governments of stable, developed nations are assumed to operate in perpetuity plus they have the ability to goose the economy through job initiatives which can take care of budgets really quickly. Then, there’s the fact we have general price deflation right now and they could still print up money. Governments are NOT households, idiot!! So, much to my chagrin and naivete, the dude I was ready to toss nerf balls at was actually Obama’s new Budget Director, Jacob Lew. I swear, he sounded like some Republican Congressman. He was defending these cuts in terms I wouldn’t believe could come from a Democratic pol. Later on Sunday, I found out they were Obama’s cuts and then later than that, I found it Obama’s budget Direct that was defending them on State of the Union. I guess every other Democratic pol was embarrassed to defend these kinds of stupid cuts.
“What [the budget] says is that we really do what every American family does: we have to start living within our means,” Lew said on CNN’s “State of the Union.”
Lew outlined a series of targeted cuts including $125 million from a fund to restore the Great Lakes. He also said graduate student loans would accrue interest while students are in school. As it stands now, interest doesn’t start accruing until after a graduate student completes his or her program.
Lew stressed that while interest will accrue while a student attends graduate school, the student will not have to pay that interest until he or she graduates. “Interest will build up, but students won’t have to pay until they graduate,” Lew said. “It will not reduce access to education.”
“It’s not possible to do this painlessly,” Lew said. “We made some tough choices.”
I’ll repeat what I said last night. How about we get rid of abstinence ‘education’? How about all those subsidies to religious organizations who try to ungay gays and try to covert alcoholics from substance abuse to religious abuse? Can we please close down all of the military bases in Europe and Japan now? I think both WW2 and the Cold War are over. How about we just leave Iraq and Afghanistan? Can we defund anything that creates a check for GE, Halliburton, or KBR? Hell, I have a $Billions of them … just ask me.
Oh, and here’s something from NPR on ‘The Dark Origins of Valentine’s Day’. It was a pretty bizarre Roman mating and fertility ritual in its earliest days. They don’t have any cards that reflect this, however. As per usual, the Roman Catholic church later co-opted it as an excuse to promote one of its numerous celebrity martyrs.
From Feb. 13 to 15, the Romans celebrated the feast of Lupercalia. The men sacrificed a goat and a dog, then whipped women with the hides of the animals they had just slain.
The Roman romantics “were drunk. They were naked,” says Noel Lenski, a historian at the University of Colorado at Boulder. Young women would actually line up for the men to hit them, Lenski says. They believed this would make them fertile.
The brutal fete included a matchmaking lottery, in which young men drew the names of women from a jar. The couple would then be, um, coupled up for the duration of the festival – or longer, if the match was right.
So, what’s on your reading and blogging list today?
I happened across the latest outlook for the global economy by Dr. Doom–Nouriel Roubini–over at Project Syndicate. We must share the same depressed muse. His outlook is very similar to mine although he’s crunching numbers in computer models that I can only dream about. It’s also a similar outlook to what Joseph Stiglitz indicated while in Davos. You will not need sunglasses while facing the future if you’re in Europe or North America. This will most likely be the decade of developing nations. I don’t have the sophisticated programs available to Roubini but his forecasts seem reasonable.
The outlook for the global economy in 2011 is, partly, for a persistence of the trends established in 2010. These are: an anemic, below-trend, U-shaped recovery in advanced economies, as firms and households continue to repair their balance sheets; a stronger, V-shaped recovery in emerging-market countries, owing to stronger macroeconomic, financial, and policy fundamentals. That adds up to close to 4% annual growth for the global economy, with advanced economies growing at around 2% and emerging-market countries growing at about 6%.
The word anemic is never one you want to see when talking economic forecasts. Roubini does identify a few possible black swan events related to things like the deterioration of the Spanish economy that could make anemic sound like a good thing. His comments on the US economy indicate more of the same. None of the same is pleasant.
The United States represents another downside risk for global growth. In 2011, the US faces a likely double dip in the housing market, high unemployment and weak job creation, a persistent credit crunch, gaping budgetary holes at the state and local level, and steeper borrowing costs as a result of the federal government’s lack of fiscal consolidation. Moreover, credit growth on both sides of the Atlantic will be restrained, as many financial institutions in the US and Europe maintain a risk-averse stance toward lending.
There’s some indication of our potential black swans in that paragraph. Every economist is attuned to the solvency problems in states like Illinois, New Jersey, and California. There is also no faith in the federal government’s ability to bail out any one but political donors. The only hope I have for the situation is that it’s an election year and those do tend to be important states electorally for presidential wannabes.
The other trends that worry me are the trends in oil and food prices which could mean that huge countries like China may have to readjust their plans with their sovereign wealth funds. Countries that import a lot of these items are going to be in for hefty bills. China is already experience inflation and has upped its interest rates. Roubini is watching for further signs that they recognize the potential problem. He also believes these tensions will further fuel currency tensions.
Roubini actually sees some upside risks and believes that we will slowly pull out of things. He believes that all sectors are still engaging in balance sheet repair with the exception of the US government. This is especially significant for the potential for jobs creation. If corporations are lean and mean and things do improve, this could create some much needed labor demand.
Joseph Stiglitz wrote a column for the UK Guardian after his Davos trip for the World Economic Forum. He may actually need to take the Dr Doom title from Robini. He focused on some systemic things that you might find interesting. Once again, we see an evaluation of the Efficient Market Hypothesis (EMH). This is something that should’ve happened years ago. He also mentions some skepticism of the monetarist (aka Milton Friedman) positions of central banks on inflation.
But this time, as business leaders shared their experiences, one could almost feel the clouds darkening. The spirit was captured by one speaker who suggested that we had gone from “boom and bust” to “boom and Armageddon”. The emerging consensus was that the International Monetary Fund (IMF) forecast for 2009, issued as the meeting convened, of global stagnation – the lowest growth in the post-war period – was optimistic. The only upbeat note was struck by someone who remarked that Davos consensus forecasts are almost always wrong, so perhaps this time it would prove excessively pessimistic.
Equally striking was the loss of faith in markets. In a widely attended brainstorming session at which participants were asked what single failure accounted for the crisis, there was a resounding answer: the belief that markets were self-correcting.
The so-called “efficient markets” model, which holds that prices fully and efficiently reflect all available information, also came in for a trashing. So did inflation targeting: the excessive focus on inflation had diverted attention from the more fundamental question of financial stability. Central bankers’ belief that controlling inflation was necessary and almost sufficient for growth and prosperity had never been based on sound economic theory; now, the crisis provided further scepticism.
I’ve been Fed watching again. That’s something of both an occupational hazard and a weirdish hobby for me. Usually, Fed chairs stay off the lecture circuit until they retire and write their biographies. Ben Bernanke, however, is not your usual Fed Chair and these are not usual times. I think you may recall that part of his observations with being in charge of monetary policy when there’s no room drop interest rates (ZIRP) has to do with communicating future Fed actions to a nervous public. This continues.
Bernanke was in Kansas City over the weekend speaking to normal people and Jim Lehr of the PBS program News Hour. There were several things from this exchange worth mentioning. The first is a response to the meme circulating around the libertarian circuit that there is no accountability between the FED and any one in Washington. That is untrue for several reasons. First, because the majority of appointments (including the Fed Chair) to the FOMC are made by POTUS and approved by the Senate. Second, the Fed Chair makes biannual trips to the Hill to speak with both houses of Congress and take questions. Third, they publish their internal records as well as their research continually. It’s a matter of public record. The only thing Congress doesn’t get to see is the rationale behind monetary policy which is perfectly in keeping with the idea of independence supported overwhelmingly by evidence and theory. They have to the right to see the Fed balance sheet and items now. What they do not have is the right to ‘audit’ monetary policy. Something that would be a disaster.
“The Federal Reserve, in collaboration with the giant banks, has created the greatest financial crisis the world has ever seen,” Representative Ron Paul, Republican of Texas, said at a House hearing last week in which Mr. Bernanke testified about the state of the economy.
Republican lawmakers portray the Fed as the embodiment of heavy-handed big government, and have called for scaling back the central bank’s regulatory powers. But liberal Democrats, like Representative Dennis J. Kucinich of Ohio, have accused the Federal Reserve of caving in to demands by banks for huge bailouts, for failing to protect consumers against dangerous financial products and for being too secretive about its emergency rescue programs.
More than 250 lawmakers have signed a bill sponsored by Mr. Paul that would allow the Government Accountability Office to “audit” the Fed’s decisions on monetary policy — a move that Fed officials see as a direct threat to their political independence in carrying out their central mission of setting interest rates.
A lot of the complaints at the appearance came from the audience who basically aired Kucinich’s view that the Fed appeared all too willing to bail out the reckless big guys while letting the little guys go belly under. Bernanke did not shy away from the questions at all.
When a small-business owner asked Mr. Bernanke why the Fed helped rescue big banks while “short-changing” small companies, Mr. Bernanke answered that he had decided to “hold my nose” because he was afraid the entire financial system would collapse.
“I’m as disgusted by it as you are,” he told the audience of 190 people. “Nothing made me more angry than having to intervene, particularly in a few cases where companies took wild bets.”
He used a most interesting metaphor when explaining why he had to hold his nose and bail out the gamblers. He basically said, if an elephant falls it crushes the grass beneath it. Wow, a zen moment from a Fed Chair. Who’d have thought that was possible? He also said that the main reason he did it was because he didn’t not want to be the Fed Chair at the time of the second Great Depression. I’d say that was succinct enough.
The Blogging Econ heads are still news makers today as we have more and more reports of record profits at Goldman pigs-playing-poker1Sachs and examples of blatant corportist propaganda at CNBC. I learned yesterday that many folks are listening, it just isn’t necessarily the ones shaping and setting policy. We also see a completely unsustainable budget coming down the pipe per the Director of the CBO. Why is it that policy makers seem to want us in dire straights? Are their sources of campaign funds so sacred that they’re willing to bring down the U.S. economy? Where does a Cassandra start?
Matt Taibbi and Paul Krugman focus in on the GS profits. So, I’m all for making a decent rate of return, that’s necessary to keep a company in business and it’s required to attract capital to grow a market. However, record setting, extraordinary profits are symptoms of a market out-of-whack. In the most simplest of analysis it could mean there are minimally too few providers of a service which can also lead to some form of market manipulation, information hiding, or information asymmetry allowing them to reap extraordinary profits. I basically think we’re seeing GS game the market based on raiding underpriced AIG assets with a free source of capital. This means the profits are straight from taxpayer funding. No wonder these guys don’t want to pony up any equity to us based on profitability and want to dump TARP funds (with their compensation restrictions) as quickly as possible. How can Washington miss that they’re back at their same old games?
This is from Taibbi who basically lays it out. They’re taking our tax dollars and buying assets with tax dollar in government-selected subsidized fire sales, creating arbitrage profits (some through their own huge market shares now that much of their competition is gone) and churning themselves some nice bonuses. In music, that’s called riding the gravy train. It’s a no risk, no brainer, no lose situation. Why would that require bonuses? [You can mark my words on this. They looted (with government enabling) AIG and the next one up will be CIT.]
So what’s wrong with Goldman posting $3.44 billion in second-quarter profits, what’s wrong with the company so far earmarking $11.4 billion in compensation for its employees? What’s wrong is that this is not free-market earnings but an almost pure state subsidy.
Krugman, a microeconomist with specializations in trade theory, sees it too.
The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?
First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.
Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away.
Third, it shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.
Meanwhile, back in the Main Stream Media, also known as the Wall Street and K Street propaganda factory, CNBC has tired to rosy up Dr. Doom’s forecasts to enable its masters arbitrage profits. Roubini made it clear that his views on the economy have remained unchanged despite the attempts to make it look otherwise.
Nouriel Roubini, the economist whose dire forecasts earned him the nickname “Doctor Doom,” said after markets closed Thursday that earlier reports claiming he sees an end to the recession this year were “taken out of context.”
“It has been widely reported today that I have stated that the recession will be over ‘this year’ and that I have ‘improved’ my economic outlook,” Roubini said in a prepared statement. “Despite those reports … my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.”
Several business news outlets, picking up on a report initially from Reuters, earlier Thursday cited Roubini as saying that the worst of the economic financial crisis may be over.
The New York University professor was quoted by Reuters as saying that the economy would emerge from the recession toward the end of 2009.
Reports of his comments helped trigger a late rally in the stock market.
Did you read that bit about triggering a late rally in the stock market? Pity the poor suckers that believed CNBC and of course, watch the deposits grow of the folks that placed the offsetting market transactions. And, let’s see, which market insiders would probably know that was BS? I don’t think you have to be Ms. Marple or an SEC investigator to figure that one out. It was just a simple mistake, wasn’t it?
Factors Explaining Future Federal Spending on Medicare, Medicaid, and Social Security (Percentage of GDP)
Factors Explaining Future Federal Spending on Medicare, Medicaid, and Social Security (Percentage of GDP)
Another thing that really has sugared my cookies is this report coming out of the Congressional Budget Office (CBO) one of the few bastions of economic thought in the beltway that tries to look out for the real constituents of Washington D.C.. The Director of the CBO,Doug Elmendorf, had this to say to a Senate Committee followed by a post to his blog.
The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.
There’s also his bottom line.
Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy.
Okay, am I just being a little too wonky here or are these three things perfectly clear to any one who has the audacity to be informed?
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