Thursday, September 30, 2010

Pushing back against the banksters

While we in USA see protests against current economic conditions by Predator-funded "tea-party" crackpots or smiley-faced efforts led by successful comedians like the Stewart / Colbert marches on Washington, the rest of the world is seeing real manifestations of rage against the greed-heads who wrecked the global economy.
Europe hit by wave of anti-austerity protests
Marches paralyse centre of Brussels while Spain sees first general strike in eight years
Ian Traynor and Elena Moya, Wednesday 29 September 2010 20.35 BST
Tens of thousands of protesters took to the streets of Europe today as strikes against austerity measures that have hit public spending and services on the continent caused widespread disruption.
The main demonstrations were in Spain, Belgium and Greece, although there was co-ordinated action in more than a dozen countries including Portugal, Ireland, Slovenia and Lithuania.
One of the largest protests converged on a park in Brussels. The demonstrations in the European capital were reinforced by Spain's first general strike in eight years, which was called to oppose the Spanish government's spending cuts and reforms of the labour market and pensions. In Portugal, unions said 50,000 protesters joined a march in Lisbon and 20,000 in Porto.
"It's a crucial day for Europe," said John Monks, general secretary of the European Trades Union Confederation, which orchestrated the events. "This is the start of the fight, not the end. That our voice be heard is our major demand today – against austerity and for jobs and growth. There is a great danger that the workers are going to be paying the price for the reckless speculation that took place in financial markets. You've really got to reschedule these debts so that they are not a huge burden on the next few years and cause Europe to plunge down into recession."
In Brussels marchers from across Europe waved union flags and carried banners saying "No to austerity" and "Priority to jobs and growth", bringing parts of the city to a halt. more
And the AP's account.
Anti-austerity protests sweep across Europe
BRUSSELS — Anti-austerity protests erupted across Europe on Wednesday — Greek doctors and railway employees walked off the job, Spanish workers shut down trains and buses, and one man even rammed a cement truck into the Irish parliament to protest the country's enormous bank bailouts.
Tens of thousands of demonstrators poured into Brussels, hoping to swell into a 100,000-strong march on European Union institutions later in the day and reinforce the impact of Spain's first nationwide strike in eight years.
All the actions sought to protest the budget-slashing, tax-hiking, pension-cutting austerity plans of European governments seeking to control their debt.
In an ironic twist, the march in Brussels accidentally comes just as the EU Commission is proposing to punish member states that have run up deficits. Most of those deficits funded social and employment programs in a time of high unemployment across the continent. The proposal, backed by Germany, is expected to run into strong opposition from France.
"It is a bizarre time for the European Commission to be proposing a regime of punishment," said John Monks, general secretary of the European Trade Union Confederation, which is organizing the Brussels march.
"How is that going to make the situation better? It is going to make it worse," Monks said in an interview with Associated Press Television News.
Unions fear that workers will become the biggest victims of an economic crisis set off by bankers and traders, many of whom were rescued by massive government intervention.
Several governments, already living dangerously with high debt, were pushed to the brink of financial collapse and have been forced to impose punishing cuts in wages, pensions and employment — measures that have brought workers out by the tens of thousands over the past months.
"There is a great danger that the workers are going to be paying the price for the reckless speculation that took place in financial markets," Monks said. "You really got to reschedule these debts so that they are not a huge burden on the next few years and cause Europe to plunge down into recession." more
Meanwhile, Iceland is moving to send one of its bankster-enablers to jail.
Geir Haarde, Iceland Ex-PM, Indicted For Role In Financial Crisis
REYKJAVIK, Iceland — Iceland's former Prime Minister Geir Haarde has been referred to a special court in a move that could make him the first world leader to be charged in connection with the global financial crisis.
After a heated debate Tuesday, lawmakers voted 33-30 to refer charges to the court against Haarde for allegedly failing to prevent Iceland's 2008 financial crash – a crisis that sparked protests, toppled the government and brought the economy to a standstill by collapsing its currency.
Haarde faces up to two years in jail if found guilty. The court, which could dismiss the charges, has never before convened in Iceland's history. A hearing date has not yet been set.
Haarde, ex-leader of the Independence Party, is no longer in parliament and stepped down from office last year following widespread protests and treatment for esophageal cancer. more

You need a real economy to have an economic recovery

There is something almost amusingly pathetic about watching the Fed trying to restart an economy it did so much to destroy.  When I was studying economics in the 1970s, we actually were taught that while the Fed could do wonders to slow down an "overheated" economy, it could not actually get one going again if they did structural damage during the slowdown.  My professors used the term "pushing on a string."  My grandfather was more to the point when he quoted the old Populist saying, "Any jackass can kick down a barn--but it takes a real carpenter to build one."

Let start with a rehash of what the jackasses have done.
19 Facts About The Deindustrialization Of America That Will Blow Your Mind
The United States is rapidly becoming the very first "post-industrial" nation on the globe. All great economic empires eventually become fat and lazy and squander the great wealth that their forefathers have left them, but the pace at which America is accomplishing this is absolutely amazing. It was America that was at the forefront of the industrial revolution. It was America that showed the world how to mass produce everything from automobiles to televisions to airplanes. It was the great American manufacturing base that crushed Germany and Japan in World War II. But now we are witnessing the deindustrialization of America. Tens of thousands of factories have left the United States in the past decade alone. Millions upon millions of manufacturing jobs have been lost in the same time period. The United States has become a nation that consumes everything in sight and yet produces increasingly little. Do you know what our biggest export is today? Waste paper. Yes, trash is the number one thing that we ship out to the rest of the world as we voraciously blow our money on whatever the rest of the world wants to sell to us. The United States has become bloated and spoiled and our economy is now just a shadow of what it once was. Once upon a time America could literally outproduce the rest of the world combined. Today that is no longer true, but Americans sure do consume more than anyone else in the world. If the deindustrialization of America continues at this current pace, what possible kind of a future are we going to be leaving to our children?
Any great nation throughout history has been great at making things. So if the United States continues to allow its manufacturing base to erode at a staggering pace how in the world can the U.S. continue to consider itself to be a great nation? We have created the biggest debt bubble in the history of the world in an effort to maintain a very high standard of living, but the current state of affairs is not anywhere close to sustainable. Every single month America does into more debt and every single month America gets poorer.
So what happens when the debt bubble pops? more
Let's compare this to China which is in the middle of an investment boom in her real economy.
Check Out What China's Doing With Its Taxpayers' Money
Henry Blodget | Sep. 26, 2010
Thomas Friedman provides a helpful snapshot of what China's doing with its taxpayers' money...versus what we're doing with ours.
Here's what China's doing:
China is doing moon shots. Yes, that’s plural. When I say “moon shots” I mean big, multibillion-dollar, 25-year-horizon, game-changing investments. China has at least four going now: one is building a network of ultramodern airports; another is building a web of high-speed trains connecting major cities; a third is in bioscience, where the Beijing Genomics Institute this year ordered 128 DNA sequencers — from America — giving China the largest number in the world in one institute to launch its own stem cell/genetic engineering industry; and, finally, Beijing just announced that it was providing $15 billion in seed money for the country’s leading auto and battery companies to create an electric car industry, starting in 20 pilot cities. In essence, China Inc. just named its dream team of 16-state-owned enterprises to move China off oil and into the next industrial growth engine: electric cars.
And here's what we're doing:
Not to worry. America today also has its own multibillion-dollar, 25-year-horizon, game-changing moon shot: fixing Afghanistan. more
And if you are a mature economy that was rocked by the global financial crises but never forgot how important your real economy is, things restart almost by themselves once the financial craziness is contained.
Shipping Boom
Hamburg's Port Sees Fruits of German Upturn
By Sven Böll in Hamburg
The economic crisis turned Hamburg's port into a ghost town. Now that things are picking up, the container terminals at Germany's most important shipping hub are buzzing with life again.
In the evening, when the at-times inhospitable northern German weather allows it, Klaus-Dieter Peters swaps his suit and tie for casual clothes and rides his bicycle from his home in the upmarket Hamburg neighborhood of Othmarschen to the beach along the edge of the city's Elbe River. There, the 57-year-old executive, who is the CEO of Hamburg Harbor and Logistics AG (HHLA), sits on the sand and enjoys a beer and a cigar. And he watches the Burchardkai container terminal on the other side of river, one of the three container terminals that HHLA operates in the Port of Hamburg.
For months, the scene resembled a still life with cranes. The container cranes' arms were raised into the sky, as if they had capitulated in the face of the economic downturn. Occasionally, but only occasionally, a ship passed by the bleak silhouette of the terminal. The port, which usually buzzes with life around the clock, was almost silent.
Last year, Hamburg's dream of an eternal boom and its ambitions to become Europe's top logistical hub seemed to have come to an end. The port's container throughput fell by 28 percent in 2009 as a result of the economic crisis. In the competition to be Europe's most important container port, Hamburg lagged in third place behind Rotterdam and Antwerp. And in the global league tables, the German port found itself in the no-man's-land of the middle rankings -- a place which did not correspond to the self-image of the proud Hanseatic city.
After a decade of euphoric growth, the crash hit HHLA, Hamburg's largest terminal operator -- which is also owned by the city -- particularly hard. "For us, 2009 was a bad year of unprecedented proportions," Peters says. But he emphasizes that that unpleasant chapter is now over. "In the last couple of months things have been taking off again," he adds quickly. Indeed, the numbers are looking up. The container throughput in the Port of Hamburg increased by 4 percent in the first half of 2010, while HHLA's terminals even saw throughput rise by nearly 9 percent.
Ever since the low point of the global crisis passed, the economic recovery has been felt with full force in ports all around the world. Containers are the red blood cells of globalization, carrying oxygen around the global economy. Most of the goods being moved in international trade are transported in containers, which are generally 12 meters (40 feet) long and 2.4 meters (8 feet) in width and height. They hold everything from Australian wine to Chinese-made PlayStations to German wind turbines. more
Of course, the politicians in USA that passed the laws that gave tax breaks to the jackasses kicking down the barn see the difference between the growth in the Chinese or German economy while ours continues to crash as a sign that "they" are cheating somehow.
A Short Tour of Junk Economics
America's China Bashing
It is traditional for politicians to blame foreigners for problems that their own policies have caused. And in today’s zero-sum economies, it seems that if America is losing leadership position, other nations must be the beneficiaries. Inasmuch as China has avoided the financial overhead that has painted other economies into a corner, U.S. politicians and journalists are blaming it for America’s declining economic power. I realize that balance-of-payments accounting and international trade theory are arcane topics, but I promise that by the time you finish this article, you will understand more than 99 per cent of U.S. economists and diplomats striking this self-righteous pose. more

Wednesday, September 29, 2010

The lie of a right-wing population in USA

The idea that there is a meaningful political distinction between left and right in USA is pretty absurd when you think about it.  Most folks are so hopelessly uninformed that any coherent political philosophy is quite literally, impossible.  So in the absence of any historically informed definitions, left and right are now usually associated with gonad issues like gay marriage or abortion.  Serious economics has been removed from the political debate for so long, only us oldsters can even remember when there were defenders of a "left" economics.

My example is pretty instructive.  I was raised by fundamentalist evangelical Protestants.  I am a technologically literate white male with a college education in the sciences.  I am a patented inventor with entrepreneurial instincts who has managed production.  If I were German with a background like that, I could easily be a member of Angela Merkel's center-right government.  Yet here in USA, I am so far to the left of the supposedly uber-liberal Minnesota Democratic Farmer Labor Party that we are no longer on speaking terms.

I hardly believe I am alone.  In issue after issue, if party labels and buzzwords are removed, the USA public is FAR to the left of the political establishment when it comes to economics. Just two days ago, I posted a report that claimed that 92% of the population preferred a Swedish-style income distribution.
The 'rightwing backlash' that never was
The consensus is that angry voters are moving rightward. But it's nothing Democrats couldn't fix with a dose of economic populism
Mark Weisbrot, Wednesday 22 September 2010 18.30 BST
Is America in the grip of a rightwing backlash that will hit the November elections like a hurricane?
This narrative is gathering steam. It is fed not only by the minority partisan rightwing media, but also its majority "liberal" counterpart, which loves a horse race and is fascinated with the Tea Party, even if it isn't so eager for the Republicans to take congress.
Regardless of the outcome, 90%-plus of the pundits and press will cheese up the same tired old cliché in their post-election analysis: the Democrats were punished (they will inevitably lose at least some seats in congress) because they tried to go too far, too fast and too left for the inherently conservative American masses. And this junk will be consumed for years, adding another layer of fat to the lazy couch potato that is American journalism's "conventional wisdom".
How about another narrative that makes more sense?
Let's start with the economic issues, since the economy was the number one issue for likely voters in the latest New York Times/CBS poll. Our worst and longest recession since the Great Depression was caused by a real estate bubble that accumulated and burst before Obama was elected. The Democrats passed a stimulus package that was much too small to compensate for the resulting loss of private spending.
As my colleague Dean Baker has pointed out, the collapse of this bubble would be expected to knock about $1.2tn annually off of private demand. This is about eight times the size of government stimulus spending when we subtract the budget cuts and tax increases of state and local governments (special thanks to the Republicans for cutting $100bn from the stimulus bill that would have gone straight to municipal governments to prevent some of this). more

Auerback: Where is Huey Long When You Need Him?
By Marshall Auerback, a portfolio strategist .hedge fund manager, and Roosevelt Institute Senior Fellow
My friend, Yves Smith, has posed the question as to why there is no political outlet for the anger on the left. In other words, where are today’s Huey Longs when you need them? It’s become patently obvious to anybody with half a brain and a pulse that President Obama’s “progressivism” has more in common with Mussolini’s corporatism than anything remotely connected to a genuinely progressive agenda.
If you think I’m exaggerating, I suggest you read Denis Mack Smith’s excellent accounts of Il Duce’s tenure in Smith’s “Modern Italy: A Political History”, or his biography, “Mussolini”. Both works describe a country which, while claiming to reduce an inflated bureaucracy, needed to do precisely the opposite in order to reward personal “clients” and followers. Both books also recount that in spite of the efforts of Mussolini’s first Fascist Finance Minister De’Stefani’s efforts to curb tax evasion and limit stock exchange speculation, his efforts were constantly thwarted by other political cronies of Il Duce, as well as Mussolini himself, who soon allowed the majority of his Cabinet to discredit one of the few competent ministers, who was of above average intelligence and competence (Elizabeth Warren, watch out).
Yet today we are being confronted by the sight of a desperate President, hoping to re-engage with a thoroughly dispirited base. President Obama recently told black leaders that he wanted their support to “guard the change” he was allegedly delivering. That would be the “change” which essentially perpetuated the TARP bailouts initiated by former President Bush and former Treasury Secretary Hank Paulson? Or the health care “reform” bill which will shovel billions of dollars into the private insurance industry with little in the way of a quid pro quo for improved HEALTH CARE? Or the “change” which brought us the supposed withdrawal from Iraq even as the Pentagon conceded that “nothing will change” – a direct quote from the Army’s chief spokesman in Iraq (although cited in a Colorado Springs Gazette dispatch which probably explains the lack of national commentary). What about the “change” in a corrupt narco-state like Afghanistan, where, the Obama Administration has concluded that its war strategy is fundamentally sound and that a December review, once seen as a pivotal moment, is now unlikely to yield any major alteration in policy?
And the President wonders why there is an enthusiasm gap amongst his base? Or why there is a smoldering anger which continues to manifest itself through the rise of the Tea Party movement? At a townhall meeting last week, Obama told the audience he relishes the opportunity to get out of Washington and talk with regular people. Hmm…one wonders. As Bloomberg’s Margaret Carlson recently pointed out, Velma Hart told the President that she’s “exhausted of defending you,” “deeply disappointed with where we are right now,” and waiting for him finally “to change things in a meaningful way for the middle class.” more

Tuesday, September 28, 2010

Someone is discovering that oil is still valuable in the ground

The idea that oil simply MUST be extracted as quickly as possible is really quite crazy.  Oil has MANY valuable uses (lubricants, feedstocks, etc,) that will grow ever more apparent as we rush to burn as much as we can.  Having some left in 50 years might prove the best planning scheme ever.  Now we see that Equador has decided the leave a whole oil field untapped and sure enough, folks are already calling them crazy.
Oil: Can Ecuador see past the black stuff?
A revolutionary plan to leave Ecuador's abundant oil in the ground could show the world just what's possible
One of the most extraordinary people I have met in 10 days of travelling around Peru and Ecuador has been Alberto Costa. He's head of Ecuador's leading research group now, but until 2007 was the second most powerful man in the country after the president, Rafael Correa. He was not only charged with masterminding the new constitition but was head of the assembly, or parliament, a founder of the ruling political party and minister of energy of the country that depends on oil.
But Costa will go down in history as the world's only serving oil minister to have ever proposed leaving a country's black stuff in the ground. That's like Dracula renouncing blood, or a sports minister saying it's better to play hide and seek than football. It just does not happen.
He is the architect of the Ecuadorean government's plan to guarantee to leave 965m barrels of oil in the Yasuni national park in eastern Ecuador if the world contributes $100m in the next year and eventually around $3.6bn. The revolutionary economic idea to earn money by not exploiting a resource has been endorsed by the government and will be administered by the UN Development Programme. more

Competitive devaluations

There is NOTHING that says the global economy is in trouble like the outbreak of competitive devaluations of national currencies.  These events take place when many countries decide that the best way to goose their economies is to stimulate exports and cut back on imports.

This happened during the Great Depression, BTW so the practice is hardly new.  And while I could give long and boring lectures on all the social damage that occurs when a nation's currency is overvalued, (yes it is true, I LIKE cheap money--so sue me) I am also quite aware of the problems that crop up whenever too many finance ministers suddenly agree with me.

Well, it seems like competitive devaluations are going to top the agenda at the next G20 meeting.  No matter--the practice will not end because some international gathering wants it to happen.  I mean, if the freaking Swiss are worried about their currency getting too valuable, then we can rest assured that everyone has finally seen the light.  (Well, not everyone--there are still plenty of folks in USA who think that an overvalued currency is a good thing.)
World gripped by 'international currency war'
• Brazilian finance minister Guido Mantega speaks out against devaluations
• Economists fear increasing currency volatility and instability
Tim Webb, Tuesday 28 September 2010 09.39 BST
The world is in the midst of an "international currency war" according to Brazil's finance minister as governments force down the value of their currencies to boost their struggling economies.
The comments are the first public admission made by a senior policymaker about a practice which has become increasingly widespread since the global economic downturn.
Many countries, notably China, have been deliberately weakening their currencies by selling them on foreign exchanges or keeping interest rates artificially low to make their exports cheaper.
Economists fear that such moves are resulting in increasing currency volatility and instability. Increasing competition among individual countries to devalue also makes it harder to mount a co-ordinated policy response to the economic downturn, particularly amid fears of a renewed slowdown.
The issue is likely to be high on the agenda at the upcoming G20 meeting in November in South Korea. China has resisted pressure from the US to allow the value of its currency, the yuan, to rise. Many countries in Asia, including the host, are reluctant to raise the issue for fear of antagonising China, a major trading partner. Switzerland also began selling Swiss francs on foreign exchanges last year to weaken its currency. more

Monday, September 27, 2010

The extremists are killing us

I have a long-standing disagreement with folks who believe that success is a function of purifying one's belief set.  During the Cold War we were told that the argument between the folks who thought that everything should be run by a government committee and those who thought that everything should be left to individual self interest was so important, it was worth arming the two sides with nukes.

The overwhelming evidence indicates that the best answers are found between these two extremes.  Yes there are things that are best done with collective effort, and yes there are matters that should be left to the individual.  The best run societies are those that understand this and can strike a wise balance between individual needs and collective needs.

The problem with being moderate and reasonable on issues like this is that the purists literally want you killed--or at least silenced--see the nuke example above.  Yet MOST people understand the need for balance.  And a most striking example of how popular moderation is was published over the weekend when it was found that the overwhelming number of Americans wanted income distributions similar to "socialist" Sweden.
Study: Most Americans want wealth distribution similar to Sweden
By Daniel Tencer
Saturday, September 25th, 2010 -- 7:28 pm
92 percent prefer Swedish model to US model when given a choice
Americans generally underestimate the degree of income inequality in the United States, and if given a choice, would distribute wealth in a similar way to the social democracies of Scandinavia, a new study finds.
For decades, polls have shown that a plurality of Americans -- around 40 percent -- consider themselves conservative, while only around 20 percent self-identify as liberals. But a new study from two noted economists casts doubt on what values lie beneath those political labels.
According to research (PDF) carried out by Michael I. Norton of Harvard Business School and Dan Ariely of Duke University, and flagged by Paul Kedrosky at the Infectious Greed blog, 92 percent of Americans would choose to live in a society with far less income disparity than the US, choosing Sweden's model over that of the US.
What's more, the study's authors say that this applies to people of all income levels and all political leanings: The poor and the rich, Democrats and Republicans are all equally likely to choose the Swedish model.
But the study also found that respondents preferred Sweden's model over a model of perfect income equality for everyone, "suggesting that Americans prefer some inequality to perfect equality, but not to the degree currently present in the United States," the authors state. more
And for comic relief, there was this piece on the sorts of jobs waiting for a Libertarian utopia.  They include plague corpse disposal and child coffin maker.
Top 10 Jobs in Libertarian Paradise 
by Troubadour  Sun Sep 26, 2010 at 12:59:03 AM CDT
Tired of Big Gubmint getting in the way of your entrepreneurial ambition? Ready to Go Galt and shrug all the welfare queens off your shoulders so you can have the riches you deserve? Well, I have some great news - there are many unique job opportunities to be had in a small government society that are simply not available in today's Communist America. In fact, there are so many that I can only discuss a handful of them here, but they're more than enough to refute the odious librul myth that people can't get by without public services. There is an entire world of opportunity for hard-working people in Libertarian Paradise. more
Damn! I detest extremists!

Sunday, September 26, 2010

Where economics REALLY gets it wrong

Hey, its election time and even Democrats who should know better are boasting about how they will be better deficit-cutters than the Republicans.  Of course, they don't seem to understand that there is a HUGE difference between running up the tab for real investments (building new energy systems to cope with the end of the Age of Petroleum, etc.) and pure conspicuous waste (the war against the people of Afghanistan.)

The economics "profession" is the cause of this problem.  They actually teach and believe that making clear distinctions between productive investment and waste involves value judgements that would impair the "objectivity" of their so-called "science."  In doing so, they would have the rest of believe that there is really no difference between up and down.  Folks who resolutely believe there is no difference between up and down will very likely get a whole lot of other things wrong.
The Soft Bigotry of Incredibly Low Expectations: The Case of Economists
Dean Baker
Co-Director of the Center for Economic and Policy Research
Posted: September 13, 2010 05:13 PM
In a country with almost 15 million people out of work, it is amazing that any economists still have jobs. This one is their fault first and foremost. Economists are supposed to know about the economy and provide advice on how to avoid disasters before they happen and help us recover from the bad things happen in spite of good advice.
The economics profession has not done well on this simple scorecard. Remarkably, rather than improve their game, economists are now busy dampening down expectations so that the public will not hold them responsible for the state of the economy.
Towards this end, a group of Fed economists recently put out a new studyclaiming that it was impossible for economists to recognize the $8 trillion housing bubble before it wrecked the economy. In effect, they argued that economists should not be blamed for this failure because:
"The state-of-the-art tools of economic science were not capable of predicting with any degree of certainty the collapse of U.S. house prices that started in 2006."
This raises the obvious question: if economists can't see an $8 trillion housing bubble, what can they see? This is bit like the firehouse where everyone sits around calmly sipping their coffee as the school across the street burns down. Completely missing the largest financial bubble in the history of the world is pretty inexcusable, even if economists continue to make excuses.
Having failed to prevent disaster, economists are now anxious to tell us that there is nothing that they can do to remedy the situation. The story they are pushing is the unemployment is structural, not cyclical. This means that people are not unemployed because of a lack of demand in the economy, but rather they are unemployed because there is a mismatch between the available jobs and the skills and location of the available workers. more
Austerity Chic: It's This Year's "Weapons of Mass Destruction"
by RJ Eskow | September 17, 2010 - 10:11am
Sometimes our political commentariat seems to go fashion-crazy. When a new trend gets popular it overwhelms everything in its path: logic, poltical divisions, even expert opinion. The latest vogue is deficit reduction, and our nation's Anna Wintours tell us we simply have to have it. In Washington, screaming about being in the red is the new black.
Call it "austerity chic," and it's catching on fast. We've already written about an odd quartet of recent austerity-chic pieces from pundits that included Tom Friedman and Anne Applebaum. These pieces tell us why we should find this new style appealing: Self-denial is what makes a nation great.
We've seen this herd mentality before, of course, most notably in the run-up to the invasion of Iraq. The experts warned us what would happen, but our keyboard-clacking dedicated followers of fashion thought they knew better. Ever eager to issue the clarion call for sacrifice - on somebody else's part - they issued their calls to arms. Their support played a pivotal role in building support for the invasion.
How'd that work out for you?
Once again, the experts tell us that the warning lights are flashing red and the fashionistas aren't listening. That was made clear again this morning, when a conference call was held to announce that 300 economist and civic leaders have signed a statement saying that "there is a grave danger that the still-fragile economic recovery will be undercut by austerity economics." The statement, released by the Institute For America's Future*, adds: "A turn by major governments away from the promotion of growth and jobs and to premature focus on deficit reduction could slow growth and increase unemployment - and could push us back into recession."
Contrast those sentences with the fetishized way Friedman approached reduced spending in his column. "The Greatest Generation's leaders were never afraid to ask Americans to sacrifice," he writes, whereas today's Americans "had a values breakdown." Here's what Friedman's missing: With 15 million people unemployed and 44 million in poverty, a lot of people are sacrificing right now. As for Applebaum, her orgiastic descriptions of "axe-wielding," "slashing" British budget cuts have to be read to be believed (although I did provide a summary here, if you're the type who shuts their eyes during slasher movies.) more
But there IS some good news.  The chief economic drooler is heading back to Harvard where folks like him are considered normal.
Larry Summers Is Resigning to Spend More Time With His Money
September 22, 2010 8:51 AM | By Tom Scocca
Now that America's finance sector has recovered its health and the wealthiest class feels more secure about its ability to stay wealthy, economist Lawrence Summers announced yesterday that he will resign as head of the National Economic Council later this year. Having successfully guided the nation into a state of jobless recovery, President Obama's lead economic adviser is turning his attention to job protection: namely, holding on to his own tenured Harvard professorship.
Summers will return to a university that is in an ongoing budget crisis. As Harvard president, earlier in the decade, Summers oversaw the conversion of the school's endowment into adangerous tangle of overleveraged and vulnerable investments. Owing to his bad manners, however, Summers got forced out of the presidency for other things before the financial disaster arrived. So he retained his reputation as a financial superhero, rather than a bungler. more

Saturday, September 25, 2010

The assault on the middle class part xxxxx

In USA, anyone who actually reads a non-faction book to its very end is considered odd.  And I didn't know that until I was in my 30s.

True story.  I once had a neighbor who had lived in Washington D.C. and had what I would consider the perfect library for a man who had lived in a national capitol.  I was quite envious of his collection.  For job reasons, he was forced to quickly relocate I wound up caring for his very nice library.  It was better than Christmas because for nine months, I devoured everything he had that I wanted to read but had not because of the expense--mostly the political / social science tomes addressing current dilemmas that were almost impossible to get from the local library.

I noticed something I thought charming.  About page 25 in almost every book there was a neatly trimmed and folded review of the book from the the New York Times or Washington Post.  I commented on this practice to another neighbor who had also spent time in D.C. because I thought it a good habit and wondered if this wasn't something from the east coast we folks in Minnesota might mimic.

What was happening, she explained to me, was my relocated neighbor was just trying to keep up with Washington chatter.  He would read the book reviews on Sunday, buy the books at some downtown bookseller during the week, read the first 25 pages, and by the next weekend could pretend he was intellectually up to speed on all the latest hot topics.  Of course, by the next Sunday there were more book reviews, books to buy, etc. so it was highly unlikely that he had ever finished any of the books is his library.

I was genuinely shocked.  And she noticed.  The poor woman almost exploded with laughter.  She said that one of the things she had observed about Minnesotans was that they read far into books.  I confessed that she had been describing me.  "When I buy a book, I want it to last a little while so not only do I read it to the end, I even read the footnotes.  I want my money's worth!  Besides, most authors don't really warm up until about chapter 10 so this guy has probably never seen the good stuff in any book."  She said my sentiments, while not common, at least manifested themselves in Minnesota. On the other hand, "I never met anyone in Washington that actually finished a book. Why do you think folks around here are such careful readers?"

I suggested that we Nordics come from a long line of people who believe that there is really nothing like books to cope with winter.  We are Lutherans who believe that being well-read is a sign of virtue.  And we are cheap.

The reason I tell this story is that I once wrote something (almost profound) about the economics of the American middle class.  I wrote it in about 1987 and it showed up in Chapter 14 of Elegant Technology.  So for all those folks who think that the first 25 pages are all that is worth reading in a book, here it is--found on page 180 of the pdf file:
Americans think that the middle class is ordained of the gods. They forget that it was a product of their grandparents, and their wisdom. Many societies exist throughout the world with no real middle class. Like anything else, the middle can be destroyed. 
In America, the middle is under siege: the political middle, the economic middle, and even the geographic middle. Charts of American prosperity in the 1980s showed that the 34 states in the middle of the country were in recession during a “growing economy.” Great societies are produced by the middle. An assault on the middle is an assault on the social fabric. 
The attack on the middle comes from an odd grab-bag of political bedfellows. From the political right the assault is a combination of Wall Street dealmakers who busy themselves destroying the futures of small Midwestern cities, and their neofeudalist apologists who concocted the utter barbarism known as monetarism. From the political left, the antitechnology, antibusiness, postindustrialists propose rationales for why this destruction does not matter.
I was not especially prescient in these matters--it was just that I knew that any economic system that could destroy the owner-operated agricultural systems of the USA midwest in the 1980s could certainly wipe out the middle class.  So in 2010 we see articles like this.
15 Shocking Poverty Statistics That Are Skyrocketing As The American Middle Class Continues To Be Slowly Wiped Out
The "America" that so many of us have taken for granted for so many decades is literally disintegrating right in front of our eyes. Most Americans are still operating under the delusion that the United States will always be "the wealthiest nation" in the world and that our economy will always produce large numbers of high paying jobs and that the U.S. will always have a very large middle class. But that is not what is happening. The very foundations of the U.S. economy have rotted away and we now find ourselves on the verge of an economic collapse. Already, millions upon millions of Americans are slipping out of the middle class and into the devastating grip of poverty. Statistic after statistic proves that the middle class in the United States is shrinking month after month after month. Meanwhile, millions of Americans are starting to wake up and are beginning to realize that we have very serious problems on our hands, but they have no idea what is causing our economic distress and they are unaware that most of our politicians have absolutely no idea how to fix the economic disaster that we have created.
On the mainstream news, the American people are treated to endless footage of leaders from both political parties proclaiming that the primary reason that we are in the midst of such an economic mess is because of what the other political party has done. more
For the Unemployed Over 50, Fears of Never Working Again
Patricia Reid, 57, lost her job at Boeing four years ago and has struggled to find a new position.
Published: September 19, 2010
VASHON ISLAND, Wash. — Patricia Reid is not in her 70s, an age when many Americans continue to work. She is not even in her 60s. She is just 57.
But four years after losing her job she cannot, in her darkest moments, escape a nagging thought: she may never work again.
College educated, with a degree in business administration, she is experienced, having worked for two decades as an internal auditor and analyst at Boeing before losing that job.
But that does not seem to matter, not for her and not for a growing number of people in their 50s and 60s who desperately want or need to work to pay for retirement and who are starting to worry that they may be discarded from the work force — forever.
Since the economic collapse, there are not enough jobs being created for the population as a whole, much less for those in the twilight of their careers.
Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. The unemployment rate in the group — 7.3 percent — is at a record, more than double what it was at the beginning of the latest recession. more
And just so one doesn't get the idea that the death of the middle class is a law of nature but a deliberate policy decision, we see a "Democratic" President actively working to subvert the remaining parts of the New Deal.
Driving Another Nail Into the Coffin of the New Deal
Obama's Latest Apologetics
By ALAN NASSER, September 15, 2010
In Cleveland, Ohio last Wednesday and a White House press conference two days later president Obama opted full throttle for Richard Nixon’s Big Lie strategy: when you preside over a worsening disaster look your constituency straight in the eye and tell them that black is white. Don’t flinch, don’t shift your eyes. Just lie. Lie big. Then cross your fingers they won’t believe you could have the audacity. 
All of the White House’s current pronouncements aim to avert large Democratic losses in the November elections, and to cover the administration’s ass in the face of economic conditions that are already worse and asymptotically approaching the worst. Wednesday’s talk touted an allegedly new plan that would address more effectively the dreadful unemployment situation: 30 million workers either can’t find jobs or are forced to accept part-time work. Friday’s press conference restated the message with an added vigorous renunciation of capitalism-with-a-human-face politics. more

Friday, September 24, 2010

Fools with expensive educations

As reason number (infinity) for why USA is doomed, one only needs to read this little absurdity by Jonathan Alter, one of our public "intellectuals" who writes the following in the September 13, 2010 Newsweek.
My favorite part of the new documentary Waiting for Superman comes just after the audience learns that American students rank far below other advanced countries in math and science. Then, with footage of Jackass-style daredevils trying and failing to perform various ambitious stunts, we see that American teens do rate No. 1 in one area—self-confidence. Even when they’re 12th or 18th or 21st in some academic category, they still think they’re No. 1.
The sequence was simultaneously funny and pathetic, and it reminded me of a story President Obama told me when I was writing a book about his first year in office. In a meeting in Seoul, President Lee Myung-bak confided to Obama that his biggest problem in education was that South Korean parents were pressuring him to import more English teachers so their kids could learn English in first grade instead of having to wait until second grade. This is what we’re up against in global competition, the president said. “And then I sit down with U.S. reporters, and the question they have for me, in Asia, is ‘Have you read Sarah Palin’s book?’” At that point Obama shook his head and said, “True story. True story.”
Got that?  Waiting for Superman is about the attempt to upgrade the educations for the poor of Washington DC while Obama's example is about the shameless idiocy of the Washington "elite" with their fancy educations.  And Alter confuses the two. (sigh)

So Robert Parry weighs in on the foolishness of the confused right wing.  OK, that's a better example.
America's Decoupling from Reality
Robert Parry
As Election Day 2010 approaches – as the United States wallows in the swamps of war, recession and environmental degradation – the consequences of the nation’s three-decade-old decoupling from reality are becoming painfully obvious.
Yet, despite the danger, the nation can’t seem to move in a positive direction, as if the suctioning effect of endless spin, half-truths and lies holds the populace in place, a force that grows ever more powerful like quicksand sucking the country deeper into the muck – to waist deep, then neck deep.
Trapped in the mud, millions of Americans are complaining about their loss of economic status, their sense of powerlessness, their nation’s decline. But instead of examining how the country stumbled into this morass, many still choose not to face reality.
Instead of seeking paths to the firmer ground of a reality-based world, people from different parts of the political spectrum have decided to embrace unreality even more, either cynically as a way to delegitimize a political opponent or because they’ve simply become addicted to the crazy.
The latest manifestation of the wackiness can be found in the rise of the Tea Party, a movement of supposedly grassroots, mad-as-hell regular Americans that is subsidized by wealthy corporate donors (such as the billionaire Koch brothers) seeking to ensure deregulation of their industries and to consolidate their elite control over the political process. more
Of course, the biggest problem is that we have a "profession" the economists, who insist folks become mindless zombies in order to gain admission to their club.  The results are truly depressing.
Our Best Minds Are Failing Us
With America in deep trouble, our economists are AWOL, and our scientists are still off ‘financial engineering.’
The most terrifying moment in modern economic history occurred two years ago this month. For several long days after the fall of Lehman Brothers on Sept. 15, 2008, the financial system was in danger of total collapse, and the United States seemed on the precipice of another Great Depression in that “Black September.” Just as bad, our economists and senior policymakers had barely any idea why this was happening. The assumptions of an entire era had been proved wrong. The “Great Moderation”—the period of post–Cold War prosperity in which capitalism was said to have been tamed and risk mastered—was revealed to be an illusion. Alan Greenspan professed his “shocked disbelief” that the Wall Street institutions he had trusted in were so reckless as to blow themselves up. “The whole intellectual edifice has collapsed,” the former Fed chairman told Congress that fall. Economists said they would have to come up with new theories for how markets worked, in particular how the financial system functioned and interacted with the “real” economy. “Large swaths of economics are going to have to be rethought on the basis of what happened,” Larry Summers, the presidential adviser who doubles as a world-renowned economist, told me in an interview shortly after Barack Obama took office.
Two years on, that rethinking has barely begun, and only with the most painful reluctance by economists. Meanwhile, policy and political debates still driven by outdated economic theory have been racing out of control, bitterly dividing the nation. Whether the arguments are about stimulus, financial reform, health care, or jobs, the discussions in Washington tend to be dominated by simplistic black-and-white views that are little different from the conceptual framework that prevailed before the collapse: markets always work better than governments. Advocates of government spending are socialists. Champions of markets are laissez-faire ideologues or slaves of Wall Street. And never the twain shall meet. A vast new regulatory framework has been set in motion, but many experts say it has done little to change the way Wall Street or the real economy functions, and there is no new economic theory underlying it. more

Green energy will be neither easy nor cheap

But at least the Germans are facing up to reality.  Unlike USA where our Nobel Laureate Secretary of Energy Dr. Chu seems to think our energy problems can be solved with a few cases of caulk.
The Expensive Dream of Clean Energy
Will High Costs Kill Merkel's Green Revolution?
Chancellor Angela Merkel's vision of completing Germany's conversion to renewable energy by 2050 is bold and ambitious. But she has remained silent about the risks and the tremendous costs the green revolution will entail -- for Germany and all of Europe. By SPIEGEL Staff
Germany's dream of an energy revolution has already come true in the small town of Morbach, nestling between wooded hills in the southwestern Hunsrück region. Morbach boasts 14 wind turbines, 4,000 square meters of solar panels and a biogas plant, all located on the site of a former military base straddling a hill above the town. Together, they produce three times more electricity than the 11,000-strong community needs.
Politicians and corporate executives from all over the world have visited the site. "They all want to see how it's done," says Morbach Mayor Gregor Eibes, a member of Chancellor Angela Merkel's conservative Christian Democratic Union (CDU) party. Morbach has already achieved what Merkel is now planning for the whole of Germany.
She wants to lift Germany to Morbach's levels in just four decades, after which Europe's largest economy will meet most of its energy requirements from the sun and the wind, biomass and water. Drawing on the inexhaustible supply of energy on land and at sea would help combat global warming. And it would mean an end the dependence on Arab oil and to fears of nuclear accidents and of the mood swings of Russia's gas suppliers.
The government laid out this bold, green vision in its draft energy plan earlier this month. It wants to increase the share of renewable energy from 16 percent today to 80 percent by 2050. more
Of course, all the investment in clean energy will produce thousands of jobs.  So how is this not a good thing?
Wind Not Weapons
An Ailing Shipyard Finds New Life with Renewable Energies
By Markus Grill
The German wind energy sector is expanding, opening up fresh business opportunities -- even for unlikely candidates like warship makers. The Nordseewerke shipyard has rejiggered its business model and decided to go green.
Someday the last swords really will be beaten into plowshares, or perhaps it is the warships that will transform into wind turbines -- precisely what is taking place at the Nordseewerke shipyard in Emden on Germany's North Sea coast.
At the moment, a gray corvette -- a type of small warship -- sways at the side of the quay. Construction is nearly complete. Over in the dry dock, workers are giving a container ship called the Alexander B a final inspection. But these are their last tasks as shipbuilders. Schaaf Industrie AG (SIAG), a mid-sized company specializing in supplying parts for wind turbines and located in the Westerwald area, well inland of Emden, bought the 106-year-old shipyard this March. The company isn't interested in continuing with shipbuilding and certainly not with manufacturing armaments. Environmental technology offers far better opportunities.
It's the end of an era in Emden. "If it floats, we built it here," says Ole-Christian Bolze, 39, assistant to the shipyard's technical director. The Nordseewerke has built submarines, war ships, container ships, yachts and even the "Vasco da Gama," at the time the world's largest suction dredger.
Bolze himself is matter-of-fact. His acquaintance with the shipyard extends back to 1991, when he began his training here as an industrial administrator, but he doesn't appear to be mourning shipbuilding's demise. "We have to accept that Korea can build container ships just as well as we can these days, and they make them cheaper," he explains. more

Thursday, September 23, 2010

Watching the elections in Sweden

My grandpa Nelson was already a Social Democrat when he left Sweden in 1899.  The Swedish Social Democrats (SDP) were arguably the most successful progressive movement ever.  And they were brave.  They had to be.  19th century Sweden was exceedingly poor.  The struggles against such backwardness required organizational genius and a clear vision of what a better society looked like.

The real father of the SDP was a guy named Hjalmar Branting who preached evolutionary change.  For example, he was a socialist scholar who was quite horrified by the Bolshevik Revolution in Russia.  He had a degree in math and astronomy and was apparently a very gifted writer who gave up his scientific career in 1884.  In 1889, he helped found the SDP and was the party president from 1907 until his death in 1925.

Branting provided a clear distinction between socialism and communism for his fellow Swedes.  In 1918 he wrote that socialism was an applied theory of democratic development and that communism, on the contrary, was an oligarchy, an enemy of democracy and an enticement to economic disaster in its demand for destruction of proprietary rights.  Branting's socialism would provide a blueprint for Sweden to become one of the most prosperous nations on earth.  His Social Democratic Party would essentially run things for 80 years.

Yet Sunday night when the ballots were counted, the SDP had lost its second election in a row and its vote total was the lowest in 96 years.  So the obvious question is, "What went wrong?"

The answer is obviously complicated but when I was in Sweden in 1995, I stayed with a devoted (and disappointed) party member who had several theories for the decline.  She worked for a bureaucracy tasked with finding jobs and alternative careers for the unemployed.  One of her clients was an economist with important entries on his CV who had been laid off and was seeking assistance.  In spite of his plight, he still was deeply wedded to the schools of thought that had destroyed his career.

This led to a fascinating conversation about the role of Sweden's conservatives in the destruction of the SDP.  This included speculation about the assassination of perhaps the best-known of all the SDP leaders Olaf Palme in 1986.  But the biggest contribution to the death of the left world-wide came through Sweden's legitimization of right-wing economists through the awarding of the Nobel Memorial Prize--especially the one given to Milton Friedman in 1973.

So her theory was that the SDP self-destructed because they forgot Branting and Palme and became a bunch of neoliberals.  The current head of the SDP, Monica Sahlin, is about as far from Branting as George W. Bush was from Abe Lincoln.

I haven't found a lot of real insightful analysis of the evolution of Swedish politics but the following will have to do until I find something better.  It was written by a self-described economic historian and there is actually some economics in it.
An Analysis of the Electoral Fiasco and Lessons for the Democrats
Why the Swedish Left Lost
In the parliamentary elections held on September 19th, the Red-Green Alliance comprised of the Social Democrats, Green and Left parties lost out to the conservative alliance led by the Moderate Party. The Moderates were a few parliamentary seats shy of an election majority. According to recent figures, the right block held a total of 172 seats compared to the 157 seats for the left. In addition, the (far right anti-immigration) Sweden Democrat Party won parliamentary representation for the first time with 20 seats (and about 5.7% of the vote). The Social Democrats registered their lowest vote total in ninety six years. The Left Party, lost some votes compared to the last election, with the total inflated by many tactical votes from Social Democrats seeking to keep them in the parliament. The Green Party gained six seats.
One fundamental question that the election results pose is: Why did the Green left register gains? The growing environmental crisis has influenced a core group of middle class, particularly younger voters. As we shall see, the Green Party has undoubtedly been helped by their implicit critique of the legacy of large, bureaucratic state structures which suppress individuals’ development. Many in the Left Party see this as a bourgeois tendency, but they are missing something important about what politics means in the post-proletarian (as opposed to post-industrial) era. more

Wednesday, September 22, 2010

My snickarglädje 2010

The new floor is in.  Our very sweet but confused cat has no carpet left to piss on.  The woman in my life is happier.  And I still can point to some Producer Class activities.

Installing hardwoord flooring has changed quite a bit since the first ones I did in 1967.  Prefinished flooring is the norm.  The tools are MUCH better (note the cute little DeWalt brad gun by the fireplace--no air hose, no CO2 cartridge, just point and shoot.)

The stair landings were also done.  Lots of fussing.

The finished landings.

The details.  Snickarglädje is ALWAYS about details.

The living room.  Moving back in.

So back to observing the real economy stagger.  This project was a lot of work but the break was good for the soul.

Thursday, September 16, 2010

Keeping up my Producer creds

The banksters are not going to suddenly become more ethical, nor the economics department at the University of Chicago more sane, nor the political classes more uplifting.  Besides winter is coming and jobs that have smells involved must be done.  So please excuse my short break from my regular topics.

The "boss" has wanted the beige contractor-grade carpeting replaced ever since we moved to E-ville so yesterday I got to pull it up, along with the pad and tack strips.  This morning I feel like I have been run over by a truck.  There is some more minor prep work before the hardwood arrives on Monday but mostly things are ahead of schedule.

In my younger days, I did quite a bit of nice finish work, so this job is pretty straightforward.  Even so, there are others to please, existing floors to match, and easily-visible details to get right.  When it comes to the work of the Producers, it is ALWAYS harder than it looks.

Wednesday, September 15, 2010

A gem from Colbert

We LIKE rationality around here--we are children of the Enlightenment.  We champion the values of the builders, the makers, and those who would give us a better world through some tiny improvement in the way we understand our place in the cosmos.

So, I have been neglecting the story of the "Ground Zero" mosque and Pastor "Yosemite Sam" who threatened to burn Korans as his chosen response.  I grew up in a parsonage and spent my first 18 years listening to church fights.  I HATED them then, and I studiously ignore them now.

But as a summary of pure crazy, Colbert's piece on this latest reminder that the lessons of the Enlightenment are barely learned and those looking for a cheap way to validate their existence have an infinity of ways to glorify irrationality, borders on pure genius.  Kudos to his superb writers.

The Colbert ReportMon - Thurs 11:30pm / 10:30c
The Word - Mutually Assured Coercion
Colbert Report Full Episodes2010 ElectionFox News

This will not end well

The crimes of the banksters are so obvious and the response of the relevant authorities is so tepid, it seems like it will only be a matter of time before angry privateers start blowing things up.  In England, these evil terrorists are often assumed to be associated with the IRA.
Real IRA says it will target UK bankers
Exclusive: Republican terror group vows to resume mainland attacks with banks and bankers now potential targets
Henry McDonald, Ireland correspondent, Tuesday 14 September 2010 21.03 BST
The IRA bombed targets in the City during the 1990s. Now the Real IRA may use the same tactic.  
Banks and bankers are now potential targets for the Real IRA, leaders of the dissident republican terror group have warned in an exclusive interview with the Guardian. Despite having only 100 activists they also said that targets in England remained a high priority.
In an attempt to tap into the intense hostility towards the banks on both sides of the Irish border they branded bankers as "criminals" and said: "We have a track record of attacking high-profile economic targets and financial institutions such as the City of London. The role of bankers and the institutions they serve in financing Britain's colonial and capitalist system has not gone unnoticed.
"Let's not forget that the bankers are the next-door neighbours of the politicians. Most people can see the picture: the bankers grease the politicians' palms, the politicians bail out the bankers with public funds, the bankers pay themselves fat bonuses and loan the money back to the public with interest. It's essentially a crime spree that benefits a social elite at the expense of many millions of victims." more

Tuesday, September 14, 2010

Getting to a real plan

I have spent most of my adult life in a frustrating pursuit of a sustainable future--retrofitting houses, writing books, promoting solar / winds projects, etc.  So I have an amazing amount of sympathy for someone like Bill McKibben who has done everything he could to promote largely the same goals.  But Bill, bless his heart, is still stuck on symbolism.
Bring solar power back to the White House
By Bill McKibben, Friday, September 10, 2010
A few of us have spent the past week carefully transporting a relic of American history down the East Coast, trying to return it to the White House, where it belongs.
It's not a painting spirited from the Lincoln Bedroom or an antique sideboard stolen from the Roosevelt Room by some long-ago servant. No, this relic comes from the somewhat more prosaic Carter roof. It's a solar panel, one of a large array installed on top of the White House in June 1979.
When he dedicated the panels, President Jimmy Carter made a prophecy that, like many oracles, came true in unexpected fashion -- in fact, nothing better illustrates both why the world is heating and why the American economy is falling behind its competitors.
"In the year 2000 this solar water heater behind me will still be here supplying cheap, efficient energy," he said. "A generation from now this solar heater can either be a curiosity, a museum piece, an example of a road not taken, or it can be just a small part of one of the greatest and most exciting adventures ever undertaken by the American people."
What happened? more
The Germans are not stuck on symbolism but they are beginning to understand what their energy future is going to cost and it shocks them.  But it's a LOT better to be shocked by real numbers than sitting around hoping a lot of small gestures will solve the problems.
Resistance to Merkel's Plan
A Multi-Trillion-Euro Price Tag for Energy Efficiency
The German government's new energy plan would require most houses in the country to be modernized and made more energy-efficient.
Chancellor Angela Merkel's plan to make Germany's residential buildings the most energy-efficient in the world has run into resistance within her cabinet. The project's price tag could be as high as 2.4 trillion euros -- and the minister responsible told SPIEGEL it is impracticable.
It was Berlin's decision to extend the lifespans of the country's nuclear reactors that has received the most attention. Since Chancellor Angela Merkel's government presented its new energy strategy last week, hardly a day has gone by without yet another voice being added to the national wrangling over atomic energy. This weekend will see a large anti-nuclear demonstration in Berlin.
But the plan goes far beyond just the controversial extension of nuclear reactor lifespans by between eight and 14 years. The goal, reads the plan's introduction, is for Germany "to become one of the most energy-efficient and most environmentally friendly economies in the world." Now, one of the unsung milestones on the road to that goal is causing consternation in Merkel's cabinet.
The plan calls for all residential buildings in Germany to be modernized such that they emit no greenhouse gases by 2050. But according to an internal ministry memo written for Germany's Minister of Transport, Construction and Urban Development Peter Ramsauer -- a memo which has been seen by SPIEGEL -- the plan will cost up to €2.4 trillion ($3.1 trillion). The total is equivalent to Germany's gross national product for an entire year and would require investments of up to €75 billion per year. more

Monday, September 13, 2010

Real problems cannot be solved by dishonest people

The biggest problem with finance capitalism is that even when the Predators are at their best, they are still essentially useless.  This distance between a hedge-fund manager doing well and a dangerous rusty bridge getting fixed is so great, it is best to believe there is no connection whatsoever.  And that's the good outcome.  MOST of the time, the activities of the Predator Classes do serious, lasting, damage to the society's ability to fix that bridge.

Here from the pen of a Wall Street insider.
Hedge Funds Have Been A Scam For The Past Twenty Years
James Altucher, Formula Capital | Sep. 3, 2010, 8:55 AM  
Mostly now-illegal or dubious activities are how hedge funds have made almost all of their money in the past 20 years.
In the mid to late 90s - investing in tech stocks is the only strategy that worked. So-called "sophisticated" funds like LTCM or Victor Niederhoffer's fund worked for awhile but ultimately failed miserably (in part, because vulture funds picked at their weaknesses until they imploded).
Also, funds that "played the calendar" worked. What is playing the calendar? If you knew XYZ Bank was going to IPO you would trade back and forth 10s of thousands of shares, generating commissions for the bank in the month before the IPO. Then, as a token of the bank's gratitude (or the broker that made the money on the commissions), you would get a slug of 100k shares at IPO time. It would open 50 points higher, you'd sell. REPEAT. Many people made 100s of millions of dollars on this and retired to far-flung locations never to be heard from again. Tech stocks are dead now and playing the calendar is somewhat illegal. Oh, another strategy (now illegal) that worked in the 90s for funds was a loophole called Reg S transactions. But that's another story.
In 2000-2003 the only strategy that worked was mutual fund timing. Every fund of funds loaded up on mutual fund timers. Now illegal. All the fund of funds redeemed their money from mutual fund timers and had to find a new strategy. more
Hudson asks an even more interesting question--is it even possible for the people who Veblen insisted are trained only in the arts of force and fraud to ever make an honest living.
The Angelides Commission Squints Back at the Bank Bailout and the Fall of Lehman
Does Our Economy Really Have to Run on Fraud?
What is the difference between today’s economy and Lehman Brothers just before it collapsed in September 2008? Should Lehman, the economy, Wall Street – or none of the above – be bailed out of bad mortgage debt? How did the Fed and Treasury decide which Wall Street firms to save – and how do they decide whether or not to save U.S. companies, personal mortgage debtors, states and cities from bankruptcy and insolvency today? Why did it start by saving the richest financial institutions, leaving the “real” economy locked in debt deflation?
Stated another way, why was Lehman the only Wall Street firm permitted to go under? How does the logic that Washington used in its case compare to how it is treating the economy at large? Why bail out Wall Street – whose managers are rich enough not to need to spend their gains – and not the quarter of U.S. homeowners unfortunate enough also to suffer “negative equity” but not qualify for the help that the officials they elect gave to Wall Street’s winners by enabling Bear Stearns, A.I.G., Countrywide Financial and other gamblers to pay their bad debts?
There was disagreement last Wednesday at the Financial Crisis Inquiry Commission now plodding along through its post mortem hearings on the causes of Wall Street’s autumn 2008 collapse and ensuing bailout. Federal Reserve economists argue that the economy – and Wall Street firms apart from Lehman – merely had a liquidity problem, a temporary failure to find buyers for its junk mortgages. By contrast, Lehman had a more deep-seated “balance sheet” problem: negative equity. A taxpayer bailout would have been an utter waste, not recoverable. more
Of course, there ARE traditional means of crime-fighting.  Danny Schecter recommends them in his latest, Plunder, The Crime of our Time.

Economics as lame theology

Yes, the study economics is a spin-off of the subject of moral philosophy.  And Yes, religion often has a great deal to say about the subject of economics and social organization.  So to accuse economics of merely being a low-proof religion is to often state the obvious.  But here are some excellent examples.  The first refers to worshipping false gods.
9 Ways That Gold Is A Religion Masquerading As An Asset Class
Joe Weisenthal | Sep. 10, 2010 
Gold remains close to its all-time high, as fears over government money printing, solvency, and general economic fears make the shiny yellow metal more popular than ever.
Experts recommend that you have a substantial chunk of your investments in this asset class.
But gold is not an asset class.
It's a religion.
Here's why. more
And then there is the problem of following false prophets.  There are essentially two ways to understand the world.  1) Find a set of teachings that explain "everything" (religion, philosophy, etc.) that you really like and study the creed in detail.  2) Find a set of instructions that lets you constantly refine and update your worldview as new evidence rolls in--this approach includes the scientific method and Evolutionary Economics.

The problem with Kudlow is that he thinks like a classic group #1 guy.  He "knows" there is something wrong with folks like Keynes but he isn't sure why but folks he trusts dislike Keynes.  Of course, the real problem is that Keynes was a textbook example of a Group #2 guy and this is so far outside of Kudlow's thinking, it could well have been written in Sanskrit on Mars.
12 Keynesian Insights To Blow The Mind Of Larry Kudlow
Elliot Turner, Wall St. Cheat Sheet | Sep. 10, 2010
Recently Larry Kudlow has been outlining his 12 Step Plan to Free Market Prosperity and both implicitly and explicitly unleashing a tirade against Keynesianism, as if Keynesianism is the cause in fact of the problem. 
What makes this incredibly ironic is that in 2007, as the economy started cratering in dramatic fashion, Larry Kudlow was applauding the “free market” initiatives undertaken over the preceding decade, while naively proclaiming that:
The recession debate is over. It’s not gonna happen. Time to move on.
At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). The Bush boom is alive and well. It’s finishing up its sixth splendid year with many more years to come.
It’s easy to misappropriate the blame for our present predicament having missed the trouble as it unfolded. Kudlow has a habit of asserting the Keynesian roots of the crisis, yet I think it’s clear that Kudlow has never read Keynes, much like some of the other “experts” out there who have made a living on deriding Keynesian economics (check out this on Richard Posner’s conversion from the Chicago School to Keynesianism, in which he admitted to never having read Keynes until the depths of the financial crisis). more