The real economy really sucks

I personally have NO problem believing that 80% of the USA is a precarious economic state.  I have gifted, educated, and crazy-hard-working friends who have fallen off the prosperity wagon.  If can happen to them, it can happen to anyone.  This is obvious to anyone except the folks who make up the stats in Washington.  This is what makes the following all the more remarkable.  For the first time since at least 1982 when it had become obvious that the official government stats were going to be "massaged" to cover up the damage that neoliberalism was doing to the real economy, we see Census cooperating in a study that begins to show the extent of the suffering.

Greider on Summers—the definitive word

The outrage that Larry Summers is even being considered to head the Fed has managed to provoke criticism from many angles.  Summers has this bad tic—he actually believes that his sun-like brilliance is enough to overcome the fact that he is a world-class prick.

He has picked up a bunch of serious critics over the years—none so qualified to discuss this particular decision as William Greider—who still has written the best book on the Fed, Secrets of the Temple.  It's only about 800 pages long so it's really only a thumbnail sketch considering the complexity of the subject.  But what an intro!  I tend to shy away from monetary discussions because there is a great deal of ignorance out there and life is short.  But when someone mentions Greider's magnum opus, I am willing to bet this person has done their homework.

And I see that even the New York Times has now voiced objections.  Considering how much water Larry Summers has carried for the class of people who own and run the Times, this borders on ungrateful.  Fortunately for the NYT, the neoliberals at the Fed have a DEEP bench.  I would imagine the top 1000 positions in the Federal Reserve system are staffed by folks who are amazingly loyal to the conventional wisdom.  If there is a heterodox full-employment economist buried at the Fed somewhere, I certainly haven't heard of him / her and I keep watch for such things.

A reasonable solution on solar panels

Any public money spent subsidizing / protecting an industry like solar panel manufacture would be FAR better spent stimulating demand.  I mean, we are probably less than 5% into the process of converting fire-based electrical generation to solar-based power and already we are seeing freaking dumping charges because the market is too small to accommodate the existing production capacity.  And so we see perfectly fine manufacturers in North America and Europe failing because they cannot sell their product.

Predator Class economics really REALLY sucks!

Anyway, some cooler heads have prevailed and the looming trade war over solar panels between EU and China seems to have been averted.  This hasn't solved the problem of necessary demand stimulus but it's a start.

Status emulation as a change agent

Veblen's most scathing critique of the human condition was reserved for the social practice of status emulation.  He believed that humans were at their most ridiculous when they attempted to ape their "betters."  At one point he wrote that status emulation is second only to the instincts of survival—and sometimes not even in second place.  (His pet example for this concerned folks would go outside on cold days in dress clothing like suits that would protect them from the elements for but a few minutes.  "Well dressed but ill clad" was how he put it.)

But if status emulation is so powerful, is there any reason why it could not be used for human progress?  And in fact the overwhelming majority of social change in the last 150 years has come about just that way.  I mean politically, we have not advanced much since Jefferson or Paine.  But technologically, we live in a completely different world.  And in many of the technologically driven social changes, status emulation was a driving force.  The new technology was expensive (it always is) so to achieve success, it had to gather the attention and favor of the rich.  And once the rich gave something the thumbs up, could mass production be far behind?  This strategy has been far more effective than revolutions.

Enter the Tesla.  Elon Musk understands the strategy of marketing first to the trend setters.  So he figured, if I must sell my car for $80,000, it must be as good or better than the other $80,000 cars out there.  Here's the problem—there are some damn fine cars in that price range.  Building something better than a Lexus LS is a tall order.  This is especially true if you've never built a car before.

And yet, Tesla seems to have pulled it off.  Consumer's Reports gave the Model S a 99 out of 100.  Turns out, the tools to make a world-class luxury car are available on the open market.  The expertise seems to be available as well.  Toyota made millions of cars before they produced the Lexus LS.  And yet according to CR, Tesla made an LS-quality car their first try.  Absolutely amazing!  Check out the advanced robotics Tesla is using in the clip below!

And by following this strategy, Musk and Tesla have done something extremely important for electric cars—they made them cool to own.  Let the status emulation begin.

Senate hearings today: "Should Banks Control Power Plants, Warehouses, And Oil Refiners."

Tip o'the hat to ZeroHedge for pointing to some Senate hearings on July 23, 2013 that could be very, very important. Why are prices basic foodstuffs, oil, and other commodities so high? Because Wall Street banksters have been allowed to rig the commodity futures markets in their favor AND buy control of crucial nodes of physical markets as well. In 2010, JPMorgan Chase bought one of the largest metal warehouse companies in the world - despite a 2005 agreement with the U.S. Federal Reserve that it would not do so. There has already been some excellent reporting on how the banksters have driven up the price of oil, and thus gasoline, such as Goldman Sachs Turns Global Hunger Into Wall Street Profit, and How Wall Street Fuels Global Hunger Food Speculation. Tomorrow hearings could give new life to the story.

Far worse than Hitler

As we watch in sadness and rage the global economy stagger around with massive unemployment and almost infinite needs going unaddressed, it is sometimes easy to lose sight of the fact that this economic condition is a CHOICE.  We know how to run an economy at full employment.  We know how to create jobs in areas of the economy that needs stimulation.  It has been done before.  So the next time you see a family living in a car, just remember, they are there because someone made the political and economic choices to put them there.

In case that isn't enough to rouse your ire, consider this—the most successful example of a full-employment economy was the creation of Hitler's economists.  So when you choose to have this ghastly mass unemployment and other economic catastrophes, you are choosing to run your economy more unfairly, more wastefully, more miserably than the government of Adolf Freaking Hitler.  Got that?

Here are the facts.  When Hitler came to power in 1933, unemployment was running at 40-50%.  People were dying of starvation in Berlin.  The financial system was in chaos.  Germany was hopelessly in debt. (Does any of this sound familiar?)  Within two years, unemployment was less than 2%.  By 1936, Germany was easily the most prosperous country in Europe and arguably the world.  And by 1939 when Germany went off to war, her economy had become so powerful, it took the rest of the world to defeat them.

It's a CHOICE.  And if you cannot choose at least as well as Hitler, it is probably time to do some deep rethinking of your economic assumptions.  Mike Whitney over at Counterpunch (who I have long considered hopeless because of his weird fixation on inflation) has apparently discovered the story of 1930s German economics and has written a pretty good piece on why it was so successful.  I believe Mr. Whitney has done some serious rethinking of his economic assumptions.  Congratulations!  Anyone who can evolve is worth listening to.

Wind Energy News Round-Up - 1st half 2013

Offshore WINDPOWER: Move forward with the U.S. offshore industry
U.S. offshore wind energy development is picking up speed and momentum, based on recent, significant advancements by federal agencies, educational institutions, and private businesses. Attend AWEA Offshore WINDPOWER Conference & Exhibition to explore these advancements, meet federal and state agency reps, and make crucial business connections for forging strategic partnerships. Mark your calendars: The event takes place Oct. 22 and 23 in Providence, R.I. Registration will be open soon -- get more information.

Report: 2012 was a boom year for wind power
More wind turbines were installed globally in 2012 than ever before, bringing the world's wind power capacity to 3% of global electricity demand, according to a report by the World Wind Energy Association. Global wind power installations reached 45 gigawatts in 2012, taking the world's wind power capacity to 282 GW, the report stated. The U.S. and China were at the forefront of wind power investments last year, adding 13 GW of capacity each, the report showed. Deutsche Welle (Germany) (5/16)

Global wind installations reached 44,000 MW in 2012
Global wind installations last year hit a record high of 44,000 megawatts in new capacity despite policy uncertainty in leading wind markets, boosting the world's overall wind capacity to more than 280,000 MW, writes J. Matthew Roney of the Earth Policy Institute. The wind industry in the U.S. installed new facilities with capacity of 13,100 MW last year, raising the country's total wind capacity to 60,000 MW, he writes. New wind installations around the world are expected to decline to about 40,000 MW this year, Roney says, citing data from Navigant Research. Sustainablog/Earth Policy Institute (4/3), Energy Matters (Australia) (4/4)

AWEA: U.S. led the way in new wind projects in 2012
The U.S. became the foremost destination for new wind projects in 2012, according to the annual market report of the American Wind Energy Association. Wind power accounted for more than 40% of newly installed capacity in the U.S. last year, surpassing natural gas, which accounted for 32%, AWEA said. "We saw an uptick in every region of the country for new installations in 2012. ... Wind is making a big mainstream impact across the country," said Emily Williams, senior policy analyst for AWEA. FuelFix.com (4/11)

(70 more)

With choices like these, who needs enemies?

Let's look first at the Republicans. Commenting on the House of Representatives passing farm assistance legislation without a single penny included for food assistance for impoverished Americans, Paul Krugman wrote in his New York Times column: 

Something terrible has happened to the soul of the Republican Party. We’ve gone beyond bad economic doctrine. We’ve even gone beyond selfishness and special interests. At this point we’re talking about a state of mind that takes positive glee in inflicting further suffering on the already miserable...  Somehow, one of our nation’s two great parties has become infected by an almost pathological meanspiritedness, a contempt for what CNBC’s Rick Santelli, in the famous rant that launched the Tea Party, called “losers.” If you’re an American, and you’re down on your luck, these people don’t want to help; they want to give you an extra kick. I don’t fully understand it, but it’s a terrible thing to behold. 

By the way, Truthout last week carried an article by Jeannette Wicks-Lim, Undercounting the Poor, which detailed both how inadequate official government statistics are, and how important government programs are in lifting millions out of poverty.

So, now let's look at the Democrats. A few days ago, Barry Ritholtz wrote,

At a dinner last week laden with economists, our discussion turned to who will replace Fed Chair Ben Bernanke. The consensus was Janet Yellen was the front runner, Roger Ferguson was the long shot . . . and then Lawrence Summers’ name arose.

Is it actually possible that Larry frigging Summers is still a respected entity in the Obama administration or among Democratic Party lawmakers? Of course, Ritholtz doesn't say one way or the other that Summers is being considered by Obama. But the next day, Dean Baker warned that there are indeed reports coming from certain business media that there actually is a campaign "among Washington insiders" to make Larry frigging Summers the next chairman of the Federal Reserve System.

Ritholtz supplied a short list of Summers' blunders that should make Summers persona non grata anywhere near a policy making position. Correct that: a short list of Summers' many and massive blunders:

• He has consistently argued for privatization and deregulation of the financial sector;
• He oversaw the repeal of Glass-Steagall via the passage of the Gramm-Leach-Bliley Act;
• He approved the (previously illegal) merger between Citibank and Travelers;
• He oversaw (and indeed encouraged) concentration in the financial sector, thinking bulked up banks are a virtue. This led to the rise of the TBTF institutions (formerly known as mega-banks).
• He successfully fought Brooksley Born, then chair of the Commodity Futures Trading Commission, to rein in financial derivatives;
• He oversaw passage of the Commodity Futures Modernization Act of 2000, preventing ALL Federal regulation of derivatives; The CFMA also exempted derivatives from state insurance oversight and antigambling laws.
• Thanks to Summers, derivatives still have no minimum reserve requirements, no disclosure obligations, no transparency and no exchange listing / reporting requirements.

After he helped to create the financial crisis and collapse, Summers found himself uniquely situated to help repair the damage he wrought. But that would have required an admission of error and responsibility; instead, he compounded his errors by pushing for a small, ineffective stimulus plan.

Note we have not even bothering with his issues with woman, his lack of collegiality, his inability to work well with others, his boorish head strong personality, and his other professional failings.

The mere idea of making Summers Fed chairman really should be causing massive hysteria among progressives and Democrats. There really are very few people who are more culpable than Larry Summers for the completely unnecessary destruction of our economy that past few decades, culminating in the financial crash of 2007-2008.

As Charles Ferguson, who created the web page building application Front Page, then sold it to Microsoft, and then used his riches to research and put together the Oscar-winning documentary film about the financial crash, Inside Job, wrote back in October 2010:

Summers is unquestionably brilliant, as all who have dealt with him, including myself, quickly realize. And yet rarely has one individual embodied so much of what is wrong with economics, with academe, and indeed with the American economy. For the past two years, I have immersed myself in those worlds in order to make a film, Inside Job, that takes a sweeping look at the financial crisis. And I found Summers everywhere I turned. (Emphasis mine.)

And we have not even begun to consider Summers' especially disastrous role as director of President Obama's Council of Economic Advisers from January 2009 to December 2010. As detailed in Ron Suskind's latest book, Confidence Men: Wall Street, Washington, and the Education of a President, Summers was ruthless in suppressing any economic views he did not agree with from reaching Obama. Together with former Treasury Secretary Tim Geithner and former White House Chief of Staff Rahm Emanuel, Summers made certain that no actions in the least bit punitive were directed against Wall Street. Thus was squandered a truly historic opportunity to fundamentally change the course of U.S. economic policy and history. By Larry frigging Summers.

It is no comfort at all that Democratic elites do not take the same perverse pleasure "in inflicting further suffering on the already miserable" like the Republicans do.

Brand magic

I usually don't get very interested in things like company names, logos, and identities.  But when I read in 1981 that Datsun was going to change its name in USA to Nissan, I was actually shocked.  How can a successful company do something so stupid? I wondered—aloud at times.

I have no problem understanding why a company whose name had been ruined by some product liability scandal, or similar, would want a name change.  But this was not the case here.  Datsun had a fanatically loyal following based on their 510 sedans which were both very inexpensive and reliable, and the 240 (260, 280) Z cars which would prove that the Japanese could build high-performace sports cars that regular people could afford.  This sort of brand loyalty was a LOT to discard over some corporate naming whim.  And to this day I have never read an account of how this happened that remotely considers the value of brand loyalty.

Not surprisingly, the customers were confused so Nissan spent millions over the next three years assuring folks that only the name had changed.  The dealers were pissed because it meant rebuilding a brand at the local level.  When Datsun became Nissan, they and Toyota had roughly the same market penetration in USA.  Now it's about half.

But "virtue" has triumphed.  Nissan is trying to build something very inexpensive for emerging markets like India.  And some genius in the corporate culture has decided to launch these ventures with a proven good-luck charm.  They are bringing back the Datsun name.  Oh, and the executive that presided over bringing back the Datsun name?  He's French.  Of course, the very idea that someone is devoting so much energy to making more cars for a world with WAY too many proves there is more market genius in this world than wisdom for resource planning.

The battle against slumlord thinking

We Swedes and Swedes-in-exile tend to admire the Germans.  The guy who invented our form of Protestantism (Martin Luther) was most certainly German and Sweden has been in the Hansa League economic orbit for centuries.  Swedish is in the Germanic family of languages. Etc.

But the main link is cultural.  We Nordics and the Germans admire each other because we admire the way we build.  And maintain.  I have trigger in me that is enraged by people who will not maintain their property.  I felt it when I did restoration work in St. Paul.  Yes, lousy tenants make keeping up the building much more difficult but the main cause for nice neighborhoods becoming dangerous slums stems from underinvestment in maintenance.  But I really got the I-hate-slumlandlord rage when a bridge over the Mississippi collapsed.

Lots of Scandinavians and Germans in Minnesota.  We are known for our propensity towards continuous improvement.  We understand how important regular maintenance is to living a decent life.  Take care of your stuff and it won't strand you on a winter's night when it -30°.  Make your car last 20 years instead of six, and transportation becomes almost affordable.  Best of all, if you have tools and know how to use them, there is a good chance you have neighbors who will lend from their tool collection.  And so a culture grows up around people who take great pride in not thinking like a slumlord.

So you might understand why I found the following article about GERMAN underinvestment in infrastructure so sad.  Neoliberalism is a major disaster if it can make even Germans think like slumlords.  This is not good.  For a long time, I have looked at the culture that builds Mercedes-Benz for inspiration.  I believe we can build a Green society because so many Germans believe it is possible.  THIS is what the neoliberals are wrecking.

Damn!  The experiment in crackpot economics simply must end.

Happy 4th

The one day when we get to celebrate folks who actually started a revolution over monetary policy (Franklin, etc) the principles of the enlightenment (Jefferson) the desire to invent a better society (Franklin, Paine, and many others) and just a general fuck you to the British (LOTS of folks.)

It's also a day when we get to hear the work of a fine Russian composer named Pyotr Ilyich Tchaikovsky who understood that lots of folks get excited by loud noises.  So he wrote a tribute to the Battle of Borodino and called it the 1812 Overture (embedded at the linked page).  Goes great with fireworks!

Some toons for the day.

High finance and climate change

For many years now, I have wondered why the hell outfits like Exxon should think of themselves as an oil business.  Now, I understand that if you have been getting rich for 150 years trafficking in oil, it maybe a stretch to think of yourselves as being in the generic energy business.  After all, it takes enormous investment in real economy skills and tooling to get gasoline to your neighborhood station.  On the other hand, while the skill sets for running an offshore oil platform and maintaining a wind farm are quite different, they have much more in common than any overlap between these Producer skill sets and someone trading on currency spreads.

At one time, BP claimed to be interested in alternative energy but their heart was never in it and their investments never matched the expectations of their Beyond Petroleum ad campaign.  But at least they brought the subject up!

But over at Daily Kos, someone posted a dairy that claimed the reason the energy companies cling so tightly to their petroleum (and other fossil fuel) assets is because they have been leveraged and so must be exploited or a bunch of investors will be VERY unhappy—investors that include pension funds, etc.