Monday, May 16, 2016
The Trump solution would, among other things, deprive the world economy of its most crucial safe asset, U.S. debt, at a time when safe assets are already in short supply.
Right. US debt is still one of the safest assets in the world despite what foams out of the mouth of the old lady debt hystericals.
And I'm still waiting for those debt collectors to come a callin' by the by...:) (he said, wondering the people who caterwaul about our debt even understand who owns it).
Wednesday, December 30, 2015
Donald Trump as a political phenomenon is very much in a line of succession that runs from W. through Mrs. Palin, and in many ways he’s entirely representative of the Republican mainstream. For example, were you shocked when Mr. Trump revealed his admiration for Vladimir Putin? He was only articulating a feeling that was already widespread in his party…
What is consistently felt, Krugman notes, is bluster and belligerence as substitutes for analysis, disdain for any kind of measure response, and the continued dismissal of inconvenient facts related by the "liberal media." This isn't anything new. This is what the GOP has been training their followers with for the last 15+ years.
Why on earth do they seem surprised now that Trump is the likely nominee?
The Obama team has it right when they say that the GOP is getting what they deserve. I've been saying all along that being an adolescent is what they party is all about these days and they are incapable of behaving like rational adults. Hilariously, many pundits and prognosticators are saying that when the GOP gets their ass kicked (again) this year, they'll finally see the light.
No, they won't:)
Sunday, August 30, 2015
Yeah...still not happening.
Paul Krugman is wondering that as well and he's got some hilarious points in his pondering.
Wags quickly noted that the U.S. economy has, on the whole, done pretty well these past 180 years, suggesting that having the government owe the private sector money might not be all that bad a thing. The British government, by the way, has been in debt for more than three centuries, an era spanning the Industrial Revolution, victory over Napoleon, and more.
Any day now...
After all, we’ve spent much of the past five or six years in a state of fiscal panic, with all the Very Serious People declaring that we must slash deficits and reduce debt now now now or we’ll turn into Greece, Greece I tell you.
Does anyone take them seriously anymore? Ron Paul is now setting up his retirement by fear peddling but that's about it.
So, is debt good?
I’ve already mentioned that having at least some government debt outstanding helps the economy function better. How so? The answer, according to M.I.T.’s Ricardo Caballero and others, is that the debt of stable, reliable governments provides “safe assets” that help investors manage risks, make transactions easier and avoid a destructive scramble for cash.
Monday, October 27, 2014
Despite bitter opposition, despite having come close to self-inflicted disaster, Obama has emerged as one of the most consequential and, yes, successful presidents in American history. His health reform is imperfect but still a huge step forward – and it's working better than anyone expected. Financial reform fell far short of what should have happened, but it's much more effective than you'd think. Economic management has been half-crippled by Republican obstruction, but has nonetheless been much better than in other advanced countries. And environmental policy is starting to look like it could be a major legacy.
Amen. Check out the full article, folks!
Saturday, April 12, 2014
But wait: What about all the people who lost their policies thanks to Obamacare? The answer is that this looks more than ever like a relatively small issue hyped by right-wing propaganda. RAND finds that fewer than a million people who previously had individual insurance became uninsured — and many of those transitions, one guesses, had nothing to do with Obamacare. It’s worth noting that, so far, not one of the supposed horror stories touted in Koch-backed anti-reform advertisements has stood up to scrutiny, suggesting that real horror stories are rare.
Rare indeed. So much so that you really don't here about them much except for in the right wing blogsphere with the sole intention of increasing mouth foam.
Republicans clearly have no idea how to respond to these developments. They can’t offer any real alternative to Obamacare, because you can’t achieve the good stuff in the Affordable Care Act, like coverage for people with pre-existing medical conditions, without also including the stuff they hate, the requirement that everyone buy insurance and the subsidies that make that requirement possible. Their political strategy has been to talk vaguely about replacing reform while waiting for its inevitable collapse. And what if reform doesn’t collapse? They have no idea what to do.
This is especially true since it was their idea to begin with!
What’s amazing about this wave of rejection is that it appears to be motivated by pure spite. The federal government is prepared to pay for Medicaid expansion, so it would cost the states nothing, and would, in fact, provide an inflow of dollars. The health economist Jonathan Gruber, one of the principal architects of health reform — and normally a very mild-mannered guy — recently summed it up: The Medicaid-rejection states “are willing to sacrifice billions of dollars of injections into their economy in order to punish poor people. It really is just almost awesome in its evilness.” Indeed.
Motivated by pure spite...one could extend that to pretty much every issue the Right whines about. They really don't have any there there...
Gruber's point really drives home how this issue ties into all the other ones that will part of this year's election. Last Wednesday, in a single committee meeting, Republicans voted against the Minimum Wage, Equal Pay, LGBT Rights, and Mine Safety. Add in a decided lack of movement on the immigration issue and the Republican party is pretty much the same one that ran behind Mitt Romney in 2012. Have they learned anything?
More importantly, do they honestly think voters aren't paying attention to this?
Tuesday, March 04, 2014
What accounts for inflation obsession? One answer is that obsessives failed to distinguish between underlying inflation and short-term fluctuations in the headline number, which are mainly driven by volatile energy and food prices. Gasoline prices, in particular, strongly influence inflation in any given year, and dire warnings are heard whenever prices rise at the pump; yet such blips say nothing at all about future inflation.
They should know this but they seemingly don't.
They also failed to understand that printing money in a depressed economy isn’t inflationary. I could have told them that, and in fact I did. But maybe there was some excuse for not grasping this point in 2008 or early 2009.
It's nothing really but willful ignorance. It's fundamental economic fact.
The point, however, is that inflation obsession has persisted, year after year, even as events have refuted its supposed justifications. And this tells us that something more than bad analysis is at work. At a fundamental level, it’s political. This is fairly obvious if you look at who the inflation obsessives are. While a few conservatives believe that the Fed should be doing more, not less, they have little if any real influence. The overall picture is that most conservatives are inflation obsessives, and nearly all inflation obsessives are conservative.
It's also emotional and rooted in profound insecurity. Why are they like this?
In part it reflects the belief that the government should never seek to mitigate economic pain, because the private sector always knows best. Back in the 1930s, Austrian economists like Friedrich Hayek and Joseph Schumpeter inveighed against any effort to fight the depression with easy money; to do so, warned Schumpeter, would be to leave “the work of depressions undone.” Modern conservatives are generally less open about the harshness of their view, but it’s pretty much the same.
The flip side of this antigovernment attitude is the conviction that any attempt to boost the economy, whether fiscal or monetary, must produce disastrous results — Zimbabwe, here we come! And this conviction is so strong that it persists no matter how wrong it has been, year after year.
It's truly bizarre. The continue to be wrong...clearly...and yet they continue to assert they are right. I suppose that's the bubble for you:)
Krugman doesn't paint a very rosy picture of the Fed either. At least it's rooted in fact and not moutfoaming moonbattery.
Friday, November 08, 2013
As some of us have tried to explain, debt, while it can pose problems, doesn’t make the nation poorer, because it’s money we owe to ourselves. Anyone who talks about how we’re borrowing from our children just hasn’t done the math.
True, debt can indirectly make us poorer if deficits drive up interest rates and thereby discourage productive investment. But that hasn’t been happening. Instead, investment is low because of the economy’s weakness. And one of the main things keeping the economy weak is the depressing effect of cutbacks in public spending — especially, by the way, cuts in public investment — all justified in the name of protecting the future from the wildly exaggerated threat of excessive debt.
If only those "debt scolds" could leave their emotions and pride out of the equation, we'd have a better economy. My only disagreement with Krugman here is that he, like the people he criticizes, are far too pessimistic. Despite the idiocy of austerity, our economy is doing better as I noted earlier today.
Wednesday, May 16, 2012
Like the seemingly endless debate between Keynesian and laissez faire economics, realism and liberalism (in terms of foreign policy) were locked in opposition as to how to deal with the Soviet Union. Realism explained the world as being in a constant state of anarchy and only through military power and constant distrust of other states will order and peace prevail. Liberalism called for international cooperation amongst the states of the world through peaceful, non-militaristic means.
Both of these ideologies completely failed to predict the collapse of the Soviet Union. One day, the Soviets simply gave up. It was not due to military pressure nor was it due to an international cooperative entity like the UN. It happened because of new thinking and out of the box ideas beginning with the simple fact the world's structure isn't set in stone and is, in fact, constantly in flux.
It is this sort of constructivist thinking that should be applied when considering the relationship between government and the financial sector...indeed, government and the free market in general. Neither Keynesian nor laissez faire economic theories (nor the various offshoots) can adequately explain the global marketplace today. Returning to the type of regulation called for Paul Krugman may not be effective for a wide variety of reasons. And clearly allowing banks like JP Morgan to continue to take the risks that they do isn't an option either. So, let's take a look at ideas from each of the pieces I've linked and see if there is a solution.
I believe that our best hope lies somewhere other than making our largest financial institutions impossible to break. Instead, I think we need to make our financial system easy to fix.
This would eliminate the need for more and more regulation. Kling's idea is to restrict the size of banks but I'm not sure that's the best way for it to be implemented. Wouldn't that be detrimental in the increased competition of the global marketplace?
Next we have the editorial staff at the Trib Review calling for a return to Glass Steagal. Why?
As The Small Business Authority puts it, "We ... need to get back to a capital asset pricing model where high-risk ventures are financed with a higher cost of capital and not government-guaranteed deposits ... ."
If the cost of capital were higher, wouldn't that make the system easier to fix? I honestly don't know. That's why I'm asking.
That brings us to Krugman.
It’s clear, then, that we need to restore the sorts of safeguards that gave us a couple of generations without major banking panics.
Exactly. But again, not the way he is suggesting with more government backed guarantees. Safeguards need to be in place but what sort of form should they take?
The reason why I am asking here is that I want to try to see if we can chuck the old schools of Keynes and laissez faire and adopt some new thinking and new ideas based on the identities that have been defined by the global marketplace.
Falling back into old ideological traps simply won't serve us.
Tuesday, January 03, 2012
First there is the central question of who owns our debt. Ask someone on the street and their first answer will likely be China. Of course, this is what the media and right wing pundits have conditioned them to believe but it's simply not true. In fact, the majority of our debt is owned by...us. Here is how it all breaks down.
Hong Kong: $121.9 billion (0.9 percent)
Caribbean banking centers: $148.3 (1 percent)
Taiwan: $153.4 billion (1.1 percent)
Brazil: $211.4 billion (1.5 percent)
Oil exporting countries: $229.8 billion (1.6 percent)
Mutual funds: $300.5 billion (2 percent)
Commercial banks: $301.8 billion (2.1 percent)
State, local and federal retirement funds: $320.9 billion (2.2 percent)
Money market mutual funds: $337.7 billion (2.4 percent)
United Kingdom: $346.5 billion (2.4 percent)
Private pension funds: $504.7 billion (3.5 percent)
State and local governments: $506.1 billion (3.5 percent)
Japan: $912.4 billion (6.4 percent)
U.S. households: $959.4 billion (6.6 percent)
China: $1.16 trillion (8 percent)
The U.S. Treasury: $1.63 trillion (11.3 percent)
Social Security trust fund: $2.67 trillion (19 percent)
So America owes foreigners about $4.5 trillion in debt. But America owes America $9.8 trillion.
Even the issue of foreigners holding our debt is offset by US claims on foreigners. Here's a chart that Krugman provides.
The blue line represents income from assets abroad and the red line represents payments on foreign owned assets. Since these assets often take the form of subsidiary US corporations, they often give a higher rate of return than do our liabilities as foreigners tend to put their money in safe, low yield assets, as Krugman notes.
The other thing that makes the doom and gloom crowd predict that we will all be thrown into a boiling pit of sewage is running debt to GDP of 100 percent (as we likely will for the next few years). Yet this chart says otherwise.
Look at all those years of 100 percent (and much higher) debt to GDP in the UK. Are they in a boiling pit of sewage? No. It makes you wonder how much of their current shift towards austerity is politically based as opposed to reality based. I certainly wonder that here although in our case it's more about "winning the argument" and "proving the Democrats wrong."
So, as Krugman aptly notes, nobody understands debt. Those who say that the government should just "live within its means like ordinary Americans do" don't understand that people owe their debt to a bank. American owes its debt to itself which is a very different thing.
First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.
Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves. This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.
Where he is exactly wrong, though, is with this line.
So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way.
Spend more than we are now? Or much more? How much? Where? This seems too vague and doesn't make much sense considering the unemployment has dropped in the last few months without increased spending. While I don't think we need the Draconian cuts called for by many on the right, we also don't need increased spending. In fact, we could cut spending in the Big Three (Defense, Social Security, Medicare) in a number of ways that won't erode employment as much as Krugman thinks and do quite a bit to reduce our long term debt and deficit. Throw in the end of subsides and tax cuts on the wealthy and things look even better. So, on this point, I simply can't agree with him.
But he is right about everything else. The next time a conservative or libertarian friend starts foaming at the mouth about our debt and how it's going to destroy us, show them this information, tell them to stop reading right wing blogs, and take a fucking chill pill.
Sunday, December 11, 2011
were the first words I heard when I flipped on NPR the other day. The caller was a guy named Steve and my ears waited for the inevitable rip on the president. Instead, this is is what I heard.
"The federal government, and I mean all of them but most specifically Congress, needs to let me know what they are going to do. See, I'm part of the 1 percent who they are calling the job creators and I have no problem if they raise my taxes. I can afford it. But where I am uncertain is if I hire more people, will I get a tax break? If they came to me and said, "Hire more people and we will give you a tax break," then I would at least be able to adjust and calculate what I'm going to need if they do raise taxes."
We then found out that Steve had three small businesses and made millions a year. So, the uncertainty for him was simply a matter of figuring out his balance sheet which, quite honestly, is all the rest of us do. It made me wonder how many of the 1 percent who were uncertain would also be willing to pay more in taxes.
Then Steve said something that the 99 percenters and occupiers should understand.
"It's not the 1 percent that are the problem. It's the .1 percent. People that are with me in the other 9/10ths of 1 percent are doctors, lawyers, and wealthy small business owners. We have the same issues that most Americans have with money. We just have more of it. What we do adds to our society in the way of jobs and economic growth. But the .1 percent? That's the people on Wall Street with whom I invest my money. All they do is move money around. They add no value to society whatsoever. "
And there it is. It's not the one percent. It's the .1 percent. They are the ones that are really the problem right now and they always have been. These are the folks that nearly ruined our economy 3 years ago and that have, more or less, created a Wall Street government. People like Steve got fucked over by them just like we did.
In a recent column, Paul Krugman echoed this sentiment with some interesting numbers.
The recent Congressional Budget Office report on inequality didn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, did. According to that report, between 1979 and 2005 the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent.
For the most part, these huge gains reflected a dramatic rise in the super-elite’s share of pretax income. But there were also large tax cuts favoring the wealthy. In particular, taxes on capital gains are much lower than they were in 1979 — and the richest one-thousandth of Americans account for half of all income from capital gains.
Clearly, there's gross inequality within the 1 percent as well. So is Steve right about who makes up the .1 percent?
For who are the 0.1 percent? Very few of them are Steve Jobs-type innovators; most of them are corporate bigwigs and financial wheeler-dealers. One recent analysis found that 43 percent of the super-elite are executives at nonfinancial companies, 18 percent are in finance and another 12 percent are lawyers or in real estate. And these are not, to put it mildly, professions in which there is a clear relationship between someone’s income and his economic contribution.
Not all in the financial sector but certainly not the "job creators" that we hear about all the time.
I took a lot away from Steve's call. I think it was important to hear from someone who is indeed a job creator and would happily pay more in taxes if the federal government would get its shit together. Based on the poll numbers and Steve's call, it appears as if most of the blame is being laid at the feet of Congress.
Will the American people let them know what they think next November?
Saturday, October 15, 2011
And since economic policy has to deal with the world we live in, not the fantasy world of the G.O.P.’s imagination, the prospect that one of these people may well be our next president is, frankly, terrifying.
Terrifying, indeed. Common sense has been sacrificed in the name of orthodoxy.
In the real world, recent events were a devastating refutation of the free-market orthodoxy that has ruled American politics these past three decades. Above all, the long crusade against financial regulation, the successful effort to unravel the prudential rules established after the Great Depression on the grounds that they were unnecessary, ended up demonstrating — at immense cost to the nation — that those rules were necessary, after all.
This is what actually happened.
But down the rabbit hole, none of that happened. We didn’t find ourselves in a crisis because of runaway private lenders like Countrywide Financial. We didn’t find ourselves in a crisis because Wall Street pretended that slicing, dicing and rearranging bad loans could somehow create AAA assets — and private rating agencies played along. We didn’t find ourselves in a crisis because “shadow banks” like Lehman Brothers exploited gaps in financial regulation to create bank-type threats to the financial system without being subject to bank-type limits on risk-taking.
No, in the universe of the Republican Party we found ourselves in a crisis because Representative Barney Frank forced helpless bankers to lend money to the undeserving poor.
This is the fantasy that has been created by the right that I hear every single day. To say this view is monumentally frustrating is a massive fucking understatement.
The G.O.P. has responded to the crisis not by rethinking its dogma but by adopting an even cruder version of that dogma, becoming a caricature of itself. It’s a terrible thing when an individual loses his or her grip on reality. But it’s much worse when the same thing happens to a whole political party, one that already has the power to block anything the president proposes — and which may soon control the whole government.
The way I see it, this is what the election is going to be about: reality or fantasy. The truly sucktacular part about all of this is that the Democrats are going to address this insanity and will likely be sucked into managing fantasies. This will give it legitimacy and then this kind of thinking will be in the national conversation. With millions of people operating solely on anger, hate and fear, many will embrace these crazy ideas. Of course, they could choose to ignore it but that would probably make it worse. We'd probably have more people believe this garbage...the great lie and all, yer know.
I suppose I could take some solace that people like me and Krugman are at least grounded in reality. But with so many irrational people that have completely taken leave of their senses, there's not really much to be happy about at all.
Wednesday, August 31, 2011
To put it simply, he's wrong and here's exactly why he is wrong.
The IPCC, the US Global Change Research Program, and earlier this year the National Research Council and the National Academy of Sciences all are in agreement on the sources of climate change and why it is happening. The last two concluded that climate change is occurring, that it is caused primarily by the emission of greenhouse gases from human activities, and that it poses significant risks for a range of human and natural systems. It specifically rejected the view that that those findings are in some way questionable
This committee organized by the NRC and the Academy had this to say.
Although the scientific process is always open to new ideas and results, the fundamental causes and consequences of climate change have been established by many years of scientific research, are supported by many different lines of evidence, and have stood firm in the face of careful examination, repeated testing, and the rigorous evaluation of alternative theories and explanations.
Further, the Academy also did a study which found that 97-98 percent of those scientists actively publishing in the field agree that climate change that human beings are causing climate change. Other surveys reveal the same percentages.
Of course, Perry also hauled the classic "faulty or manipulated data" line which has been thoroughly debunked by three separate reviews. This brings us to Krugman's Anti Science piece.
I could point out that Mr. Perry is buying into a truly crazy conspiracy theory, which asserts that thousands of scientists all around the world are on the take, with not one willing to break the code of silence. I could also point out that multiple investigations into charges of intellectual malpractice on the part of climate scientists have ended up exonerating the accused researchers of all accusations. But never mind: Mr. Perry and those who think like him know what they want to believe, and their response to anyone who contradicts them is to start a witch hunt.
For those of you who are in the GOP or on the right, is this really the direction you want to head? It's honestly just another example of how there is literally nothing behind your ideology other than proving the other side wrong...your central credo being, "My ignorance is just as good as your knowledge."
Krugman points out where we might be headed.
We don’t know who will win next year’s presidential election. But the odds are that one of these years the world’s greatest nation will find itself ruled by a party that is aggressively anti-science, indeed anti-knowledge. And, in a time of severe challenges — environmental, economic, and more — that’s a terrifying prospect.
Amen, brother. And this is why I have this site.
Thursday, July 08, 2010
But I have to disagree with him in one of his latest columns entitled The Third Depression. To be honest, his "sky is falling" theme which dominates this piece reminds me quite a bit of the Cult's insistence that they are going to be sent to re-education camps.
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
How does he know what is going to happen? I know he is an expert but nearly all of the experts were way off the mark on all economic doings in the last two years.
And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
With only a small amount of the TARP money spent, why do we need to spend more money? Shouldn't we see what happens when all of it gets spent? The other issue that I'm wondering if Krugman is taking into account is where exactly the money is being spent. It seems to me Krugman is being pretty naive if he thinks that all of it is being spent to bolster our economy.
I guess I'm a little hesitant to accept more spending as the answer especially when it is backed up by such a "hurry up or we're all dead" meme. He is right about one thing, though. Completely going the other direction and embracing our inner Hoovers is also not the answer.
As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover...Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider...
So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.
I agree with this point. Comparing us to Greece is ridiculous as I have said before and cutting taxes is certainly not the answer although letting the cap gains tax cuts expire won't amount to much in the way of increased revenue...just less loss...though it will be nice to reverse this complete failure of an idea.
To me, Krugman seems over the top with his call for more spending. I agree that listening to the Cult on what to do about the economy is a very bad idea. That's what got us into this mess in the first place. But going spend happy isn't the solution either. In the final analysis, if people want less government involvement in the corporate world then it's really up to the private sector to unfuck themselves from their casino mentality and start practicing sound business again.
Given human nature, I'm not sure this can happen.