Charting Blame

Aug 22nd, 2012

Calling the aughts the "lost decade of the middle class," PEW has released the results of some recent polling. Their sample was asked to assess "blame" for the general collapse of American upward mobility. The numbers are probably providing Team Obama with some confidence as the public lays responsibility for what ails us at the feet of congress over the President by nearly a two to one margin.

What Would Deporting 11 Million People Cost? cont...

June 16th, 2012

Beyond the costs of a mass detention and expulsion of undocumented immigrants, what would the long term impact be? Numbers high enough to guarantee another recession or even a depression. Via the Center For American Progress:

"...legalization of undocumented immigrants and more flexible immigration channels would significantly expand the economy—by a cumulative $1.5 trillion in gross domestic product over 10 years—through increased consumer spending, higher tax receipts, and other related factors. A deportation approach, by contrast, would have the cumulative effect of draining $2.5 trillion over 10 years from the U.S. economy. That is a $4 trillion swing in GDP depending on which policy approach we adopt." EMPHASIS OURS

The right wing's dream solution to the issue would collapse us.

Mitt Watch: Now He's Just Lying... Again

May 29th, 2012

If there's any hunk of red meat for self-declared "conservatives" which they can be relied upon to devour more voraciously than charges of "big government" I don't know what it is. Speaking to a crowd in Colorado today, Mittens Romney made the following statement:

"We have 145,000 more government workers under this president. Let’s send them home and put you back to work."

This isn't merely spin and it's not some sort of exaggeration. It's an outright, bold-faced, incredibly big-balled, straight up lie. Period. End of discussion. At least it should be.

Since President Obama took office, six hundred and eight thousand public sector jobs have been eliminated (SOURCE).

Here's the rub; Obama has actually presided over the largest contraction of government in generations, something the right has demanded for as long as can be remembered. That's well over half a million consumers not participating in the economy during the worst downturn in 80 years, a fact which has directly contributed to the stalled recovery by further depressing demand.

To Obama's army of detractors I would say this:

You can have wildly shrinking government or a robust and dynamic short term rebound.

You can't have both.

You have received full delivery on one of your movement's core demands and it is biting our country on the ass.

Sleep tight.

H/T to MM

Staggering Impunity

May 23rd, 2012

Charles Ferguson, the director of Inside Job and author of the soon to be released examination of the 2008 collapse, Predator Nation, wants to know where the hell the prosecutions for rampant criminal activity are:

"Almost all the prospectuses and sales material on mortgage-backed securities sold from 2005 through 2007 were a compound of falsehoods. But it starts even earlier in the food chain. We also know that mortgage originators committed securities fraud when they misrepresented the characteristics of loan pools, and the nature and extent of their due diligence with regard to them, when they sold pools to securitizers (and accepted financing from them). Most or all of the securitizers (meaning nearly all the investment banks and major banking conglomerates) then committed securities fraud when they misrepresented the characteristics of the loans backing their CDOs, the characteristics of the resulting mortgage-backed securities, and the nature and results of their due diligence in the process of creating those securities. The securitizers also committed securities fraud when they made similar misrepresentations to the insurers of, and sellers of credit default swap (CDS) protection on, those securities."

The utter lack of consequences for this illegality and, worse, the excuse-making by conservatives that the downturn was somehow a "glitch" in legitimate capitalism very nearly ensure another crisis. Possibly quite soon.

"In some cases, we already have clear evidence of senior executive knowledge of and involvement in these frauds. For example, quarterly presentations to investors are nearly always made by the CEO or CFO of the firm; if lies were told in those presentations, or if material facts were omitted, the responsibility lies with senior management. In some other cases, such as Bear Stearns, we already have evidence from civil lawsuits that very senior executives were directly involved in constructing and selling securities whose prospectuses contained lies and omissions."

And yet, not one CEO or CFO involved has been charged with so much as a misdemeanor. It's long past time we admitted that these are not titans; they are simply extremely ambitious thieves.

Frum's Economic Prescription

April 10th, 2012

In the wake of last month's much discussed jobs report, David Frum has some interesting ideas:

"To do better, we'll need a program to stimulate employment for the long-term unemployed -- including potentially a New Deal-style requirement that nobody receive benefits without working. It's no good to anybody -- the unemployed least of all -- to allow the unemployed to collect two years' worth of benefits while waiting at home, their skills atrophying, their resumes going stale.

To do better, we may need to induce employers to create jobs, not only through tax cuts but through direct subsidies, including subsidies of the cost of health coverage. (Especially for older workers, health costs can be more of a deterrent to hiring even than the cost of wages.)

We will need to curtail the generosity of Medicare to open fiscal room for government programs to support opportunities for the young.

We will need a permissive monetary policy that accepts moderate inflation to reduce the burden of mortgages and other debts -- even if it bites a little into savings and fixed incomes.

We'll need above all to recognize the magnitude of the social distress we still face, even as the economic statistics tell us of a recovery that moves financial markets and presidential polls -- but that threatens to bypass tens of millions of Americans for months and years."

Worth 1,000 Words

Nov 6th, 2011

Luridly Loathsome Laffer

Nov 6th, 2011
by F. Grey Parker

As much as rational economists from both right and left continue to hope that Art Laffer will, at long last, simply shut up, Mr. Laffer shows no signs of doing so. Nor, it would seem, does he have any interest in lessening the actual damage to our country that he has done over the course of two generations. In fact, Mr. Laffer continues to double down on promoting the very policies which have brought us to our knees.

Yesterday afternoon, Neil Cavuto hosted Mr. Laffer over at Fox Business.

Something so very wrong was said that it cannot go unchallenged; It was not any part of the predictable litany of anti-Obamaisms. Nor was it Mr. Laffer's pandering declaration that the stimulus is "the reason we have... high unemployment." What was truly shocking was Cavuto's description of Mr. Laffer as "about as fair and balanced an economist as you're going to get."



This is rather like describing Idi Amin as having been a well rounded humanitarian.

Fighting FOR The Double Dip

Oct 1st, 2011

Kevin Drum argues that the coming double dip will be wholly owned by the Tea Party and their sympathetic (or fearful) agents in the 112th Congress. The kicker:

"If we want them to, both monetary and fiscal policy can have plenty of bite left. Bottom line: If we plummet into a second recession, it will be solely the fault of fanatical conservatives in Congress who refuse for reasons both partisan and ideological to acknowledge that we can do something about this. It'll be the Tea Party Recession of 2011."

I think it's worse than Drum realizes. We're not dealing with a group that's simply opposed to changes in "fiscal and monetary policy" now. We're dealing with a collectively delusional cabal that is opposed to centralized intervention ever. Their meme of "not picking winners" has devolved into an unthinking scheme that ensures greater hardship for most Americans.

So, yeah. They own it.

Getting Back To "Jobs, Jobs, Jobs"

Oct 1st, 2011

Krugman makes an accurate observation in his latestet critique of GOP obstructionism and self-delusion:

"The starting point for many claims that antibusiness policies are hurting the economy is the assertion that the sluggishness of the economy’s recovery from recession is unprecedented. 


But, as a new paper by Lawrence Mishel of the Economic Policy Institute documents at length, this is just not true. Extended periods of “jobless recovery” after recessions have been the rule for the past two decades. Indeed, private-sector job growth since the 2007-2009 recession has been better than it was after the 2001 recession."

I have pointed out, time and again, that job creation ended as we once knew it a decade ago. We are now, in fact, on track to add more jobs to the American economy in a single Obama term than were added under eight years of Bush II.

Cycling Poverty

Sept 20th, 2011

The chart below from EPI tracks the American poverty cycle since 1979. We are just slightly below the two previous peaks in that period. There is, however, a fundamental difference between now and then. The two booms that temporarily reduced the overall rate in the last three decades were illusory and built upon variations of the same unsustainable model. The markets, as we have been pointing out recently, are no longer working.

Paying For The Jobs Bill

Sept 13th, 2011

The American Jobs Act doesn't stand much of a chance. The reasons for this are two fold:

First, it would actually help the country and the GOP's saboteurs (previously noted HERE, HERE, HERE, HERE and HERE) definitely can't have that. Second, it would rely on the rich getting some more "skin in the game."

via Washington Post

The Entire Text Of Tonight's Speech

Sept. 8th, 2011

Damn straight. Give 'Em Hell Barry came back tonight.

"Tonight we meet at an urgent time for our country. We continue to face an economic crisis that has left millions of our neighbors jobless, and a political crisis that has made things worse.

This past week, reporters have been asking "What will this speech mean for the President? What will it mean for Congress? How will it affect their polls, and the next election?"

Quote Of The Day - Here and Now Edition

Sept 2nd, 2011

"Their optimism has been crushed by reality: They are still not working, or if they are working they're making a lot less money. You're either devastated or you're hurting, that's the range."

-- Carl E. Van Horn on the continued hardships faced by the millions who lost their jobs during the Great Recession. Van Horn teaches at Rutgers and is also a co-author of the just released study, Out Of Work and Losing Hope: The Misery and Bleak Expectations of American Workers

Dominionist Watch - Perry Edition

Aug 29th, 2011

I have been trying to imagine what it would have sounded like to the average American had they been hearing 20 years ago what we have been hearing recently within a field of Republican Presidential hopefuls.

Frankly, I think I would have assumed someone was doing a very poor impersonation of Margaret Atwood. Nevertheless, here we are.

Having jumped into front runner status with the GOP base almost immediately upon his entry into the race mere weeks ago, Texas Governor Rick Perry is, as was predicted, doubling down on some very ugly, anti-intellectual and outright Dominionist statements. It's one thing for him to misrepresent his economic record. It's another thing for him to deny climate science. However, it is something altogether more dangerous for a potential Commander in Chief to allege that the current crippling recession is not the product of decades of unrealistic economic policy and is, rather, a test from God.

Yup, who needs a comprehensive plan to deal with perennially widening income disparity or the collapse of job creation? Apparently, all we really have to do is to submit in accordance with Mr. Perry's theological view.

Glory!
 

Perhaps we should pray for the Republic. As Paul Krugman noted today:

"Now, 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."

Austerity Now?

Aug 28th, 2011

The Economist laments the current obsession with reducing debt in Western economies generally, but their harshest critique is directed at our own:

"America... has done virtually nothing to deal with its medium-term deficit, but on current policy will see the biggest short-term tightening of the big rich economies next year. That would have been a poor choice even in a reasonable recovery. Given the economy’s weakness, it looks daft. But it could be fixed. The congressional supercommittee charged with finding ways to trim the ten-year deficit as part of the recent debt-ceiling deal could agree on a bolder package of entitlement cuts and new revenue, while Barack Obama and the Republicans could limit the short-term squeeze by extending the temporary payroll-tax cut and boosting spending on things like roads and school repairs."

I part ways with their editors on issues of "entitlements" but they are otherwise dead on.

Matthew Desmond notes how eerily similar this preoccupation with debt reduction at the expense of all other policy initiatives is to the disastrous path once taken by the Hoover Administration.

Alas, we are now in a climate dominated by zealots who proceed as if they worship Murray Rothbard's historical revisionism and laissez-faire extremism. That is to say, the debate has been hijacked by people who actually don't believe in government directly stimulating the economy in any form to alleviate the crisis.

We've Been "Jackson Holed"

Aug 26th, 2011

Before we begin parsing and dissecting Ben Bernanke's most important pronouncement of the year, shouldn't we all actually read the whole statement for yourselves?

Here is the annual Fed Chairman speech in Jackson Hole, WY:

"Good morning. As always, thanks are due to the Federal Reserve Bank of Kansas City for organizing this conference. This year's topic, long-term economic growth, is indeed pertinent--as has so often been the case at this symposium in past years. In particular, the financial crisis and the subsequent slow recovery have caused some to question whether the United States, notwithstanding its long-term record of vigorous economic growth, might not now be facing a prolonged period of stagnation, regardless of its public policy choices. Might not the very slow pace of economic expansion of the past few years, not only in the United States but also in a number of other advanced economies, morph into something far more long-lasting?

No Recovery

Aug 24th, 2011

If one accepts the narrow and long held academic definitions of the words "recession" and depression," then technically we are in a recovery. Which makes those 20th Century meanings quite absurd. Job creation is not much different now than it was 10 years ago. That is to say, for a full decade we have have failed to add even enough jobs monthly to accommodate new entrants to the workforce, much less return to employment the millions whose positions were lost during the "height" of the crisis in late 2008 and early 2009.

As Roubini pointed out last week, the crisis is actually structural:

"We thought that markets worked. They're not working."

Over at TNR, Richard A. Posner basically agrees with both points:

"If the notion that we are merely living through the after effects of a mere "recession" that ended in 2009 sounds somewhat ridiculous, that’s because it is. If we were being honest with ourselves, we would call this a depression. That would certainly better convey both the severity of our problems, and the fact that those problems have no evident solutions."

We live in an era within which rational public sector solutions are not only the only real hope for a transformative remedy but are also politically impossible due to the fanatical opposition of a Randian and Misesian Republican Party.

In short, we're screwed.

Roubini Raises The Alarm Level

Aug 15th, 2011

Many people find Nouriel Roubini's work dry and dispassionate. You generally don't see him on television. After all, his style is more academic than political. He is certainly no hyper-partisan of the Krugman or Stiglitz mode. All that said, Roubini got a lot more attention last week than usual. In an interview with the WSJ's Simon Constable, he told it like it is in the same measured tones that have made him a less than household name.

You don't cut taxes when you go to war. The stimulus was too small. The deficit is "Bush's fault." You don't "front load" austerity in a crisis. Rather, you apply that pressure when an exit from recession is secure. Rising income inequality naturally leads to civil unrest.

However, this observation at the 5min 10sec mark sent out a shock wave:

"Karl Marx had it right. At some point, Capitalism can destroy itself. You cannot keep on shifting income from labor to Capital without having an excess capacity and a lack of aggregate demand. That's what has happened. We thought that markets worked. They're not working. The individual can be rational. The firm, to survive and thrive, can push labor costs more and more down, but labor costs are someone else's income and consumption. That's why it's a self-destructive process."


God help us. He is usually right. No one more accurately predicted the collapse of 2008.

The fact that we now have an ascendant movement in American politics which greets proven centralized monetary policy with charges of "Communism" only makes the disaster more likely.

It's all common sense... unless you are a devoted Fox viewer.

What We Need

August 4th, 2011

The Economist, that once staid and altogether traditionally conservative bastion of reasonable economic thought, tells it like it is while issuing a common sense call for action... again.

"Extension of the payroll tax cut and emergency unemployment benefits would improve confidence, reduce projected fiscal tightening over the next year, and ease the suffering of the unemployed. The double-dip is at the door. Only quick action can send it packing now."

This isn't about entitlements. It's about the government not actively increasing the crisis of demand.

The So-Called Financial Repatriation Holiday

July 5th, 2011

The latest scheme to keep American corporations from paying a reasonable tax on profits made abroad is not a new idea. The Republicans can dress it up as a way to "create jobs" all they want but that hasn't happened in the past. As Krugman notes, the last time we tried this the results were of no discernible benefit to anyone other than stockholders:

"A similar tax holiday was offered in 2004, with a similar sales pitch. And it was a total failure. Companies did indeed take advantage of the amnesty to move a lot of money back to the United States. But they used that money to pay dividends, pay down debt, buy up other companies, buy back their own stock — pretty much everything except increasing investment and creating jobs. Indeed, there’s no evidence that the 2004 tax holiday did anything at all to stimulate the economy.

What the tax holiday did do, however, was give big corporations a chance to avoid paying taxes, because they would eventually have repatriated, and paid taxes on, much of the money they brought in under the amnesty. And it also gave these companies an incentive to move even more jobs overseas, since they now know that there’s a good chance that they’ll be able to bring overseas profits home nearly tax-free under future amnesties.

Yet as I said, there’s a push for a repeat of this disastrous performance. And this time around the circumstances are even worse. Think about it: How can anyone imagine that lack of corporate cash is what’s holding back recovery in America right now? After all, it’s widely understood that corporations are already sitting on large amounts of cash that they aren’t investing in their own businesses.

In fact, that idle cash has become a major conservative talking point, with right-wingers claiming that businesses are failing to invest because of political uncertainty. That’s almost surely false: the evidence strongly says that the real reason businesses are sitting on cash is lack of consumer demand. In any case, if corporations already have plenty of cash they’re not using, why would giving them a tax break that adds to this pile of cash do anything to accelerate recovery?"