Fun with Numbers

According to the Financial Times (article is behind a paywall, citation from here):

The Republican plan to slash government spending by $61bn in 2011 could reduce US economic growth by 1.5 to 2 percentage points in the second and third quarters of the year, a Goldman Sachs economist has warned. 

Now, I trust Goldman about as far as I can throw them, ethics-wise.  But I do trust them to be clear-eyed when it comes to economic projections.  That's their bread and butter.

According to this website, the GDP from Q4 2010 was $13.38 T.  That's more than thirteen trillion dollars.  So if the economy grows by 1.5 to 2 percentage points less, that's at least $200 billion dollars less money sloshing around in the economy, paying people and buying stuff. 

How many jobs do you suppose that is, even after the super-wealthy take their outsized cut? 

Oh yeah.  They don't care.

Dear slight majority of Americans:  You voted for these guys why again?

I Stole This Graphic from Mother Jones

If you want to know why things are the way they are in America, economically and politically, this graph (and the other seven) will give you a pretty good idea, I think.

Quote of the Day

According to another study by Cornell's Suzanne Mettler, many Americans don't even realize they're relying upon government services. 53 percent of those who said they're not using a government program borrowed a student loan from the government. 44 percent are on Social Security. 39 percent are on Medicare (reinforcing the imperative: "Keep your government hands off my Medicare!"). 27 percent are on Medicaid. 28 percent are on Disability. 41 percent are receiving veteran's benefits. Again, these are people who also insist they're absolutely not "living off the public tit," to quote Senator Chuck Grassley. But they are.
-Bob Cesca

Quote of the Day

I am not interested in anything any Republican or Conservative has to say about debt or deficits or "shared" sacrifice.

Not now. Not tomorrow. Not ever again.

You are the Party that inherited surpluses from Bill Clinton and pissed them away.

You are the Party that ran two wars on a credit card.

You are the Party that ran two wars on a credit card...while cutting taxes.

You are the Party that only learned how to spell d-e-f-i-c-i-t ten seconds after the Black Democrat was inaugurated.

You are the Party that held medical care for 9/11 first responders hostage so that you could ram through one more round of giveaways to billionaires.

 ...

To reiterate, I am not interested in anything any Republican or Conservative has to say about debt or deficits or "shared" sacrifice.

Not now.

Not tomorrow.

Not ever again.

-driftglass

Initiatives, Referenda, and Joint Resolutions: a Guide to Washington State's Midterm Ballot

As an American, I feel it is every citizen's duty not only to vote, but to inform themselves as to the choices they have in the voting booth, and the consequences of those choices.  But I also understand that not everyone has the time or inclination to dig into it that I do.  So, as a public service (or possibly just a cry for attention), I have spent the afternoon going through the Washington State Voter's Pamphlet, reading through the wording, the consequences, and the statements for and against, and I have assembled this handy guide to how I think you should vote and why.


Please note that this is only a guide to Initiatives to the People, Referenda from the State Legislature, and State Senate and House Joint Resolutions.  I may or many not have time to write about the races for federal and state political office later this week.  I feel like people are probably already pretty set as far as the types of candidates they support, being that people generally know where they stand on the political spectrum.  But ballot initiative and the like take a little more unpacking, I think, and I wanted to devote a little time to figuring it out for myself, and apparently I've decided that you want to know what I think, too.  So here it is.


The Quick and Dirty Version:


I-1053:  NO
I-1082:  NO
I-1098:  YES
I-1100:  YES
I-1105:  NO
I-1107:  NO
R-52:  YES
SJR-8225:  YES
HJR-4220:  NO


Reasons why below the jump, for those who care to know.

Enthusiasm Gap

I've done my level best for some months now to stop obsessively following politics in America.  I still think it's important (being that this is the game that determines the shape of the field and the rules of the game we all play by), but I've been trying to concentrate on other things, for the sake of my sanity as well as many other good reasons.

But I still keep my ear to the ground, if for no other reason than that obsessions die slowly, and one thing I keep hearing in the run-up to the midterm elections this November is about the enthusiasm gap between those on the left and those on the right.  The story I keep hearing goes something like this:  the wingnut right is in ascendance, making lots of noise and getting lots of coverage, because their side lost last time and so they've decided it's the End of Days, and as a result they've gone even crazier (or just gotten louder about it).  And since apparently very few of them work they spend a lot of time protesting and driving up Glenn Beck's TV ratings.  They hate Barack Obama and everything he stands for, even when he stands for the same things they do, and they're all really excited to go to the polls and elect like-minded ignorami who believe things that are completely crazy, like that doctor visits should be paid for with chickens, that social security ought to be privatized or abolished, and that tax cuts will solve the budget deficit.

On the flipside you've got the left, who're upset because Obama hasn't completely reversed the world-historical fuckups of the Bush Administration and because the political realities of actually governing (especially when the opposition party doesn't negotiate in good faith or actually want government to work) require compromises that are disappointing to them.  And apparently many of them are so upset that they are considering staying home en masse come November in order to punish the Democrats for not living up to their dreams and making everything better in the two years or so they've had control of the White House and both Houses of Congress.

Now, I have every sympathy for people who find the Democrats maddening. 

Dept. of Speak, Brother, Speak

When someone says that the drug war is a failure because instead of stopping drug use, it destabilizes narco-producing regions of the world, brutalizes the underclass, perpetuates inequality, and foments the expansion of the police-prison state, then that person has mistaken a slogan for a product. When someone muses that our "strategy" in Iraq or Afghanistan is a failure because it is not producing "a durable, non-violent resolution to . . . political conflicts", then that person is a fool. And when someone says that late, post-industrial capitalism fails to "bring together willing buyers with willing sellers in order to produce value," then I wonder in what idealized world of pure form and meaning has this man been living, because obviously, if you consider the current American economy and the global system in which it is embedded, the production of "value" is incidental to the continued concentration of material wealth and political influence. That is the point. It isn't a failure of the system. It is the system.

[...]

Cui bono, motherfuckers?

-IOZ

That last line should be the motto and first question of any serious seeker after political or economic truth.

Smart Guy says Something Smart

Hey, maybe decades of downward pressure on real wages, the destruction of even the tissue of socially guaranteed retirement, and the artificial extension of the duration of the working life in response to these pressures has created a paucity of demand for new labor that has made economic independence economically unobtainable for young people. I'm just, you know, throwin' it out there. Maybe the near-total absence of even subsistence-level wages for people without an at-minimum four-year program of educational debt-indenturage is driving the upticking of the age of marriage and the formation of independent households just as much as "social acceptance of premarital sex." I'm just, you know, sayin'. Maybe the general trend of our society at all but the highest levels of class and income, which are principally inherited anyway, is toward debt-and-wage-peonage that is gradually reducing the viability of the independent household to exist at all.
-IOZ

Why did some societies have serfs or slaves and others not? You could talk about culture and national character and climate and changing mores and heroes and revolts and the history of agriculture and the Romans and the Christians and the Middle Ages and all the rest of it; or, like Krugman’s economics teacher Evsey Domar, you could argue that if peasants are barely surviving there’s no point in enslaving them, because they have nothing to give you, but if good new land becomes available it makes sense to enslave them, because you can skim off the difference between their output and what it takes to keep them alive.

-Larissa Macfarquhar, from her profile of Paul Krugman in the New Yorker

Posted Without Comment

What's being tested here is not just our ability to solve this one problem, but our ability to solve any problem. Right now, Americans are understandably despairing about whether partisanship and the undue influence of special interests in Washington will make it impossible for us to deal with the big challenges that face our country. They want to see us focus not on scoring points, but on solving problems; not on the next election but on the next generation. That is what we can do, and that is what we must do when we come together for this bipartisan health care meeting next week.
-Barack Obama

Posted Without Comment

For me the basic dynamic of the mortgage bubble is some Ivy League dickwad hawking a billion dollars of securitized subprime mortgages to a pension fund, and then Hobie-sailing off into the sunset with a bonus after they all blow up.
-Matt Taibbi

Why Capitalism in its Current Form Needs to Die

In 2007 alone, the chief executive officers at these companies collected combined total compensation of $118.6 million—an average of $11.9 million each. That is 468 times more than the $25,434 an average American worker made that year.
-from a report by HealthCareforAmericaNow.Org

When your economic system produces outcomes like this, where the executives of a protected (read: functionally monopolistic) industry make exorbitant amounts of money for figuring out ways to not provide the service which is their companies' reason for being, something is broken and needs to be fixed.

Now don't get me wrong. I am pro-capitalism. I agree with the market fundamentalists that it's the best way to drive innovation, which makes everyone's life better, or at least should. But when the rules are gamed such as to produce outcomes like this (or, worse, outcomes like Goldman, Sachs' current balance sheet less than a year after they helped nearly drive the economy over a cliff, taking themselves with it), then the rules need to be changed.

Myself, I favor the installation of both a ceiling and floor to compensation. I think that, until the entirety of humanity is brought into the twenty-first century in terms of access to education, health care, and economic opportunity (which would solve at least half of the world's problems right off the bat), that anybody being allowed to make more than, say, half a million dollars a year is, quite frankly, obscene.

Yeah, yeah. I can hear the grumbles already, that I don't really believe in capitalism, that I'm nothing more than a dirty fucking Marxist bent on redistributing wealth away from the productive class towards the great unwashed, and hey, to you maybe I am (I consider myself post-Marxist, personally, but opinions being like assholes, everybody gets one). But I'm really a radical democrat (note the small d). I believe that every American citizen, upon paying their taxes, ought to get to say what those taxes go towards paying for. So by all means let corporate boards compensate their executives as richly as they like. They'll take home a half mil and they can decide what the rest should be used for, and that can be their reward for being so high-powered and smart, or whatever justification it is they offer for their ridiculous and obscene compensation packages.

But that's beside the point. The point is that the system we have is broken, and will doom us, both as a nation and as a people (perhaps even as a species) to the inevitable slide into Imperial Senescence and Banana Republic-hood, and if we don't fix it we'll deserve every bad thing that happens as a result.

And no, I won't be happy about it. Schadenfreude's not my thing. I love this country, and all the good things it stands for. It's too bad the fuckers making all that money denying coverage and preventing competition don't feel the same.

"I call do-over!"

So, props to Kevin Drum for letting us know. The same people who threw the shit and the shinola into a blender a few years ago to make those mortgage-backed securities that worked out so well for everybody are at it again, with the very same scam, except this time they're being really careful (pinkie swear!) to include only solvent, performing mortgages in the AAA-rated stuff. They're called -get this- Re-Remics, and they are, so far as I (a non-specialist) can tell, pretty much the same as the Collateralized Debt Obligations that nearly took down the American economy just one short year ago.

Here's how it works: Banks all over are currently stuck with whatever toxic crap they had on the books when the music stopped and the last chair was pulled. Because the crap is toxic, they're required to keep money on hand to cover it in case it goes even further south. The worse the rating, the more money the bank has to keep on hand. So, say you've got a CDO that's seventy-five percent non-crap and twenty-five percent crap. The twenty-five percent that's crap drags the rating of the whole thing down, say to a C, which means the bank has to keep 100% of the value of the CDO on hand, which means they can't use that money to refurbish the offices or buy a politician. Enter the magical masters of the universe, with scissors and calculators and a lovely assistant who draws your attention over here to her lovely boobs while the magician goes to work with the scissors and some glue and -voila!- you've suddenly got two CDOs, one good, one crap. Get the good one rated back to AAA, and suddenly the capital requirement is only 100% on the lesser share; for the newly-minted AAA investment vehicle, the capital requirement goes down, which means the bank can go ahead and call the interior decorator and fire up the corporate jet for some serious fact-finding. And hey, with any luck, maybe they can sell the good paper. There is a sucker born every minute, and nobody ever lost money underestimating the intelligence of the American people.

On paper, it makes sense. The problem is that the people doing the Re-Remicing are the very same magical masters of the universe that nearly took the whole house of cards down last year, and the same ratings agencies that dropped the ball last time (and have suffered, inexplicably to me, no consequences at all) are still in charge of saying what's shit and what's shinola.

How do you suppose that's gonna work out?

Posted Without Comment

The banking fiasco still underway is at once a proxy for the larger failure of the American economy and the greatest fissure in it. Put as simply possible: we can't service our debt, we can't generate more debt, and the notional "capital" we thought we possessed is dissolving into nothingness. The federal government and Wall Street remain committed to supporting all the rackets associated with a suburban sprawl economy that has entered its own zone of remorseless failure. It is failing as a capital investment first, and is secondarily failing as a practical living arrangement. The two failures will continue in a close race toward terminal entropy.
James Kunstler

Posted Without Comment

[I]f you start from the assumption that people are perfectly rational and markets are perfectly efficient, you have to conclude that unemployment is voluntary and recessions are desirable.
-Paul Krugman

Quick Thought

Macroeconomists generally base their predictive models on two underlying assumptions, assumptions that are, by definition, assumed but never investigated or proven.

One is that markets always work perfectly. The other is that people always act rationally.

You do the math.

Oh, and the other thing they assume? Bubbles don't (indeed can't) exist.

Posted Without Comment

In recent, rueful economics discussions, an all-purpose punch line has become “nobody could have predicted. . . .” It’s what you say with regard to disasters that could have been predicted, should have been predicted and actually were predicted by a few economists who were scoffed at for their pains.
-Paul Krugman

Department of Well, Duh...

[W]hile the pace of job losses continues to slow, American workers will still be among the last to benefit from a recovery.
Jack Healy, in the NYT

People notice the rampant fuckery all the time in their daily lives. Everybody can think of someone who's screwing them. What I don't understand is why they so rarely make the leap to realizing that the fuckery is not just personal, but systematic.

posted without comment

[Y]ou’re not considered serious on national security unless you bought the case for invading Iraq, even though the skeptics were completely right; you’re not considered a serious political commentator unless you dismissed all the things those reflexive anti-Bushists were saying, even though they all turn out to have been true; and you’re not considered serious about economic policy unless you dismissed warnings about a housing bubble and waved off worries about future crises.
Paul Krugman

this makes far too much sense

to ever be implemented. but, if you'd like to know what the government is supposed to do with insolvent banks, you should read this.

just remember, everybody. the solution to the credit crisis is actually pretty simple and straightforward, and only requires that some laws be passed allowing the government to take over investment banks and bank-like entities in exactly the way that they are already allowed, even compelled, to take over insolvent commercial banks.

the reason for all the pretzel-twisting and the public-private partnership ponzi scheme is just so that stakeholders who underwrote bad bets and can't or won't pony up now that they lost won't have to lose the money the put on the horse with three legs and a bloodstream full of steroids.