State of the Union

At least Paul Krugman is honest about the state of the American Union...

The latest economic data have dashed any hope of a quick end to America’s job drought, which has already gone on so long that the average unemployed American has been out of work for almost 40 weeks. Yet there is no political will to do anything about the situation. Far from being ready to spend more on job creation, both parties agree that it’s time to slash spending — destroying jobs in the process — with the only difference being one of degree.

Nor is the Federal Reserve riding to the rescue. On Tuesday, Ben Bernanke, the Fed chairman, acknowledged the grimness of the economic picture but indicated that he will do nothing about it.

And debt relief for homeowners — which could have done a lot to promote overall economic recovery — has simply dropped off the agenda. The existing program for mortgage relief has been a bust, spending only a tiny fraction of the funds allocated, but there seems to be no interest in revamping and restarting the effort.

Obama prefers to pretend that his February 2009 was "just right" and that the US economy has been safely sailing into a glorious job-full, strong, productive, and happy future. He, like Marie Antoinette, can't be bothered to look out on the streets of the city to see the mobs demanding "bread, bread, bread!". Instead, he wanders around the Washington rose garden puzzled why the people wouldn't eat cake if they can't get bread. Why bother going after the McDonald's low end jobs when they should be shooting for the stars like he did: sign up to be President! Make a big salary! Write your life story and get a million dollars from a publisher! He simply doesn't understand why Americans want to moan and groan rather than lift themselves up by their own bootstraps.

Meanwhile the Republicans are flustered because Americans haven't signed up for the good ship Lollipop with its chop government spending down to the levels of Calvin Coolidge and get move tax breaks to corporations and the rich to keep the big flood of jobs that was first unleashed under Reagan, then raised on an even higher tide by the first Bush, and finally brought to a real tsunami of jobs under the second bush with his tax cuts after tax cuts policies that literally unleashed a floodtide of innovation and a wild growth of jobs that still hasn't come to an end. The Republicans are saying, with medicine like that, why would the American people not put us back into power so we can raid the Treasury again, create more "jobs" by more giveaways to billionaires and millionaires, and start more wars to really cut government down to size, you know, that infamous size that would allow it to be strangled in a bathtub.

Why all this irreality in America? Here's Krugman's diagnosis:

What lies behind this trans-Atlantic policy paralysis? I’m increasingly convinced that it’s a response to interest-group pressure. Consciously or not, policy makers are catering almost exclusively to the interests of rentiers — those who derive lots of income from assets, who lent large sums of money in the past, often unwisely, but are now being protected from loss at everyone else’s expense.

Of course, that’s not the way what I call the Pain Caucus makes its case. Instead, the argument against helping the unemployed is framed in terms of economic risks: Do anything to create jobs and interest rates will soar, runaway inflation will break out, and so on.

I simply can't believe my bad luck to have been born at a time when governments around the world decide to commit collective suicide:

• Europe has decided "austerity" is the way to excite businessmen about business prospects. What is more exciting than seeing destitute in the streets trying to sell apples for a dollar each? Scenes like that will pop out everywhere under austerity and give convincing proof that entrepreneurship is alive and now if the time to gamble business on billion dollar new product/new service schemes to people with no money in their pockets!


• Japan has decided to cut corners and build nuclear facilities right on beachfront property and dare the sea gods to bring on a tsunami. That kind of risk-taking entrepreneurship has been richly rewarded. Add to that, the fact that the Japanese government has shown "leadership" by refusing to tell their own people about the nature and depth of the crisis and by refusing to mobilize social resources to deal with the reality, and you have a government well on its way to extinguishing itself.


• Now we come to America where the elites split into two camps. On one side are those who think a run of "good times" for the guys on top will never come to an end, so they keep coming up with their one-size-fits-all solution to all economic and political problems: a tax cut! On the other side you have the elite that recognize that you can push half-baked lies to social conservatives for only so long before they wise up and seize government under a Sarah Palinesque Savonarola, so they have decided to sell "feel good" politics where you tell people "trust us, things are getting better" and "you can't expect a recovery from such a deep, deep recession overnight". Yep, very comforting words that leave the suffering with so much hope, the kind of hope that dreams of cake when there is no bread.

Why me? Why my lifetime? Why couldn't I have been born during the time of plague or famine. Times where death was at the hand of honest dark forces of nature instead of the sneaky hands of lying politicians and manipulative and greedy people?

Oh... and why not go for a twofur. Here's a bit from a Krugman NY Times op-ed that points out the incredibilty subtlety of Obama's negotiating strategy:

Six months ago President Obama faced a hostage situation. Republicans threatened to block an extension of middle-class tax cuts unless Mr. Obama gave in and extended tax cuts for the rich too. And the president essentially folded, giving the G.O.P. everything it wanted.

Now, predictably, the hostage-takers are back: blackmail worked well last December, so why not try it again? This time House Republicans say they will refuse to raise the debt ceiling — a step that could inflict major economic damage — unless Mr. Obama agrees to large spending cuts, even as they rule out any tax increase whatsoever. And the question becomes what, if anything, will get the president to say no.

Ya gotta admit, that Obama is one slick negotiator. He now has the Republicans by the short and curlies and whatever they say, he will do. They can't best him now. He's too busy selling the farm to give them what they want before they even ask for it! Now that has them truly flummoxed! How can you possibly "negotiate" with such a crafty fellow?