Great Recession

There is no better concise picture of the Great Recession than this graph from the Calculated Risk blog:

Click to Enlarge
This clearly shows that all previous post World War II recessions which had fully recovered employment by 4 years after the start of the recession. Even the pathetic "recovery" brought about Bush's two tax cuts to "inspire" entrepreneurial spirit got employment back to pre-recession levels in four years. But the recession is different. This is a credit crunch just like the Great Depression.

Obama's "stimulus" was pathetically inadequate with one-third of the money going to "tax cuts" which clearly are very poor stimulants (see the four year delay in recovery due to Bush's tax cut strategy). The other two-thirds was money that truly stimluated but was about three to four times too small for the size of the real problem. But Obama spent all of 2009 and 2010 assuring everybody that his stimulus was a Goldilocks "just right" amount. Then in 2011 Obama compounded his mistake by focusing on "deficits" (read austerity budgets) instead of stimulation to get the economy to come back.

The US economy is in a complete mess because both major political parties are more interested in catering to corporate interest than they are in the people and the real economy. They both spin masterful stories about how their policies are "effective" when it is utterly evident that they fail. Of course the Republicans are grievously wrong-headed. The Democrats at least pretend to cater to the interests of the 99%, but in reality they are just junior partners with the Republicans in acting as the minions of Wall Street, big corporations, and the ultra-rich. Tragic.

DeLong on the Financial Sickness in America

The financial "industry" is a bloated, corrupt section of the economy that grows at the expense of everything else. Here is a bit from UC Berkeley economist Brad DeLong on the Project Syndicate blog:

In 1950, finance and insurance in the United States accounted for 2.8% of GDP, according to US Department of Commerce estimates. By 1960, that share had grown to 3.8% of GDP, and reached 6% of GDP in 1990. Today, it is 8.4% of GDP, and it is not shrinking. The Wall Street Journal’s Justin Lahart reports that the 2010 share was higher than the previous peak share in 2006.

...

But if the US were getting good value from the extra 5.6% of GDP that it is now spending on finance and insurance – the extra $750 billion diverted annually from paying people who make directly useful goods and provide directly useful services – it would be obvious in the statistics. At a typical 5% annual real interest rate for risky cash flows, diverting that large a share of resources away from goods and services directly useful this year is a good bargain only if it boosts overall annual economic growth by 0.3% – or 6% per 25-year generation.

There have been many shocks to the US economy over the past couple of generations, and many factors have added to or subtracted from economic growth. But it is not obvious that the US economy today would be 6% less productive if it had had the finance-insurance system of 1950 rather than the one that prevailed during the past 20 years.

There are five ways that an economy gains from a well-functioning finance-insurance system. First, people are no longer as vulnerable to the effects of fires, floods, medical disasters, unemployment, business collapses, sectoral shifts, and so forth, because a well-working finance-insurance system diversifies and thus dissipates some risks, and deals with others by matching those who fear risk with those who can comfortably bear it. While it might be true that America’s current finance-insurance system better distributes risk in some sense, it is hard to see how that could be the case, given the experience of investors in equities and housing over the past two decades.

Second, well-functioning financial systems match large, illiquid investment projects with the relatively small pools of money contributed by individual savers who value liquidity highly. There has been one important innovation over the past two generations: businesses can now issue high-yield bonds. But, given the costs of the bankruptcy process, it has never been clear why a business would rather issue high-yield bonds (besides gaming the tax system), or why investors would rather buy them than take an equity stake.

Third, improved opportunities to borrow allow one to spend more now, when one is poor, and save more later, when one is rich. Households are certainly much more able to borrow, thanks to home-equity loans, credit-card balances, and payday loans. But what are they really buying? Many are not buying the ability to spend when they are poor and save when they are rich, but instead appear to be buying postponement of the “unpleasant financial retrenchment” talk with the other members of their household. And that is not something you want to buy.

Fourth, we have seen major improvements in the ease of transactions. But, while electronic transactions have made a great deal of financial life much easier, this should have been accompanied by a decrease, not an increase, in the finance share of GDP, just as automated switching in telecommunications led to a decrease in the number of telephone switchboard operators per phone call. Indeed, the operations of those parts of the financial system most closely related to technological improvements have slimmed down markedly: consider what has happened to the checking operations of the regional Federal Reserve Banks.

Finally, better finance should mean better corporate governance. Since shareholder democracy does not provide effective control over entrenched, runaway, self-indulgent management, finance has a potentially powerful role to play in ensuring that corporate managers work in the interest of shareholders. And a substantial change has indeed occurred over the past two generations: CEOs focus much more attention than they used to on pleasing the stock market, and this is likely to be a good thing.

Overall, however, it remains disturbing that we do not see the obvious large benefits, at either the micro or macro level, in the US economy’s efficiency that would justify spending an extra 5.6% of GDP every year on finance and insurance. Lahart cites the conclusion of New York University’s Thomas Philippon that today’s US financial sector is outsized by two percentage points of GDP. And it is very possible that Philippon’s estimate of the size of the US financial sector’s hypertrophy is too small.

Why has the devotion of a great deal of skill and enterprise to finance and insurance sector not paid obvious economic dividends? There are two sustainable ways to make money in finance: find people with risks that need to be carried and match them with people with unused risk-bearing capacity, or find people with such risks and match them with people who are clueless but who have money. Are we sure that most of the growth in finance stems from a rising share of financial professionals who undertake the former rather than the latter?

This is a pretty astounding indictment of the sleaze, corruption, and fraud in America's financial industry that has let it grow huge despite providing no real benefits to justify its larger share of national GDP.

Sadly, no govenment has taken on this issue and tried to cut the financial industry down to size to make it more economically efficient. Exactly the opposite has occurred. Over the last 30 years great laudatory sermons have been given about "enterprise" and "unleashing business from regulation" when in fact this has proven to be catchwords for turning a blind eye to corruption and crime on an unimaginable scale. The American people have been hoodwinked and lied to and nobody has yet been held accountable because the rich and powerful have bought off the politiians.

Religion in America

Here is Penn Jillette, half of my favourite magician duo, gives an monologue on religion in America...



He says some very interesting things. This is well worth listening to.

An Indictment of Obama and Most Western Governments

Here is Paul Krugman in a NY Times op-ed laying bare the open secret: Obama and European governments are contemptuous of Keynes, rejecting his advise, and imperiling the tenuous "recovery" that countries have been experiencing by calling for "deficit reduction" which is just another name for austerity:

“The boom, not the slump, is the right time for austerity at the Treasury.” So declared John Maynard Keynes in 1937, even as F.D.R. was about to prove him right by trying to balance the budget too soon, sending the United States economy — which had been steadily recovering up to that point — into a severe recession. Slashing government spending in a depressed economy depresses the economy further; austerity should wait until a strong recovery is well under way.

Unfortunately, in late 2010 and early 2011, politicians and policy makers in much of the Western world believed that they knew better, that we should focus on deficits, not jobs, even though our economies had barely begun to recover from the slump that followed the financial crisis. And by acting on that anti-Keynesian belief, they ended up proving Keynes right all over again.

... the real test of Keynesian economics hasn’t come from the half-hearted efforts of the U.S. federal government to boost the economy, which were largely offset by cuts at the state and local levels. It has, instead, come from European nations like Greece and Ireland that had to impose savage fiscal austerity as a condition for receiving emergency loans — and have suffered Depression-level economic slumps, with real G.D.P. in both countries down by double digits.

This wasn’t supposed to happen, according to the ideology that dominates much of our political discourse. In March 2011, the Republican staff of Congress’s Joint Economic Committee released a report titled “Spend Less, Owe Less, Grow the Economy.” It ridiculed concerns that cutting spending in a slump would worsen that slump, arguing that spending cuts would improve consumer and business confidence, and that this might well lead to faster, not slower, growth.

Sadly a generation will pay the price for this obtuse ideological refusal to accept standard economics in favour if the idiocies of right wing economics that created the deregulation fiasco leading to the S&L crisis, the dot.com bust, and the 2008 financial crisis. These are the failures of government by right wing politicians who have sold the public on the idea that "government is not the solution to our problems; government is the problem". For 30 years bad ideas pushed by right wing politicians have enriched the ultra-rich while the bottom 99% have been left to tread water. Wealth has increased but "trickle down" economics delivered nothing to the poor who are poorer now than since the Great Depression when the lot of the poor was to live in Hoovervilles and stand in bread lines.

The common people need to rise up and say "enough!" and vote in politicians who want to grow the economy for the benefit of the 99% and who want to see a profound redistribution of income so that those who work hard in the 99% get the kind of rewards that for the last 30+ years have only flowed to the ultra-rich. Stop the privatization of government for the bottom 99% with the cutting of services and the raising of "hidden" taxes. Stop the socialization of government for the top 1% with the quiet fraud that lets the rich milk the poor, demand and get sweetheart deals from government, and the continued policy of handouts and bailouts and tax cuts and special tax loop holes for those who can buy government via lobbyists.

Krugman perfectly characterizes the failures of politics today:

We entered 2011 amid dire warnings about a Greek-style debt crisis that would happen as soon as the Federal Reserve stopped buying bonds, or the rating agencies ended our triple-A status, or the superdupercommittee failed to reach a deal, or something. But the Fed ended its bond-purchase program in June; Standard & Poor’s downgraded America in August; the supercommittee deadlocked in November; and U.S. borrowing costs just kept falling. In fact, at this point, inflation-protected U.S. bonds pay negative interest: investors are willing to pay America to hold their money.

The bottom line is that 2011 was a year in which our political elite obsessed over short-term deficits that aren’t actually a problem and, in the process, made the real problem — a depressed economy and mass unemployment — worse.

For three years the political right has been screaming "inflation" and called for austerity to stop the devaluation of "fiat money". In truth, there has been no runaway inflation despite the trillions that the Federal Reserve has pumped into the monetary system.

Keynes called for a coordinated fight on both the monetary and fiscal fronts to fight depression. But since 2008 there has been only a monetary policy in place that is now being withdrawn and there was a very, very small fiscal policy with Obama's 2009 stimulus package. The tools that Keynes outlined have not been used. That is why the Great Recession continues to plague the United States.

How US Companies Help Set Up Repressive Regimes

Here is a bit from a post by Cory Doctorow on the BoingBoing blog:

Two thirds of the way through the talk, they broaden the context to talk about the role of American companies in the war waged against privacy and free speech -- SmartFilter (now an Intel subsidiary, and a company that has a long history of censoring Boing Boing) is providing support for Iran's censorship efforts, for example. They talked about how Blue Coat and Cisco produce tools that aren't just used to censor, but to spy (all censorware also acts as surveillance technology) and how the spying directly leads to murder and rape and torture.

Then, they talked about the relationship between corporate networks and human rights abuses. Iran, China, and Syria, they say, lack the resources to run their own censorship and surveillance R&D projects, and on their own, they don't present enough of a market to prompt Cisco to spend millions to develop such a thing. But when a big company like Boeing decides to pay Cisco millions and millions of dollars to develop censorware to help it spy on its employees, the world's repressive governments get their R&D subsidized, and Cisco gets a product it can sell to them.

They concluded by talking about how Western governments' insistence on "lawful interception" back-doors in network equipment means that all the off-the-shelf network gear is readymade for spying, so, again, the Syrian secret police and the Iranian telcoms spies don't need to order custom technology that lets them spy on their people, because an American law, CALEA, made it mandatory that this technology be included in all the gear sold in the USA.

Here is the video of the talk which Doctorow attended given by Tor technologists:



It is depressing that US politicians pass laws that set up the basis for the spyware and then US corporations do the multi-million dollar R&D to develop the spyware that is then deployed by repressive regimes worldwide (plus the US government and big US corporations). We live in a "big brother" world. Orwell thought he was writing a cautionary tale with his book Nineteen Eighty-Four, but he was documenting the hellish future we now all live in.

Thinking about Debt

Here is a key bit from a post by Paul Krugman on his NY Times blog:

People think of debt’s role in the economy as if it were the same as what debt means for an individual: there’s a lot of money you have to pay to someone else. But that’s all wrong; the debt we create is basically money we owe to ourselves, and the burden it imposes does not involve a real transfer of resources.

That’s not to say that high debt can’t cause problems — it certainly can. But these are problems of distribution and incentives, not the burden of debt as is commonly understood. And as Dean says, talking about leaving a burden to our children is especially nonsensical; what we are leaving behind is promises that some of our children will pay money to other children, which is a very different kettle of fish.

The political right has made a career out of packaging up bad politics as reasonable sounding phrases which don't hold up to scrutiny:

• running government is just like running a business, so the country needs a CEO not a politician


• government is not the solution, government is the problem


• the need to put "God back into the nation's schools", and they don't mean the loving Jesus, or Krishna, Odin, or Moloch, they know that God is that white haired old man sitting on a throne up there in the air somewhere, the avenger of the Old Testament, the guy who is the fixer of the political right


• what America needs is "family values" as laid down by the womanizing, sex-crazed, power hungry politicians of the political right who find time to sit in Congress between screwing their secretaries and divorcing the wives and refusing to pay child support


• get government off our backs by bringing back Joe McCarthy with his demand of "loyalty oaths", or Goldwater with his decision to bomb Vietnam back to the Stone Age with nukes, or Reagan who wanted to stop the limousine liberals from giving money to welfare queens by putting up layer after layer of bureaucratic restriction of aiding the poor while ranting that the problem with government was that it needed to "cut regulations", or the 2000 George Bush who ranted that government had to get out of the business of "nation building" and then he started a couple of trillion dollar wars to bring "democarcy" and "good government" to Afghanistan and Iraq

Debt as a public policy is something that the economists understand but which gets twisted and distorted by right wing politicians into a lie on the same level as the 50 year lie that the United Nations was a front for Communism and that the US should "get out of the UN".

Understanding the Evil and Nefarious Schemes of Marketers

Here is truth laid bare...



I was well into my twenties before I had this level of sophisticated understanding of the evil marketing schemes of merchandisers.

A Glimpse into the Future

Here is a talk by Cory Doctorow on the future of computers given the impulse by corporations to control "rights" that require them to tie down their "customers" in thousands of ways to ensure maximum profit:



Skip the first 2 minutes of intros to get into the Doctorow talk.

A full transcription of the talk can be found here.

Cory offers up lots of thoughtful points. This video is well worth your time.

New Rules for the New Economy

Rule #1: He who writes the rules owns the gold.

Here is a bit from an article by Simon Johnson that rips into the insanity of the US government letting the big banks make big bucks on their housing bubble fraud but then demanding that the little guy, the taxpayer, first fork over billions to "make whole" the fraudulent banks, then stand by and look down at our feet while the big bank's top people get billions in bonuses, then go through a charade of "law enforcement" where the bankers get off the hook with pitifully small fines for bad behaviour and no jail time:

Santa Claus came early this year for four former executives of Washington Mutual (WaMu), a large US bank that failed in fall 2008. The Federal Deposit Insurance Corporation (FDIC) had brought a lawsuit against the four, actions that included taking huge financial risks while “knowing that the real estate market was in a ‘bubble.’” The FDIC sought to recover $900 million, but the executives have just settled for $64 million, almost all of which will be paid by their insurers; their out-of-pockets costs are estimated at just $400,000.

To be sure, the executives lost their jobs and now must drop claims for additional compensation. But, according to the FDIC, the four still earned more than $95 million from January 2005 through September 2008. So they are walking away with a great deal of cash. This is what happens when financial executives are compensated for “return on equity” unadjusted for risk. The executives get the upside when things go well; when the downside risks materialize, they lose nothing (or close to it).

Here is the problem with the current "system" that is shafting the 99%:

But capitalism without the prospect of failure is not any kind of market economy. We are running a large-scale, nontransparent, and dangerous government subsidy scheme for the benefit primarily of a very few, extremely wealthy people.

Jon Huntsman, a candidate for the Republican presidential nomination, is addressing this directly – insisting that we should force the largest banks to break up and to become safer. No other candidate for the presidency is seriously confronting this issue head-on: just saying “we’ll let them fail” is no kind of answer when the failure of megabanks would cause so much damage.

We should learn from both the WaMu and the Occupy movement. In both cases, the lesson is the same: concentrated financial power is a gift that keeps on giving – but not to you.

How to Know That Your Government is Rotten

Here is a bit from a Washington Post article that points out that while the "representatives" of the people have gotten fabulously wealthy over the last 25 years, the common people are either treading water or slowly sinking:

Between 1984 and 2009, the median net worth of a member of the House more than doubled, according to the analysis of financial disclosures, from $280,000 to $725,000 in inflation-adjusted 2009 dollars, excluding home ­equity.

Over the same period, the wealth of an American family has declined slightly, with the comparable median figure sliding from $20,600 to $20,500, according to the Panel Study of Income Dynamics from the University of Michigan.

The comparisons exclude home equity because it is not included in congressional reporting, and 1984 was chosen because it is the earliest year for which consistent wealth statistics are available.

The growing disparity between the representatives and the represented means that there is a greater distance between the economic experience of Americans and those of lawmakers.

...

The growing financial comfort of Congress relative to most Americans is consistent with the general trends in the United States toward inequality of wealth: Members of Congress have long been wealthier than average Americans, and in recent decades the wealth of the wealthiest Americans has outpaced that of the average.

In 1984, the 90th percentile of U.S. families had holdings worth six times the median family’s; by 2009, the 90th percentile was worth 12 times the median family, according to the University of Michigan study, a longitudinal panel survey. These figures include home equity.

This growing inequality, not surprisingly, is seen in Congress. Not only has the median wealth increased, but the proportion of representatives who have little besides a home has shrunk. In 1984, one in five House members had zero or negative net worth excluding home equity, according to the disclosures; by 2009, that number had dropped to one in 12.

When the guardians of the government are stuffing their pockets with money while the people are slowly sinking, things are rotten. There is corruption and incompetence in government.

The Republicans loved to say that "government is the problem, not the solution". That's got it wrong. The problem is that the government politicians are the problem, not the solution. These "elected representatives" have been using their power to feed at the trough of government, taking money from lobbyists, selling their votes, all while they have been telling the ordinary citizens that the problem is "big government", not crooked, greedy politicians.

Rather than pass laws to help their constituents. These pigs have been feasting off tax money while blaming "big government" for everything. They are hypocrites, crooks, and liars. And they and their buddies, the elite 1% are doing this at the expense of the bottom 99%.

Note: From this same article. Here is how the rich view themselves as deserving their wealth. This is what a guy who married into the Phillips petroleum empire says of how "hard work" will make you a billionaire:

In 1973, Kelly married Victoria Phillips, an heir to the oil fortune. Kelly’s financial disclosure forms show that among her holdings is stock in Phillips Resources Inc., which is valued at between $5 million and $25 million and which generated more than $100,000 annually in dividends.

Four years out of college in 1974, Mike and Victoria were able to buy a home for $50,000, roughly twice the median value of homes in Pennsylvania at the time, a large, stately house close to downtown.

In 1997, Kelly bought his dad’s business from him, taking out a $1.6 million mortgage to pay for it.

When discussing his wealth and how it came to him, Kelly, who was called “Millionaire Mike” during the 2010 campaign, grows animated.

“The way my dad taught me was pretty basic: You have to kill more than you eat. You gotta wake up every day before anyone else, you better get to work, and you better stay later than everybody else,” he said. “I’m a rich guy because I’ve worked hard. I gotta work every fricking day. Listen, nobody gives it to you. I compete. I’m not the only guy selling hot dogs at the ballpark, okay?”

I don't doubt he worked hard. But tens of millions of people work hard, real hard. A lot of poor people hold down two jobs at minimum wage working incredibly hard. But they don't "build up" car dealerships. This guy Mike Kelly, a Republican, worked hard. I don't doubt it. But he didn't get fabulously wealthy from working hard. His dad owned a car dealership and he bought out his father (probably at a steeply discounted price) and he married an heiress to a fortune. I bet a lot of janitors would me multi-millionaires if their fathers owned car dealerships and they married heiresses. And I bet they would be millionaires if they only put in an "average day" at work. It wasn't the hard work that made Mike Kelly rich. It was his education, his connections, his charm, probably his "flexible" ethics, and certainly some good old fashioned hard work.

Interesting Article on Young Love Between Autistics

Here is a bit from a very interesting NY Times article that looks at two young autistic people negotiating the strange world of love and intimacy. You need to be aware of the basics of ASD to appreciate this article:

Jack, Kirsten noticed, bit his lips, a habit he told her came from not knowing how he was supposed to arrange his face to show his emotions. Kirsten, Jack noticed, cracked her knuckles, which she later told him was her public version of the hand-flapping she reserved for when she was alone, a common autistic behavior thought to ease stress.

Their difficulty discerning unspoken cues might have made it harder to know if the attraction was mutual. Kirsten stalked Jack on Facebook, she later told him, but he rarely posted. In one phone conversation, Jack wondered, “Is she flirting with me?” But he could not be sure.

But Jack, who had never known how to hide his feelings, wrote Kirsten an e-mail laying them out. And when Kirsten’s boyfriend pleaded with her to tell him what was wrong, she did, sobbing. She could not explain, she said. She knew only that she felt as if she had found her soul mate.

From the beginning, their physical relationship was governed by the peculiar ways their respective brains processed sensory messages. Like many people with autism, each had uncomfortable sensitivities to types of touch or texture, and they came in different combinations.

Jack recoiled when Kirsten tried to give him a back massage, pushing deeply with her palms.

“Pet me,” he said, showing her, his fingers grazing her skin. But Kirsten, who had always hated the feeling of light touch, shrank from his caress.

“Only deep pressure,” she showed him, hugging herself.

He tried to kiss her, but it was hard for her to enjoy it, so obvious was his aversion. To him, kissing felt like what it was, he told her: mashing your face against someone else’s. Neither did he like the sweaty feeling of hand-holding, a sensation that seemed to dominate all others whenever they tried it.

“I’m sorry,” he said helplessly.

They found ways to negotiate sex, none of them perfect. They kept trying.

What mattered more to Kirsten was how comfortable she felt for the first time in a relationship. Even if she did something wrong, she believed, Jack would not leave her. When he remarked on her obliviousness after she chattered on one day about vertebrate anatomy to their neighbor — “Matson was totally bored,” he informed her — there was no judgment, only pride that he had managed to notice. “Is that why he was yawning?” she asked, laughing with him.

...

She tolerated his discomfort with public displays of affection, though she pushed for more in private. When he explained that his lack of expression did not mean a lack of warmth for her — he often simply forgot — she devised a straightforward strategy to help him.

“When I put my hand on your leg,” she said, “you put your arm on my back.”

...

Looking for clues to fix her new relationship, Kirsten began frequenting autism Web sites like WrongPlanet.net, where hundreds of messages a day are posted. “Eligible Odd-Bods,” read one. Another, “Are relationships harder for Aspies?”

In the library, she paged through autism guidebooks, few of which contained any information about relationships, not to mention sex. But as she read about the manifestations of the condition, she recognized them — and not only in Jack.

A passage about the difficulty that people with autism have reading facial expressions reminded her of being mocked by a friend at age 5 with whom she had agreed to draw “angry ghosts.” The friend’s ghost had zigzag lines for scowling lips and a knitted brow. Kirsten, unsure how to depict anger, had drawn a blank-faced ghost with a dialogue box above its head that read “Grrr.”

I love the odd connections this article brought up in me:

• The Jack Robison in the article is the son of John Elder Robison who has written a very interesting book on the autistic experience Look Me in the Eye.


• The brother of John Elder Robison is also a writer, Augusten Burroughs, who has written two books about his bizarre upbringing caused by the fact that his father was autistic and his mother suicidal. The first book was Running with Scissors which was made into a move. And the second was A Wolf at the Table which looked more deeply into his relatioship with his autistic father.


• These connections remind me of the "small world" phenomenon that was first researched by Stanley Milgram who is famous for his early 1960s experiments in authority.


• And these connections of course remind me of the famous science historian James Burke who had a very popular TV series called "Connections" and who wrote many books on the deep connections through scientific history.

The world is fascinating because it is all tied together by multiple connections. This wondrous fact makes learning so very satisfying. Not only do you get to discover the hidden connections, you find that these connections make a framework which makes learning new facts and connections so much easier.

I get utterly disgusted by religious fanatics who claim that "all knowledge" is captured in some millennia old "sacred text" that records the sketchy, ill-informed, and stuffed with magical thinking "explanation" of the world. The real world is much more fascinating. But religious bigots refuse to open their eyes and look. Very much like the famous scholastics of the Middle Ages who could interminably "debate" over how many teeth in a horse's head based on the various writing of ancient "sages" when in fact the solution lay at hand: go out on the street, open a horse's mouth, and count the teeth!

EFF's List of Shame

Here is a list of US government "secrecy" actions that are mindless and counter-productive published by the Electronic Frontier Foundation (EFF):

As the year draws to a close, EFF is looking back at the major trends influencing digital rights in 2011 and discussing where we are in the fight for a free expression, innovation, fair use, and privacy.

The government has been using its secrecy system in absurd ways for decades, but 2011 was particularly egregious. Here are a few examples:

• Government report concludes the government classified 77 million documents in 2010, a 40% increase on the year before. The number of people with security clearances exceeded 4.2. million, more people than the city of Los Angeles.


• Government tells Air Force families, including their kids, it’s illegal to read WikiLeaks. The month before, the Air Force barred its service members fighting abroad from reading the New York Times—the country’s Paper of Record.


• Lawyers for Guantanamo detainees were barred from reading the WikiLeaks Guantanamo files, despite their contents being plastered on the front page of the New York Times.


• President Obama refuses to say the words “drone” or “C.I.A” despite the C.I.A. drone program being on the front pages of the nation’s newspapers every day.


• CIA refuses to release even a single passage from its center studying global warming, claiming it would damage national security. As Secrecy News' Steven Aftergood said, “That’s a familiar song, and it became tiresome long ago.”


• The CIA demands former FBI agent Ali Soufan censor his book criticizing the CIA’s post 9/11 interrogation tactics of terrorism suspects. Much of the material, according to the New York Times, “has previously been disclosed in open Congressional hearings, the report of the national commission on 9/11 and even the 2007 memoir of George J. Tenet, the former C.I.A. director.”


• Department of Homeland Security has become so bloated with secrecy that even the “office's budget, including how many employees and contractors it has, is classified,” according to the Center for Investigative reporting. Yet their intelligence reports “produce almost nothing you can’t find on Google,” said a former undersecretary.


• Headline from the Wall Street Journal in September: “Anonymous US officials push open government.”


• NSA declassified a 200 year old report which they said demonstrated its “commitment to meeting the requirements” of President Obama’s transparency agenda. Unfortunately, the document “had not met the government's own standards for classification in the first place,” according to J. William Leonard, former classification czar.


• Government finally declassifies the Pentagon Papers 40 years after they appeared on the front page of the New York Times and were published by the House’s Armed Services Committee.


• Secrecy expert Steve Aftergood concludes after two years “An Obama Administration initiative to curb overclassification of national security information… has produced no known results to date.”


• President Obama accepts a transparency award…behind closed doors.


• Government attorneys insist in court they can censor a book which was already published and freely available online.


• Department of Justice refuses to release its interpretation of section 215 of the Patriot Act, a public law.


• U.S. refuses to release its legal justification for killing an American citizen abroad without a trial, despite announcing the killing in a press conference.


• U.S. won’t declassify legal opinion on 2001’s illegal warrantless wiretapping program.


• National Archive announced it was working on declassifying “a backlog of nearly 400 million pages of material that should have been declassified a long time ago.”


• The CIA refused to declassify Open Source Works, “which is the CIA’s in-house open source analysis component, is devoted to intelligence analysis of unclassified, open source information” according to Steve Aftergood.


• Twenty-three year State Department veteran gets his security clearance revoked for linking to a WikiLeaks document on his blog.


• The ACLU sued asking the State Department to declassify 23 cables out of the more than 250,000 released by WikiLeaks. After more than a year, the government withheld 12 in their entirety. You can see the other 11, heavily redacted, next to the unredacted copies on the ACLU website.

The ACLU said it sued the State Department in part to show the "absurdity of the US secrecy regime."

Go to the original EFF posting to access the embedded links.

The Bush administration was blatant in its disregard for law and its disrespect for sensible security. The Obama regime is more devious. It gives the pretense of "concern" but its actions belie the truth. There is little difference between the Republicans and the Democrats. They both believe in the "mushroom theory" of government: keep the people in the dark and feed them shit.

My Kind of App

Here's a great app to get your mind off your troubles and cares...



Yep... life has a way of biting back!

Take a Tour Through Airport Security Theatre

Here is a bit from an article in Vanity Fair in which the reporter takes a walk through Reagan National Airport with security critic Bruce Schneier who points out the security weaknesses and the incredible expense to achieve this "security":

Since 9/11, the U.S. has spent more than $1.1 trillion on homeland security.

To a large number of security analysts, this expenditure makes no sense. The vast cost is not worth the infinitesimal benefit. Not only has the actual threat from terror been exaggerated, they say, but the great bulk of the post-9/11 measures to contain it are little more than what Schneier mocks as “security theater”: actions that accomplish nothing but are designed to make the government look like it is on the job. In fact, the continuing expenditure on security may actually have made the United States less safe.

...

Two months after 9/11, the Bush administration created the Transportation Security Agency, ordering it to hire and train enough security officers to staff the nation’s 450 airports within a year. Six months after that, the government vastly expanded the federal sky-marshal program, sending thousands of armed lawmen to ride planes undercover. Meanwhile, the T.S.A. steadily ratcheted up the existing baggage-screening program, banning cigarette lighters from carry-on bags, then all liquids (even, briefly, breast milk from some nursing mothers). Signs were put up in airports warning passengers about specifically prohibited items: snow globes, printer cartridges. A color-coded alert system was devised; the nation was placed on “orange alert” for five consecutive years. Washington assembled a list of potential terror targets that soon swelled to 80,000 places, including local libraries and miniature-golf courses. Accompanying the target list was a watch list of potential suspects that had grown to 1.1 million names by 2008, the most recent date for which figures are available. Last year, the Department of Homeland Security, which absorbed the T.S.A. in 2003, began deploying full-body scanners, which peer through clothing to produce nearly nude images of air passengers.

Bruce Schneier’s exasperation is informed by his job-related need to spend a lot of time in Airportland. He has 10 million frequent-flier miles and takes about 170 flights a year; his average speed, he has calculated, is 32 miles and hour. “The only useful airport security measures since 9/11,” he says, “were locking and reinforcing the cockpit doors, so terrorists can’t break in, positive baggage matching”—ensuring that people can’t put luggage on planes, and then not board them —“and teaching the passengers to fight back. The rest is security theater.”

...

Terrorists will try to hit the United States again, Schneier says. One has to assume this. Terrorists can so easily switch from target to target and weapon to weapon that focusing on preventing any one type of attack is foolish. Even if the T.S.A. were somehow to make airports impregnable, this would simply divert terrorists to other, less heavily defended targets—shopping malls, movie theaters, churches, stadiums, museums. The terrorist’s goal isn’t to attack an airplane specifically; it’s to sow terror generally. “You spend billions of dollars on the airports and force the terrorists to spend an extra $30 on gas to drive to a hotel or casino and attack it,” Schneier says. “Congratulations!”

What the government should be doing is focusing on the terrorists when they are planning their plots. “That’s how the British caught the liquid bombers,” Schneier says. “They never got anywhere near the plane. That’s what you want—not catching them at the last minute as they try to board the flight.”

To walk through an airport with Bruce Schneier is to see how much change a trillion dollars can wreak. So much inconvenience for so little benefit at such a staggering cost. And directed against a threat that, by any objective standard, is quite modest. Since 9/11, Islamic terrorists have killed just 17 people on American soil, all but four of them victims of an army major turned fanatic who shot fellow soldiers in a rampage at Fort Hood. (The other four were killed by lone-wolf assassins.) During that same period, 200 times as many Americans drowned in their bathtubs. Still more were killed by driving their cars into deer. The best memorial to the victims of 9/11, in Schneier’s view, would be to forget most of the “lessons” of 9/11. “It’s infuriating,” he said, waving my fraudulent boarding pass to indicate the mass of waiting passengers, the humming X-ray machines, the piles of unloaded computers and cell phones on the conveyor belts, the uniformed T.S.A. officers instructing people to remove their shoes and take loose change from their pockets. “We’re spending billions upon billions of dollars doing this—and it is almost entirely pointless. Not only is it not done right, but even if it was done right it would be the wrong thing to do.”

The article is well worth reading. Go read the whole thing.

The Sleaze that Passes for Politics in America

Here are some bits from a NY Times op-ed by Paul Krugman exposing the cynical manipulation of truth by Republicans, Romney in particular:

Suppose that President Obama were to say the following: “Mitt Romney believes that corporations are people, and he believes that only corporations and the wealthy should have any rights. He wants to reduce middle-class Americans to serfs, forced to accept whatever wages corporations choose to pay, no matter how low.”

How would this statement be received? I believe, and hope, that it would be almost universally condemned, by liberals as well as conservatives. Mr. Romney did once say that corporations are people, but he didn’t mean it literally; he supports policies that would be good for corporations and the wealthy and bad for the middle class, but that’s a long way from saying that he wants to introduce feudalism.

But now consider what Mr. Romney actually said on Tuesday: “President Obama believes that government should create equal outcomes. In an entitlement society, everyone receives the same or similar rewards, regardless of education, effort, and willingness to take risk. That which is earned by some is redistributed to the others.”

And in an interview the same day, Mr. Romney declared that the president “is going to put free enterprise on trial.”

This is every bit as bad as my imaginary Obama statement. Mr. Obama has never said anything suggesting that he holds such views, and, in fact, he goes out of his way to praise free enterprise and say that there’s nothing wrong with getting rich. His actual policy proposals do involve a rise in taxes on high-income Americans, but only back to their levels of the 1990s. And no matter how much the former Massachusetts governor may deny it, the Affordable Care Act established a national health system essentially identical to the one he himself established at a state level in 2006.

Over all, Mr. Obama’s positions on economic policy resemble those that moderate Republicans used to espouse. Yet Mr. Romney portrays the president as the second coming of Fidel Castro and seems confident that he will pay no price for making stuff up.

Welcome to post-truth politics.

...

So here’s my forecast for next year: If Mr. Romney is in fact the Republican presidential nominee, he will make wildly false claims about Mr. Obama and, occasionally, get some flack for doing so. But news organizations will compensate by treating it as a comparable offense when, say, the president misstates the income share of the top 1 percent by a percentage point or two.

The end result will be no real penalty for running an utterly fraudulent campaign. As I said, welcome to post-truth politics.

If there were any justice in the world, this farce that passes for politics would quickly lead to the complete collapse of America. Instead, the Republicans have been pulling this fraud for 30+ years and the only penalty has been a slow decay within America and a slow collapse of their economy. And the electorate continues like sheep to the slaughter. They don't complain. They keep electing these liars to positions of power, to positions that let them enrich the top 1% at the expense of the bottom 99%.

America, Land of the Freely Arrested

From an article in the NY Times:

By age 23, almost a third of Americans have been arrested for a crime, according to a new study that researchers say is a measure of growing exposure to the criminal justice system in everyday life.

The study, the first since the 1960s to look at the arrest histories of a national sample of adolescents and young adults over time, found that 30.2 percent of the 23-year-olds who participated reported having been arrested for an offense other than a minor traffic violation.

...

The study did not look at racial or regional differences, but other research has found higher arrest rates for black men and for youths living in poor urban areas.

I have to laugh. Americans love to beat their chest and proclaim their "love of liberty" but they arrest and incarcerate at a rate far beyond almost every other country in the world except for the handful of despot dictatorships. You would think this report would force Americans to look in the mirror. Their myth of "freedom loving" doesn't match up with their eagerness to jail. It is much like the Founding Fathers prating on about "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. while being one of the worse slavery-based societies on the face of the earth.

America's Love Affair with the Rich

Here is an excellent post by Joshua M. Brown on his blog The Reformed Broker. I've bolded some key bits:

Dear Jamie Dimon,

I hope this note finds you well.

I am writing to profess my utter disbelief at how little you seem to understand the current mood of the nation. In a story at Bloomberg today, you and a handful of fellow banker and billionaire "job creators" were quoted as believing that the horrific sentiment directed toward you from virtually all corners of America had something to do with how much money you had. I'd like to take a moment to disabuse you of this foolishness.

America is different than almost every other place on earth in that its citizenry reveres the wealthy and we are raised to believe that we can all one day join the ranks of the rich. The lack of a caste system or visible rungs of society's ladder is what separates our empire from so many fallen empires throughout history. In a nation bereft of royalty by virtue of its republican birth, the American people have done what any other resourceful people would do - we've created our own royalty and our royalty is the 1%. Not only do we not "hate the rich" as you and other em-bubbled plutocrats have postulated, in point of fact, we love them. We worship our rich to the point of obsession. The highest-rated television shows uniformly feature the unimaginably fabulous families of celebrities not to mention the housewives (real or otherwise) of the rich. We don't care what color they are or what religion they practice or where in the country they live or what channel their show is on - if they're rich, we are watching.

When Derek Jeter was toyed with by the New York Yankees when it came time for him to renew his next hundred million dollar contract, the people empathized with Derek Jeter. Sure, this disagreement essentially took place between one of the wealthiest organizations in the country and one of the wealthiest private citizens - but we rooted for Jeter to get his money. Nobody begrudged him a penny of it or wanted a piece of it or decried the fact that he was luckier than the rest of us. In the American psyche, Jeter was one of the good guys who was deservedly successful. He was one of us and an example of hard work paying off.

Likewise, when Steve Jobs died, he did so with more money than you or any of your "job alliance" buddies - ten times more than most of you, in fact. And upon his death the entire nation went into mourning. We set up makeshift shrines to his brilliance in front of Apple stores from coast to coast. His biography flew off the shelves and people bought Apple products and stock shares in his honor and in his memory. Does that strike you as the action of a populace that hates success?

No, Jamie, it is not that Americans hate successful people or the wealthy. In fact, it is just the opposite. We love the success stories in our midst and it is a distinctly American trait to believe that we can all follow in the footsteps of the elite, even though so few of us ever actually do.

So, no, we don't hate the rich. What we hate are the predators.

What we hate are the people who we view as having found their success as a consequence of the damage their activities have done to our country. What we hate are those who take and give nothing back in the form of innovation, convenience, entertainment or scientific progress. We hate those who've exploited political relationships and stupidity to rake in even more of the nation's wealth while simultaneously driving the potential for success further away from the grasp of everyone else.

Here in New York, we hated watching real estate and financial services elitists drive up the prices of everything from affordable apartments to martinis in midtown with the reckless speculation that would eventually lead to mass layoffs, rampant joblessness and the wreckage of so many retirement dreams. No one ever asked the rest of us if we minded, it just happened. I'm sure people across the country can tell similar stories.

So please, do us all a favor and come to the realization that the loathing you feel from your fellow Americans has nothing to do with your "success" or your "wealth" and it has everything to do with the fact that your wealth and success have come at a cost to the rest of us. No one wants your money or opportunities, what they want is the same chance that their parents had to attain these things for themselves. You are viewed, and rightfully so, as part of the machine that has removed this chance for many - and that is what they hate.

America hates unjustified privilege, it hates an unfair playing field and crony capitalism without the threat of bankruptcy, it hates privatized gains and socialized losses, it hates rule changes that benefit the few at the expense of the many and it hates people who have been bailed out and don't display even the slightest bit of remorse or humbleness in the presence of so much suffering in the aftermath.

Nobody hates your right to make money, Jamie. They hate how you and certain others have made it.

Don't be confused on this score for a moment longer.

If only the American people really took the sentiments of this post to heart. They could break the chains of financial and political abuse they have been under for 30+ years of the "Reagan Revolution".

The Civil War That Won't End

Here is a bit from a post by Robert Reich looking at the bizarre behaviour of America's Republican party:

Two weeks before the Iowa caucuses, the Republican crackup threatens the future of the Grand Old Party more profoundly than at any time since the GOP’s eclipse in 1932. That’s bad for America.

The crackup isn’t just Romney the smooth versus Gingrich the bomb-thrower.

Not just House Republicans who just scotched the deal to continue payroll tax relief and extended unemployment insurance benefits beyond the end of the year, versus Senate Republicans who voted overwhelmingly for it.

Not just Speaker John Boehner, who keeps making agreements he can’t keep, versus Majority Leader Eric Cantor, who keeps making trouble he can’t control.

And not just venerable Republican senators like Indiana’s Richard Lugar, a giant of foreign policy for more than three decades, versus primary challenger state treasurer Richard Mourdock, who apparently misplaced and then rediscovered $320 million in state tax revenues.

Some describe the underlying conflict as Tea Partiers versus the Republican establishment. But this just begs the question of who the Tea Partiers really are and where they came from.

The underlying conflict lies deep into the nature and structure of the Republican Party. And its roots are very old.

As Michael Lind has noted, today’s Tea Party is less an ideological movement than the latest incarnation of an angry white minority – predominantly Southern, and mainly rural – that has repeatedly attacked American democracy in order to get its way.

It’s no mere coincidence that the states responsible for putting the most Tea Party representatives in the House are all former members of the Confederacy. Of the Tea Party caucus, twelve hail from Texas, seven from Florida, five from Louisiana, and five from Georgia, and three each from South Carolina, Tennessee, and border-state Missouri.

Others are from border states with significant Southern populations and Southern ties. The four Californians in the caucus are from the inland part of the state or Orange County, whose political culture has was shaped by Oklahomans and Southerners who migrated there during the Great Depression.

This isn’t to say all Tea Partiers are white, Southern or rural Republicans – only that these characteristics define the epicenter of Tea Party Land.

The Germans let militarists lead them into war after war that led to defeat until Hitler iced the cake with a war to end all wars for the Germans. Hitler left a scorched earth German. Is the Republican party working hard to achieve the same in the United States?

Corruption in High Places

Here is a bit from a post by Matt Taibbi in his Rolling Stone blog:

Obama and Geithner: Government, Enron-Style

Strongly recommend this piece at the Huffington Post by Jeff Connaughton, a former aide to Senator Ted Kaufman. Jeff is one of the smartest guys on the Hill and is particularly strong on issues surrounding Wall Street and the regulatory system. In this piece, he takes apart the oft-stated mantra that what Wall Street firms did during and after the crisis was maybe unethical, but not illegal.

He takes particular aim at Barack Obama, who recently tossed that line out on 60 Minutes in what I thought was one of the real low moments of his presidency. Here’s Jeff’s take:

Speaking in Kansas on December 6, [Obama] said, "Too often, we've seen Wall Street firms violating major anti-fraud laws because the penalties are too weak and there's no price for being a repeat offender." Just five days later on 60 Minutes, he said, "Some of the least ethical behavior on Wall Street wasn't illegal." Which is it? Have there been no prosecutions because Wall Street acted legally (albeit unethically)? Or did Wall Street repeatedly violate major anti-fraud laws (and should thus find itself in the dock)?

The President is confusing "legal" with "difficult to prosecute successfully."

The notion that what Wall Street firms did was merely unethical and not illegal is not just mistaken but preposterous: most everyone who works in the financial services industry understands that fraud right now is not just pervasive but epidemic, with many of the biggest banks committing entire departments to the routine commission of fraud and perjury – every single one of the major banks, for instance, devotes significant manpower to robosigning affidavits for foreclosures and credit card judgments, acts which are openly and inarguably criminal.

Banks and hedge funds routinely withhold derogatory information about the instruments they sell, they routinely trade on insider information or ahead of their own clients’ orders, and corrupt accounting is so rampant now that industry analysts have begun to figure in estimated levels of fraud in their examinations of the public disclosures of major financial companies.

Beyond that, as Jeff points out, Obama is simply not telling the truth about the supposedly insufficient penalties available to regulators. Employing the famous "mistakes were made" use of the passive tense, Obama copped out in his December 6 speech by saying that “penalties are too weak." As Jeff points out, what Obama should have said is that "the penalties my own regulators chose to dish out were too weak":

Moreover, the President is misleading us when he says that Wall Street firms violate anti-fraud law because the penalties are too weak. Repeat financial fraudsters don't pay relatively paltry -- and therefore painless -- penalties because of statutory caps on such penalties. Rather, regulatory officials, appointed by Obama, negotiated these comparatively trifling fines. This week, the F.D.I.C. settled a suit against Washington Mutual officials for just $64 million, an amount that will be covered mostly by insurance policies WaMu took out on behalf of executives, who themselves will pay just $400,000. And recently a federal judge rejected the S.E.C.'s latest settlement with Citigroup, an action even the Wall Street Journal called "a rebuke of the cozy relationship between regulators and the regulated that too often leaves justice as an orphan."

What makes Obama’s statements so dangerous is that they suggest an ongoing strategy of covering up the Wall Street crimewave. There is ample evidence out there that the Obama administration has eased up on prosecutions of Wall Street as part of a conscious strategy to prevent a collapse of confidence in our financial system, with the expected 50-state foreclosure settlement being the landmark effort in the cover-up, intended mainly to bury a generation of fraud. Here’s how Jeff puts it:

In Ron Suskind's book, Confidence Men, he quotes Treasury Secretary Timothy Geithner as saying, "The confidence in the system is so fragile still... a disclosure of a fraud... could result in a run, just like Lehman." The Obama Administration is pushing hard for a 50-state settlement with the major banks for their fraudulent foreclosure practices, even though several state attorneys general have rejected this approach because, in their view, it would shield too much wrongdoing. Regrettably, Obama's top officials and lawyers seem more eager to restore the financial sector to health than establish criminal accountability among the executives who were in charge.

In other words, Geithner and Obama are behaving like Lehman executives before the crash of Lehman, not disclosing the full extent of the internal problem in order to keep investors from fleeing and creditors from calling in their chits. It’s worth noting that this kind of behavior – knowingly hiding the derogatory truth from the outside world in order to prevent a run on the bank – is, itself, fraud!

This is exactly the mindset that led Lehman to the abuses of the "Repo 105" accounting trick, in which loans were disguised as revenues in order to prevent the outside world from knowing the dire state of the bank’s balance sheet.

Now Obama and Geithner are engaged in the same sort of activity, only they’re trying to prevent a run not on an individual bank, but the entire American financial services sector. Geithner seems really to believe that if fraud were aggressively policed, and the world made aware of the incredible extent of the illegality in our markets, that international confidence in the American financial sector would plummet and our economy would suffer – and suffer, incidentally, on Barack Obama’s watch.

I was a big fan of Obama in 2008. I had read his books and followed the campaign. I was sucked into deeply believing in his "change you can believe in" and "hope" themes. I'm especially bitter by how he has proven himself to be a liar. He stole the vote because he knowingly promised one thing and did another. He is better than the Republican idiot, but Obama is an abomination and doesn't deserve the presidency. But, sadly, people better vote for him rather than the horse pucky that the Republicans will nominate.

It is criminal that the US political system throws up such crappy candidates... and allows them to lie their into power. There is no "representative" democracy if voters have to take a pig in a poke.

Justice in America

Here is a bit from a post by Robert Reich in his blog:

— American Airlines uses bankruptcy to ward off debtors and renegotiate labor contracts. Donald Trump’s businesses go bankrupt without impinging on Trump’s own personal fortune. But the law won’t allow you to use personal bankruptcy to renegotiate your home mortgage.

— If you run a giant bank that defrauds millions of small investors of their life savings, the bank might pay a small fine but you won’t go to prison. Not a single top Wall Street executive has been prosecuted for Wall Street’s mega-fraud. But if you sell an ounce of marijuana you could be put away for a long time.

The above is the key issue in the 99% versus 1% fight now going on in the US. There is a "justice" for the poor and a "justice" for the rich. There is a government for the rich and the poor have no voice in government. In fact the US Supreme Court has made it official with its Citizens United case: corporations are "people" with no limits on their political donations, while real living and breathing human beings are limited -- by law! -- in their donations. So the "person" of a corporation is above the law that applies to "mere persons" as represented by the bottom 99%.

Here is the reality of today:

... the four hundred richest Americans, whose total wealth exceeds the combined wealth of the bottom 150 million Americans put together, pay an average of 17 percent of their income in taxes. That’s lower than the tax rates of most day laborers and child-care workers.

Read the whole post.

Egypt in the Throes of Another Revolution

To defeat cruel leaders and a country with a tiny elite is very hard. You can kill the monster who officially runs things, but quickly a new monster grabs the reins of power and re-imposes the cruel regime. That is exactly what is happening in Egypt.

Here is a bit from an excellent article by Ahdaf Soueif in the UK's Guardian newspaper:

Since Friday the military has openly engaged with civilian protesters in the heart of the capital. The protesters have been peacefully conducting a sit-in in Ministries' Street to signal their rejection of the military's appointment of Kamal Ganzouri as prime minister.

Ganzouri announced that no violence would be used to break up the Cabinet Office sit-in. Moments later the military took on the protesters. For a week Military Police and paratroopers had kidnapped activists from the streets, driven them off in unmarked vehicles, interrogated them and beaten them. On Friday they kidnapped Aboudi – one of the "Ultras" of the Ahli Football Club. They gave him back with his face so beaten and burned that you couldn't see features – and started the street war that's been raging round Ministries' Street for the last three days.

The protesters have thrown rocks at the military. The military has shot protesters, and thrown rocks, Molotov cocktails, china embossed with official parliament insignia, chairs, cupboards, filing-cabinets, glass panes and fireworks. They've dragged people into parliament and into the Cabinet Office and beaten and electrocuted them – my two nieces were beaten like this.

They beat up a newly elected young member of parliament, jeering: "Let parliament protect you, you son of … ". They took a distinguished older lady who's become known for giving food to the protesters and slapped her repeatedly about the face till she had to beg and apologise. They killed 10 people, injured more than 200, and they dragged the unconscious young woman in the blue jeans – with her upper half stripped – through the streets.

The message is: everything you rose up against is here, is worse. Don't put your hopes in the revolution or parliament. We are the regime and we're back.

Third Time is a Charm... maybe

Here is a bit from a NY Times op-ed piece by Paul Krugman:

Consider the following picture: Recent growth has relied on a huge construction boom fueled by surging real estate prices, and exhibiting all the classic signs of a bubble. There was rapid growth in credit — with much of that growth taking place not through traditional banking but rather through unregulated “shadow banking” neither subject to government supervision nor backed by government guarantees. Now the bubble is bursting — and there are real reasons to fear financial and economic crisis.

Am I describing Japan at the end of the 1980s? Or am I describing America in 2007? I could be. But right now I’m talking about China, which is emerging as another danger spot in a world economy that really, really doesn’t need this right now.

I’ve been reluctant to weigh in on the Chinese situation, in part because it’s so hard to know what’s really happening. All economic statistics are best seen as a peculiarly boring form of science fiction, but China’s numbers are more fictional than most. I’d turn to real China experts for guidance, but no two experts seem to be telling the same story.

Still, even the official data are troubling — and recent news is sufficiently dramatic to ring alarm bells.

The world doesn't need more bad news. But sadly the world is indifferent to humans, their needs, their wants. While Krugman worries about the effect of China on the world, Kim Jong-il has died in Korea creating an unstable mess that could easily spin out of control.

When I was a kid I heard the so-called "Chinese" curse of "may you live in interesting times". All I knew is that I desperately wanted to live in boring times, but sadly my whole life has been lived in the maelstrom of "interesting" events bringing misery and chaos. That is how the world works. Complete indifference to humans needs or wants.

The Case Against Copyright

Here is a brief summary of why SOPA and similar copyright laws are bad for people and bad for the economy. This is a bit from a post by Dean Baker on his Beat the Press blog:

Standard economic models show that tariffs cost jobs. The reason is that they make consumers pay more money for the protected product. This pulls money away that could be spent in other areas. If the spending took place elsewhere, it would create more jobs than the additional money earned by the protected industry.

The same logic applies to increasingly stringent protections for copyright, except the economic waste and resulting job loss is likely to be much larger. Tariffs rarely raise the price of products by more than 15-20 percent. Copyright can make items very costly that could otherwise be available for free or nearly free. This implies a tariff of several thousand percent or higher.

In addition, there are enormous costs associated with copyright enforcement, with both the public and private sector required to make substantial expenditures to prevent unauthorized copies of copyrighted material from being circulated. This amounts to a waste of resources that could instead go to productive activity.

Copyright and its enforcement can be thought of as being analogous to toll booths, which can be used as a way to finance road construction. If the only way we have to finance road construction is toll booths, then we absolutely need toll booths to pay the road-builders.

However, once we have roads that are financed through other mechanisms (e.g. government funding), then it becomes increasingly difficult to collect money at the tollbooths since people will opt to use the free roads. We could go the route that many in Congress want to take with the Stop Online Piracy Act (SOPA), which effectively amounts to building toll booths that are harder to get around and imposing tough penalties on those who try to take free roads.

This gets more money for the people who build and operate toll booths, but may not do very much to help the people who build roads. Alternatively, we could try to find ways to get more money directly to the road-builders without spending vast sums erecting bigger more expensive toll booths and being more punitive to those who use free roads.

A Summary of America's "Effort" In Iraq

Here is a bit from an opinion piece in the NY Times by Maureen Dowd that nails down the idiocy of US policy in Iraq:

You’d never know it, given Republicans’ churlish silence and unseemly sniping, but the president and the vice president have stumbled and bumbled their way to an acceptable ending to the war that George W. Bush and Dick Cheney so recklessly started. It was a magnificent miscalculation that Obama warned in 2002 was “a dumb war.”

Funnily enough, Obama has found it easier to wrap up Bush’s foreign policy blunders than his domestic ones.

Vice President Joseph Biden spent so many hundreds of hours hashing things out with Iraqi officials that he knew the names of their grandchildren — just as Bill Clinton could reel off street names during the peace effort in Northern Ireland.

In the painful calculation of what’s “good enough,” as we end our two attenuated wars, the White House sees it this way on Iraq: The baby is born. The gestation period couldn’t be 18 years; eight years was bad enough. The midwife had to leave.

The spectacular error that Bush, Cheney and Donald Rumsfeld made was feeling we needed a post-9/11 demonstration of war to prove our toughness. If they had merely pushed along the Arab Spring, they could have saved a trillion dollars and the lives of 4,500 American troops.

It would have been more of a boon to our national security to finish off the Afghanistan mission and kill Osama bin Laden sooner. Instead, the Bush team let itself get distracted with nation-building in Iraq when our own nation was falling apart, and President Obama ended up surging and withdrawing in Afghanistan at the same time, which made no sense.

Before W. tried to outdo his daddy, we were a country that usually had to take a punch before we went to war. We didn’t unilaterally start wars.

In her new memoir, Condoleezza Rice has a sentence so stunningly lame it makes you want to scream — or cry. “The fact is,” she writes, “we invaded Iraq because we believed we had run out of other options.”

I’m not a National Security Council adviser, but I can think of about a hundred other options we had with Saddam.

At least Condi admits that one of the inflated and improvised rationales for war wasn’t true: “We did not go to Iraq to bring democracy any more than Roosevelt went to war against Hitler to democratize Germany, though that became American policy once the Nazis were defeated.”

The real tragedy is that in 2008 Americans voted to change policies but got a Bush "lite" in Obama. Obama promised to get out of the war, stop torture, and get out of Guantanamo. Once in office he "surged" in Afghanistan and dragged his feet on all these commitments. He may have stopped torturing prisoners, but he has upped the ante with a lot more drone-based killings. Rather than arrest Osama Bin Laden he sent in a killer elite to "terminate" rather than capture. There is something indescribably sinister in a policy of death rather than justice.

Understanding the Great Recession

Here is a short summary of a proposed explanation of the current economic collapse. This is a bit from a post by UC Berkeley economist Brad DeLong:

As I understand the Greenwald-Stiglitz hypothesis--about the Great Depression as applied to agriculture and about today as applied to manufacturing--it goes like this:

1. Rapid technological progress in a very large economic sector (agriculture then, manufacturing now) leads to oversupply and steep declines in the sector's prices. Poorer producers have less income. They come under pressure to cut back their spending. Others--consumers--are now richer because they are paying less for their food (or their manufactures), but their propensity to spend is lower than that of the stressed farmers or ex-manufacturing workers.


2. Moreover, the oversupply of agricultural commodities (or manufactured goods) means that only an idiot would invest at their normal pace in those sectors. To the shortfall in consumption spending is added a shortfall in investment spending as well.


3. Thus we have systematic pressures pushing spending down below economy-wide income. These aren't going to go away until the declining sector (agriculture then, manufacturing now) is no longer large enough to be macroeconomically significant.


4. Macroeconomic balance requires that the economy generate offsetting pressures pushing spending up. What might they be?


5. For a while, those receiving the income that farmers (or ex-manufacturing workers) have lost and those who use to invest in the declining sectors can lend it to the farmers (or ex-manufacturing workers) so that they can keep up with the Joneses. But lending more and more to poorer and poorer debtors is, like lawn darts, only all fun-and-games until somebody loses an eye.


6. An alternative possibility is to switch investment away from the farm value-chain complex (or the manufacturing value-chain complex) to something else. But what? Nobody really knows. The future is uncertain. Other investments are clearly riskier then funneling money into the old channels of boosting the capital of the farm value-chain complex (or the manufacturing value-chain complex) had been. Given the extra risks, this pressure can only manifest itself if the cost of capital falls. But here we hit the zero lower bound on interest rates. And we are off to the secular liquidity-trap races. This won't work either.

A very readable presentation of the thesis is in a Vanity Fair article by Nobel prize-winning economist Joseph Stiglitz.

Dowd on Newt Gingrich

Here is a bit from an opinion piece in the NY Times by Maureen Dowd:

Gingrich agreed in 1995 that we might have to “rethink our Constitution” — something that wouldn’t go over well with originalists.

The man who wishes to be our leader implementing Lean Six Sigma might shy away from Toffler’s main thesis, that we were moving toward a basically leaderless society where information was available to everyone, so everyone could make their own decisions. “Someday,” Toffler wrote, “future historians may look back on voting and the search for majorities as an archaic ritual engaged in by communicational primitives.”

And what about Toffler’s prediction that those (like Gingrich) who resist the end of the nuclear family and the spread of gay parenting, gay rights, women’s rights and abortion access as variegated families set up shop in “electronic cottages” would just add to the pain of inevitable transition to a “de-massified society”?

Torn between the virtual and the virtue-crats, Gingrich this week endorsed the “marriage pledge” of an evangelical group in Iowa opposing same-sex marriage and abortion and vowed fidelity to Callista. Hasn’t he taken that vow and broken it twice before?

Sometimes you go with “Future Shock.” Sometimes you go with present schlock.

It is absolutely pathetic that this wretch from the past is considered by 40% of the Republicans to be the "leader" of the future. I think back to America of the 1960s and wonder how that country has gone so badly off track. In the 1960s the US was rising to challenges with hopeful policies like breaking Jim Crow racism and setting a mission to the moon. Sure, there had been bumpy stretches like McCarthyism in the 1950s and the idiocy of the Vietnam war in the 1960s, but generally the US was a positive force for good in the world. Now it is the last remaining of the two evil empires of the Cold War and it is in fast decline. It is like a muttering senile relative puttering around making of mess of everything. Tragic.

Growing American Inequality

Here is a bit from an article by MIT economist Daron Acemoglu on the growing inequality in the US:

Inequality is in the news a lot right now. How should we be thinking about it and trying to get our heads around it?

Inequality is one of the things that has changed quite a lot in the United States and other economies over the last three decades or so. A lot of things don’t change radically, but inequality has. Understanding why that has happened and what it implies for our society is important. So it’s a good thing that it’s in the news, it’s an important topic and there is no reason for it to be taboo. Having said that, there is no broad consensus among social scientists about how to talk about inequality, and the average economist probably thinks about it very differently than the average layman. I’m not saying one is right and one is wrong, but the conversation needs to be expanded to bring these different viewpoints to the table.

What’s the economist’s view?

The default position of economists is that inequality reflects the unequal human capital or productive capabilities of different workers. If you start with that premise – that what people earn is commensurate with their contribution to their employer, and also perhaps to society – then greater inequality tells you something about how people’s productivities have evolved over time. This is by no means what every economist believes, but it’s a common view. Economists have cut their teeth on inequality by looking at things like the increase in the college premium over the last 30 years in the US and other economies, as well as the increase in the gap between relatively high earners – the 90th percentile of income distribution – versus the bottom 10th percentile. We’ve seen a big increase in inequality, measured in various ways, and this reflects the fact that the top people, the more educated, high earners have become more skilled. Technology has favoured them, globalisation has favoured them, and inequality has increased for that reason.

So if a CEO is earning $5 million a year, that’s because he deserves that $5 million?

That’s why I put emphasis on the 90th versus the 10th percentile, because once you get to that very high level, the story becomes a little harder to swallow. Economists have, for the most part, not focused on the CEOs for two reasons. This is changing, but one reason is that most of the publicly available data sources don’t have information on CEOs. That’s because there are not that many CEOs, or multimillionaires. So when you take a sample – for example, a 1% sample of all the US households – you’re not going to get many of them. Secondly, data are top coded. You don’t actually see people’s exact earnings. You see that they are at the very top, which might be $250,000, but you don’t see if they’re making $25 million. For that reason, a lot of the labour economics literature has focused on things like, do people with college degrees earn more than high school graduates? Do postgraduates earn more? What has happened to earnings inequality among lawyers or doctors or among production workers?

...

In terms of the actual figures, how bad is inequality in the US and, say, the UK?

Based on the work of Thomas Piketty and Emmanuel Saez, if you look from the 1950s up to the end of the 1970s, the share of total national income in the US earned by the richest 1% was about 10%. If you look at the 2000s, it’s well over 20%. It rose up to nearly 25% and then came down. In the UK it’s at about 15%, up from 7% or so. The trend towards inequality over the last 50 years has been very similar in the Anglo-Saxon economies, though it’s important to say that it’s not just an Anglo-Saxon phenomenon. There are similar trends in many economies, though there are a few that haven’t experienced it to any notable extent.

...

That’s what’s interesting about Occupy Wall Street. Its supporters aren’t just crazy lefties who don’t believe in free markets, but respected economists.

I’m definitely in that camp. I do believe in markets. I passionately believe in the importance of property rights and private property. I think they are absolute sine qua nons for prosperity. But I also believe that these things are very political and the politics shouldn’t be one-sided. Gore Vidal said, “The United States has only one party – the property party. It’s the party of big corporations, the party of money. It has two right wings; one is Democrat and the other is Republican.” If that is true, that’s a real threat to a free market and a fair society. For that reason I think Occupy Wall Street is very important. It’s a grassroots movement that tries to stand up to this tendency of our political system.

Go read the whole article.

The growing inequality is creating class warfare and will lead to the US becoming a banana republic.

The 2012 Fight

Here is Robert Reich laying out the basis for a real political fight in the 2012 US Presidential campaign:



I'm pessimistic because in 2008 Obama ran on a platform of real change and then gave the US 4 more years of watered down Bush policies of war, tax cuts for the rich, and a focus on deficits. He should have fought for a real stimulus, for public works programs to reduce unemployment, and for mortgage relief. Of the promises he made, he lived up to very few. Instead he surprised the American people with a pro-Wall Street, pro-rich guy, pro-corporation, business-as-usual in Washington. Now he wants people to believe that he has "changed". I don't think so.

But sadly, the other choice is far worse. A crazed right wing nut from the fundamentalist Christian and Libertarian minorities that hunger to set the agenda for the vast majority. That would be letting the inmates run the asylum.

Social Protest

Here is a good overview of the protests that are shaking the world and a prediction of more to come. The interview is with Gerald Celente.

My favourite phrase:

When the money on the top stops flowing down to the man on the street, the blood starts flowing in the streets.

While I don't agree with his specific "predictions" (he is no better than most other prognosticators), I do think he has the zeitgeist of the time correct: we are in an era of social upheaval because of a failing economic system with the root cause being a growing economic inequality and a growing marginalization of the bottom 50%.

Physics

This is a wonderful demonstration of how a simple physical setup following a very simple rule can create marvelously complex action:



For the details of the underlying physics, read this.

Who Rules (and Owns) America

There is a nice graphic in the article that helps you visualize the unfair concentration of political power.

The graphic is taken from an article by the Sunlight Foundation on political spending in the US:

If you think wealth is concentrated in the United States, just wait till you look at the data on campaign spending.

In the 2010 election cycle, 26,783 individuals (or slightly less than one in ten thousand Americans) each contributed more than $10,000 to federal political campaigns. Combined, these donors spent $774 million. That's 24.3% of the total from individuals to politicians, parties, PACs, and independent expenditure groups. Together, they would fill only two-thirds of the 41,222 seats at Nationals Park the baseball field two miles from the U.S. Capitol. When it comes to politics, they are The One Percent of the One Percent.

A Sunlight Foundation examination of data from the Federal Election Commission and the Center for Responsive Politics reveals a growing dependence of candidates and political parties on the One Percent of the One Percent, resulting in a political system that could be disproportionately influenced by donors in a handful of wealthy enclaves. Our examination also shows that some of the heaviest hitters in the 2010 cycle were ideological givers, suggesting that the influence of the One Percent of the One Percent on federal elections may be one of the obstacles to compromise in Washington.

The One Percent of the One Percent are not average Americans. Overwhelmingly, they are corporate executives, investors, lobbyists, and lawyers. A good number appear to be highly ideological. They give to multiple candidates and to parties and independent issue groups. They tend to cluster in a limited number of metropolitan zip codes, especially in New York, Washington, Chicago, and Los Angeles.

In the 2010 election cycle, the average One Percent of One Percenter spent $28,913, more than the median individual income of $26,364

At the top of this elite group are individuals such as Bob Perry, CEO of Perry Homes, who gave $7.3 million to Karl Rove’s American Crossroads in 2010 and $4.4 million to Swift Vets and POWs for Truth in 2004, and Wayne Hughes, owner and chairman of Public Storage Inc., who gave $3.25 million to American Crossroads in 2010, and Fred Eshelman, CEO of Pharmaceutical Product Development who spent $3 million in 2010 on his own group, RightChange. Sunlight’s Ryan Sibley writes more about the top donors here.

Go read the original to get more details and access the embedded links.

The US Supreme Court has stated that corporations as "persons" and their money speaks a lot louder than the bottom 99.99%. You are "free" in America to have a "voice" but if you can't cough up $30,000 in political campaigns, your voice is lost in the noise. To are effectively mute.

How to Buy and Election

Here is a bit from an article in Salon.com on the source of campaign finance money in the US:

The hidden infrastructure of the 2012 campaign has already been built.

A handful of so-called Super PACs, enabled to collect unlimited donations by the continued erosion of campaign finance regulations, are expected to rival the official campaign organizations in importance this election. In many cases, these groups are acting essentially as outside arms of the campaigns.

These are America’s best-funded political factions, their war chests filled by some of the richest men (and almost all are men) in the country.

More than 80 percent of giving to Super PACs so far has come from just 58 donors, according to the Center for Responsive Politics analysis of the latest data, which covers the first half of 2011. The Republican groups have raised $17.6 million and the Democratic groups $7.6 million. Those numbers will balloon, with American Crossroads, the main Republican Super PAC, aiming to raise $240 million.)

If you want the names named, go read the whole article.

The US is sliding into "banana republic" status because the politics and the judicial branch have been bought off with the idea that "corporations are people" with "rights" to "speech". The joke is that corporations have no limit on their donations, but real breathing humans do have a limit. And of course, the Supreme Court has decided that the ultra-rich can set up Super-Pacs to allow them to use big dollar amounts to skew elections to favour the ultra-rich.

Ideal Tax Law from the Political Right

Here is a post by Paul Krugman on his NY Times blog that captures the intent of the political right to makes sure that the middle class carries the burden of taxation:

Gingrich-Helmsley 2012

From the Tax Policy Center, the Gingrich tax plan:

Click to Enlarge
Also, it would add $1.3 trillion to the annual deficit compared with current law.

For those too young to remember, Leona Helmsley famously declared that only the little people pay taxes.

So much for the theory of progressive taxation, i.e. those who are able, pay more while the poor are given a break.

Stiglitz on the Great Recession

Here is a bit from an article in Vanity Fair by Nobel prizing-winning economist Joseph Stiglitz looking at the similarity between now and the 1930s. It is dismal reading:

The trauma we’re experiencing right now resembles the trauma we experienced 80 years ago, during the Great Depression, and it has been brought on by an analogous set of circumstances. Then, as now, we faced a breakdown of the banking system. But then, as now, the breakdown of the banking system was in part a consequence of deeper problems. Even if we correctly respond to the trauma—the failures of the financial sector—it will take a decade or more to achieve full recovery. Under the best of conditions, we will endure a Long Slump. If we respond incorrectly, as we have been, the Long Slump will last even longer, and the parallel with the Depression will take on a tragic new dimension.

Until now, the Depression was the last time in American history that unemployment exceeded 8 percent four years after the onset of recession. And never in the last 60 years has economic output been barely greater, four years after a recession, than it was before the recession started. The percentage of the civilian population at work has fallen by twice as much as in any post-World War II downturn. Not surprisingly, economists have begun to reflect on the similarities and differences between our Long Slump and the Great Depression. Extracting the right lessons is not easy.

...

The argument has been made that the Fed caused the Depression by tightening money, and if only the Fed back then had increased the money supply—in other words, had done what the Fed has done today—a full-blown Depression would likely have been averted. In economics, it’s difficult to test hypotheses with controlled experiments of the kind the hard sciences can conduct. But the inability of the monetary expansion to counteract this current recession should forever lay to rest the idea that monetary policy was the prime culprit in the 1930s. The problem today, as it was then, is something else. The problem today is the so-called real economy. It’s a problem rooted in the kinds of jobs we have, the kind we need, and the kind we’re losing, and rooted as well in the kind of workers we want and the kind we don’t know what to do with. The real economy has been in a state of wrenching transition for decades, and its dislocations have never been squarely faced. A crisis of the real economy lies behind the Long Slump, just as it lay behind the Great Depression.

For the past several years, Bruce Greenwald and I have been engaged in research on an alternative theory of the Depression—and an alternative analysis of what is ailing the economy today. This explanation sees the financial crisis of the 1930s as a consequence not so much of a financial implosion but of the economy’s underlying weakness. The breakdown of the banking system didn’t culminate until 1933, long after the Depression began and long after unemployment had started to soar. By 1931 unemployment was already around 16 percent, and it reached 23 percent in 1932. Shantytown “Hoovervilles” were springing up everywhere. The underlying cause was a structural change in the real economy: the widespread decline in agricultural prices and incomes, caused by what is ordinarily a “good thing”—greater productivity.

At the beginning of the Depression, more than a fifth of all Americans worked on farms. Between 1929 and 1932, these people saw their incomes cut by somewhere between one-third and two-thirds, compounding problems that farmers had faced for years. Agriculture had been a victim of its own success. In 1900, it took a large portion of the U.S. population to produce enough food for the country as a whole. Then came a revolution in agriculture that would gain pace throughout the century—better seeds, better fertilizer, better farming practices, along with widespread mechanization. Today, 2 percent of Americans produce more food than we can consume.

What this transition meant, however, is that jobs and livelihoods on the farm were being destroyed. Because of accelerating productivity, output was increasing faster than demand, and prices fell sharply. It was this, more than anything else, that led to rapidly declining incomes. Farmers then (like workers now) borrowed heavily to sustain living standards and production. Because neither the farmers nor their bankers anticipated the steepness of the price declines, a credit crunch quickly ensued. Farmers simply couldn’t pay back what they owed. The financial sector was swept into the vortex of declining farm incomes.

The cities weren’t spared—far from it. As rural incomes fell, farmers had less and less money to buy goods produced in factories. Manufacturers had to lay off workers, which further diminished demand for agricultural produce, driving down prices even more. Before long, this vicious circle affected the entire national economy.

The value of assets (such as homes) often declines when incomes do. Farmers got trapped in their declining sector and in their depressed locales. Diminished income and wealth made migration to the cities more difficult; high urban unemployment made migration less attractive. Throughout the 1930s, in spite of the massive drop in farm income, there was little overall out-migration. Meanwhile, the farmers continued to produce, sometimes working even harder to make up for lower prices. Individually, that made sense; collectively, it didn’t, as any increased output kept forcing prices down.

Given the magnitude of the decline in farm income, it’s no wonder that the New Deal itself could not bring the country out of crisis. The programs were too small, and many were soon abandoned. By 1937, F.D.R., giving way to the deficit hawks, had cut back on stimulus efforts—a disastrous error. Meanwhile, hard-pressed states and localities were being forced to let employees go, just as they are now. The banking crisis undoubtedly compounded all these problems, and extended and deepened the downturn. But any analysis of financial disruption has to begin with what started off the chain reaction.

...

The parallels between the story of the origin of the Great Depression and that of our Long Slump are strong. Back then we were moving from agriculture to manufacturing. Today we are moving from manufacturing to a service economy. The decline in manufacturing jobs has been dramatic—from about a third of the workforce 60 years ago to less than a tenth of it today. The pace has quickened markedly during the past decade. There are two reasons for the decline. One is greater productivity—the same dynamic that revolutionized agriculture and forced a majority of American farmers to look for work elsewhere. The other is globalization, which has sent millions of jobs overseas, to low-wage countries or those that have been investing more in infrastructure or technology. (As Greenwald has pointed out, most of the job loss in the 1990s was related to productivity increases, not to globalization.) Whatever the specific cause, the inevitable result is precisely the same as it was 80 years ago: a decline in income and jobs. The millions of jobless former factory workers once employed in cities such as Youngstown and Birmingham and Gary and Detroit are the modern-day equivalent of the Depression’s doomed farmers.

...

Can we actually bring ourselves to do this, in the absence of mobilization for global war? Maybe not. The good news (in a sense) is that the United States has under-invested in infrastructure, technology, and education for decades, so the return on additional investment is high, while the cost of capital is at an unprecedented low. If we borrow today to finance high-return investments, our debt-to-G.D.P. ratio—the usual measure of debt sustainability—will be markedly improved. If we simultaneously increased taxes—for instance, on the top 1 percent of all households, measured by income—our debt sustainability would be improved even more.

The private sector by itself won’t, and can’t, undertake structural transformation of the magnitude needed—even if the Fed were to keep interest rates at zero for years to come. The only way it will happen is through a government stimulus designed not to preserve the old economy but to focus instead on creating a new one. We have to transition out of manufacturing and into services that people want—into productive activities that increase living standards, not those that increase risk and inequality. To that end, there are many high-return investments we can make. Education is a crucial one—a highly educated population is a fundamental driver of economic growth. Support is needed for basic research. Government investment in earlier decades—for instance, to develop the Internet and biotechnology—helped fuel economic growth. Without investment in basic research, what will fuel the next spurt of innovation?

...

Americans in general are coming to understand what has happened. Protesters around the country, galvanized by the Occupy Wall Street movement, already know.

Shocking that greater productivity can cause an economic disaster. It should mean more goodies for everyone. But if you can't organize economic life in a way that everybody gets a fair share and decent opportunity, you are asking for a broken system that collapses around you. The Republicans and Democrats fail to address the fundamental problems of the current situation. Obama, the great hope of 2008, has been a complete bust, a flailing, useless, clueless fool who self-satisfiedly claimed he had done a "just right" stimulus as the economy flat-lined.

These are historic times and they require radical solutions under a leader of vision. Sadly the US has the oddly impassive Obama and the clearly incompetent and clueless Republican presidential candidates as the possible leaders after 2012. This says only one thing: the future will be incredibly bleak. There is a desperate need for a visionary leader with an understanding of economics and instead the US is stuck with buffoons and timid pretenders.