Thursday, June 30, 2011

Political Blackmail

The current threat by the political right to drive the US economy into the ground by refusing to raise the public debt limit is blackmail pure and simple. Here's Paul Krugman spelling it out in an op-ed in the NY Times:
The federal debt limit is a strange quirk of U.S. budget law: since debt is the consequence of decisions about taxing and spending, and Congress already makes those taxing and spending decisions, why require an additional vote on debt? And traditionally the debt limit has been treated as a minor detail. During the administration of former President George W. Bush — who added more than $4 trillion to the national debt — Congress, with little fanfare, voted to raise the debt ceiling no less than seven times.

So the use of the debt ceiling to extort political concessions is something new in American politics. And it seems to have come as a complete surprise to Mr. Obama.

Last December, after Mr. Obama agreed to extend the Bush tax cuts — a move that many people, myself included, viewed as in effect a concession to Republican blackmail — Marc Ambinder of The Atlantic asked why the deal hadn’t included a rise in the debt limit, so as to forestall another hostage situation (my words, not Mr. Ambinder’s).

The president’s response seemed clueless even then. He asserted that “nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse,” and that he was sure that John Boehner, as speaker of the House, would accept his “responsibilities to govern.”

Well, we’ve seen how that worked out.

Now, Mr. Obama was right about the dangers of failing to raise the debt limit. In fact, he understated the case, by focusing only on financial confidence.

Not that the confidence issue is trivial. Failure to raise the debt limit — which would, among other things, disrupt payments on existing debt — could convince investors that the United States is no longer a serious, responsible country, with nasty consequences. Furthermore, nobody knows what a U.S. default would do to the world financial system, which is built on the presumption that U.S. government debt is the ultimate safe asset.

But confidence isn’t the only thing at stake. Failure to raise the debt limit would also force the U.S. government to make drastic, immediate spending cuts, on a scale that would dwarf the austerity currently being imposed on Greece. And don’t believe the nonsense about the benefits of spending cuts that has taken over much of our public discourse: slashing spending at a time when the economy is deeply depressed would destroy hundreds of thousands and quite possibly millions of jobs.

So failure to reach a debt deal would have very bad consequences. But here’s the thing: Mr. Obama must be prepared to face those consequences if he wants his presidency to survive.

Bear in mind that G.O.P. leaders don’t actually care about the level of debt. Instead, they’re using the threat of a debt crisis to impose an ideological agenda. If you had any doubt about that, last week’s tantrum should have convinced you. Democrats engaged in debt negotiations argued that since we’re supposedly in dire fiscal straits, we should talk about limiting tax breaks for corporate jets and hedge-fund managers as well as slashing aid to the poor and unlucky. And Republicans, in response, walked out of the talks.

So what’s really going on is extortion pure and simple. As Mike Konczal of the Roosevelt Institute puts it, the G.O.P. has, in effect, come around with baseball bats and declared, “Nice economy you have here. A real shame if something happened to it.”

And the reason Republicans are doing this is because they must believe that it will work: Mr. Obama caved in over tax cuts, and they expect him to cave again. They believe that they have the upper hand, because the public will blame the president for the economic crisis they’re threatening to create. In fact, it’s hard to avoid the suspicion that G.O.P. leaders actually want the economy to perform badly.

Republicans believe, in short, that they’ve got Mr. Obama’s number, that he may still live in the White House but that for practical purposes his presidency is already over. It’s time — indeed, long past time — for him to prove them wrong.
Go read the whole article.

If you wonder how Hitler could bully the democratic parties to give in and let him be Chancellor of Germany, you are getting a nice "history lesson" from the Republican party in the US. The right wing party in the US is fanatical and ideological and is willing to destroy the country to get its way. That is exactly the political strategy of Hitler and it paid off big for him. Will the American people allow the same vicious political thuggery to pay off in the US? It looks to me that they will. It is utterly depressing, but Obama is doing his best impression of Neville Chamberlain coming back from each disastrous "negotiations" with the Republicans waving a sheet of paper and telling people "this means peace in our time!"

Where are the Democratic Party Fighters?

Well... here's one. He would stand up to Republican "talking points". But he got thrown under the bus.



Sure Anthony Weiner was sleazy. But you don't force a politician to resign if he has bad fashion taste. Weiner didn't break any laws. He showed stupidity, but if that is your measuring stick, then 95% of the the legislators in the Congress should be forced to resign right now.

Weiner's own Democratic party forced him to resign. That's why there is no effective counter-weight to the Republican slime machine.

From Wikipedia, here are Republicans guilty of sex scandals much worse the Weiner and they weren't forced by their political party to walk the plank and resign:
  • Chip Pickering, (R-MS) On July 16, 2009 it was announced that his wife had filed an alienation of affection lawsuit against Elizabeth Byrd, a woman with whom Chip allegedly had an affair. The lawsuit claimed the adulterous relationship ruined the Pickerings' marriage and his political career.

  • John Ensign Senator (R-NV) Resigned his position as Chairman of the Senate Republican Policy Committee on June 16, 2009, after admitting he had an affair with Cynthia Hampton, the wife of a close friend, both of whom were working on his campaign. Under investigation, he then resigned his seat in Congress 20 months early. In 1998, Senator Ensign had called for President Bill Clinton (D) to resign after admitting to sexual acts with Monica Lewinsky.

  • Vito Fossella, Representative (R-NY) Arrested for drunk driving. Under questioning, the married Congressman, father of three, admitted to an affair with Laura Fay that produced a daughter.

  • Larry Craig, Senator (R-ID) Pleaded guilty to disorderly conduct following his arrest in a Minneapolis airport men's room in June 2007, on a charge of lewd conduct. Senator Craig had previously stated that "people already know that Bill Clinton is a bad boy - a naughty boy."

  • David Vitter, Senator (R-LA): Took over former Congressman Robert Livingston's House seat in 1999, who resigned following revelations of an extramarital affair. At the time, Vitter stated: "I think Livingston's stepping down makes a very powerful argument that (Bill) Clinton should resign as well ..." Vitters' name was then discovered in the address book of the DC Madam Deborah Jeane Palfrey. He admitted his adultery and withdrew from the 2003 gubernatorial race for governor.

  • Jack Ryan, Senate candidate (R-IL) During sealed divorce proceedings in 2004, his wife Jeri Ryan accused him of forcing her to go to public sex clubs and described one as "a bizarre club with cages, whips and other apparatus hanging from the ceiling."

  • Don Sherwood, Representative (R-PA) Failed to win re-election following revelations of a five-year extramarital affair with Cynthia Ore, who accused him of physically abusing her.
Etc., etc., etc.

It is sad that the Democratic party has a leader, Obama, who thinks you lead by compromise, by giving the other side what it wants, then asks "What more can I give you?". Nobody in the Democratic party is outraged by the fact that unemployment is 9% and that millions are being foreclosed and tossed out of their houses because of Wall Street scam that -- really a crime that lured unsuspecting into signing papers that set them up to lose their house -- and when the economy blew up, the Wall Street banks got $700 billion of taxpayer money while the people being forced out of their homes get nothing. Where are the politicians who will fight for the ordinary people instead of selling their soul to big money?

Thomas Jefferson, writer of the Declaration of Independence, founding father who helped write the Constitution, forced his black slave to have sex and bear him children. But he ended up being a president. Sure. What he did was a crime. But if you make people ineligible for political office because they have lax morals or are "on the make" you will be left with a handful of prudes and prigs to run your government. And I can assure you that you will hate that far more than allowed some morally questionable people -- who have been legally elected to represent their constituents -- do do their job and stop with all the moral prudery about sex and bad manners.

Comparing Greece and the US Subprime Crisis

The two disasters are similar in that the elites are blaming the victims and forcing the general public to pay the cost of sleazy and/or criminal activities by elites.

Here's Barry Ritholtz's take in his The Big Picture blog:
I’ve noticed something intriguing about the debate regarding the Greek default/restructuring/bailout: There is a familiar odor to the “Blame the profligate Greeks” meme now circulating. It is little more than a brilliant marketing ploy. This distraction ignores the simple reality that lending to insolvent people, institutions and countries is first and foremost the fault of the lenders.

Let us start first with the Greeks, who lied their way into the EU (with the help Goldman Sach’s financial engineers). The ridiculous pay and vacation structure, the absurdly generous pension plan, the excessive spending by Athens. They are a nation that can honestly be described as tax scofflaws. Yes, Greece is a mess.

Which begs the question: WHO THE FUCK WOULD LEND A DIME TO THESE PEOPLE?

None of these factors were well-hidden. Everything about Greece is well known to any casual visitor, from its Welfare state to its deficits. Even the shenanigans Greece went through to join the Union European were not unknown. Rather than confront their obvious lack of qualifications, the EU turned a blind eye to it, in order to form their more perfect union.

Which brings us back to the lenders. What is their role, if not to exercise expert judgment? If they cannot independently determine who is credit worthy and who is not, than why do they even exist at all? We might as well leave piles of money around and ask borrowers to self-regulate their appropriate credit limits.

Back to that “familiar odor.” There was a meme attempted during the US housing collapse to place the blame upon the home buyers and borrowers who exercised poor judgment and got in over their heads. It manifested itself in numerous ways. It was an intellectual failure, for the simple reason that it is the lenders job to assign credit, to determine who has the ability to service the debt and who is a bad risk. Indeed, lenders have legal and fiduciary duties to their shareholders, capital sources and regulators. Eejit home buyers who went wild during the era of free money have no such obligations.

Michael White, formerly of CountryWide’s Subprime Unit, had complained bitterly about the increased probability of defaults to his bosses when they decided to drop income verification in mortgage lending. “Eliminate the verification of income for a mortgage borrower, and you eliminate your ability to predict the likelihood of repayment or default” he told them, and was roundly ignored.

We need to better understand the term “Loan Origination Fraud,” when lenders willingly make bad loans, consequences be damned.

As we noted yesterday, bailouts go to the incompetent bankers. Whether bankers are foolishly giving credit to home buyers (and ignoring their lack of incomes), or making loans to Greece (and ignoring their broken financial structures), it is the LENDERS who are making these awful decisions. The LENDERS should be forced to suffer the consequences of their own incompetence and not the taxpayers.

And that means defaults, rather than bailouts . . .
The political system is broken. The politicians are acting as enablers for this con job and crime. They are facilitating by passing legislation to make "the little people" pay for the crimes of the ultra-rich as they do financial rape and pillage in broad daylight.

Wednesday, June 29, 2011

Life After Obama

The centrist Obama has disappointed, so what's down the line? Here is a bit from a NY Times op-ed by Maureen Dowd that identifies one possible candidate, Andrew Cuomo, who has shown nerves of steel and a dedication to progressive causes. Here's the key bit:
If a politician’s character is defined by what he chooses to put himself on the line for, then Cuomo has shown character.

I asked him if President Obama had missed the moment when he stuck to his position at a Democratic fund-raiser for the gay community in Manhattan that states should decide the issue.

“No, there will be other moments,” he said diplomatically. “The president comes to New York and they ask him that question. That question didn’t exist a year ago. There’s been an amazingly rapid evolution on this.”

But, for many gays, Cuomo is now the civil rights leader among elected officials, a role President Obama should have proudly held. Cuomo, who now has a huge and excited base of millions of volunteers, activists and donors across the country, can press a button and raise millions.

And that, of course, has led to talk of 2016, when he could face his neighbor Chris Christie, who says he is not a fan of the gay marriage legislation, and even Michele Bachmann, who reacted to the joy in New York by saying she wants a Constitutional amendment protecting marriage.
I wish Andrew Cuomo challenged Obama in 2012. I'm tired of Obama coming in a day late and dollar short on big issues, I'm tired of Obama negotiating with himself until he's given the Republicans everything they want before he sits down to "negotiate", I'm tired of a guy who claimed "change you can believe in" but has delivered more Bush policies for four more (and threatening 8 more) years. The US doesn't need more years of wars of "choice", more years of warrantless wiretaps, more years with Guantanamo being a torture camp outside the law and making the US the shame of the world. The US needs a social progressive to roll back 40 years of abuse and misrule by right wing Republicans and "centrist" Democrats who roll over an look like "me too!" Republicans.

Belief in Math

This is a wonderful spoof of empty-headed beauty pageant "interviews". But instead of asking what they most wanted ("world peace"), this video speculates on what you would get if you asked "Should math be taught in schools?"



When a beauty queen tells me that she doesn't "believe in math" I sit up and pay attention. And when another tells me that math is "only a theory" and isn't what the Bible tells us therefore it shouldn't be taught in American school, then I know they are onto something big, really big.

I'm guessing America should now be preparing to "reform" its school system and remove all that "belief-based math" and replace it with real, hard facts, Bible-based facts. Oh, and teach more of the sounds, smells, and vibrations stuff. That's just so much more fun than that stodgy old "mathy" stuff.

Glory hallelujah! Religion is going to help free Americans from the cruel domination of "math". God speed the day of our salvation!


By the way... If you want to see the real 2011 Miss USA contestants, try this web page.

If you do want to hear the idiocies of genuine Miss America 2011 contestants ruminating over the tough question of "Should evolution be taught in schools?" watch this...



You can see how the spoof in the first video took some liberties with the idea of "empty-headed beauty queen", but the second video should reassure you, that idea isn't a myth. These women really are only loosely connected to reality. And it is so lovely to see that they clasp religion so closely to their breasts... oh, I mean "bosom".

How to be a Successful US Lobby

Here is a bit from a post by Dean Baker on his Beat the Press blog:
Doctors in the United States have enormous political power. They use it to limit the supply of doctors domestically both by restricting medical school enrollment and the number of foreign doctors who can enter the country. As a result of these protectionist measures, the United States pays more than twice as much for its doctors as other wealthy countries, costing it more than $90 billion a year.

The NYT reported on the successful effort by the doctors' lobby to stop the use of government testers to determine the ability of people with different types of insurance to get appointments. The plan was to have people call doctors office and ask for an appointment saying that they have various types of insurance (e.g. Medicare, Medicaid, private insurance). This would provide a basis for determining how easy it is for people get care.

The article should have pointed out that this use of anonymous testers is absolutely standard. It has been used to uncover discrimination in the issuing of loans by banks, in selling cars, and offering jobs. It would be irresponsible for the government to be spending hundreds of billions of dollars a year on programs like Medicare and Medicaid without knowing how effective they are in providing care.

Therefore when Senator Orin Hatch complained that the administration was:

"wasting taxpayer dollars to snoop into the care physicians are providing their patients,"

he was not saying anything that made sense. Presumably he was doing the bidding of the doctors' lobby.
Baker monitors the US media to catch bias and mis-reporting. In this case he points out that the NY Times refuses to point out the power of the AMA as a lobbyist group. So their report leaves readers in the dark. It is exactly this kind of "reporting" which leaves US electors blind as to real politics that governs them, i.e. corporate money and not "Tea Party" hoopla.

Oh... and this post by Dean Baker is a gem in pointing out hypocrisy by the rich and powerful:
Will Legarde Do Anything About the IMF's Bloated Pensions?

Just asking, and asking why no one in the media is asking. The Washington Post, NYT and other major news outlets have been running wild yelling about excessive public sector pensions. The median pension for a public sector worker is a bit over $20,000. In many cases this is their sole retirement income, since they are not covered by Social Security. The pensions of public sector employees has been the topic of numerous front page stories in major newspapers.

This is why it is striking that no one raised this question with the announcement that Christine Lagarde had been selected as the new director of the IMF. IMF economists are often able to retire with 6-figure salaries in their early 50s. This is likely to strike many people as unfair by itself, however it would seem especially inappropriate in an institution that has explicitly called for governments to raise the age of eligibility for much smaller pensions to 65 or even 67.

And the strangest part of it all is that no one in media is even talking about it.

The US Debt Ceiling

Here are some bits from a post by Brad DeLong on his blog. They give some insight into the "situation" that will arise when the US government hits the debt limit:
Tim Geithner begins to disinvest the Social Security Trust Fund. As FICA taxes come in, the Managing Trustee of the Social Security Trust Fund (Tim Geithner) asks the Secretary of the Treasury (Tim Geithner) to sell him some government bonds in exchange for the cash, and the Secretary of the Treasury (Tim Geithner) says: "No. I can't." The Secretary of the Treasury (Tim Geithner) takes the cash and uses it to cover the U.S. government's other obligations. The Secretary of the Treasury (Tim Geithner) tells the Managing Trustee (Tim Geithner) that because congress has not raised the debt ceiling he cannot sell the Social Security system any bonds. The Secretary of the Treasury (Tim Geithner) then puts a sign on the front of the Treasury lawn with a continuously-updated number on it: "Because congress has not raised the debt ceiling the Social Security Trust Fund has lost $x billion dollars."
All this "Tim talks to Tim" shows that the legal niceties are completely obscure and ridiculous.

And this bit shows that the whole thing may be just a charade:
Tim Geithner announces that by law he is required to spend money on appropriations and entitlements--that he is not allowed to impound--and that there is not enough coming in in tax payments to both do all the spending he is legally required to do and to pay back the debt of the United States as it matures. In the absence of the 14th Amendment, he says, he would be required by law to default on the maturing debt. But, he says, the 14th Amendment forbids him to default. In order to take care that the laws be faithfully executed, therefore, even without explicit congressional authority to do so, he must borrow on the full faith and credit of the United States in order to completely (a) meet his spending obligations, and (b) honor the debt of the United States of America. He begins selling more bonds...
DeLong concludes that Constitutional amendments will override the law setting a public debt limit:
The Treasury Secretary's argument would be that the debt in excess of limit issued is required in order for him to faithfully execute the appropriations bills, and that the 14th Amendment makes the debt in excess of limit full faith and credit obligations of the U.S. government in spite of the limit in §3101(b). The excess bonds are not authorized by §3101 and §3102. But they are authorized by the 14th Amendment.
My personal view is that the US government will go through a "shutdown" with monies stopped and lots of wailing and gnashing of teeth. But before that circus really gets going, the financial markets will have gone ballistic with institutions (forced by their mandates and "fiduciary responsibilities") dumping US government bonds by the boatload sending financial markets into a free fall and bond rates soaring up to the 30% rate that Greece is now paying on its newly issued bonds.

What will be interesting is when the Republicans back off and say "we were just joking around, here, we'll sign the new debt limit" and watch to see if the financial markets (1) quickly recover to conditions before the panic or (2) whether they continue in shell shocked territory and the US goes into Great Depression 2. I'm guessing that the truth with lie somewhere between these two extremes.

What I find completely unacceptable is that any major political party would flirt with the idea of destroying their own national economy to make a "political point". To me that is grounds for arresting them all as traitors and stringing them up on the first available lamppost. It is complete idiocy.

For those who do not think that governments can commit suicide by idiotic political stands, I have some Confederate Bonds I'm willing to see you... cheap!

Click to Enlarge

Getting the Dirt on Bachmann

Here is a bit from Matt Taibbi dishing out the dirt on Michele Bachmann. From his Rolling Stone blog:
Michele Bachmann’s presidential campaign is running exactly according to plan. She kicked off the festivities Monday with one of her all-time Zucker-Brothers-style whoppers, confusing John Wayne with John Wayne Gacy...

...reports surfaced that the therapy clinic belonging to Michele Bachmann’s husband Marcus – whom she married after the couple experienced simultaneous visions from God – has received over $100,000 in Medicaid funds. This is sort of the typical progression of Tea Party politicians; they come out blasting any sort of government “welfare,” and then it comes out later that they themselves a) have collected farm subsidies b) are doctors with a 50% Medicare-supported patient base who also oppose cuts in such doctor payments c) are strident opponents of government health care who themselves are insured by government health care programs (this is nearly universal among TP candidates, but my favorite example is Sharron Angle and her husband). Bachmann, of course, added her own unique twist to the Tea-Party-hypocrisy meme, being an antitax advocate who once worked as an attorney collecting taxes for the IRS.

So this news about Marcus Bachmann collecting state aid is not so surprising, but what is interesting is that he got these state funds and used them for, among other things, counseling gays to abandon their orientation. I hadn’t seen this quote before, but I’m sure it will repeated quite a lot in the upcoming months (emphasis mine):
“We have to understand that barbarians need to be educated, need to be disciplined,” Bachmann said. “And just because someone thinks [they're gay] or feels it doesn’t mean we need to go down that road. That’s what is called the sinful nature.”
We can pretty much count out the gay vote for this candidate, I think.

Lastly, Bachmann in her Stephanopoulos interview unveiled what I think (I haven’t heard it before, at least) was a new take on her “the founding fathers worked tirelessly to end slavery” comment. Her new thing is to say that John Quincy Adams, who was a founding father, worked tirelessly to end slavery. Therefore, apparently, the Founding Fathers worked tirelessly to end slavery. When Stephanopoulos asked her if she was standing by her original statement, she repeated the Quincy Adams answer. So that’s fantastic – rather than own the mistake, she’s just plowing ahead.
Go to the original article to get the embedded links.

Tuesday, June 28, 2011

Worrying about China

This is worrying about China with a twist. Most people worry because China is growing so big so fast. But here are Daniel Gross and Aaron Trask looking at reasons why China might crash...


I've been expecting the emerging giant to stumble and fall for years. At some point I will be right. But is it going to be this year? Probably not.

One thing I learned long ago: the stuff that common sense tells you are inevitable, can take longer than you have patience or cash to wait out.

David Frum on Obama

I generally don't pay much attention to right wing "analysts". They are mostly flaks. But Frum has been more honest than most and as a result his right wing buddies have beat him up and turned their backs on him. That's a sign that he may be worth listening to.

Here is a critique of Obama by David From on his blog that I think is dead right:
He’s just not the person the country needs. He’s not tough enough, he’s not imaginative enough, and he’s not determined enough.

In the throes of the worst economic crisis since the 1930s, the president ran out of ideas sometime back in 2009.

In the face of opposition, Obama goes passive. The mean Republicans refused votes on his Federal Reserve nominees and Obama … did nothing. Would Ronald Reagan have done nothing? FDR? Lyndon Johnson?

With unemployment at 10% and interest rates at 1%, the president got persuaded that it was debt and interest that trumped growth and jobs as Public Issue #1.

Yet even as he yields to his opponents on the fundamental question, Obama is surprisingly rigid in his political tactics. Back in 2008, Obama made two big promises: a tax cut for everybody earning less than $250,000 and an Afghan surge. I think it’s safe to say that Obama believed in neither of them. I’d argue that neither was important to electing him. Both were adopted for defensive reasons, to shield himself from conservative critique. In the very different circumstances of 2009, both promises rapidly showed themselves to be counter-productive. The “tax cut” promise caused Obama to direct almost one-third of his big stimulus into an individual tax rebate that no economist would have regarded as effective, for reasons explained by Milton Friedman more than 40 years ago. The Afghan surge promise was regretted by Obama himself as soon as he came into office, and he spent 9 months looking for ways to evade it. He proceeded with both, leading to the two biggest problems of his presidency: a stimulus that added hugely to the national debt while under-delivering on jobs and an expanded Afghanistan war that must end in a reversion to the same disappointing status quo that prevailed before the Afghan surge. Obama probably anticipated both results. And yet he staggered forward anyway. As ready as Obama is to surrender to uncongenial political pressures, he is strangely inattentive to negative real-world results.
What really galls me, Obama is a flop but his ego has him running for another term. For what? To preside over not just a 4 year Great Recession but an 8 year Even Greater Recession?

When it comes to the debt ceiling "debate", Obama should simply say "you will vote for the ceiling or I will stop paying all federal activities including the military, homeland security, and the intelligence agencies in order to have the money to meet the debt obligations of the country. If that doesn't get the attention of Republicans, I don't know what will. Do the Republicans really want to unilaterally disarm?

If the Republicans were serious about debts and deficits they would have a real program that they would be working hard to implement. They would be doing the serious negotiating and compromising to get a consensus on a plan. But they don't. They grandstand. They run the country up to the brink of a financial crisis, and apparently even over the brink, in order to "win" the political game. That is insane! And Obama hasn't stood up to this hooliganism on the right. What does it take to get Obama to show some fire and determination?

The Brave New World of "Open Source" Weapons

Here is an interesting video about Stuxnet virus. In 3 minutes it will explain to you what it can do and what it did.


Stuxnet: Anatomy of a Computer Virus
from Patrick Clair on Vimeo.


The video ends with a sobering worry: This is a weapon that can be used to destroy infrastructure anywhere in the world. Who will use next and where?

We live in a crazy world that has been made much, much less secure by this concoction of the dark arts brewed by the US and Israeli military.

Making the US "Fiscally Responsible"

There are such wonderful stories coming out the US about Republican govenors making "the hard decisions" to stop the gravy train for all those greed civil servants and people with state-sponsored benefits. Here's an example of the brave Indiana governor Mitch Daniels "holding the line" on waste. Here are bits from an article in the LA Times:
Louise Cohoon was at home when her 80-year-old mother called in a panic from Terre Haute: The $97 monthly Medicaid payment she relied on to supplement her $600-a-month income had been cut without warning by a private company that had taken over the state's welfare system.

Later, the state explained why: She failed to call into an eligibility hot line on a day in 2008 when she was hospitalized for congestive heart failure.

...

Cohoon's mother, now suffering from Alzheimer's disease, was one of thousands of Indiana residents who abruptly and erroneously lost their welfare, Medicaid or food stamp benefits after Republican Gov. Mitch Daniels privatized the state's public assistance program — the result of an efficiency plan that went awry from the very beginning, the state now admits.

Though the $1.37-billion project proved disastrous for many of the state's poor, elderly and disabled, it was a financial bonanza for a handful of firms with ties to Daniels and his political allies, which landed state contracts worth millions.

The disparate effects underscore the risks of handing control over public services to the private sector. Whether the approach will ultimately improve services and save money remains a matter of fierce debate in Indiana. But the state's experience shows that without adequate safeguards, privatization can compound the very problems it is designed to correct: bureaucratic burdens, perceptions of influence-peddling and a lack of competition.
There is more, read the whole article.

Obviously Louise Cohoon, nor her now Alzheimer-suffering mother, understand the urgency for providing yet more tax cuts for billionaires and millionaires so that they will "kick start" the economy for the umpteenth time, a promise that keeps being repeated by the political right as they give away more and more wealth to the ultra-rich while whittling away at what little the bottom 90% get from government.

It is funny how the LA Times doesn't understand that handing over government programs to "entrepreneurs" is exactly what has "kick-started" the strong economic recovery which Americans can see all around them. Just look at those foreclosed homes, the laid off public service workers, etc. These are all signs of a super-charged economy leaping ahead providing millions of jobs and giving people mind-boggling salary increases as wealth flows from "trickle-down" economics.

It is typical that the "little people" simply don't understand the logic of helping the ultra-rich to get even richer so that they will let crumbs fall from their table. Obviously the "little people" have little brains and don't understand the sage wisdom of Republican economic policy. And they are a-historical. They can't look back and realize that Republican presidents delivered the bacon by making the "little people" phenomenally wealthy while cutting the public debt. Everybody knows that the Clinton years were the years of desperation where unemployment ran out of control, wages fell, and the federal government built up trillions in debt. It was only with Reagan and the two Bushes that the economy soared, people were so wealthy they bought 2 and 3 houses, and the federal debt simply disappeared like a puddle on hot pavement in the midst of a summer day. Right? What? Don't bother me with facts. I know my right wing ideology, and it tells me all the previous is true. I can't be bothered if historians claim the opposite. They are obviously the stooges of the liberal elites who are running the country into the ground, unlike the Republicans who have made the US wealthier, more powerful, more industrialized, better educated, and surfeited with budget surpluses "as far as the eye can see"!

Make Big Time Money and Pay No Taxes!

From Bruce Bartlett's Economix blog on the NY Times:

Click to Enlarge

Notice how 3,000 people making more than $2,178,886/year pay not taxes!

If you ever wonder why the US has a debt problem, this answers it. There are a lot of ultra-rich people -- 2.3% of them -- who pay no taxes. (What the above doesn't show is the trivial amount of taxes that the other 97.7% of those making over $2,178,886/year are paying in taxes. Thanks to the Reagan "revolution" which slashed taxes on the ultra-rich to "unleash the entrepreneurial spirit" which any American can look around as see is fully at work in a country with 14 million unemployed, a lot of people of food stamps, a lot of people about to lose their homes, etc. That Reagan "revolution" was a real success!

Seems to me the US should try another kind of revolution which taxes the rich and forces them to carry their fair share in order to make the government solvent, to allow government to provide necessary services like education, police, fire, pensions, welfare, etc.

Economic Elitism

Those on top like having things their way. They are willing to screw up their eyes and squint sideways in order to convince themselves that the world is they way they want it: with them on top.

Here is an excellent post by Paul Krugman on his NY Times blog pointing out that the blighted self-interested "interpretation" of economics continues despite the supposed lessons of the Great Depression. I've bolded key bits:
The Old Superstition

I picked up a copy of Lionel Robbins’s 1934 book The Great Depression in a used book shop in Norwich. It’s quite revealing: judicious in tone, full of tables and facts, clearly meant to be seen as the work of a wise observer – indeed, a Very Serious Person.

And utterly, utterly wrongheaded

“The first essential of any recovery from the position in which the world now finds itself is a return of business confidence,” declares Robbins. “But how is confidence to be restored?” He comes out against expansionary monetary policy, even to reverse the deflation of 1929-33 – he doesn’t really have any logical explanation, but having decided that the problem is “confidence”, he declares that monetary expansion would create “uncertainty” and therefore hurt confidence. He condemns exchange rate flexibility, again because it creates uncertainty and undermines confidence.

And after surveying the wreckage all around him, he declares that the cause of the depression was excessive government intervention, and the remedy, the thing needed to restore that all-essential confidence was … drum roll .. a return to the gold standard.

You can sort of see how this kind of policy analysis based on superstition might have seemed plausible in 1934, although even pre-General Theory Keynes could have explained just how wrong Robbins was (and did). But one would have hoped that we were past this sort of thing today.

The point, of course, is that we aren’t. The new BIS report is very much in the same vein as Robbins 1934, with much less excuse. Robbins suffered from the lack of a framework to make sense of events; the BIS, like so many economists, faced with exactly the economic syndrome Keynes analyzed, and for that matter even Milton Friedman would have seen as demanding strong action, has chosen to ignore that framework and play monetary Calvinball instead.

I was originally going to end this post by saying something about stupidity, but that’s not right: the people at the BIS aren’t stupid. What’s going on here is something different and worse: we’re seeing the desire for conventional respectability outweighing the lessons of history; we’re seeing vague prejudice (prejudice that just so happens to serve the interests of rentiers) trumping analysis.

History will not forgive these people.
As Upton Sinclair used to say: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" The rich and the elite aren't interested in reviving the economy. They are interested in maintaining their great wealth. If that requires them to preach about "confidence" and "gold standard", they will. Rather than grow the economic pie and let everybody have more, they would rather shut it down and keep their gargantuan piece for themselves. That is what is behind the stupidity coming from these "economists" and politicians.

Monday, June 27, 2011

Graft, Fraud, and Corruption in America

How can a billion dollar grossing film end up "losing" a major studio $167 million?

Well, here's how Harry Potter and the Order of the Phoenix film, which had the 4th biggest opening weekend gross of any film in history supposedly "lost" money:

Click to Enlarge

I think it is funny how Americans complain about bribes, graft, and corruption elsewhere in the world. They just down see it in their own backyard!

To find out more details, read this article in Deadline:
Signing a deal that makes anyone a net profit participant in a Hollywood movie deal has always been a sucker’s bet. In an era where studios have all but eliminated first dollar gross and invited talent to share the risk and potential rewards, guess what? Net profit deals are still a sucker's bet. I was slipped a net profit statement (below) for Harry Potter and The Order of the Phoenix, the 2007 Warner Bros sequel. Though the film grossed $938.2 million worldwide, the accounting statement below conveys that the film is still over $167 million in the red.

Dog Eat Dog World

After watching the following, I think we need to change the adage...


Native snails in NZ are big, mean and carnivorous. They hunt their prey by stealth. When the attack comes, it is sudden, ruthless and fatal.

I think the saying should be "snail eat worm world".

Why US Democratic Admininstrations are Better than Republican

From an article in Slate magazine, a graph showing how Democratic administrations have "grown the economic pie" to let everybody have a better life:

Click to Enlarge

What the rich don't like about Democrats is that relatively speaking, the rich slip a bit. Sure the economy grows, but the rich don't quite keep up with the growth of income among the lower classes. They clearly prefer Republican administrations that ratchet back growth but make sure that the lion's share of income growth goes to the very top of the economic pyramid. This is what the really wealthy like. This clearly moves them ahead of the mass of unwashed, undeserving "little people".

For more details about US income distribution, click here for a huge graphic with details.

Sunday, June 26, 2011

The Sad State of Science Education in the US

If you think US schools are going a fair to good job of educating the next generation, watch this slow motion train wreck...



It is pitiful that 92% show a fundamental confusion in thinking that "evolution is only a theory that should be taught alongside other great theories like the Biblical creation myth". I'm surprised these budding geniuses didn't opt for Mayan cosmology and the Greek pantheon as suitable "science" subjects as well.

The US is rapidly becoming a banana republic.

Compare the simplistic stupidity of the "beauty queens" with real science. Here is a bit from a post about evolutionary aspects of sex by Carl Zimmer in his blog The Loom at the Discover Magazine web site:
In many species of animals, males and females have a conflict of evolutionary interests. Males compete with each other for the opportunity to fertilize the eggs of females. Males use all sorts of strategies in these competitions. They fight with each other for territory, they scare off intruding males, they put scrapers into females to dump out the sperm from previous males, and they inject “anti-aphrodiasiacs” to make females unreceptive to other males.

A number of experiments suggest that females have to pay a steep price for these male shenanigans. Anti-aphrodisiacs are toxic to the females, shortening their lifetime. Why would males harm the females that carry their offspring? In many species, males can mate with many females. The long-term health of any one female doesn’t matter–in an evolutionary sense–to the male.

As natural selection favors increasingly deadly male mating strategies, this onslaught opens up the opportunity, in turn, for the evolution of counterstrategies in females. In some species, females may evolve antidotes to male poisons. The males, in turn, may evolve counterattacks to overcome these new defenses. Theoretically, this coevolution can become a never-ending cycle of sexual conflict, capable of producing some of nature’s greatest extravagances (like absurdly kinky ducks).

Up till now, the best evidence for this kind of sexual conflict came from experiments. Scientists manipulated Drosophila flies so that the males were free to evolve while the females couldn’t. The result: the lifespan of the females got shorter and shorter over the course of generations. In a flipped version of the experiment, scientists prevented males from mating with lots of females, as they normally do. Instead, the male flies were forced into monogamy. Now there was no evolutionary reward for competing with other males. Over time, the male fly toxins got less toxic, and the females lost their defenses.

Now Nicolas Rode of the the Center for Functional and Evolutionary Ecology in Montpellier, France, and his colleagues have found a new way testing this hypothesis: by having males travel through time to mate with females.

The time-traveling males in this case are brine shrimp (a k a sea monkeys). Brine shrimp produce tough eggs that can survive through droughts for years and then hatch into healthy young when water returns. In the Great Salt Lake in Utah, the brine shrimp egg cysts form layers on the lake bed going back decades. Rode and his colleagues gathered cysts from layers that formed in 1985, 1996, and 2007. They brought the cysts back to their lab and reared the sea monkeys. And then they orchestrated some sea monkey sex. They had females mate with males from their own time, as well as from the other years. For example, females from 1996 could mate with males from 2007 and 1985.
There is more. Go read the whole article.

The world of real science is so much richer, so much more exciting and beautiful than the simplistic crap that religious fundamentalists spew. It is tragic that the fundamentalists have such a hold on the minds of America's youth. The funny thing is that Americans understand that the madrassah's of fundamentalist Islam are dangerous and mind stultifying, but they don't see the same truth about their own Christian fundamentalism. Tragic.

A Tongue-in-Cheek Review of Recent American Political History

From A plain blog about politics there is this humourous review of "politically correct" history of tax cuts and GDP growth. Talk about getting ducks in a row! This guy has lined up cats and mice and has them tap dancing to "Happy Days are Here Again!"

This is a great caricature of American "politics" and how it bends and twists economic facts:
Silly Liberals and Their So-Called "Facts"

Jonathan Chait is sadly misinformed about economic history and taxation levels over the last thirty years.

He writes that conservatives opposed tax hikes in 1982 and claimed they would derail recovery; that conservatives opposed Bill Clinton's tax hikes in 1993 and claimed they would tank the economy; and supported George W. Bush's tax cuts in 2001 and 2003, claiming that they would spur economic growth -- but that each time, the opposite happened.

This is obviously wrong.

Bill Clinton's tax hikes in 1993 pretty clearly caused the 2001 recession, and despite the heroic efforts of Republicans, the hangover from those tax hikes moderated the otherwise exceptional growth rates of the Bush years. I mean, the Bush years between recession and even bigger recession. Which we'll get to later.

So why did the economy grow so fast in the 1990s? No question about that -- it grew because of the Reagan tax cuts of 1981. Now, granted, those tax cuts couldn't prevent a recession in 1990-1991, which was caused by Clinton's tax increases in 1993, but the effects of the Reagan tax cuts kicked back in again around 1994 and resulted in several years of excellent growth.

Now, what about that 1982 tax increase? That's easy: if we never speak about it, then it didn't really happen, and it can't really affect economic growth. Indeed, Chait risks contributing to the current economic tough times by mentioning it now, and potentially risking the economic confidence about taxes that is the only reason employers ever hire anyone.

If you've understood everything so far, it should be pretty easy to deduce why the economy fell into another recession in late 2007. George W. Bush was term-limited, and the odds were high that Barack Obama would soon be president and usher in an era of unprecedented tax increases. Faced with that inevitability, no wonder the economy collapsed! The Obama tax increases were devastating, and businesses in 2007 were helpless in their wake, rippling backwards through time.

A Call for Moderation

Here is a bit from a post by Paul Krugman on his NY Times blog calling for people to acknowledge there are shades of gray. Sadly US politics and intellectual discussion has gone black-or-white. Fanaticism is the result. Krugman is wisely calling people back to make moderate, sensible judgements where you acknowledge that the world doesn't lie at extremes but lies in the muddly details in the middle.
Just a thought suggested by some economic discussions I’ve followed, including the comments on this blog: many people seem to have a hard time accepting that there are intermediate positions, in particular that you can question free-market, hard-money dogma without being a wild man. To say that some inflation can sometimes be a good thing does not mean advocating hyperinflation; to call for deficit spending in slumps does not mean saying that debt and deficits never matter; and so on.
I watched ABC's This Weeks this morning and was stunned by how their panelists all assumed that it was normal politics to push the US raising of the debt ceiling to be "normal" politics. Bizarre.

Nobody pointed out the obvious. That a debt ceiling and deficits are not really connected. That is you want to solve a problem you don't demand that all problems be solved simulataneously. Nobody seemed to understand that the appropriate moderate position would be to recognize that there is a "long term" need for government to be solvent and live within its means, but right now the issue is meeting obligations to creditors which has nothing to do with solvency or creating new spending initiatives or even fixing old spending initiatives.

What I find truly astounding is that these black-or-white minds can't see the need for short term debt to shore up an economy so that long term debt can be addressed in the next few years. Instead, I saw a lot of grave faces saying that the US will have to actually go to the brink and "shake up" financial markets before there is "enough of a crisis" to motivate the politicians to get serious about passing a new debt ceiling. Insane!

This bit in the post is worth contemplating:
I really do worry about the state of reading comprehension. Or maybe it’s just that extremists can’t grasp the notion of non-extreme positions held by other people.
Where is the pragmatism of doing first things first and attacking problems one-by-one?

Terrorism Fears Invokes Police State Mentality

I find it odd that Americans celebrate their "love of liberty" but have been one of the fastest peoples on the face of the earth to give up basic freedoms and personal dignity in the name of "security". It is tragic and laughable.

Here is a report from the Northwest Florida Daily News -- which is ironically owned by "Freedom Communications" -- reporting this indignity:
Elderly woman asked to remove adult diaper during TSA search

Jean Weber of Destin filed a complaint with the Department of Homeland Security after her 95-year-old mother was detained and extensively searched last Saturday while trying to board a plane to fly to Michigan to be with family members during the final stages of her battle with leukemia.

Her mother, who was in a wheelchair, was asked to remove an adult diaper in order to complete a pat-down search.

“It’s something I couldn’t imagine happening on American soil,” Weber said Friday. “Here is my mother, 95 years old, 105 pounds, barely able to stand, and then this.”

Sari Koshetz, a spokeswoman for the Transportation Security Administration in Miami, said she could not comment on specific cases to protect the privacy of those involved.

...

She said her mother was first pulled aside into a glass-partitioned area and patted down. Then she was taken to another room to protect her privacy during a more extensive search, Weber said.

Weber said she sat outside the room during the search.

She said security personnel then came out and told her they would need for her mother to remove her Depends diaper because it was soiled and was impeding their search.

Weber wheeled her mother into a bathroom, removed her diaper and returned. Her mother did not have another clean diaper with her, Weber said.

Weber said she wished there were less invasive search methods for an elderly person who is unable to walk through security gates.

“I don’t understand why they have to put them through that kind of procedure,” she said.

Koshetz said the procedures are the same for everyone to ensure national security.
I always find it hysterically funny with bureaucrats cover their ass with a claim that they can't talk about an issue because "they are concerned about the privacy of those involved". But they weren't concerned enough to not impose this indignity on a dying 95 year old woman. Who are they kidding with their "concern".

By the way, it is the very same government which says that dying 95 year olds must be brutalized for "security" which also decided that an Al Qaeda double agent, Balawi, didn't need any "pat down" when he met with high CIA agents and killed 7 of them with a suicide vest (more in the UK's Guardian newspaper). On the one hand you have American "security" policy degrading a 95 year old dying woman "because of security policy" but you have the leading lights of the "war on terrorism" deciding they didn't need to pat down a known terrorist who they thought they had "turned" against Al Qaeda and were "surprised" when he blew them to kingdom come because of their stupid gullibility. This is madness.

What this shows it that Americans would rather have a police state with all the trappings of "security theatre" rather than have a society in which the dignity and freedom of individuals are upheld.

I find it funny that it is the Republican party that waves the flag most vigorously over "freedom" and "family values" but it was specifically the Republican party under George Bush who threw aside all rights and allow an intrusive police state to grow and swell into its current behemoth state. The US is spending $664 billion on its military and a poorly disclosed amount of spying and intelligence. This is over $2000/person in order to have 95 year old terminally ill women forced to get out of wheelchairs and strip off their adult diaper in public so that a bureaucrat can run his hands over her body to assure "safety" to the American people. What a joke!

A truly "freedom-loving people" does not live on its knees with security goons feeling them up while ordering them around. The American people needs to open its eyes and realize they made a pact with the devil when they bought the "war on terror" sold to them by Bush and continued by Obama. Since there will always be "terror", this is a proscription for eternally living on their knees while mumbling about the "love of liberty".

Update 2011jun27: I don't buy into Rand Paul's crazy right wing politics, but I fully agree with his tongue-lashing of the TSA for their failure to respect the rigths of Americans and their absolutely idiotic "security theatre" pat downs...



Rand Paul asks the right questions about the kind of investigative background and risk assessment that should be done and the need to target the searching to real suspects. It is mind-boggling that Americans put up with the complete destruction of "life, liberty, and the pursuit of happiness" on the part of the TSA bureaucracy. This TSA "testimony" is absolute idiocy.

The right wing Rand Paul politics I don't buy into: turning over security to "private enterprise" is idiotic. There is nothing about a private company that implies that it can be more intelligent in providing security. In fact, there are good arguments that private companies by their very nature, i.e. primary goal is profit-seeking, owners can be world-wide, limited liability means they can walk away if something absolutely reprehensible is done, cannot provide the same kind of honest, diligent security that a government agency can provide. So I don't go for the right wing Kool-aid that Paul is selling. But his points about TSA being brain dead and wasting resources of "security theatre" are right on the mark.

The Politics of Un-Memorable

People who refuse to use reason are called unreasonable.

People who refuse to use memory should be called un-memorable.

The political right wing in the US is un-memorable. Here is a bit from Paul Krugman in his NY Times blog to substantiate the claim:
Bruce Bartlett points out something I had forgotten: the 1993 Clinton tax increase wasn’t the first time conservatives predicted doom from any rise in tax rates. They did the same in response to the Reagan tax hike of 1982 — and yes, the sainted Reagan, after cutting taxes at the beginning, raised them repeatedly thereafter.

What actually happened, of course, was a V-shaped recovery — Morning in America — which was mainly due to Fed policy, but got credited to the 1981 tax cut. And the 1982 tax hike got sent down the memory hole.

The story I knew was about that Clinton tax hike, which was supposed to send the economy into a tailspin.

Let’s also mention the Bush tax cuts, which were supposed to produce a vast boom, and ended up being followed by the weakest recovery of modern times.

The point is that these people have been wrong about everything — and yet tax-cut magic is the official religion of the GOP.
"The failure to remember the past condemns you to hideous politics." Wasn't that the memorable quote of the philosopher Santayana? Or was it that "people who live in un-memorable houses shouldn't throw around big policy prescriptions"? I dunno. It was something like that.

Dowd on Obama's "Leadership"

This is excellent. She has nailed Obama's problems as "leader". Here is a bit from Maureen Dowd's NY Times op-ed column:
Our president likes to be on both sides at once.

In Afghanistan, he wants to go but he wants to stay. He’s surging and withdrawing simultaneously. He’s leaving fewer troops than are needed for a counterinsurgency strategy and more troops than are needed for a counterterrorism strategy — and he seems to want both strategies at the same time. Our work is done but we have to still be there. Our work isn’t done but we can go.

On Libya, President Obama wants to lead from behind. He’s engaging in hostilities against Qaddafi while telling Congress he’s not engaging in hostilities against Qaddafi.

On the budget, he wants to cut spending and increase spending. On the environment, he wants to increase energy production but is reluctant to drill. On health care, he wants to get everybody covered but will not press for a universal system. On Wall Street, he assails fat cats, but at cocktail parties, he wants to collect some of their fat for his campaign.

On politics, he likes to be friends with the other side but bash ’em at the same time. For others, bipartisanship means transcending their own prior political identities. For President Obama, it means that he participates in all political identities. He does not seem deeply affiliated with any side except his own.

He was elected on the idea of bold change, but now — except for the capture of Osama and his drone campaign in Pakistan and Yemen — he plays it safe. He shirks politics as usual but gets all twisted up in politics.

The man who was able to beat the Clintons in 2008 because the country wanted a break from Clintonian euphemism and casuistry is now breaking creative new ground in euphemism and casuistry.
Obama was elected under the banners of "hope" and "change you can believe in". But he is delivering the same old back room political dealing and the kind of cynical half measures which makes people want to puke when they think about politicians:
As a community organizer, Obama developed impressive empathetic gifts. But now he is misusing them. It’s not enough to understand how everybody in the room thinks. You have to decide which ones in the room are right, and stand with them. A leader is not a mediator or an umpire or a convener or a facilitator.

Sometimes, as Chris Christie put it, “the president has got to show up.”

With each equivocation, the man in the Oval Office shields his identity and cloaks who the real Barack Obama is.
Obama lied his way to the top. He sold himself as one thing and delivered something substantially less. He is still far superior to the idiocy that the Republican party puts on offer, but his indecisiveness and vacillation leaves his administration in a muddle. Instead of leading America out of the Great Recession, his half measures leaves the country mired in a mess. It will take a new president either 2 years from now or 6 years from now to finally grab the country by the ears and yank it painfully out of the quagmire it is in. In the meantime tens of millions will live blighted lives because Obama can't be decisive.

Saturday, June 25, 2011

The Science of Sleep

Here is an interesting panel from the June 2011 World Science Festival dealing with the issue of sleep and dreaming:



The web page with annotation introducing this panel can be found here.

I like the bit at 24:20 because it addresses the connundrum of why everybody finds their own dreams "meaningful" but find other people's dreams pretty boring.

The most fascinating bit is the section from 25:20 thru 49:20 where Matthew Wilson looks at his research on a rat's mind. First his has decoded the rat's experiencing the traversing of a maze and he can then follow the rat dreaming or rehearsing that traversal during sleep. What is especially fascinating is his interpretation of non-REM versus REM dreaming.

Going Green and the Hand Wringing Apologists

There is a lot of brow-beating of people in the developed world about their "guilt". Guilt for a "colonial" past. Guilt about outrageously self-indulgent lifestyles. Guilt about greedily seizing resources and living the underdeveloped world desperate and without.

Well... I was never a colonialist. I don't live an indulgent lifestyle. And I've never hogged resources. Sure, colonialism was rampant 300 years ago. But if you go back 2000 years you find Romans, Chinese, Persians, Indians, etc. as the great colonialists. Why don't be beat Iranians, Chinese, Indians, etc. about the ears for having "empires". My ancestors were running around half naked in the northern fringe woodlands 2000 years ago.

As for using an "unfair" share of resources:

Click to Enlarge

The above graph is from a post on energy by Ed Yardini in his blog Dr. Ed's Blog.

As the graph makes clear, the rising standard of living in China and India (and more generally in southeast Asia) means that resource consumption there has rapidly surpassed the "developed" world. Sure, the per-capita resource use is still low, but the graph shows the trend. In 30-50 years the overwhelming about of resource consumption will be with the billion+ populations of China and India.

Oil consumption is falling in the "developed" world while it is strongly rising in the "undeveloped" world. But all the anti-technology, "green", guilt-ridden propaganda used to make people in the developed world feel guilty is out-dated. It doesn't reflect the world we now live in. But it always takes time for people to throw off out-dated mental shackles.

How to Sell Global Warming

For those who think "global warming" is an academic debate, and especially for those who think it is "settled science", they should look back to the origins of the debate in June 1988 when the Senator who set up the issue with a Congressional hearing laid his thumb heavily on the scale to "sell" his side:



The above is from a post on the blog Watts Up With That?. Go read the whole post.

This isn't how an honest debate is staged. This is manipulation and lies with a goal of "winning" and not of getting at the truth.

Update 2011jun26: Here is yet more about Senator Wirth on the Watts Up With That? blog:
...I realized that the former Senator is mentally incapable of addressing the issue of global warming on a factual level, and there would never be a response to my challenge and offer.
“We’ve got to ride the global warming issue. Even if the theory of global warming is wrong, we will be doing the right thing, in terms of economic policy and environmental policy. ” – Timothy Wirth quoted in Science Under Siege by Michael Fumento, 1993
That’s true religion. Wirth’s quote makes Dr. Phil Jones look almost reasonable by comparison.

Walter Lewin with Warren Goldstein's "For the Love of Physics"


This is a fun romp through physics. It starts with the tragic personal story of Walter Lewin surviving WWII and the Nazi extermination policies. Then quickly moves the scene to America where he arrives in 1966 to teach at MIT. The book is chatty, filled with solid basic physics and curious bits of physics that lighten the tone and make this book interesting. Despite being trained as a particle physicist, Lewin has a keen interest in astronomy and atmospheric physics. The book is filled with references to video clips to illustrate concepts.

This isn't a review of physics for the student. It is a more light-handed romp through physics with references to historical figures and key physical facts. It won't prepare you for a physics exam, but it will make attractive the idea of reading more in this subject.

Of the 15 chapters. One is Lewin's personal background. Eight are fairly standard surveys of basic physics. And six focus on his speciality: x-ray astronomy.

Here's Lewin's comment on his approach in this book:
My purpose in the classroom, and the main reason I've written this book, is to translate the truly astounding, groundbreaking, sometimes even revolutionary discoveries of my fellow physicists into concepts and language intelligent, curious laypeople can really get hold of -- to make a bridge between the world of professional scientists and your world. Too many of us seem to prefer talking only to our peers and make it awfully difficult for most people -- even those who really want to understand science -- to enter our world.
And:
Most high school and college students hate taking physics because it is usually taught as a complicated set of mathematical formulas. That is not the approach I use at MIT, and it is not the approach I use in this book. I present physics as a way of seeing our world, revealing territories that would otherwise be hidden to us -- from the tiniest subatomic particles to the vastness of our universe. Physics allows us to see the invisible forces at play all around us, from gravity to electromagnetism, and to be on the alert not only for where and when we'll find rainbows, but also halos, fogbows, and glories, and maybe even glassbows.
I highly recommend this book. It is lots of fun and will teach you some basic physics.


I plan to watch the videos from Lewin's on-line MIT course in physics.

What is Happening in China

The following is from the Washington's Blog site. I find the information here is generally right, but sometimes is spectacularly wrong. I have no way of independently assessing the following, but it sounds right to me:
Is the Chinese Economy Sputtering for the Same Reasons as the American Economy?

It was tempting to believe that China was different.

With its command and control economy with some of the trappings of free market capitalism, trillions in reserves, and abundant natural resources, many thought that China would "decouple" from the Western world's problems and sail into a prosperous future.

However, despite its long history, exotic names and seemingly strong position, China cannot avoid the rules of economics which have applied to all countries throughout history.

Corruption and Phony Bookkeeping

Corruption and the failure to follow the rule of law is one of the main factors which has dragged down the American economy.

The fact that - according to the Chinese central bank - Chinese officials stole $120 billion and fled the country does not auger well for China.

Scandals among various Chinese companies are not helping, either.

And then there are the made up statistics. As Warren Hatch of Catalpa Capital Advisors notes:
As Li Keqiang, the vice premier and heir-apparent to Wen Jiabao, laconically remarked to the US ambassador a few years ago, most of the statistics in China are “for reference only.”
And Charles Hugh Smith argues:
Despite their many differences, the economies of China and the U.S. share a number of key traits: both are corrupt, rigged, crony-Capitalist, rely on phony statistics and propaganda and operate with two sets of rules: one for the Elites, and another for the masses.

Despite their many differences, the economies of China and the U.S. share a number of key traits: both are corrupt, rigged, crony-Capitalist, rely on phony statistics and propaganda and operate with two sets of rules: one for the Elites, and another for the masses.
There is much more in the original post. Go read the whole article.

From my perspective, both countries suffer a large degree of corruption because they have an elite which has run amok.

How does this problem get fixed? It isn't clear to me. But it will require a wholesale revulsion by an overwhelming number of people, something like 80% will have to turn their back on the past and demand a new "social contract". Whether that is done through revolution, a new mass political party, a religious conversions, etc. I don't know. But it will take a social change of that order to sweep out the Augean stables of corruption and greed that now reign in both countries.

Friday, June 24, 2011

A Story with a Moral

I love stories that "teach life lessons".

Here's one...



Who hasn't dreamed of having an "invisibility cloak" or a super-powers that would let them cash in big or get away with something. Stories with the above twist for an ending ensures we don't let our dreams carry us away.

Income Trickles Up in a Supposedly "Trickle Down" Economy

Here is a post by Mark Thoma on his blog Economist's View:
Labor's Share of Nonfarm Business Income Plummets

This graph of labor's falling share of income explains a lot about the growing political discord in the middle and lower classes:

Click to Enlarge

[via Frum Forum]

I've talked a lot about the need for job creation, and that is still of utmost importance. But job creation alone is not going to be enough to turn the tide of growing unhappiness with our increasingly two-tiered society.
You can fool all the people some of the time and some of the people all the time, but you can't fool all the people all the time. At some point the American electorate is going to wake up and realize they've been taken for fools by the "Reagan revolution" with his "trickle down" economics that has only succeeded in making the ultra-rich fabulously wealthy while leaving the bottom 90% with nothing.

Krugman Nails the Phony Debt Concern of the Republicans

Here is a post by Paul Krugman on his NY Times blog:
Phony Deficit Hawks

So, just to summarize: Republicans are deeply, deeply concerned about the budget deficit; they believe that our nation’s future is at stake.

But they’re willing to sacrifice that future, not to mention risk the good faith and credit of the federal government, rather than accept so much as a single penny of tax increases as part of a deal.

Given all that, it seems almost redundant to mention that federal tax receipts as a percentage of GDP are near a historic low:

Click to Enlarge

Federal receipts as % of GDP

So what’s it all about? The answer, of course, is that the GOP never cared about the deficit — not a bit. It has always been nothing but a club with which to beat down opposition to an ideological goal, namely the dissolution of the welfare state. They’re not interested, at all, in a genuine deficit-reduction deal if it does not serve that goal.

And everyone who has preached bipartisanship, who has called for a meeting of minds on the subject, is either a fraud or a chump.
Obama needs to call the bluff. If he continues to make concessions in the face of Republican intransigence, he fails to do his duty. He was elected to represent the people, not dance to the tune that the Republicans play.

Krugman's Review of Age of Greed

Here are the opening paragraphs of Paul Krugman's review of the book Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present by Jeff Madrick:
Suppose we describe the following situation: major US financial institutions have badly overreached. They created and sold new financial instruments without understanding the risk. They poured money into dubious loans in pursuit of short-term profits, dismissing clear warnings that the borrowers might not be able to repay those loans. When things went bad, they turned to the government for help, relying on emergency aid and federal guarantees—thereby putting large amounts of taxpayer money at risk—in order to get by. And then, once the crisis was past, they went right back to denouncing big government, and resumed the very practices that created the crisis.

What year are we talking about?

We could, of course, be talking about 2008–2009, when Citigroup, Bank of America, and other institutions teetered on the brink of collapse, and were saved only by huge infusions of taxpayer cash. The bankers have repaid that support by declaring piously that it’s time to stop “banker-bashing,” and complaining that President Obama’s (very) occasional mentions of Wall Street’s role in the crisis are hurting their feelings.

But we could also be talking about 1991, when the consequences of vast, loan-financed overbuilding of commercial real estate in the 1980s came home to roost, helping to cause the collapse of the junk-bond market and putting many banks—Citibank, in particular—at risk. Only the fact that bank deposits were federally insured averted a major crisis. Or we could be talking about 1982–1983, when reckless lending to Latin America ended in a severe debt crisis that put major banks such as, well, Citibank at risk, and only huge official lending to Mexico, Brazil, and other debtors held an even deeper crisis at bay. Or we could be talking about the near crisis caused by the bankruptcy of Penn Central in 1970, which put its lead banker, First National City—later renamed Citibank—on the edge; only emergency lending from the Federal Reserve averted disaster.

You get the picture. The great financial crisis of 2008–2009, whose consequences still blight our economy, is sometimes portrayed as a “black swan” or a “100-year flood”—that is, as an extraordinary event that nobody could have predicted. But it was, in fact, just the most recent installment in a recurrent pattern of financial overreach, taxpayer bailout, and subsequent Wall Street ingratitude. And all indications are that the pattern is set to continue.

Jeff Madrick’s Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present is an attempt to chronicle the emergence and persistence of this pattern.
If you read this review you will learn some history, an understanding of how banking and regulation has changed, and get a better grasp of the role of politics in setting the US up for a series of financial bubbles and crashes.

I like this bit:
While we believe that there were deeper reasons for Reagan’s rise, Madrick is right that the economic malaise of the 1970s gave Reagan his big opening. As Madrick describes, Reagan’s enormous capacity for doublethink and convenient untruths enabled him, the front man for business interests, to convince a credulous public that “government had become the principal obstacle to their personal fulfillment.” In possibly the best chapter of the book, Madrick recounts the irony of how Reagan, the great moralizer, made unchecked greed and runaway individualism not only acceptable, but lauded, in the American psyche.

Madrick also does an especially persuasive job of demythologizing Milton Friedman, who provided intellectual heft for the antigovernment movement. As Madrick points out, although Friedman offered some important economic insights, he often shoehorned real-life data to fit into a one-sided narrative, gaining his theories wider acceptance than was ultimately justified. And Friedman, like Reagan, preferred “overly simple assertions of free market claims,” discarding the caveats.

In Friedman’s worldview, free markets were the solution to practically every problem—health care, product safety, bank regulation, financial speculation, and so on. And Friedman squarely blamed government for the Great Depression, a view that is at odds with the data.
At some point the public will turn on the philosophy of "greed is good" and "lifestyles of the rich and famous" and return to the values of hard work, careful husbanding of resources, and giving a generous helping hand to those caught in "hard times". But for 40 years the philosophy of "me first" and worshiping at the feet of great wealth has held reign. Its time is coming to an end.

That's my optimism. Krugman is more pessimistic:
Whatever the deeper story, however, Madrick’s subtitle gets it right: what we have experienced is, in a very real sense, the triumph of Wall Street and the decline of America. Despite what some academics (primarily in business schools) claimed, the vast sums of money channeled through Wall Street did not improve America’s productive capacity by “efficiently allocating capital to its best use.” Instead, it diminished the country’s productivity by directing capital on the basis of financial chicanery, outrageous compensation packages, and bubble-infected stock price valuations.

And what has happened in the aftermath of the 2008–2009 crisis is still worse: all the evidence suggests that the United States is on track to spending the better part of a decade experiencing high unemployment and sub-par growth blighting millions of lives—particularly the old, the young, and the economically vulnerable.

Yet even now we don’t seem to have learned the lesson that unregulated greed, especially in the financial sector, is destructive. True, most Democrats are now in favor of stronger financial regulation—although not as strongly as is required by the continuing manipulations by large financial institutions. But today’s Republicans remain firmly attached to greedism. In their view, it’s still government that’s the problem.
I hope Krugman is wrong. But he is almost always right. That is a depressing thought.
The Age of Greed is a fascinating and deeply disturbing tale of hypocrisy, corruption, and insatiable greed. But more than that, it’s a much-needed reminder of just how we got into the mess we’re in—a reminder that is greatly needed when we are still being told that greed is good.

A Krugman Book Review

Here are the opening paragraphs of Paul Krugman's review of the book Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present by Jeff Madrick:
Suppose we describe the following situation: major US financial institutions have badly overreached. They created and sold new financial instruments without understanding the risk. They poured money into dubious loans in pursuit of short-term profits, dismissing clear warnings that the borrowers might not be able to repay those loans. When things went bad, they turned to the government for help, relying on emergency aid and federal guarantees—thereby putting large amounts of taxpayer money at risk—in order to get by. And then, once the crisis was past, they went right back to denouncing big government, and resumed the very practices that created the crisis.

What year are we talking about?

We could, of course, be talking about 2008–2009, when Citigroup, Bank of America, and other institutions teetered on the brink of collapse, and were saved only by huge infusions of taxpayer cash. The bankers have repaid that support by declaring piously that it’s time to stop “banker-bashing,” and complaining that President Obama’s (very) occasional mentions of Wall Street’s role in the crisis are hurting their feelings.

But we could also be talking about 1991, when the consequences of vast, loan-financed overbuilding of commercial real estate in the 1980s came home to roost, helping to cause the collapse of the junk-bond market and putting many banks—Citibank, in particular—at risk. Only the fact that bank deposits were federally insured averted a major crisis. Or we could be talking about 1982–1983, when reckless lending to Latin America ended in a severe debt crisis that put major banks such as, well, Citibank at risk, and only huge official lending to Mexico, Brazil, and other debtors held an even deeper crisis at bay. Or we could be talking about the near crisis caused by the bankruptcy of Penn Central in 1970, which put its lead banker, First National City—later renamed Citibank—on the edge; only emergency lending from the Federal Reserve averted disaster.

You get the picture. The great financial crisis of 2008–2009, whose consequences still blight our economy, is sometimes portrayed as a “black swan” or a “100-year flood”—that is, as an extraordinary event that nobody could have predicted. But it was, in fact, just the most recent installment in a recurrent pattern of financial overreach, taxpayer bailout, and subsequent Wall Street ingratitude. And all indications are that the pattern is set to continue.

Jeff Madrick’s Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present is an attempt to chronicle the emergence and persistence of this pattern.
If you read this review you will learn some history, an understanding of how banking and regulation has changed, and get a better grasp of the role of politics in setting the US up for a series of financial bubbles and crashes.

I like this bit:
While we believe that there were deeper reasons for Reagan’s rise, Madrick is right that the economic malaise of the 1970s gave Reagan his big opening. As Madrick describes, Reagan’s enormous capacity for doublethink and convenient untruths enabled him, the front man for business interests, to convince a credulous public that “government had become the principal obstacle to their personal fulfillment.” In possibly the best chapter of the book, Madrick recounts the irony of how Reagan, the great moralizer, made unchecked greed and runaway individualism not only acceptable, but lauded, in the American psyche.

Madrick also does an especially persuasive job of demythologizing Milton Friedman, who provided intellectual heft for the antigovernment movement. As Madrick points out, although Friedman offered some important economic insights, he often shoehorned real-life data to fit into a one-sided narrative, gaining his theories wider acceptance than was ultimately justified. And Friedman, like Reagan, preferred “overly simple assertions of free market claims,” discarding the caveats.

In Friedman’s worldview, free markets were the solution to practically every problem—health care, product safety, bank regulation, financial speculation, and so on. And Friedman squarely blamed government for the Great Depression, a view that is at odds with the data.
At some point the public will turn on the philosophy of "greed is good" and "lifestyles of the rich and famous" and return to the values of hard work, careful husbanding of resources, and giving a generous helping hand to those caught in "hard times". But for 40 years the philosophy of "me first" and worshiping at the feet of great wealth has held reign. Its time is coming to an end.

That's my optimism. Krugman is more pessimistic:
Whatever the deeper story, however, Madrick’s subtitle gets it right: what we have experienced is, in a very real sense, the triumph of Wall Street and the decline of America. Despite what some academics (primarily in business schools) claimed, the vast sums of money channeled through Wall Street did not improve America’s productive capacity by “efficiently allocating capital to its best use.” Instead, it diminished the country’s productivity by directing capital on the basis of financial chicanery, outrageous compensation packages, and bubble-infected stock price valuations.

And what has happened in the aftermath of the 2008–2009 crisis is still worse: all the evidence suggests that the United States is on track to spending the better part of a decade experiencing high unemployment and sub-par growth blighting millions of lives—particularly the old, the young, and the economically vulnerable.

Yet even now we don’t seem to have learned the lesson that unregulated greed, especially in the financial sector, is destructive. True, most Democrats are now in favor of stronger financial regulation—although not as strongly as is required by the continuing manipulations by large financial institutions. But today’s Republicans remain firmly attached to greedism. In their view, it’s still government that’s the problem.
I hope Krugman is wrong. But he is almost always right. That is a depressing thought.
The Age of Greed is a fascinating and deeply disturbing tale of hypocrisy, corruption, and insatiable greed. But more than that, it’s a much-needed reminder of just how we got into the mess we’re in—a reminder that is greatly needed when we are still being told that greed is good.

A View on the Failing US Recovery

Here are some bits from a post on the Free Exchange blog at The Economist magazine:
Yesterday, the Federal Open Market Committee concluded its June meeting and released new economic projections. I found them profoundly disappointing. American unemployment is expected to remain uncomfortably high through 2013 at least (in which year the Fed projects an unemployment rate between 7.0% and 7.5%, up from April's estimate). Keep in mind that 2013 is 7 years from the official start of the recession. One simply can't look at projections of serious labour market difficulties over that stretch of time and see anything other than a major crisis, for workers, wages, and budgets.

There's no real mystery behind the slow improvement in employment; it flows directly from the lacklustre growth in the economy. The Fed projects that the economy will expand at less than 3% for 2011 as a whole; growth was revised downward for 2011, 2012 and 2013. It should be noted once again that rapid labour market recoveries are associated with periods of rapid, above-trend growth. If you don't have the latter, you don't get the former.

...

I don't expect the Fed to work miracles. There are lots of economic problems Ben Bernanke can't solve. I do expect the Fed to do its job, and right now it looks like the Fed is saying it has no responsibility for meeting its nominal goals. That's not acceptable.

Mr Bernanke has been clear about why he's reluctant to act at this moment. He thinks the current hiccup is largely due to temporary factors. And I think he's mostly right about that. But it shouldn't matter. Temporary factors can turn permanent if expectations begin falling. ... I understand that a conservative Fed is reluctant to act without a clear view of the economy's trend. But the Fed also shapes the trend, and by publishing these projections and stating that it's comfortable with them, the Fed is helping to orchestrate a too-slow recovery.
It is a tragedy for the 14 million unemployed that they are being (a) left to pay the price of Wall Street's greed and (b) Obama has clearly decided to let them pay this price because he is refusing to use the resources of the federal government to stimulate the economy and stretch out a lifeline to those marooned by the recession.

Of course the fat cats and those with jobs are more "worried" about inflation and deficits than they are with unemployment. They can be hurt by the former but not the latter. So they are protecting their interests by yammering about the "possibility" of inflation and their "worries" about deficits. But that means they are perfectly willing to let the 14 million have their lives destroyed by an economic shipwreck that was not of their making.

If the US was consistent, then when a tornado wrecks a town like Joplin Missouri there should be protests in other towns against sending in emergency aid or rescue specialists because that would threaten the "well-being" of the unaffected. The pleas of those left in utter destruction should be ignored. It is their mess, they should clean it up. This is certainly the policy of the political right with regard to the Great Depression. And sadly it is what the deeds of Obama demonstrate even as his words claim the opposite.