Augusten Burroughs' "You Better Not Cry"

This is yet another delightful book by Augusten Burroughs. I first picked up his Running with Scissors because I had read his brother's book Look Me in the Eye: My Life with Aspergers. That was an interesting read, but not interesting and entertaining like his brother, Augusten Burroughs.

The two come from a dysfunctional family and reading their books is a Roshomon-type experience, i.e. the same event seen from a different perspective. Very interesting.

This latest book by Bourroughs is an enjoyable collection of short stories related only by the theme of Christmas. They are bitter-sweet funny. They continue the dance-of-many-veils as Burroughs lets you see aspects of his life. He comes across as plagued with problems, but in reality he has managed to make his way through life and is a successful author. His stories are self-centred but wonderfully comic. My favourite story is "Why Do You Reward Me Thus?" with his encounter with Shirley, a down-and-out druggie with the golden voice of an opera singer. The story has the wonderful feel of backing into the unknown with a dash of wholesome human redemption. Very nice.

If you want some light entertainment with a twist, Augusten Burroughs is your man. But -- be warned -- he dances on a precipice. Only if you are able to handle the more bizarre aspects of human existence, will you find this book satisfying.

Bubble-ology

Here's a blog post by Paul Krugman on the NY Times site which is well worth reading:

There Are Bubbles, And Then There Are Bubbles

On the whole, I find it amazing and distressing that fear of new bubbles is playing such a large role in current policy discussion, leading too many prominent economists to recommend raising interest rates in the face of a hugely depressed economy. Even if you believe that excessively low policy rates were a key reason for the housing bubble — which I don’t — the idea that we should be raising rates now brings to mind the old joke about the motorist who runs over a pedestrian, then tries to fix the damage by backing up, and running over the pedestrian a second time.

Beyond that, I think we need to bear in mind that while bubbles are in general a bad thing, just how bad depends a lot on the context — in particular, whether the inflation of the bubble has been accompanied by a big increase in leverage on the part of those buying the inflated assets.

Consider the stock bubble of the late 1990s. It was crazy, and when it popped U.S. households suffered a capital loss of about $5 trillion. This was bad, and helped cause a recession. But it never rose to the level of economic catastrophe.

Then came the housing bubble, after which households suffered a capital loss of about $8 billion trillion [hey, a few zeroes more or less ... ]. Yes, they also suffered a big loss as stocks plunged — but that was because the housing bust, unlike the stock bust, had a huge impact on the financial system and the economy as a whole.

What was the difference? First, a lot of financial institutions — which are highly leveraged — were holding securities whose value was highly sensitive to the state of the housing market. There was nothing comparable in the case of stocks. So the housing bust undermined the financial system in a way the stock bust never did.

Second, households also leveraged themselves up in the housing boom, in a way they for the most part didn’t with stocks (yes, there were people buying dotcoms on margin, but they were not typical). So the housing bust created a balance-sheet crisis for the household sector in a way that the dotcom bust didn’t.

The moral for right now is that even if you believe that there are bubbles inflating or about to inflate, they’re only a big concern if they are leading to leveraged positions for key players. The alleged carry trade bubble sorta kinda mighta have met that criterion, although I never found the warnings all that persuasive. But other stuff — bubbles in BRIC equities, or gold, or whatever, don’t make the grade.

Anyway, my point is not so much about current events as a more general observation: the bubbles we should fear are those that lead to leverage, and set us up for a Minsky moment.

I wanted to cut out the "key bit" but Krugman writes so beautifully and makes every word count. So I ended up excising the whole thing! If you don't read Krugman regularly, you should. He both writes articles for the NY Times as well as blog posts that elaborate themes which the space limitations of a newspaper require they be left out. Monitor this site and you will get all his postings and his articles.

The above post is typical of Krugman. He points out the false beliefs of pundits who are media stars. Sadly, too many people with access to the media don't really know what they are talking about and keep making mistakes and misleading people. Poor Paul Krugman is like the little engine that could. For years he keeps telling people truths they don't want to hear. I'm hoping someday Krugman, like the little engine, will actually succeed in his goal.

Diving into a Double Dip

Well... it looks like the US is in fact going into a double dip recession, or more correctly, the Great Recession is turning into a decade-long stagnation. Here's a bit from a posting by Gavyn Davies, a macroeconomist, on the FT web site. I've bolded some key bits:

I am becoming increasingly concerned about the extent of the slowdown which is now underway in the US economy, a trend which has not yet been fully recognised by the Federal Reserve. Admittedly, some decline in the growth rate was always inevitable at this stage of the cycle, because the large boosts to growth stemming from the upswing in inventories and from fiscal stimulus were certain to lose momentum about now. But the pick up in more sustainable sources of growth, notably consumers’ expenditure and capital investment, has so far been more anaemic than I had hoped, and the improvement in the labour market may be going into reverse. The Fed may soon be forced to confront the choice they most wanted to avoid, which is whether to extend quantitative easing, instead of allowing their programmes of unconventional easing to lapse, as they fervently hoped earlier this year.

...

With the ISM dropping towards the low 50s, initial claims rising, and the number of private sector jobs declining, it seems likely that the Fed will be forced to accept that below trend GDP growth is likely in coming quarters. Previously optimistic private sector forecasters have been downgrading their central case, and the danger of a double dip is coming onto the radar screen. For example, JP Morgan have recently shaved a full percentage point from their US GDP growth forecast for the second half of 2010, taking it down to 1.75 per cent.

No-one yet makes a double dip the most likely course of events in the US. But this is not very surprising, since economic forecasters almost never acknowledge the start of a recession until some months after it has actually taken place. Instead, they talk about “increased risks of recession”. It is interesting to note that both JP Morgan and Goldman Sachs now say that a double dip recession is about 25-30 per cent probable, which is what forecasters generally say when they are becoming really concerned that such an outcome could easily occur.

The tragedy is that voices like that of Paul Krugman who warned of this a year and a half ago were ignored and continue to be ignored.

Policy in the US is still being made by the very people who allowed the financial crisis to occur, the very people who saw no "housing bubble", who assured us that sub-prime mortgage failures would be "contained", and that the fiscal stimulus by Obama was "big enough" and no second stimulus was (or is) needed. These are the very leaders who beat the drums and led the conga line of self-congratulations on a "job well done" as over 14 million Americans became officially unemployed and many millions of others have been banished to statistical "non-existence".

Hummingbirds

I have a real soft spot for hummingbirds:

At Last, Some Sanity from the Right

Libertarian Ron Paul, a former Republican candidate for the Presidency, has done the right thing. He has taken a principled stand on the controversy over construction of an Islamic Center and Mosque in New York City in full. I've bolded key bits:

“Is the controversy over building a mosque near ground zero a grand distraction or a grand opportunity? Or is it, once again, grandiose demagoguery?

“It has been said, “Nero fiddled while Rome burned.” Are we not overly preoccupied with this controversy, now being used in various ways by grandstanding politicians? It looks to me like the politicians are “fiddling while the economy burns.”

“The debate should have provided the conservative defenders of property rights with a perfect example of how the right to own property also protects the 1st Amendment rights of assembly and religion by supporting the building of the mosque.

“Instead, we hear lip service given to the property rights position while demanding that the need to be “sensitive” requires an all-out assault on the building of a mosque, several blocks from “ground zero.”

“Just think of what might (not) have happened if the whole issue had been ignored and the national debate stuck with war, peace, and prosperity. There certainly would have been a lot less emotionalism on both sides. The fact that so much attention has been given the mosque debate, raises the question of just why and driven by whom?

“In my opinion it has come from the neo-conservatives who demand continual war in the Middle East and Central Asia and are compelled to constantly justify it.

“They never miss a chance to use hatred toward Muslims to rally support for the ill conceived preventative wars. A select quote from soldiers from in Afghanistan and Iraq expressing concern over the mosque is pure propaganda and an affront to their bravery and sacrifice.

“The claim is that we are in the Middle East to protect our liberties is misleading. To continue this charade, millions of Muslims are indicted and we are obligated to rescue them from their religious and political leaders. And, we’re supposed to believe that abusing our liberties here at home and pursuing unconstitutional wars overseas will solve our problems.

“The nineteen suicide bombers didn’t come from Iraq, Afghanistan, Pakistan or Iran. Fifteen came from our ally Saudi Arabia, a country that harbors strong American resentment, yet we invade and occupy Iraq where no al Qaeda existed prior to 9/11.

“Many fellow conservatives say they understand the property rights and 1st Amendment issues and don’t want a legal ban on building the mosque. They just want everybody to be “sensitive” and force, through public pressure, cancellation of the mosque construction.

“This sentiment seems to confirm that Islam itself is to be made the issue, and radical religious Islamic views were the only reasons for 9/11. If it became known that 9/11 resulted in part from a desire to retaliate against what many Muslims saw as American aggression and occupation, the need to demonize Islam would be difficult if not impossible.

“There is no doubt that a small portion of radical, angry Islamists do want to kill us but the question remains, what exactly motivates this hatred?

“If Islam is further discredited by making the building of the mosque the issue, then the false justification for our wars in the Middle East will continue to be acceptable.

“The justification to ban the mosque is no more rational than banning a soccer field in the same place because all the suicide bombers loved to play soccer.

“Conservatives are once again, unfortunately, failing to defend private property rights, a policy we claim to cherish. In addition conservatives missed a chance to challenge the hypocrisy of the left which now claims they defend property rights of Muslims, yet rarely if ever, the property rights of American private businesses.

“Defending the controversial use of property should be no more difficult than defending the 1st Amendment principle of defending controversial speech. But many conservatives and liberals do not want to diminish the hatred for Islam--the driving emotion that keeps us in the wars in the Middle East and Central Asia.

“It is repeatedly said that 64% of the people, after listening to the political demagogues, don’t want the mosque to be built. What would we do if 75% of the people insist that no more Catholic churches be built in New York City? The point being is that majorities can become oppressors of minority rights as well as individual dictators. Statistics of support is irrelevant when it comes to the purpose of government in a free society—protecting liberty.

“The outcry over the building of the mosque, near ground zero, implies that Islam alone was responsible for the 9/11 attacks. According to those who are condemning the building of the mosque, the nineteen suicide terrorists on 9/11 spoke for all Muslims. This is like blaming all Christians for the wars of aggression and occupation because some Christians supported the neo-conservative’s aggressive wars.

“The House Speaker is now treading on a slippery slope by demanding a Congressional investigation to find out just who is funding the mosque—a bold rejection of property rights, 1st Amendment rights, and the Rule of Law—in order to look tough against Islam.

“This is all about hate and Islamaphobia.

“We now have an epidemic of “sunshine patriots” on both the right and the left who are all for freedom, as long as there’s no controversy and nobody is offended.

“Political demagoguery rules when truth and liberty are ignored.”

Ifind common cause with libertarians over their devotion to freedom, liberty, and property rights. Where I stand apart is the need to also stand up for justice, equality of opportunity, and the right to the pursuit of happiness. It is good to see that somebody on the American right has stood up to the Joe McCarthy witch-hunt unleashed by the right wing crazies in the US.

... now for a broader perspective...

Here is a clip from MSNBC's Rachel Maddow Show which shows the machinations of the right wing crazies:

Life in Space

Here's an interesting bloggingheads.tv diavlog with Mary Roach talking about her new book Packing for Mars and Jennifer Ouellette who has the blog Cocktail Party Physics:

The Bush Tax Cuts

Paul Krugman in his NY Times op-ed takes on the hypocrites who insist that the Bush tax cuts must be kept to "help the economy to recover" from the Great Recession:

We need to pinch pennies these days. Don’t you know we have a budget deficit? For months that has been the word from Republicans and conservative Democrats, who have rejected every suggestion that we do more to avoid deep cuts in public services and help the ailing economy.

But these same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country.

What — you haven’t heard about this proposal? Actually, you have: I’m talking about demands that we make all of the Bush tax cuts, not just those for the middle class, permanent.

...

What’s at stake here? According to the nonpartisan Tax Policy Center, making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years. For the sake of comparison, it took months of hard negotiations to get Congressional approval for a mere $26 billion in desperately needed aid to state and local governments.

And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year. But that’s the least of it: the policy center’s estimates say that the majority of the tax cuts would go to the richest one-tenth of 1 percent. Take a group of 1,000 randomly selected Americans, and pick the one with the highest income; he’s going to get the majority of that group’s tax break. And the average tax break for those lucky few — the poorest members of the group have annual incomes of more than $2 million, and the average member makes more than $7 million a year — would be $3 million over the course of the next decade.

All I can say is that the Republicans sure know who their friends are and they sure want to look after their friends.