Since I can't get an amen for breaking public laws and half the readership insists I'm being mean to the troops...and the rest of the news seems too obvious to even discuss (what can you say about a country that is worried about deficits in the middle of the worst economy in three decades and seems to find no end of reasons to meddle in foreigners business despite all that bad evil deficity..?) I've gotta admit - I've got nuthin'.
I'm fresh out of fresh ideas, and seydlitz is off fighting with the IWW against the evil Pinkertons, and between the two of us we've put up 5 of the 6 posts this month. (Interesting, I looked back and realized that we did 12 of 15 last month, 6 of 14 in April, and a whopping 17 of 25 in March. I think it's time I shut the hell up, anyway)
So I'm asking for some new ideas; anyone? Let's see if we can spark some real old-fashioned Intel-Dump knockdowns around here. I promise to try and work on my inner Diogenes just to see whose skirt I can blow up.
Have at it!
Chief,
ReplyDeleteJust for the record, I don't think you are being mean to troops. I agree with jim's statement that it is about keeping the boys safe, and not about protecting their delicate feelings. We are all victims of our own experience, and as one of my bosses once told me, "now you will become a victim of mine."
Here is a topic for the forum. Yesterday I sat in a lecture from a "strategic thinking group" who claimed that the Arab Spring will one day be talked about in the same vein as the falling of the Berlin Wall, perhaps even bigger. His argument was that there are currently 28 countries that we are watching carefully that have already had a regime change, or are at risk. (noting that not all countries associated with the Arab Spring, speak Arabic). He also noted a few domino effects that I didn't think of, such as Libya being the greatest supporter of the Zimbabwe regime, and when Qudafi goes, so goes Mugabe and you will see another regime fall.
Something else he hit on, something that I can say I've been talking about on this forum for a few years, is the role of social networking sites in the organizing and spreading of this movement throughout the world.
Curious to hear the thoughts. I imagine that at first, there will be a "WTF" reaction, comparing this even to the fall of Iron Curtain, but beyond that what do we think actually sparked the revolution, what has sustained it, and where is it going.
Oh, and one further question. What should the US's role be, if any? I know that is a BS question, because each country will require a tailored role, with the vast majority of the situations being "no US involvement." But are there any places we should be inserting US efforts, how and why?
ReplyDeleteI'll take up BG's gauntlet.
ReplyDeleteYour speaker is optimistic and premature. The key factor in the Arab Spring is what replaces the deposed governments. If we see more of the same (as seems likely) then it will be a footnote in the history books.
If the locals manage to get some sort of a lasting good government (it doesn't have to be very democratic, just not very corrupt) then there's a chance that your speaker was correct.
As for the correct level of US involvement, that's easy: AS LITTLE AS POSSIBLE!
The locals have been screwed up for centuries and we don't understand their culture so we should stay out as much as possible. A large part of the value of the Arab Spring is that the local man-on-the-street is taking control of his life for the very first time. Substantial US intervention voids that and turns it into just another colonial action.
A different topic for posting: Will the Greece financial mess be the end of the Euro and is that a good or bad thing?
ReplyDeleteI'm asking these question from the perspective of somebody who is on the sidelines and has no dog in this fight. I admire what the Euro has done for Europe but establishing an economic union without first establishing an iron-clad method of working out differences and ways to keep things more-or-less on an even keel seems a bit on the foolhardy side.
Chief,
ReplyDeleteWe otta do a series on VN restaurants and all the people working in them that were re-educated and 30 years later escaped to any country that would take them.
Maybe to expand that to MACVSOG indig fighters that we abandoned after we hatted up and moved em out.
Maybe this would remind us whose really on first.
I'm in your corner, and fuck the X wives.
And fuck the X men too.
BTW-after seeing Weiners weiner i think i'm qualified to run for Congress.
jim
There's lots of stuff to talk about and debate. Here are a couple of things that caught my interest recently:
ReplyDelete1. NATO relevancy. Where is NATO headed, it is even needed anymore? Sec. Gates gave a prickly speech on NATO cooperation. Personally, I've long thought NATO's days are numbered.
2. The economy. The big story here is jobs. Politicians are selling all kinds of magical solutions but I'm skeptical that any of them know what they are talking about. Same with most economists.
3. Civ-Mil relations. Maybe it's just my perception, but I seem to be seeing more indications that some in the military are increasingly contemptuous of a civilian population that doesn't really care about them or what they're doing. Just two examples from this week were the soldiers who were charged baggage by Delta and threw a fit about it, and a Marine Sgt who asked Sec. Gates this:
"Sir, we joined the Marine Corps because the Marine Corps has a set of standards and values that is better than that of the civilian sector. And we have gone and changed those values and repealed the 'Don't Ask, Don't Tell' policy...We have not given the Marines a chance to decide whether they wish to continue serving under that. Is there going to be an option for those Marines that no longer wish to serve due to the fact their moral values have not changed?"
Gates gave the right answer (IMO), but the Sgt's attitude is deeply troubling.
Andy - "Politicians are selling all kinds of magical solutions but I'm skeptical that any of them know what they are talking about. Same with most economists."
ReplyDeleteThat's why I chose to avoid the topic. I've got a few ideas on how to solve the economic mess that we are in but they are so extreme that I'm positive that they would never be enacted and I'm not sure whether they'd do any good.
Pluto
I don't care much about quantity of posts per month when I am blogging. Sometimes I'm in the mood and write about 30/month, sometimes I'm not and output is halved.
ReplyDeleteThe better metric is quality; don't miss an opportunity to write a good post, but don't publish one that doesn't meet your own standard - unless it's about humour or otherwise simple fun ;) .
1. Gwynne Dyer always has an interesting take on things. His latest column is about the efficacy of people power.
ReplyDelete2. The beginnings of bones
3. Given the economic rise of the rest of the world (and particularly China) the influence of the USA in world affairs has peaked. How should American diplomacy approach the next decade to make the upcoming long twilight as comfortable as possible.
New subjects? All of the above suggestions certainly, and I am also interested in discussions on Petraeus at CIA and Panetta at DoD. Too early maybe, but I would love to read and contribute to a small e-powwow here on what their priorities should be their first year in office.
ReplyDeleteJim - A few of our former indigenous, non-Viet allies from Nam were brought out. They are still hunter-gatherers. Some of them (or their descendants) swing through the Northwest here on a regular basis every November picking the woods clean of mushrooms. Not the magic ones, just the high-priced wild chantarelles, morels, shitake and others they can wholesale for $10 to $20 per pound.
Chief - As a former 1stSgt it is your job to be hell-on-wheels with and mean to the troops. So I admired the passion in your previous post - admired but disagreed on what we knew about what was going on outside the frame of that photo. For all we knew the whole shebang was a dog and pony show. Or as Andy said so well perhaps those troops do deserve a rug dance in your office for forgetting the basics. Possibly (or more like probably) I am an inveterate kibitzer. So if I ruffled any feathers, oh well. All I was trying to say is that there was not enough evidence either way so I myself would have let it go unless and until I knew more than a single photo.
AEL - "Gwynne Dyer always has an interesting take on things. His latest column is about the efficacy of people power."
ReplyDeleteI find Dyer to be more provocative than informative. His column on people power is a case in point. He does a fine job of documenting a growing and positive trend (successful non-violent revolutions) and then says that there's nothing despots can do about it.
Sorry, but that's BS and we all know it. The US and Chinese governments have been increasingly successful at quelling the power of the crowd in a modern information-oriented society without raising any world-wide media hackles.
The reason the despots fell in Egypt, Tunisia, the Philippines, etc. is that they were lazy and stupid. They didn't do enough to isolate their disaffected masses from the rest of the population and the media and didn't do enough to ensure that their security forces would be willing to crack down on the masses when they started gathering.
While I heartily applaud the elimination of despotic idiots, this is not a sea-change in world history favoring democracy, it is social evolution at work pruning off the weaker branches of despotism so there is room for more efficient despots.
How about a discussion of the War Powers Act in the context of Libya? Is the WPA constitutional at all? Does it constitute an improper legislative veto?
ReplyDeleteWhy doesn't the Congress use its 'power of the purse' to enforce its will WRT military actions? Should it?
I remember going 'round and 'round with Andy on this one after the Dems got control of Congress in 2006. And I suspect we all know that the answer to this question is a matter of alleged 'supporting the troops.'
Just a thought... I'd love to hear milpub's take on this.
Cheers,
JP
Chief,
ReplyDeleteI'm giving you a direct order.!
Take some R&R, or if you prefer some I&I.
I believe we've all been at this for a while without any leaves or passes and some time off would clear your mind (or tubes).
The ONLY reason that i stay the course here is because i believe that we're all friends.I say this realizing that bg needs to be house broken.
jim
jim
I disagree Pluto.
ReplyDeleteDemocracy is indeed spreading across the world.
Go back 200 years and look at the proportion of people in the world living under democratic rule.
Go back 100 years.
Go back 50 years.
Look at today.
Draw a graph.
There is a well defined trend towards democratization. It happens between 2 and 3 generations after a plurality of people in a country can read and write.
I can say that its time to START worrying about deficits because THAT is what needs to be cut. Again, the lessons of history show that cutting spending is only one half of the solution when dealing with the economic disaster we find ourselves in right now. We cut taxes (which is the other half) but have INCREASED spending which is goddamn DUMB.
ReplyDeletehttp://mises.org/daily/3788
Damn, guys, this is some good stuff. I need to STFU more often.
ReplyDeleteI'm with Andy - I think that job-creation is and will be a huge issue/problem in the U.S. for a significant time to come. The Reagan Revolution was predicated on breaking the New Deal social contract that bought labor peace at the price of making U.S. workers "middle class". Now those chickens are coming home to roost, and short of a new Smoot-Hawley (and remember how well THAT worked out) I can't see a way out of the labor-liquidity trap we're in. We've backed ourselves into a consumerist corner; personal consumption is something like 60-70 percent of the U.S. economy...and then we've kicked the props out from under the blue-collar working class (and now much of the white- and pink-collar classes, too) in favor of allowing the rentier corporatists to profit on the hollowing and offshoring of the labor economy. The folks in the non-two-yacht families managed for a while by sending the wives to work, running up credit card debt and using their homes as ATMS, but that's done...
This country can work as an oligarchy - look at our climb to world power in the late 19th and early 20th Century - but it's not much fun unless you're an actual oligarch. And the huge difference is that there's now no "free land" or agricultural labor sector to take up the excess. I can't think of how this ends except badly.
JP - We did have a sorta-kinda discussion about 50 U.S.C. 1541-1548, once last month and again just a little while ago. But we can't seem to generate much discussion; the general attitude seems to be a sort of "oh, well...". The entire issue gives me a white-hot pain in the giggy, but I've written a volcanic letter to my guy Merkeley, and now short of armed rebellion, what else is there to do? If the U.S. public cannot be roused by the spectre of their President doing one of the things that exercised their Founding Fathers to rebellion...what CAN rouse them? I tend to agree with Pluto that our ruling class has become tremendously effective in "...quelling the power of the crowd in a modern information-oriented society without raising any world-wide media hackles."
BRL: Nations whose populace is caught in a liquidity trap run deficits. If the Depression-WW2 cycle taught us anything it taught us that. The current cleft stick we're caught in is of our own making because;
ReplyDelete1. The Bush GOP proceeded to piss away money like a drunken squid in a liberty port, while
2. Encouraging its corporatist cronies to build enormous profits on bubble economies that
3. Largely bypassed a huge percentage of the U.S. public, who managed to stay afloat using financial tricks and foolishness until
4. The banksters shat the bed, and knocked the bottom out of the already-perilous jobs bucket.
We now have something like 13 million unemployed, and that's not even really counting the under-employed and those so fucked they're not even looking for work. Many of these people are like me, older guys, who are NEVER going to be able to get back to anything other than a McJob.
So, in fact, this is the perfect time NOT to be worrying about deficits. U.S. corporations and the financial industry are sitting on heaps of cash, but are using it, if at all, to engineer mergers and acquisitions (that typically cost the merged companies' employees jobs!). They aren't spending because the U.S. public - unemployed, under-employed, worried about their jobs, losing money on their overpriced homes - aren't spending, either. Any gains in private employment have more than been cancelled out by layoffs from state and local governments. Every dollar that we cut now from things like AFDC and unemployment benefits is ANOTHER dollar that's NOT going to go back into the economy. It becomes the perfect self-licking ice-cream cone; the Japanese have been dealing with this for 12 years.
So the problem isn't that we've increased spending - in fact, other than defense and defense-related spending most of the cost-increase of government outlays hasn't been increases in program costs but of HEALTH-CARE costs driving up Medicare and Medicaid outlays - but that we've kept spending roughly even and cut taxes dramatically, even insanely. Tax revenue is now at a level we haven't seen since the end of WW2, and we're heading towards Gilded Age levels if the idiotic "debt ceiling" debate plays out as it looks like it will.
No, this mess has two aspects; the immediate one, which is that there are a gajillion people not working, not spending, and not paying taxes. THAT part you can ameliorate by simple deficit spending. The problem is that you THEN have to have an economy that puts those people back to work in the private sector...and that's where I just don't see an answer. As I said above, short of some sort of mad protectionst legislation a pantsload of those jobs are gone for good. Bob Reich keeps talking about "inventing a new economy" as the real solution, but even he admits he has NO idea what that economy is or could be.
WASF, in other words.
Sven: Not an issue of post-quantity so much as how much of the posts were either mine or seydlitz's. Throw in jim and sheerah, who each contributed 2-3 a month, and though we have nine people listed on the bar staff the four of us, and me in particular, were running our mouths. Even if the post quality is good, that's a lot of input from a small group. And, in my case, I think that jim is right and I need to take some R&R from H&I; I find myself getting spun up over a lot of things my country is involved in, and for all that I can do exactly nothing about them other than come on here and rant.
ReplyDeleteThat's not what we're supposed to be about, here, hence my thoughts on the benefits of my shutting up and letting others step up.
Re: Chief's response to BRL:
ReplyDeleteBRL, the Chief has just given you a nicely detailed, generally accurate, Keynsian response to your comment.
The only modifier I would add is that the Japanese have really been struggling against this liquidity trap since about 1990 and so have been stuck for 21 years. Unfortunately the US seems to be working from the Japanese playbook (with minor variations) and so isn't likely to get out of this situation any time soon.
While Keynes is widely respected (as he should be), there is a factor in the one prior test of Keynes' theories that hasn't been well enough discussed.
The world economies didn't really kick into gear again until WWII started. They responded to the liquidity trap in ways that made life considerably easier for the afflicted (which is good) but didn't really solve the liquidity trap puzzle until Hitler changed the world for the worse.
I've been looking at the history of the 1930's off and on for the last decade or so and have noted a couple of curious things. The big one is the benefit of going off the gold standard. The earlier a country did this the quicker it recovered from the Depression and the easier it was to combat deflation and unemployment. If I recall correctly, Germany was the first country to disavow the gold standard in 1932.
Another things to note is the continuing heavy loan repayments made to creditors with scarce resources. To use the Keynsian analogy, the economy is driven by spending. As people lose their jobs they stop spending, this shrinks the economy but the debt payments stay the same size. The natural response is to cut spending, which shrinks the economy more, which makes the debt payments a larger percentage of the economy. Thus creating the self-licking ice cream mentioned earlier.
Keynes was brilliant in recognizing and describing the problem. As the Chief mentioned earlier, his remedy was for the government to indulge in massive deficit spending and then repay the debt as soon as possible after the crisis was over. I suspect that is an invalid solution for two reasons:
1. When I said massive, I really mean massive. Given the data generated by the current crisis, I suspect we would have needed a well-planned $10+ trillion stimulus to rock us out of this mess. There's no way that Congress could ever have gotten its act together well enough to spend that kind of money wisely.
2. Once the money has been spent and the crisis is averted, the government needs to keep taxes high to pay down the deficit immediately. That also just can't happen. Politicians just don't have that kind of backbone.
This leaves me suspecting that Keynes should be ranked with Marx (both Karl and Groucho) as a philosopher.
(part 2)
ReplyDeleteSo what to do about the situation?
There are two beacons of hope:
1. What I mentioned about the gold standard. Once governments freed themselves from the anchor (and I mean that in all possible permutations) of the gold standard, they were free to expand their currency.
2. The most recent round of the crisis has noted a new type of homeowner. The one who stops paying his mortgage when his debt repayment situation becomes hopeless. This instantly gives them a lot of extra money every month that they can spend. In essence, disavowing the debt becomes a new revenue stream.
So many people did this in the last two years that they caused a small but measurable increase in the economy (I'm talking about $600 billion per year). This positive bump will slowly go away as these people are slowly pushed out of their homes and have to start spending money on housing again.
This leads me to wonder whether the only way out of the paradox of the liquidity trap is for the largest debtors in the world to default on their loans to some (as yet undetermined) degree.
Let's say that the US government defaults on half of its debt. Even at today's rock-bottom interest rates, that just freed up 5% of the budget that could (hopefully) be used more constructively, approximately $200 billion annually.
The losers in this situation (foreign governments, pension funds, and other large holders of US debt) would rightfully be extremely angry about this. US government debt is supposed to be the safest thing in the world. They would do everything in their very considerable power to prevent such an action and the consequences of such an action would echo in the financial markets for decades.
But study after study has shown that the most credit-worthy people in the US are those who have just emerged from bankruptcy. Admittedly this is in large part because they MUST repay their debts for the next seven years or go to jail.
Another negative data point is that the British did much the same thing after WWII because their financial situation had become impossible after the empire collapsed. This did not lead to utopia as predicted. But that was primarily due to other factors, primarily the rise of the rest of the world.
I guess my entire position can be stated (somewhat whimsically) as follows:
1. Other peoples debt is generally regarded as an asset
2. Until they can't pay it back
3. Then the other people are in control of the situation and the creditor has relatively few options unless he can get the law to assist him
4. The US is a law unto itself
What do you think?
I am not sure that Japan is really stuck in the mud.
ReplyDeleteAfter all, they do maintain a balance of trade with China.
What other first world nations can say the same?
Pluto: One thing to note is the current fixation of the GOP and their corporatist masters over inflation.
ReplyDeleteWhen you're caught in a debt bind inflation is reasonably kind to you. Your pay goes up, while the size of your debt (and, typically, the interest on the note) is fixed, so you have more money relative to the size of your debt. The people this hurts are the creditors; there are stories of Germany in the hyperinflation periods of creditors hiding from their debtors, who were hunting them down to pay of thousands of marks that were, by then, worth the equivalent of a handful of pfennigs.
The other thing worth noting is that government defaults are a different matter than personal bankruptcy. I worry that the damn teatard House Goopers will really try and play chicken with the debt ceiling. That's letting a chimp juggle fulminate detonators, and we could all get seriously hurt if it happens. My only comfort is that their economic masters are unlikely to allow such shenanagains...
Like I said at the end of my comment; I don't see a really good way out of this mess. I suspect that the economy will come creeping back in time. But I think a huge bulk of the U.S. public is going to be left further and further behind unless there is a huge economic black swan out there. The resulting U.S. will be much more like the oligarchic nation we were in 1911 than the nation we were in 1961 or are in 2011. That's nice.
IF you're one of the oligarchs.
FDC: I thought you were going on radio silence :-) . Never mind, your opinions are greatly appreciated.
ReplyDeleteYour comments on inflation and the Republicans are noted. Also noted is the fact that up until recently the money supply (as measured by the semi-extinct M3) was still shrinking. Furthermore, most of the money that Helicopter Ben created immediately moved to the emerging nations where it could return 6-9% instead of a paltry 1-2%. The Republicans have the advantage of unity but have regressed to a Kindergarten level of economic thinking.
Your comments on government default accurately describe the widely believed theory, there's no fact to back it up at this time because no world-leading economy has ever been desperate enough to default on its debt. Am I pushing for the US to default? Not really, as I noted such a move would echo throughout the world economy (frequently in bad ways) for decades, possibly even generations.
On the other hand, your comment about there not being a good way out of the mess is also very accurate. My research, which isn't based on anything substantial that I can point to, suggests that the world economy is in worse shape than is currently believed.
The two big areas of immediate concern are the Euro (which stands some chance of being papered over for a while longer) and China. Near as I can tell, the Chinese central planners lost control of their economy somewhere around 2004. The Chinese juggernaut is still barreling down the road at a slowing pace but it isn't responding to normal measures to bring it under control. This is bad, potentially very bad. Furthermore, western reporters are finding more and more ways in which China is deviating from the official party line (Potemkin villages, faked steel production reports (both positive and negative), province-level party corruption, the Chinese military is becoming more and more corporatized).
It's likely that the situation in China is very much more alarming than we can know and will implode in unexpected ways at some point in the future. The response from the Chinese government should be fascinating, to say the least.
The big areas of concern in the next 3-5 years is pretty much every major aspect of every country in the world. And each aspect is tightly integrated with every other aspect. Any failure can take down the whole system if immediate correct actions is not taken.
The Obama administration likes to take credit for saving the country from a Depression. Sorry, they didn't do that; all a paltry $3.4 trillion in stimulus (mostly from the Fed) could do is to delay the inevitable and to ensure that the deck chairs on the Titantic are not only arranged nicely but have a fresh coat of paint.
I understand the reasoning behind your comments comparing 1911, 1961, and 2011 but I feel they are inaccurate. But I'm not sure why. Your reasoning seems sound but I feel that there's something missing that will either make the situation much better or much worse. I wish I knew what it was.
"I understand the reasoning behind your comments comparing 1911, 1961, and 2011 but I feel they are inaccurate. But I'm not sure why. Your reasoning seems sound but I feel that there's something missing that will either make the situation much better or much worse. I wish I knew what it was."
ReplyDeleteI've figured out what is missing, the fact that 1911 America was rural and not tightly linked. Today we are urban and much more vulnerable to supply chain disruptions.
The other thing I forgot to say in my previous post regarding defaulting on debt (both public and private) is that once you have eliminated all of the good courses of action (which we have) you must either:
a) Do nothing (which hasn't worked out real well for Japan or during the Great Depression) or
b)Start examining the the less good courses of action to see if you can live with the consequences of trying something one or more of them.
I've got to admit that in general I subscribe to the theory that doing something, even the wrong something, is usually better than doing nothing.
Before the inevitable storm of protest about tax cuts arises, I also want to learn from our mistakes. We've done the tax cut thing, literally to death and it hasn't helped. It is time to drop that from our list and consider other options.
Final note: Some crew and passengers on the Titanic couldn't bear the thought of jumping into the icy water so they sat comfortably in the deck chairs with drinks in hand and waited to die. Let's not go there with the economy, folks.
suggestion for a new post: I have no idea what is going on in Greece. I would be very interested to read a post explaining what happened, why and what are the left and right limits of the potential future (along with regional and global impacts). Just some light reading. Thanks!
ReplyDeleteOf course, if someone just has a good link where I can read up, that would be great too.
@Chief - "So, in fact, this is the perfect time NOT to be worrying about deficits."
ReplyDeleteBaloney. The Depression of 1920/21 and post-WWII budget/tax cutting forced on Truman proves otherwise. Keynesian taxing and spending prolonged The Great Depression.
http://www.cato.org/pub_display.php?pub_id=3357
"U.S. corporations and the financial industry are sitting on heaps of cash, but are using it, if at all, to engineer mergers and acquisitions (that typically cost the merged companies' employees jobs!)."
Banks are NOT lending money because its less risky to lend out said money than it is to put it in a 1-2% yield bond for the short term. This was a predictable consequence of having an artificially imposed 0% interest rate.
"Any gains in private employment have more than been cancelled out by layoffs from state and local governments. Every dollar that we cut now from things like AFDC and unemployment benefits is ANOTHER dollar that's NOT going to go back into the economy. It becomes the perfect self-licking ice-cream cone; the Japanese have been dealing with this for 12 years."
The answer is NOT to spend more. Now, let me PERFECTLY CLEAR about something. I would MUCH rather take the money we're pissing away on R&D, military-industrial bullshit, foreign aid and corporate welfare to pay to support people who have become dependent upon the government. The same goes for inane State-level bullshit like our overcrowded prisons that house the world's largest population, almost half of whom are incarcerated for the bullshit non-crime of either selling or partaking of a substance some assjackal at The Sewer on the Potomac decided was bad for them.
However, that means we HAVE to cut somewhere and its goddamn high time we STOP attacking other countries. Piss on Europe, they can defend themselves and their fights are NOT our fights. There is NO reason to have troops stationed in South Korea. The North Koreans are a toothless old lion roaring to make itself seem more formidable.
BRL - First I want to thank you for providing some sources. Now to your arguments.
ReplyDelete"Baloney. The Depression of 1920/21 and post-WWII budget/tax cutting forced on Truman proves otherwise. Keynesian taxing and spending prolonged The Great Depression."
Okay, I'm confused. Both examples you cite are the logical result of converting an economy from world-shaking military conflicts back to meeting civilian needs and demobilizing literally millions of soldiers all at the same time. How does that have a bearing on the current situation?
There's been a lot of discussion on FDR's handling Keynsian economics in the 1930's. See my post above on why I equate Keynes with Karl Marx (a smart, well-intentioned person who relies way too much on the wisdom of the masses), BUT that DOES NOT mean that Keynes was wrong in his diagnosis of the situation.
As you'll recall, the 1937 crisis was caused by FDR cutting spending and raising taxes to pay down the deficit. Why would your proposal cause a different outcome? PLEASE cite reputable sources in your response.
"Banks are NOT lending money because its less risky to lend out said money than it is to put it in a 1-2% yield bond for the short term. This was a predictable consequence of having an artificially imposed 0% interest rate."
Agreed, but it doesn't address the Chief's point. The Wall Street Journal estimates that non-financial companies have $1.93 trillion in cash and other liquid assets. Why aren't they spending this money to improve their income stream?
I suspect it is because they do not believe that they will see more than a 1-2% improvement in sales so they are better off loaning the money to the US government. The US consumer simply can't buy any more. So it is smarter for them to keep the cash or send it overseas.
Now back to your comment about US banks. Home loan interest rates are running around 4-5%. Why do the banks prefer to loan that money to the US government at 1-2%? It doesn't make sense unless you accept that the only part of the US economy that CAN spend money right now is the government. Taking that away will not lead to a blossoming economy, it will lead to disaster.
"The answer is NOT to spend more."
Okay, so you obviously refute the idea that spending is the basis of the economy. Please provide a different model and cite plenty of reputable sources.
"I would MUCH rather take the money we're pissing away on R&D", "foreign aid"
Uh, what money? We're spending WAY less than 1% on anything resembling research or foreign aid.
"military-industrial bullshit", "corporate welfare", "prisons"
Nobody here is arguing with you so why are you shouting? Also please suggest a reasonable way to stop the madness. Again, please cite respected sources.
"North Koreans are a toothless old lion"
I'll let the more knowledgeable foreign policy and military wonks answer this one.
PS - the last comment was from me, Pluto. I'm having troubles posting comments in IE8, Firefox works okay but I don't always have access to it.
ReplyDeleteHuh! I posted a long rebuttal to BRL, saw it post and when I posted my second shorter one the longer message disappeared.
ReplyDeleteI hope the spam-catcher ate it and we can recover it.
Pluto
Pluto: Gotcha covered. I'm sorry to see BRL vomiting out the same-old same-old Austrian nonsense that failed so spectacularly in the early Thirties and in the 19th Century.
ReplyDeleteThere's no question that deficit spending is not a "good" thing. But there are just as obviously times - like world wars, or great depressions - when governments don't have choice if they are to preserve some modicum of social and political equilibrium. Perhaps BRL can explain how fiscal rectitude worked so well for the Weimar government, or the Bourbons in 1789.
But here's the thing I want to keep hammering away on; the REAL problem here, the real buried 1,000-pound bomb, is that since about 1980 (hmmm...what happened then, I wonder..?) we've been mortgaging small business, the middle and working class in order to enrich the wealthy and make profits for large businesses. The U.S. public kept pace for that time working more, for longer hours, and using credit cards and homes as ATMs.
That wasn't sustainable, and it eventually crashed. And WE HAVEN'T FIGURED OUT A REPLACEMENT.
My fear is that we have permanently idled a fairly substantial - something in the 10-15 percent range - group of Americans. These people promise to become our capti censi, and what we don't need right now is a group of idle louts just waiting for a Gaius Marius.
FDC: "the same-old same-old Austrian nonsense that failed so spectacularly in the early Thirties and in the 19th Century."
ReplyDeleteIt's also failing spectacularly in Europe right now. The biggest question in Europe right now is whether the Greek government will fall before or after the European Union falls apart over Greek debt. The level of austerity required to pay down the Greek debt does not seem to be sustainable for either the Greeks or their bankers.
"That wasn't sustainable, and it eventually crashed. And WE HAVEN'T FIGURED OUT A REPLACEMENT."
Dead-on accurate and the situation is becoming more dire by the day. Far too many in the poor and middle class are draining their last savings to just stay alive while the wealthy have convinced themselves the crisis is over and we don't need extraordinary measures anymore.
Some point in the next 5 years we're going to have a repeat of 2008 and it's going to be bigger and nastier than 2008 because we've spent so much money, time, and public confidence so unwisely.
"My fear is that we have permanently idled a fairly substantial - something in the 10-15 percent range - group of Americans."
I was with a group of friends last night and found that something like 1/3rd of them are out of work right now.
Even scarier, I met some friends over the Memorial Day weekend and was astonished to discover that only me and one other guy out of five very experienced, very smart business professionals and engineers had a job. And the other guy who had a job was worried about losing it soon.
The number of empty store fronts has been steadily increasing over the last year in my hometown, which has one of the most vibrant business districts in the state.
All of which brings to mind Mark Twain's comment on the third kind of lie.
bg - Sorry I lost your question in the hubbub around BRL.
ReplyDeleteHere's a good starting description for the Greek debt crisis.
http://www.theglobeandmail.com/report-on-business/brian-milner-explains-the-greek-debt-crisis/article1554488/
Your question about the left and right limits of the crisis are the key issue in the crisis. The heart of the problem is that the European Union created a single currency that has been popular and effective while times were good but nobody gave any real thought how to handle bad times.
There is no mechanism for punishing countries such as Greece that squandered a large amount of cash. There's also no mechanism for collecting the debt. There's also no mechanism for expelling the Greeks from the Euro-based Union. In short, they (and the rest of the world) are flying nearly blind in this crisis and are not sure what can or should be done about the situation.
Pulling back the camera a little bit, the European Union rests on French and German cooperation. Pull either player out and the Union founders. Up until now the two have played well together but there are major philosophic differences between the two and Greece has managed to nicely highlight all of them.
The French want to go easy on the Greeks and offer them some hope of having a reasonable life while paying off their debt. The only problem with this policy is that it can't work. The Greeks owe too much money and simply can't have their cake and pay for the debt too. The French solution to this problem is to loan the Greeks more money. This doesn't sound like a workable plan to anybody outside of France.
The Germans are more self-honest. They just want their money back... NOW!!! They don't really care whom they hurt or how, they just want the money back or SOMEBODY is going to get hurt real soon.
The Greek people haven't helped matters much; loudly protesting against stinging pay cuts, new taxes, and near-critical cuts in services. It's quite possible that the French and Germans may work out a deal with the Greek government only to see the government fall to a different party that refuses to repay the debt.
The sum the Greeks owe are large enough to take down all of the major French banks (who are heavily invested in Greece) and the French public isn't too happy about the thought of a bailout so the French government could fall as well.
Then there are the other bailout partners, Ireland and Portugal. They are also facing massive protests and seem likely to reneg on their debts as well. That would take down the German banks and probably the German government.
Finally, the European banks have partly hedged their bets by getting insurance policies with US banks. So we could be affected as well.
Who'd have thought that one little country partying like there literally was no tomorrow could cause so much trouble?
Thanks Pluto, appreciate the insight.
ReplyDeleteOne problem that was never really solved prior to the Euroization was the discrepancy between the fiscal union and the economic disunion. The actual societies and economies of the various Euro states were never as fungible as, say, the American "states" are with each other. A family, or a company, can literally pack up and move from Delaware to California to follow the work, or to find better economic times. Despite attempts to reproduce this in Europe, a Greek contractor can't really go find work in Germany or Denmark, and a Belgian manufacturer would have a lot of trouble moving operations to Athens, or Dublin.
ReplyDeleteIn the pre-Euro world Greece could help itself by devaluing its currency. Now? Not so much...
Pluto: "The Germans are more self-honest. They just want their money back... NOW!!! They don't really care whom they hurt or how, they just want the money back or SOMEBODY is going to get hurt real soon."
ReplyDeleteWhile expecting the rest of Europe to buy German exports, to keep the German economy going.
You're being a bit silly here, Barry.
ReplyDeleteThe Germans have very good reason to suspect that they are about to lose every dime they've loaned to Greece (and if they let Greece get away with it, Ireland and Portugal). That's a LOT of money and tends to bring out the worst in people.
Furthermore, the EU could potentially be at stake. It's only natural to tend to want to limit the possible contagion and to set a harsh example for others to consider.
Frankly I consider the French line of thinking (the Greeks owe us a lot of money and can't pay us back so let's give them lots more money) to be considerably more irrational. The Germans at least want to confront the problem directly and resolve it reasonably quickly.
But when you consider that Germany is now the #2 exporter in the world (China, Germany, US, and Japan) and their primary customers are European, you can see they have a tremendous amount to lose if the EU starts unraveling or goes into a debt black hole.