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Housing Bubble Deniers Exposed

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Thank to Ollie Nanyes who posted this list of right wing economists and pundits who were positive there was no housing bubble preparing to burst in the last decade.

The housing bubble has precipitated a severe, and possibly catastprophic, economic crisis, so I thought it would be useful to put together a list of pundits and experts who were dead-wrong on the housing bubble. They were the enablers, and deserve to be held accountable. People also need to know (or be reminded of) which pundits/experts should never be listened to again. But most importantly, I have time to do this kind of thing now.

The list includes only pundits and (supposed) experts. That means the list doesn’t include policymakers such as Alan Greenspan and Ben Bernanke, because however wrong they may have been, policymakers—and especially Fed chairmen—are undeniably constrained in what they can say publicly. I strongly suspect that both Greenspan and Bernanke honestly believed that there was no housing bubble, but alas, we’ll never know for sure. The list also doesn’t include pundits/experts who were wrong only about the fallout of the collapse of the housing bubble—that is, the extent to which the collapse of the housing bubble would harm the economy.

Many of the names on the list won’t shock anyone, I’m sure. And FWIW, a few of the pundits seemed to deny the existence of the housing bubble simply because Paul Krugman argued that there was a housing bubble, and they absolutely hate Krugman. Unfortunately (for our economy), Krugman was right—again.

The list is a work in progress (though I’ve been reasonably thorough in my research), so feel free to suggest other people who should go on the list. So without further ado, here’s the list:

1. Alan Reynolds, Senior Fellow, Cato Institute:

Read the rest of the list here.

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February 14th, 2013 at 10:07 pm

Posted in Economy,Housing

Shock Doctrine in the UK

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I was watching the world news on BBC America a few nights ago and the talking heads were all in agreement that the Tory government had no choice but to make draconian cuts to the UK budget. Unless they wanted to emulate Japan, which did not reduce living standards during its economic troubles in the ’90s or during the current world wide slowdown. Japan may not be paradise but it seems to be getting through the crisis as well as or better than most of the industrialized world. .

Here is George Monbiot , describing what the Coalition government in Britain is up to. This will also serve as a prediction of what the Teabag Republicans will do if they win a majority in the House of Representatives and start drafting federal budgets:

In her book The Shock Doctrine, Naomi Klein shows how disaster capitalism was conceived by the extreme neoliberals at the University of Chicago. These people believed that the public sphere should be eliminated, that business should be free to do as it wants, and almost all tax and social spending should be stopped. They believed that total personal freedom in a completely free market produces a perfect economy and perfect relationships. It was a utopian system as fanatical as any developed by a religious cult. And it was profoundly unpopular. For a long time its only supporters were the heads of multinational corporations and a few wackos in the US government.

In a democracy under normal conditions, those who were harmed by abandoning public provision would outvote those who gained from it. So the Chicago programme couldn’t be imposed in these circumstances. As the Chicago School’s guru, Milton Friedman, explained, “only a crisis – actual or perceived – produces real change.” After a crisis has struck, he added later, “a new administration has some six to nine months in which to achieve major changes; if it does not act decisively during that period, it will not have another such opportunity.”

The first such opportunity was provided by General Pinochet’s coup in Chile. The coup was plotted by two factions: the generals and a group of economists trained at the University of Chicago and funded by the CIA. Their ideas had already been comprehensively rejected by the electorate, but now the electorate was irrelevant: Pinochet used the crisis he had created to imprison, torture or kill anyone who dissented. The Chicago School policies – privatisation, deregulation, massive tax and spending cuts – were catastrophic. Inflation rose to 375% in 1974; the highest rate on earth. Even so, Friedman insisted that the programme was not going far or fast enough. On a visit to Chile in 1975 he persuaded Pinochet to hit much harder. The result was a massive increase in unemployment and the near-eradication of the middle class. But the very rich became much richer, and the corporations, scarcely taxed, deregulated, fattened on privatised assets, became much more powerful.

By 1982, Friedman’s prescriptions had caused a spectacular economic crash. Unemployment hit 30%; debt exploded. Pinochet sacked the Chicago economists and started re-nationalising stricken companies, whereupon the economy began to recover. Chile’s so-called economic miracle began only after Friedman’s doctrines were abandoned. The Chicago School’s catastrophic programme pushed almost half the population below the poverty line and left Chile with one of the world’s highest rates of inequality.

But all this was spun by the corporate media as a great success. With the help of successive US governments, similar programmes were imposed on dozens of countries in which crises ensured that the population was unable to resist. Other Latin American dictators copied Pinochet’s economic policies, with the help of mass disappearances, torture and killings. The poor world’s debt crisis was used by the IMF and the World Bank to impose Chicago School programmes on countries that had no option but to accept their help. The US hit Iraq with economic shock and awe – privatisation, a flat tax, massive deregulation – even as the bombs were still falling. After Hurricane Katrina wrecked New Orleans, Friedman described it as “an opportunity to radically reform the educational system”. His disciples immediately moved in, sweeping away public schools while the residents were picking up the pieces of their lives, replacing them with private charter schools.

Our crisis is less extreme, so, in the United Kingdom, the shock doctrine cannot be so widely applied. But, as David Blanchflower warned yesterday, there’s a strong possibility that the cuts programme will precipitate a bigger crisis: “it’s a terrible, terrible mistake. The sensible thing to do is to spread [the cuts] over a long time”. That’s another feature of disaster capitalism: it exacerbates the crises on which it thrives, creating its own opportunities.

Of course there is more and I invite everyone to go ZSpace and read the whole article. I would comment that South American countries like Argentina and Brazil have done relatively well since they moved left, away from Friedman’s Randian pipe dreams.

I suspect the Tories know these draconian cuts will make them unpopular, but they are willing to risk losing the next election if they are able to tie the hands of the next Labour government. Of course, the British Right have Murdoch on their side just as do the Teabaggers in the U.S. As for the Liberal Democrats, they will probably be nearly wiped out unless they somehow manage to distance themselves from Cameron and his Thatcherite policies.

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October 22nd, 2010 at 10:17 am

“The Greatest Depression”?

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Here’s a cheery thought from Gerald Celente, founder and head of the Trends Research Institute.

The fake “recovery” was nice while it lasted, says famous apocalyptic forecaster Gerald Celente, founder of the Trends Research Institute. But now the fun’s over, and we’re headed for what Celente describes as the “Greatest Depression.”

Specifically, the always startling Celente says the country is headed for rising unemployment, poverty, and violent class warfare as the government efforts to keep the economy going begin to fail.

I think Celente’s analysis and basis for his predictions on this matter are not too far removed from the Krugman school of political economy. If I may interpret and summarize, governments and the U.S. economic and political elites have poured gasoline on the fire by trying to solve the crisis top down. Unlike FDR, who attacked the Depression by throwing a lifeline to the middle and working classes, the suits in charge these days seem to think that if the big banks and Wall Street are happy, problem solved.

Celente’s prescription on the other hand is something FDR and Krugman could live with:

The crux of the problem, Celente argues, is that the middle class has been wiped out. America used to be a land of opportunity for all, where hard-working people could build their own small businesses in their own communities and live prosperous and fulfilling lives. But now a collusion of state and corporate interests that Celente describes as “fascism” have conspired to help only the biggest companies and the richest Americans. This has put a shocking amount of the country’s wealth in the hands of a privileged few and left the rest of the country to subsist on chicken-feed wages and low job satisfaction as Wal-Mart “associates” — or worse.

The answer, Celente says, is to bring back the laws that prevented huge companies from getting so big and powerful, and put some opportunity back in the hands of ordinary people. But doing that is going to take a while. And in the meantime, we’re headed for trouble.

I’m taking a bottle of Grey Goose out of the freezer and going back to bed. Somebody wake me after World War III.

Thanks to Raw Story for alerting me to this story. The whole interview is Yahoo Tech Ticker (linked to above) and here is a Yahoo article about wealth and inequality inthe U.S.

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August 21st, 2010 at 10:22 am

RSA Animate – Crises of Capitalism

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Food for thought on the current Depression found at Firedog Lake:

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July 5th, 2010 at 8:52 am

Posted in Economy

Tagged with ,

Ezra Klein Interviews James Galbraith: The danger posed by the deficit ‘is zero’

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Thanks to Daily Kos for pointing me to this. Galbraith provides some well informed straight talk (real straight, talk, not the John McCain pandering kind) about deficits and the economy. Too bad the current “Democratic” Administration didn’t hire him, or someone similar, instead of Summers or Geitner.

Where have you gone Franklin Roosevelt, Our nation turns its lonely eyes to you.

Here is how the interview concludes:

JG: I have one more answer, though! Since the 1790s, how often has the federal government not run a deficit? Six short periods, all leading to recession. Why? Because the government needs to run a deficit, it’s the only way to inject financial resources into the economy. If you’re not running a deficit, it’s draining the pockets of the private sector. I was at a meeting in Cambridge last month where the managing director of the IMF said he was against deficits but in favor of saving, but they’re exactly the same thing! A government deficit means more money in private pockets.

The way people suggest they can cut spending without cutting activity is completely fallacious. This is appalling in Europe right now. The Greeks are being asked to cut 10 percent from spending in a few years. And the assumption is that this won’t affect GDP. But of course it will! It will cut at least 10 percent! And so they won’t have the tax collections to fund the new lower level of spending. Spain was forced to make the same announcement yesterday. So the Eurozone is going down the tubes.

On the other hand, look at Japan. They’ve had enormous deficits ever since the crash in 1988. What’s been the interest rate on government bonds ever since? It’s zero! They’ve had no problem funding themselves. The best asset to own in Japan is cash, because the price level is falling. It gets you 4 percent return. The idea that funding difficulties are driven by deficits is an argument backed by a very powerful metaphor, but not much in the way of fact, theory or current experience.

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May 14th, 2010 at 10:22 am

Why Obama No Longer Has My Vote

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From Open Left

Obama’s grand accomplishment is not breaking a sweat while giving us a jobless recovery just like Bush Sr. and Bush Jr. His most-touted accomplishment is passing the REPUBLICAN alternative to HillaryCare from 15 years ago, but meanwhile tens of millions of people go without work, while homes continue being lost at an incredible rate, (The good news from USA Today: “Foreclosure rates up by smallest amount in 4 years”.)

I will never vote for a Republican at any level, but I simply do not understand why Obama is working so hard to lose my support.

Written by slothropia

April 3rd, 2010 at 1:39 pm

Posted in Al Qaeda,Economy

Motor City Sadness

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Holy majoley!! I look up from my needlepoint and discover that I haven’t posted anything in almost three weeks. Bad blogger!

It was not intentional. I wanted to blog, but I have been kept busy with other projects, job hunting, trying to put the garden in and other miscellaneous blah blah. I’m not getting paid for this you know.

Now that I am here, I have a brief observation to make about Obama’s auto industry moves yesterday.

I don’t know whether or not GM or Chrysler will survive this mess, though it appears that Chrysler will soon join American Motors and Studebaker in car company heaven. I don’t know whether what Obama is doing is good for the auto industry or the larger economy. But if anybody has a better idea (besides letting the companies fail) I sure would like to hear about it.

Public opinion across the country seems to be n Obama’s favor on matters economic, so he has room to maneuver. However, I fear that he will pay a political price, at least in the short term in Michigan, Ohio and Indiana. That may not be fair, but who said either life or politics were fair.

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March 31st, 2009 at 10:30 pm

Apres Stimpy

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Cross posted at Daily Kos.

This is about right.

Ackroyd does look a lot like Boehner doesn’t he? Maybe a little heavier but close enough for satire.

Further to this point, today’s Frank Rich column in the NY Times is worth reading. Check out the whole column and the polling data Rich provides:

But, as he (Obama) said in Fort Myers last week, he will ultimately be judged by his results. If the economy isn’t turned around, he told the crowd, then “you’ll have a new president.” The stimulus bill is only a first step on that arduous path. The biggest mistake he can make now is to be too timid. This country wants a New Deal, including on energy and health care, not a New Deal lite. Far from depleting Obama’s clout, the stimulus battle instead reaffirmed that he has the political capital to pursue the agenda of change he campaigned on.

Republicans will also be judged by the voters. If they want to obstruct and filibuster while the economy is in free fall, the president should call their bluff and let them go at it. In the first four years after F.D.R. took over from Hoover, the already decimated ranks of Republicans in Congress fell from 36 to 16 in the Senate and from 117 to 88 in the House. The G.O.P. is so insistent that the New Deal was a mirage it may well have convinced itself that its own sorry record back then didn’t happen either.

Don’t just take Frank’s word for it. Check out this polling data from Research 2K, posted at Daily Kos.

So this week, the Republicans are receiving a failing grade from the American electorate. But a week is a long time in politics. Six months is even longer. In six months time we may have a clearer view of the efficacy of STIMPY (the stimulus bill). Right now though, the polling tells us that most Americans are glad it was passed and glad that Obama is President and in a position to sign the bill into law tomorrow.

If I were an ambitious freshman Congressman from a traditionally red district in a heavily blue state I would be worried about the politics of STIMPY. If it works (and it will boost the GDP) the congressional Democrats and the President get the glory. Republicans will become more marginalized than they already are.

Consider these Research 2000 numbers

In the Midwest, which includes Illinois, Republicans have a favorable/unfavorable deficit of 33 percentage points. The Obama party is up by 23. I guess the GOP has the Dems where they want them now, eh?

Unless Obama destroys the U.S. economy, our hypothetical young congress critter will have much difficulty running for statewide office anytime soon.

To refocus on the bigger picture, Obama and the Democrats have momentum, a strong wind behind them. To paraphrase Frank Rich, Obama has a huge pile of political capital and a pretty good idea of what he needs to do with it.

And if he fails? If the economy collapses? The Republican id, neo confederate, laissez faire, theocratic, violent, racist, sadistic, elitist, will be at last freed to slouch toward Bethlehem for its long awaited birth.

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February 16th, 2009 at 3:36 pm

Schock in the Hotseat?

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Cross posted at Daily Kos.

Greetings from Central Illinois. Specifically from the 18th congressional district of the Prairie State. The (Fightin’?) 18th is composed of the Peoria metropolitan area and a whole lot of rural.

Here in the 18th District, Caterpillar is the largest employer – or was until they laid off over 20,000 workers. The President seems to understand the importance of Caterpillar to the economy of Peoria and will be visiting one of that company’s facilities tomorrow, Thursday, February 12.

In fact, President Obama will be joined on Air Force one by Caterpillar CEO Jim Owen. Owen, by the way, is a member of Obama’s Economic Recovery Advisory Board.

The President’s visit to Peoria is part of his push for passage of the economic stimulus bill that came out of a House/Senate conference today and will almost certainly receive final passage in a matter of days.

The 18th has long been a GOP district, and Peoria was once represented in Congress by a founder of that party, Abraham Lincoln. Illinois 18 is currently represented in by Aaron Schock, a Republican. Schock’s predecessor was Ray Lahood, now President Obama’s Secretary of Transportation.

Before being elected to the U.S. House of Representatives, Schock was a State Representative fro an inner city district in Peoria, A Republican neglected in a Democratic district, so at the time, Schock clearly had some cross over appeal.

Then he ran for Congress and took the standard GOP neocon positions in the 2008 primary. One of his first votes in the House was on the Ledbetter Act for pay equity. Schock voted against the bill along with all but three House Republicans.

Schock also voted against the House version of the current stimulus bill. Again, that bill has been reported out of conference. It is going to pass unless a giant meteor strikes the earth and we all join the dinosaurs. Will Representative Schock continue to vote the way John Boehner and Rush Limbaugh tell him to, or will vote aye and join Jim Owen, Ray Lahood and the thousands of his constituents who are desperate to get back to work? Would it help if he got a call from from fellow Illinoisan, President Barack Obama?

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February 11th, 2009 at 11:33 pm

Effing Blue Dogs

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Cross posted at Daily Kos.
This blog post from Paul Krugman is worth considering in light of what is happening in the Senate this weekend:

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.

The real question now is whether Obama will be able to come back for more once it’s clear that the plan is way inadequate. My guess is no. This is really, really bad.

Atrios found this for me and his billions of other readers.

Wanna know the difference between a “moderate” or Blue Dog Democrat and a Republican?

A Republican will face you as he plunges the knife into your gut. Blue Dogs will stab you in the back.

Is it not time for America and the Democratic party to stop letting the tail wag the dog (ironic use of metaphor intentional)?

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February 8th, 2009 at 11:10 am