I can't get the Angry Birds game off my mind. I feel so accomplished when I help them burst the pigs and they all say "Yea!!!"
Corporations are making record profits very efficiently, that is, without hiring people in the USA.
Tax the rich and the corporations more? I wouldn't think about it. Look, they ARE the USA.
Look at that, they are so efficient and wonderful. Record profits! And each one of us working so much more productively with outsourcing!
Ok, my sarcasm alert went off. I apologize.
But keep in mind, "Pessimists are either right or pleasantly surprised by the outcome." a paraphrase of George Will. One of my favorite sayings, one of my least favorite sayers. :)
Yes, there is a scratch on this blog causing it to skip and repeat, but that is only because of the scratch on the economy causing it to skip.
This is a depression, not a recession, in terms of jobs. The growth rate and signs of progress in FDR's day form what we now think of as the Great Depression. Jobs and income equality should be the measure not GDP growth. By the historical GDP measure we are doing fine but are possibly going into another recession, In real terms, we have never gotten out of this awful thing! "We still can't find jobs!!! AHHHHHH!" There is no "double dip" there is only one large dip with aberrations. And now we are tightening government spending.
Please, someone, call CNBC and tell them. They will listen to reason, surely. :)
Exxon-Mobile has formed an "alliance" with Russia's largest oil producing company, the state owned Rosnef. Such news should rightfully send shivers down the spine of Michele Bachman who after all believes that we all fear the "rise of the Soviet Union [sic]." But I do want to give her the benefit of the doubt and say that she accidentally referred to Reagan's "evil empire" instead of the Russia that is our friend and ally. And I do want to believe that she was talking about the rise of Russia in terms of economic power. But if Fox News, the mouth organ of the right, readily broadcasts that Warren Buffet is a socialist because Buffet wants a more progressive income tax can I really stay away from outlandish stereotyping and be relevant?
How can a Tea Party Republican contender not now jump in there and address Exxon-Mobile's red commie leanings? Part of the financial agreement appears to be in giving the Soviets, umm Russians, properties off the coast of Texas to practice deep water drilling on. The big picture here is that soon enough the Arctic will be free of ice and the Russians have property rights in the area. In exchange for some of the properties of Exxon-Mobile, notably some in deep water drilling areas, the Russians give Exxon the right to explore off their Arctic coast, a deal the Russians formerly were trying with BP. Is it cold in here? I felt a shudder. Sure the environmental risk screams out for our attention here but a Bachman administration may stereotypically have connections in this area as evidenced by recent remarks about God trying to get the attention of her political foes with a hurricane and an earthquake. Gosh, I'm being unfair in this stereotype, because she later said, "Of course I was being humorous when I said that. It would be absurd to think anything else." So you have to guess she would be awesome at a post-Katrina Press Correspondents' Dinner.
I feel guilty about stereotyping to be relevant, but I guess I feel that candidate Bachman should publicly put her foot down over the continuing tax breaks to oil companies like Exxon-Mobile if she also logically considers the possibility that Exxon is treasonous in providing the Ruskies with the opening we have denied them for so many years, the power to build large threatening structures along our southern border. :)
The Irene story can be summarized as "looks like a big storm is coming" then "looks like we overestimated the danger." But that story loses ratings as it goes. So the second half never materializes very fully.
While it is good to be safe, of course no one listens after the first big storm of the season that the media hypes. These television jerks who "warn" us like they are agents of the government need to be guided by something other than the moral values of free enterprise. It's like the little boy who cried wolf taking money from Pfizer.
The streaking video that is linked to in the article will be a Daily Show moment for sure. Streaking in this context actually has a reason to exist. But I'm afraid that when we need real weather information we are fed the same reality show atmosphere that doesn't save many lives.
"We're in the news business," [Chuck] Scarborough [WNBC] said wryly. "We deal in doom."
...and deal with doom without foresight or concern.
I've been a bit lazy but mindful. Facebook is making me lazy but I am always mindful of the original long form blogging that I have committed to. I look for little snapshots and try to understand them in a broader context. For instance, the food stamp chart above suggests an alarming expense that is part of the hidden depression problem. The growth of economic inequality costs us huge amounts of money in the form of food stamps and unemployment expenditures. These are the props that keep us from sliding ever downward. I don't wish to denigrate the human toll of the "downturn" but should we look at this from only a cost perspective, keeping the rich from paying taxes is costing us an arm and a leg. The increased unemployment taxes needed around the country (Hawaii has raised this tax on businesses 600%) to keep up with the burgeoning problem of keeping everything churning along seems to me to be unsustainable.
Revenue loss from just the top 1% is taking it's toll on our coffers:
The first column is the effective tax rate paid by the richest of the rich. It dives ever downward. The second column shows the money taken in from this group. The next column shows the amount we would have taken in had the rich not received all the tax breaks since 1986. The last column shows the lost revenue. This is not a cumulative total, it is yearly. We dig deeper and deeper so some billionaire can have a few extra billion a year. http://economix.blogs.nytimes.com/2011/08/23/what-the-rich-can-afford-in-income-tax/
The costs of unemployment benefits will no doubt cause employers to think twice about new hires which cost more unemployment tax than ever before.
Finally, here is a opinionated list of problems I read recently that I thought was particularly relevant:
Can the US resolve these issues?
1) An excess credit problem, left over from the 2000s Housing boom and credit bubble — being solved v e r y s l o w l y through deleveraging and passage of time;
2) Slowing economy and high unemployment (including increasing High School drop out rates creating a structural employment problem);
3) Crumbling infrastructure: Electric Grid, Bridges, Tunnels, Roads, Naval Ports, Airports;
4) Medical Costs that are double the rest of the industrialized world’s yet produces worse results.
5) Systemic deficits caused by unfunded tax cuts, unfunded entitlements, and a military bigger than the next 20 countries combined, (plus a lack of fiscal discipline);
6) A wholly dysfunctional electoral process, including corporate control of what was once a democratically elected legislative branch;
7) Increasing wealth and income inequality (Historically not a long term positive for social unrest and political legitimacy)
8) An overt hostility to empiricism and science (which helped create most of our wealth) and an embracing of “magical thinking”
9) An intellectually bankrupt political class married to outmoded, disproven, fantasy based economic ideas. http://www.ritholtz.com/blog/2011/08/waiting-for-the-cavalry/
That is extrodinarily big. "Don't need a weatherman..."
But the Weather Channel's frank statement, anyway:
"Dangerous surge, winds, and widespread destruction are likely on the East Coast."
Let's hope people leave when they are told to leave.
*Pun bound to make the rounds of us older folks. The newsmedia might just use it to display night pictures etc, just for the sake of the pun. Don't forget. You heard it here first. And yes it is cheesy when talking about people's lives with puns, but it will happen. News IS entertainment in the USA.
My recent posts were in honor of my good friend's mother.... all the music and flowers were the best I could do here to honor her life in the way I can. Her life was celebrated by friends and family today. I have my little odd moments when I want to do something and cannot. So I posted what I thought was respectful and what she would truly enjoy. In this process, I was trying to figure out what she and I have in common, that made her so special to me. She reminded me so much of my own mom. Her interest in her son (and daughter and grandson) was paramount. She would talk politics so well, it would surprise you every time. She showed a big interest in the Beatles because her son had a great interest. In this respect, since my friend and I have had this lifelong interest in common, his mom reminded me so much of my own late mother who also shared this love for what I loved.
I thought about what I could portray in photographs that would be a suiting end to this portion of my blog. I had a thought of posting a picture of the pizza parlor which had recently become the common place to meet her and her son to eat. I certainly will never go in that building again without her foremost in my mind.
Knowing how kind she was and what a realistic sharp mind she had, I thought about something in the middle of the service that would have put a smile on her face in the right circumstances. It is one of those little things that make you think about life with all it's imperfections and yet with all it's humor and kindness.
The people gathered would repeat a prayer that Mrs. Burson had cut out of a newspaper. But in the little booklet that was given us, there was a typo. I'm sure Mrs. Burson, with her good natured wit, would have had a smile on her face as the entreaty of our heavenly Father "And hel[sic] me when I falter" was noticeably spoken a little less clear as people faltered on the words. She would smile and probably laugh that kind laugh I remember.
There is so much to remember about Mrs. Burson. I loved her very much and I will miss the mother who raised my best friend.
One last song that will now, as I post it here, always make me remember Mrs. Burson and her love for dogs and pets.
Martha My Dear
(listen to the lyrics about Paul's love of his pet dog, Martha)
I always thought he must have had to leave the dog a lot because of his busy life and was entreating Martha to remember him, to not forget him.
Please, please, Randy T., feel free to comment on any blog entries I have posted. I have posted most of this before with commentary. I get no feedback because either no one reads me, or no one that reads me understands me. :) My wife thinks I am obsessed. :)
The following chart is the most famous and most posted chart.
I don't do math if I don't have to, Randy. I do like charts. They help me see things clearer. Look at the huge amount of the Bush tax cuts here, as opposed to the new spending of Obama (the Obama figure is projected over an 8 year period, which probably won't happen.) The only basic flaw in logic here is that Obama has not had 8 years to make decisions that might cost more money. But it puts to rest the notion that Obama is a big spender so far. We have actually had too little stimulus. Unemployment insurance has saved us from another Great Depression but we can't count on handing out money like this forever.
Please look at the non-defense discretionary spending comparisons. They are the only real place to cut spending other than defense, or social programs. Social programs won't happen from either party, sorry. I remember a line from Oliver North's hearings when Lt. North was hinting that the American people were wrong and that was why Reagan had to start a shadow government. The congressman questioning North said something like, "The American people have the democratic right to be wrong."
I am in favor of more taxes across the board, much later. We have to pay for our government, but until the unemployment rate is back to a manageable figure, the rich will just have to pay the share they haven't been paying since 1980's Reagan tax cuts. That moment in history marks the beginning of our increase in debt. You can follow that putting these two charts together:
The chart above shows the tax rate for the affluent. If trickle down really worked then, the debt wouldn't be gong up at precisely the time we cut taxes for the rich. See below:
Notice that the debt goes up for the first sustained period with Reagan's tax cuts. Then it goes down for a sustained period with Clinton's tax increases (even though they were small). To put a little perspective, some of this was Bush senior's tax increase, the little two year sliver before Clinton. Of course, the debt goes up tremendously at the end. This is our current crisis, where we lose tax revenue across the board, and simultaneously have to stimulate the economy with bailouts and stimulus. The following chart puts taxes and expenditures on the same chart using share of GDP as the gauge. Notice where expenditures are paid for (Clinton with his tax increases) and notice Obama's leveling off. Also notice how tax receipts are at their lowest, as a percent of GDP, right now.
Income inequality that has increased to levels not seen since 1928 is the real cause of the downfall of our nation. Concentrating wealth into the hands of the ultra rich causes a lack of demand.
This graph is a little tricky. the first part shows the population broken down into 20 percent segments. The second part, breaks down the top fifth to show that the top 1% are actually the one's gaining.
The lack of economic activity because of the lack of demand because of the concentration of money to the top 1% of the people IS our problem.
Here is the state of the recovery of employment. The people without jobs are NOT where taxes are coming from:
What was said behind closed doors in Washington yesterday probably should have stayed behind closed doors. Meanwhile, a completely freaked-out Hank Paulson resorts to begging.
[This has become one of my favorite articles to re-edit. If you've read it before I apologize if any of your favorite bits are missing. :) I really edit better than I write and both skills need improving. Now, don't worry, I'm not delusional. I actually know no one ever reads this blog. :)]
I hope I'm not getting too esoteric here, so I'll try to explain as I go. First, and I hope this is not true, the Wall Street Journal actually seems to have changed into a rag since Rupert Murdoch purchased it. Second, Rupert the Bear (left) is a children's cartoon character in Great Britain. I wish I could take credit for being so knowledgeable about the Brits because I do watch a lot of British television, but alas, I only know Rupert the Bear from Paul McCartney's musical soundtrack songs for Rupert.
But getting back to this Wall Street Journal thing: is Rupert Murdoch going to change the way we perceive the words "journal" and "journalist" similarly to the way he changed the way we perceive the word "news," as in Fox's version? I ask this because, lately, I have read a few articles from WSJ, probably all editorials, that have, shall we say, appeared to be less scholarly than I remember the Journal as being. I used to see an interesting topic and see the source, WSJ, and say to myself, "That sounds like an interesting topic and gosh, the source is the Wall Street Journal. I might enjoy learning something." Now I don't see things in quite the same light. And honestly, I really was naive enough to believe they would not change the "Journal." Trust me, I was blinded by my love of my past learning experiences.
You see, I recently stumbled across an article: "Stephen Moore: Why Americans Hate Economics
(Gosh, that sounds like an interesting topic and the source is...) However, the subtitle says it all, really: "In university classrooms—and especially the Obama White House—fancy theories of macroeconomics defy basic common sense." Really? Is the article really about common sense versus the economic theories taught in economic classrooms that underpin much of what is published in the Wall Street Journal?
And why is Obama "especially" at fault? Why would one want a White House that didn't understand "fancy" university class economic theories and even, gasp, use them in the worst downturn since the big one? "Common sense" is the reasoning submitted, but please, please put me on board the plane whose pilot studied fancy aeronautics. That seems common sense to me.
The phrase "common sense" has always bugged me. I have told the story before about the drunk guy calling me, a reference librarian at the time, from a bar and saying "Hey, buddy, tell my friend here that the moon is bigger than the sun, I got a twenty dollar bet on it. I'm giving him the phone." You see, common sense is not all that accurate. It's why we have things like the scientific method and fancy theories.
And those fancy economic theories, especially the Keynesian ones that usually come up in recessionary times, are particularly relevant to us exactly now, as we struggle out of the worst economic recession since...well never mind... you get the picture. Here is an excerpt of the completely (how do I put it? I hate to use words like "asinine")...dismal logic of a WSJ article these days.
Consider what happened last week when Laura Meckler of this newspaper dared to ask White House Press Secretary Jay Carney how increasing unemployment insurance "creates jobs." She received this slap down: "I would expect a reporter from The Wall Street Journal would know this as part of the entrance exam just to get on the paper."
Mr. Carney explained that unemployment insurance "is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren't earning a paycheck are going to spend the money that they get . . . and that creates growth and income for businesses that then lead them to making decisions about jobs—more hiring."
That's a perfect Keynesian answer, and also perfectly nonsensical. What the White House is telling us is that the more unemployed people we can pay for not working, the more people will work. Only someone with a Ph.D. in economics from an elite university would believe this.
I have two teenage sons. One worked all summer and the other sat on his duff. To stimulate the economy, the White House wants to take more money from the son who works and give it to the one who doesn't work. I can say with 100% certainty as a parent that in the Moore household this will lead to less work.
First, let's repeat the most obviously interesting statement made by Mr Carney: "I would expect a reporter from The Wall Street Journal would know this as part of the entrance exam just to get on the paper." I would, too. It is dead serious that a White House Press Secretary has stuck his neck out this far. And I'll guess from the no holds barred wording that this was not the first time Mr. Carney has come across an improbably non-scholarly question from the Journal. If you have never heard of or have forgotten Keynesian economics, trust me, that it is respected enough for all my economics teachers, respected by all your economics teachers and historically respected by the WSJ itself. It is indeed Macroeconomics 101 which most people take in college, and hopefully most if not all Wall Street journalists. I'll bet it is even taught in high school economics classes these days. Don't let the word "theory" throw you. Adam Smith's theories are discussed right alongside those of John Maynard Keynes. It's all theory so let's just use some "common sense." The basics of the Keynesian model are easy to understand particularly in recessionary times and should seem even more commonsensical today.
A bubble bursts in the economy, people lose jobs, so these people have no money to spend, businesses suffer from lack of demand, businesses lay people off, so these people have no money to spend, businesses suffer from lack of demand, businesses lay people off, so these people have no money to spend...
This leads to a death spiral for the economy. It led to the Great Depression. I cannot overstate this: it is standard economic theory. It used to be understood by Wall Street Journalists.
Keynesian economics was developed fully during the Great Depression and is the only way of explaining our sudden extraction from this depression during WWII. The government borrowed money and spent it on industrial production of weapons. Why would building weapons and armies extract us from the Great Depression? It is common sense among economists that the money pumped into the economy multiplied throughout the economy and soon Ann's Pie Shop sprung up even though Ann was not manufacturing bullets but feeding people who had paper dollars to spend, borrowed paper dollars that were injected into the economy. Heck, you don't have to be an economist to understand such a common sense idea. "We are all Keynesians now." was a quote attributed to Richard Nixon by Milton Friedman.
Is it true that when we inject money into the system we would be better off giving it to people who don't have money rather than people who have money enough? Yes, in Christian ethics AND common sense. If money is given out, it will more likely be spent, or injected into a sluggish economy, if people receiving the money don't have a paycheck. Make sense? Then this money is spent again and again and again by the people who receive it in each subsequent transaction. This is the multiplier effect. It isn't perfect because sometimes the money reaches wealthy people and it stops (through their obvious fear of what might happen in times of recession), and this money goes into a bank that, oddly enough, doesn't want to let go of it (for the same fearful reason) during a recession. That is the concept of a "credit crunch." Notice that terms like "credit crunch" wouldn't even be really possible without those fancy Keynesian type theories. Now, going back to our example, if we gave the money instead to the wealthy people at step one, this money would make it's way fearfully into into a bank, not be lent because of the bank's fear, and it would be as if the money never existed. Transactions of money which lead to other transactions of money are the only actions which get capitalism rolling again when there are large numbers of fearful people that make up the "demand" side of the supply/demand equation.
The real insidiousness of this excerpt from the "Journal" is the description of the son who "sits on his duff." That is, in actuality, a class warfare statement --plain and simple. People lost their jobs in this downturn because rich people played with their money. That might be slightly debateable, but people certainly lost jobs through no fault of their own. The economy sunk. Who among us was not fearful of losing their job? Who among us does not know someone who is desperate right this minute to find a job?
The tip off that this is a Rupert Murdoch/Fox News type of article is this charge of elitism: "What the White House is telling us is that the more unemployed people we can pay for not working, the more people will work. Only someone with a Ph.D. in economics from an elite university would believe this." No, that's not quite right. What the White House is saying is that unemployment insurance is doing it's function in stemming job loss and honestly in creating new jobs. They are saying that the LONGER we can pay people who are unemployed (remember not by their own choice as is the qualification for benefits) the less employed people will lose their jobs and as an added benefit, the less the unemployed people lose their houses, and the less the unemployed people end up on the street corners selling apples.
Elitism would imply that one is in one's ivory tower with one's educated buddies and didn't care about the average man. This incredibly ironic charge of elitism from someone writing an elitist class warfare article is so ridiculous that it must receive the Rupert Murdoch Good Foxnewsing seal of approval. The article is making a charge of elitism that the Murdoch paper is itself guilty of because of the article that is making the charge.
There may be a few people that can be characterized as sitting on their "duffs," collecting unemployment and enjoying their significantly decreased standard of living as this "elitist" article suggests. There may actually be some wealthy people who have more than enough money in the bank and collect unemployment because they can, because honestly it is actually owed to them. I just know a lot of people who don't fit this stereotype put forward. I know a lot of people desparately looking for replacement jobs and not finding them. The Wall Street Journal has no moral authority here either as they never did a timely investigation of the knowingly false AAA ratings placed by the ratings agencies on crap derivatives, never saw the financial crisis coming and worked hand in glove with the financial institutions which caused this whole gigantic mess. How dare this "news"paper equate people who are out of work through no fault of their own to a rich journalist's lazy son. People now unemployed paid into an unemployment insurance fund whether directly or indirectly. How dare these class conscious jerks at WSJ berate the unfortunate among us apparently just so that they can defend their own seemingly economically ignorant reporter that they sent to the White House press corps, bash Obama, and thereby publish an article that pleases Rupert Murdoch.
I submit that the title of the article suggests scholarship that we have grown accoustomed to in the WSJ while the article is written for the sole purpose of expounding the politics that we have grown accoustomed to from Fox News.
Besides, would you castigate one of your kids in public to make a political point? Loyalty to Rupert Murdoch must be mighty demanding.
Oh, yes, my apologies to Rupert the cartoon bear.
This is the demo for "We All Stand Together" for the animated Rupert the Bear. I often like demos better than final versions even though they are bare :) and unfinished. The song's final version went to #3 on the UK chart even though it was written for a children's cartoon. Rupert, the non-animated version whose newspapers do silly illegal things, and those employees he influences could all possibly benefit from the moral values espoused in this silly little song for children about standing together in bad and good times.
One incredible chart! Start during the 20's and notice that drastically reduced taxes for the wealthy apparently pumped idle money into the hands of those who enjoy playing with it by creating bubbles and whatnot. Then, catastrophically the bubble burst, and rest of society paid with their jobs. A few years later, tight money policy eventually raised the taxes on the rich, but also prolonged the depression until WWII.. During some of most prosperous years after WWII, the rich are still being taxed at 90% and everything is wonderful. The height of our industrial and economic power is reached. Then comes the Vietnam war, the rich are still paying a portion of their previous share but a little less. Economic troubles begin over the costs of Vietnam. Nixon takes us off the gold standard because we cannot pay our bills giving us free reign to finagle the money supply. Reagan comes into office with promises to cut taxes and reduce government. He cuts taxes for the rich, massively, by borrowing money. Because when it came time to cut government, Reagan decided everything was just fine where it was (David Stockman who created the cut-taxes-with-promises-to-cut-government budget resigns in disgust as borrowing replaces government cuts and he writes a scurrilous book about his experiences. He is called names by the administration and no one pays attention to his message.) Here the myth is born that cutting taxes actually pays for itself. Borrowing money and tax cutting does indeed stimulate the economy, but it is best to do this when the economy needs it. In the last year of the Reagan administration taxes are cut for the rich down to levels unseen since just before and during the first few years of the Great Depression. George HW Bush succeeds Reagan in a promise to never ever "read my lips" raise taxes. Soon the Reagan debt has such a dire effect, he has to backtrack on one of the loudest campaign promises ever made. He has no choice but to raise taxes. All logic says we have to begin paying for our debt. The Gulf War has caused part of this problem but actually ends up a rather cheap war as our allies chip in. Because of the broken "no new taxes" campaign promise, GHW Bush is beaten by Clinton who raises taxes for the rich. Prosperity seems to reign as we actually balance the budget and no new costly wars are begun (Additionally, Clinton continues the deadly policy of deregulating the investment banks in a bid to make the Democratic Party a golden baby for Wall Street. Unfortunately this deregulation, actually started by Reagan, and continued by all succeeding presidents and ingloriously out of control during GW Bush's watch creates the groundwork for the crash.) GW Bush for no apparent economic reason lowers the taxes for the rich and also unfortunately becomes the biggest spending president in history with two mightily expensive wars and general/social spending at high levels. By this time the myth that tax cuts pay for themselves and the general belief of the public that cutting taxes is good for the economy has become well entrenched. The idea of collecting taxes from people who can easily afford this in order to pay for government is so lost that the top one per cent of the people can easily influence people to believe that the historically low rate of taxes for the wealthiest (and the gigantic gains they have made in share of income) can somehow be justified because no one wants bad old taxes. This idea reigns up until the crash. Again, just as in the lead up to the Great Depression, there was plenty of money for the wealthy to play with, leading to catastrophe. People elect a president who promises to raise taxes on the well-to-do. Obama is unable to fulfill his campaign promise of taxing the wealthiest a little more to give tax cuts to the rest and stimulate demand. Finally as the inadequate stimulus money runs thin, the public is convinced that the debt is too high. The most fortunate among us must not pay one penny more (taxes they had paid throughout history.) Austerity measures are put into place, Since not enough stimulus money was injected, we appear to head into another recession or the second dip in the downturn.
Further illustrating the power of under taxing the rich. Notice that U.S Debt falls from a high in WWII (money that stimulated the economy out of the worst depression in it's history.) Debt falls until the magic moment a little after Reagan enters office and just as he initiates tax cuts. At this fortuitous moment, it begins it's ascent. Only once does it dip down, magically just as taxes are raised on the rich by Clinton. Then the line goes unvaryingly up again until the crash where it cascades upwards.
Why don't we need the austerity measures we have just voted into law?
It has to do with what we did after the crash of 1929, i.e., the wrong thing.
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"[David] Stockman was quoted as referring to Reagan's tax act as: "I mean, Kemp-Roth [Reagan's 1981 tax cut] was always a Trojan horse to bring down the top rate.... " - Wikipedia article about Reagan's OMB Director link
"(Extending the Bush tax cuts is) rank demagoguery. We should call it for what it is. If these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. So, to stand before the public and rub raw this anti-tax sentiment, the Republican Party, as much as it pains me to say this, should be ashamed of themselves. " - quote by David Stockman from this same Wikipedia article link
"The Education of David Stockman" linkThe Atlantic Dec. 1981 Note: this is the famous magazine article that exposed the Reagan tax cut as a "Trojan horse to bring down the top [tax] rate..." as Stockman realized that cutting government was not what was happening. Those were the days of true "public" officials with conscience.
Charts have been off the hook describing our dilemma. In almost every category, our mistakes are staring at us in the starkest of terms in ways that make even a non-economist sit up and say "Wow, that was a good one!"
I have been posting charts that really point out how deep our depression has gotten in terms of job loss, I have posted charts that show how incredibly bad the public is taking all of this. The charts continue and continue to point out just where we need to go, what we need to do. And yet... all movement in the direction most likely to provide a successful path for our country in the future have been blocked in a mountain of inactivity that would make a darn good chart, if that were possible. :)
Here is the chart of income inequality. This is the trend from 1979 - 2005. This is the period dating from the Reagan Revolution where we stopped paying for our government and started handing out money in the form of tax breaks at regular intervals and building up our debt. Here are the results in terms of where you stand, whether you did well with all the deluge of tax breaks or whether you didn't. Or as Reagan might have put it, "Are you better off than you were 30 years ago?"
The first half of the chart shows the general U.S. population broken down into segments. The last segment is so very skewed. But then when we break that down in the second half of the chart, low and behold, most of them too were screwed ummm skewed. Only the very wealthiest 1 percent show they have made substantial gains from our failed policies that have led us to the edge of bankruptcy.
Previously in this blog, I have rated bothersome companies on a Schizophrenic Cat Index (SCI). When I was studying psychology so many years ago, multiple psychology books had a chart that showed the descent into schizophrenia of the artist Lous Wain known for his beautiful cat art. Many people who have taken at least one psychology class may have come across these striking pictures that serve to illustrate his worsening disorder. I had been using a 4 cat chart to rate companies but a recent development made me decide to expand to an 8 cat chart. Honestly, I’m cognizant of the fact that you are lost by now so please don’t think, no matter how enticing it may be, that the chart describes my own schizophrenia (though level 2 has some relevance to the way I feel perhaps... :) ). The new expanded chart, level numbers added by me, is illustrated below:
AT&T was rated pretty high on the old 4 cat chart but now they have prompted me to add more levels to include their most recent behavior. Every month that I had service with AT&T (phone and Internet) they sent me a letter which was “signed” by the head of some department, perhaps the odd letters department or something, I can't remember. It would always ignore the fact that I had the Internet through AT&T and the letter would go on to say they had recently analyzed my bill and had this great plan which would save me money. All the plans were variations on telephone-only service (without Internet bundling) and all cost substantially more money than I was paying for that part of my bill. In addition to these letters, that had an employee analyzing my bill each and every month to save me money, were other mailings or propositions for me to become a customer. I was already a customer, of course, one that was thoroughly analyzed after years of monthly personal attention. Yes, this was pretty odd behavior… and then there were the even more annoying times in which I called with a problem and was switched back and forth between representatives. It always took at least 3 representatives and sometimes as many as 6. In the dire cases, I would be told by one department that another department was responsible, only to be told by this other department that the previous one was responsible. Again, these type of things happened on a consistent basis. My bills were often incorrect for 3 or more iterations, so… being a cheapskate I called for each error.
But… the real odd behavior came three months after terminating my services with AT&T. In my mailbox was a letter stating my credit card on file was about to expire and that I needed to update it. I thought for a moment. Should I call and ask why they had kept my credit card in their files three months after I was no longer a customer? Should I call and confront them with their odd behavior and suggest a therapist? Finally, I decided that since the card was about to expire, well, they wouldn’t really have it anyway. And… I think I need to keep a distance from Cat Level 6 corporations.
Meanwhile, the cable satellite guy came the next day to hook up my satellite so I could leave Charter Cable television behind in the dust. Three awful months of Charter Cable’s dismal DVR had finally worn thin. The satellite guy took 5 ½ hours to do the job even though there was already a dish on my roof that had been working 3 months ago. Nothing worked for the guy. His equipment wasn't charged in two separate instances. He called in to the office and asked questions that were simplistically stated at best. Even when he eventually left my house, my Internet was not working. I fixed it myself a few minutes after he left. He left an extra pole on my roof because he couldn't get it off from the old satellite dish which he had to discard. I have nicknamed the odd looking array the "factory on my roof." It was a sad experience but far better than a previous satellite guy that actually asked me for a beer and then a six pack, asked if my wife had any sisters and then when he came back later to fix something he had gotten wrong, behaved even more oddly. Dish still has a favorable rating of Cat Level 1 however, because it’s not the corporation that causes problems, it’s the companies they contract to for installation. And the contractors are more like substance abusers than schizophrenics.
Charter Cable, rates Cat Level 4. Their bill is amazingly odd. It’s like an accountant was hired to set up the bill so that only he could read it after a few cups of coffee. The secret to their pricing is that there is always a deal to be had. They pretend to be researching the “deals in your area” but the deal is always 10 dollars less than you would have paid. Complain about the DVR, get 10 dollars off. When I cut their television sevice, I was still keeping their telephone and their Internet (think about it, my other choice was AT&T). I called one last time (I hoped) and was given one price by one person and another by a different person later when it came time to commit. I asked to speak to a supervisor and was told there was “no way” the supervisor would quote any different prices to me. Supervisor: 10 dollars off, which happened to be the price I was given by the first person in the loop. But she was only going to give it to me for 6 months. I need to call back in 6 months to get someone else to knock 10 dollars off, I guess.
Cats actually get a form of schizophrenia called Feline Hyperasthesia which I found here.
Wait, they are offering 75 dollars as a gift! Not to me! Ok, Dish is now officially Level 2. Then look at the eyes of that cat that the "webmeister" put at the top of the website. I'm a little concerned.
Then there was this story making the rounds, before we collectively had really bad economic things to worry about, that humans can get schizophrenia from cats: http://abcnews.go.com/GMA/OnCall/story?id=1299317 which makes a lot of sense when you think of the artist who loved cats and his paintings.
I’m a little frightened now, I might be heading towards level 3 myself!
But lest you think that I have been unfairly anthropomorphizing corporations, Mitt Romney's recent remarks defend me: "Corporations are people, my friend."
This certainly explains why corporations have freedom of speech through bribery donations to candidates but doesn't explain why many flesh and blood types of humans weren't bailed out of their financial problems. Actually, maybe Mitt should amend that statement and say: "Corporations are very important people, my loser friend."
____________
Please note: while this post is written in jest, schizophrenia and other brain disorders are really no laughing matter. Please visit http://www.narsad.org/ if you want to learn more about the stigma of mental disorders and the way you can help.
I'm just guessing consumers are coming to terms with either 1) their broken government, 2) the downgrading of their nation's credit rating, or most likely 3) both of the above. That is one stark chart!
Just for good measure, here is another stark chart in it's surrealistic contrast to the one above:
A combination of feeling bad and getting out the credit card? Sounds like Gabrielle Solis from Desparate Housewives. There is actually no good explanation for this. Other factors confusing the issue are lower prices and measured lower consumer spending during this last gigantic leap of credit upward. There just is no apparent logical connection. One interesting uneducated thought (i.e., mine) is that people who can't afford necessities are giving up and reaching for the credit card while those who can afford it are playing it safe and hoarding money. Heck, the fortunate may be buying gold with credit. I don't know but the U.S. economy may just be reaching a tipping point of some kind though. Stay tuned.
The cornerstone of health care reform went down for the count. "Chalk up another one for the GOP, outwitting and outflanking the President and the Democrats." - from Robert Reich's blog on the subject. He's always a bit harsh, but highly intelligent in framing and discussing the subject. The single payer option was quite obviously the way to go at the time but the forces against people being equally healthy used the broken system to compromise a bill down to a level they expected and openly proclaimed they could beat in court. Returning the taxes of the most fortunate among us back to pre-Iraq War levels to help pay for the burgeoning debt threatening the very security of our country? Compromised away. The pattern here is that the benefits of the few outweigh the good of all.
Imagine, if you will, a Tea Party president in charge. OK, I'm sorry about that rather disturbingly uncivil image. Yet Iowans recently have imagined that very thing in the form of Michelle Bachman winning their straw pole. (Didn't Ron Paul come in close behind?) And Iowans know a thing or two about public policy that benefits the few at the expense of the many. Ethanol, the burning of food to create gasoline for automobiles that wastes more energy than that created, is top on their list of objectives. Bad for mankind, bad for the United States, but good for their corn farmers and their local economy. It is a stark example.
How did a "democracy" come to represent the few over the many? It is a systemic failure I have touched upon before.
I watched a show on A&E entitled The Killing of Bin Laden. That dramatic picture of President Obama and his staff watching the mission unfold shows a bit of concern around the table. Intelligence estimates were apparently only at 60% that Bin Laden was in the compound. Obama himself had lowered that in his mind to 50/50. Either Bin Laden was there or he was not. Yet no compromise came forward that was dependent on what the Tea Party would think or the farmers in Iowa. The riskiest yet most effective and subsequently correct option was chosen. One man decided and would suffer the consequences if wrong, if the mission failed.
Are acts of war the only things that can be accomplished in today's democracy with any definitive decisiveness?
We are a divided people in uncivil times. It doesn't seem to matter that someone willing to compromise and bring sides together is at the helm. Seemingly, we are going to fight each other until we are all consumed in flames of failure.
I joined Facebook recently. It was the concept of Bowling Alonethat pushed me over the edge. As I was filling out my profile and thinking about my former job and the negative consequences that it had on my health and wellbeing, I decided I just couldn't document the decades I spent at that job with mere dates without some form of comment. I decided on a compromise that is literary (befitting the job) and at the same time described my distaste. As two unyielding sides of our society in "superlative degree" clash to the detriment of us all in a time so important to us all, the quote keeps popping back into my head:
“
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.
”
—The opening paragraph of A Tale of Two Cities by Charles Dickens
As you might guess from all the facts around us, our country's post WWII boom, our democracy, our system of economics, our influence in the world and I myself, are aimlessly aging.
Well, if you have read any of my posts, you know how wonderful it makes me feel when my very own Senator, Al Franken, does things I elected (gave money to his campaign) him for. This time it is like he is reading my mind as a "constituent." This is an article about Al on the subject of S&P and the other faux ratings services:
S&P will undergo some kind of probe. It's obvious they were irresponsible about they way they put out this downgrade of America. Numbers were wrong and then there were inconsistencies even after a hasty patch up job. S&P seemed determined on Monday to make sure that all kinds of insurance companies went down right on the day of the most fear from the market. You see somehow these insurance companies could not have higher ratings than the USA itself. Well, duh, at least not except for during the two days of the weekend, but certainly not ONE STINKING DAY LONGER! So, instead of doing this secondary carnage on the same day as the USA downgrade they decided to wait until the first market day after, not on a Friday news dump like they did the USA downgrade. They heaped bad news on the market in the midst of reeling from the first bad news instead of waiting till the next Friday news dump.
(Side note: USAA Insurance Company and Bank was incidentally among those that went down the ratings white rabbit hole saying on their homepage "This has everything to do with the USA and nothing to do with USAA." USAA didn't mention the Tea Party antics while the President of the USA did. They didn't mention S&P's assinine ratings from the past. USAA likes a little politics when it suits them. I'm familiar with this pattern of theirs. A while back, they were asking all their members to contact their legislators to protest regulations meant to strengthen the financial industry and stop abuse. However a bank making political insinuations and using it's power to openly influence their members against the bank's own regulators is surely fairly unsavory. This time around they did the politics more subtly. They're goal was to protect their repuation but USAA just can't completely contain themselves in their zeal to encourage their agenda in the political arena.)
As for S&P, can we hold out any hope that a congressman will bring up the fact that AAA ratings in the past were bought and sold? And perhaps in our financial condition the US couldn't afford to do that... ;) I do have a teaspoon full of hope that some discussion will be made about the role of S&P in our country's financial demise in their long term actions of selling AAA ratings of CDO's to the investment banks. One example is that the AAA rated instruments on the books of AIG lost 90 percent of their value. How does this equate to the USA? Discussion, I expect, but not criminal charges, alas.
S&P being investigated for the wrong thing. Again, criminal charges for actions before 2008 need to be addressed but... I guess a congressional probe about the downgrade (yawn) will have to do. This blog shows why this is necessary, S&P holds our lives in it's slippery hands:
It was images. Today a massive number of hits, of course. Everyone wanted Brooksley on the day of the crash. :) Well... at any rate all are from image sites. No one is reading what I write but at least they are getting images. :) That being said, recent posts that had their meaning only in images were also hit. So... these are the last words I ever write. Everything will be an image. :) Just joking... OOOPs... :)
I love the Sen. John Kerry (D) phrase "Tea Party Downgrade." :)
Dow down over 300 points but that's not so bad when you consider S&P continues with what amounts to Guerrilla warfare by timing the Fanny Mae and Freddie Mac downgrades on this awful day. Perhaps the timing is in response to Treasury Secretary Geitner's attacks on them. Secretary Geitner may have been responding to previous attacks on him from financial big boys.
Considering the questionable legality of S&P's (and other rating agencies) selling of AAA ratings that led up to the first half of depression, wouldn't it be likely that someone at sometime might have legally threatened them? And wouldn't such a threat also be of concern to the investment banks who pushed S&P into AAA ratings with offers of financial bribes?
All in all, assuming this leads to the rest of a very bad depression, S&P will have been intrinsically involved at every turn.
S&P originally made a $2 trillion dollar mistake (concerning a $4 trillion dollar number) which was briefly reported on CNBC that day (I happened to hear it). S&P had backed off at that time to make corrections but had reassured the financial reporter that a downgrade would be coming. I searched for news of this mistake (that looks a bit like bias an a bit like total incompetence) and found no major reporting of the story but did find this edition of "Treasury Notes." :) It is actually interesting reading and probably the single most exciting issue of Treasury Notes ever. :)
Considering how fast the U.S. Treasury found the mistake they must have been very prepared. S&P sites "brinkmanship" as a major reason for the downgrade. Thus "Tea Party Downgrade."
Although, the permanently filibustered Senate also points to systematic weakness in governing.
However, for the player responsible for the weakness in the economic system, we need look barely further than Standard and Poor's itself.
“I’m asking you to look at a potential increase in the debt limit as a leverage moment when the White House and President Obama will have to deal with us." GOP House Majority Leader Eric Cantor
I know I'm posting a bit more often than usaual but things seem to be coming to such a definitive conclusive moment. This is a fine piece of journalism from the Washington Post:
"Financial experts from across the globe are now commenting negatively on Washington's last-minute deal to slow down the ballooning growth of America's debt and that it was obviously not enough to please the agency." http://www.christianpost.com/news/special-report-sps-news-worries-asian-markets-53491/ And China looks down upon us from their high moral ground where all our jobs are performed by the working impoverished.
It all speaks for itself really. S&P thinks our Herculean efforts to cut the deficit begot a Satan Sandwich of lies. Why didn't they just downgrade us before all the deficit debate? My instinctual logic tells me that had they timed it like that, the fear used in the debate would have been far less effective: no carrot to hope for and a stick that had already hit our backside
What we need for the middle class and the poor is not more deficit cuts but increased investment in our economy. Tightening the monetary policy is exactly the policy that deepened the Great Depression until finally the government had no choice but to inject monetary investment into factories to build the military machinery for WWII. Remember hearing about War Bonds? It's too late for lessons from history anyway. We seem to be committed to failed policies from the past.
Can a reporter please ask Speaker Boehner if the downgrading of the credit rating of the United States falls within the 2% of the legislation that he disapproved of?
Can a reporter please ask S&P whether their opinions of the U.S. government credit results from a new and improved valuation system and not the one they used to launder the mortgage debt products that got us into this depression in the first place?
Can a reporter please ask S&P whether they now feel inoculated and protected against criticism from the governing authorities of their malfeasant role in the mortgage financial instrument scams? And has the company done anything since those dark days to distance themselves from the corporations who paid them for AAA ratings on the obviously lower grade debt instruments?
[This has become one of my favorite articles to re-edit. If you've read it before I apologize if any of your favorite bits are missing. :) I really edit better than I write and both skills need improving. Now, don't worry, I'm not delusional. I actually know no one ever reads this blog. :)]
But… the real odd behavior came three months after terminating my services with AT&T. In my mailbox was a letter stating my credit card on file was about to expire and that I needed to update it. I thought for a moment. Should I call and ask why they had kept my credit card in their files three months after I was no longer a customer? Should I call and confront them with their odd behavior and suggest a therapist? Finally, I decided that since the card was about to expire, well, they wouldn’t really have it anyway. And… I think I need to keep a distance from Cat Level 6 corporations.
Meanwhile, the 
Charter Cable, rates Cat Level 4. Their bill is amazingly odd. It’s like an accountant was hired to set up the bill so that only he could read it after a few cups of coffee. The secret to their pricing is that there is always a deal to be had. They pretend to be researching the “deals in your area” but the deal is always 10 dollars less than you would have paid. Complain about the DVR, get 10 dollars off. When I cut their television sevice, I was still keeping their telephone and their Internet (think about it, my other choice was AT&T). I called one last time (I hoped) and was given one price by one person and another by a different person later when it came time to commit. I asked to speak to a supervisor and was told there was “no way” the supervisor would quote any different prices to me. Supervisor: 10 dollars off, which happened to be the price I was given by the first person in the loop. But she was only going to give it to me for 6 months. I need to call back in 6 months to get someone else to knock 10 dollars off, I guess.
I'm a little concerned.
