The slowness of US response to Myanmar’s cyclone and China’s earthquake is a measure of the unreservedness of the Bush administration to do much of anything. Iraq as an intelligence failure, and Katrina as a domestic disaster failure, mark the spectrum of this administrations failure to think about administration.
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U.S. consumers apparently didn’t want to wait for the stimulus. In fact, they dug themselves way deeper in debt than usual in March. According to yesterday’s Federal Reserve consumer credit report, consumers heaped over $15 billion — that’s billion with a “B” — in personal debt onto their already stressed balance sheets during that month. That’s more than double Wall Street estimates and the biggest monthly increase since November, peak holiday buying season.
Total U.S. consumer credit – what the Fed categorizes as basically all debt except mortgages — is now $2.6 trillion. Yikes…Agora Financial’s 5 Minute Forecast
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The Federal government’s budget balance is deteriorating in fiscal year 2008. Weaker economic activity has dampened the pace of revenue collection and lifted growth in economically sensitive spending. A recent survey of primary dealers estimates that the deficit for the 2008 fiscal year ending in September will exceed $400 billion with some economists expecting a deficit of more than $500 billion–a significant deterioration from fiscal 2007’s deficit of $163 billion. Economic stimulus measures will complement the forces widening the budget deficit. This year’s shortfall may surpass fiscal year 2004 as the largest on record in nominal dollars.
Today’s NYT has an article on the fifth anniversary of “Mission accomplished”, by having half a dozen ‘experts” talk about what next. the overall message, is back off smarter but leave five brigades. What the NYT does not say is that all the commentators are from the neocon right who supported, encouraged, or even planned the war.
After the NYT did the article on Obama Hillary above, today’s leads off with two major articles making race the centerpiece. to Obama’s cost.
There is a sense throughout that politics is not quite engaging at the level of major issues, but it is faint.
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Getting ready to put more of GardenWorld Politics on line, I’ve revised the web presence, reducing it to two
The blog here
The wiki www.pbwiki.com
I’ve also opened up the blog to comments.
On the current situation,
I am surprised at the lack of thinking systemically. The rise of financial capitalism is (has been) generating lots of wealth for those at the top. They have no incentive to change because all proposed changes start with reducing their share of the pie, and the institutions (banks, wars, bought congress) that are entwined with them. Having gotten Reagan and thatcher, and now the Chinese to embrace creating capital at the top, they are not going to give up the leverage they have obtained. It never occurs to the blue jays to stop robbing the nests of the wrens. In our case, the destruction is out running the capacity to produce. the US has spent itself out on war and overseas consumption. Then we try to blame the folks who go to Walmart. But they go to Walmart (and don’t revolt) because the prices are low and they need low prices because they have lost jobs and purchasing power. They went for sub prime loans (look at the implied contempt, realistically they are super prime loans)because the extra dump of dollars by the fed, by making speculation in houses cheap, forced prices up and poor folks had to pay more for them - and we call it their greedy fault! All the time the pres and Greenspan were saying hey, all curves are up, ride with us!
We see the solutions, but those with power do not want them.
I am currently at Stanford where i can see some of the folks angling. Nano-tech and bio-tech - hey, we can keep the merry-go-round going, increase our share of the pie. still! Oh, the pie is shrinking! Better work even harder to expand out share so we at least stay even with ourselves!
And then I’ll move to Singapore, Costa Rica (I was just there and the building of million dollar houses, and investment, from London The US, the Emirates, and Israel is shocking because it is moving fast and will destroy the country).
Spengler, Toynbee, Marx, Malthus, Club of Rome. They were all correct. Unfortunately, while getting the years wrong, the scale, they are all proving right right now, and the pain is excruciating.
Dick your last question is missing any institutional analysis. the war supports traditional power and corporations (banks, oil, weapons - like GE, GM, Boeing) and whereas alternative energy is not organized to offer profit. And when it is, who will benefit? The Shell exec who said “When alternative industries are mature (past risk) we will buy them.”
That is, to me it is obvious why we can’t do the sane things.
We must try systemic approaches. And I suggest reading
http://atimes.com and some recent historians, such as David Harvey on the neocons and the economy.
Clinton and Obama white and black voters. This is powerful
So much for the press.
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On Israel, Tony Judt. Solid, realisitc, deeply sad.
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From Asian Times
I laugh at the arrogant eggheads with egg all over their faces as their stupidities blew up in their faces and got egg all over them, which is funny enough, but the comedic effect is ruined by the prospect of taxpayer bailouts of their stupidities, which is altogether too, too much because of the gross economic impact of that much money being created to subsidize the financial sectors of the economy, which takes all the fun out of it.
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71
From the excellent Calculated Risk
[On CNBC] I fleshed out my arguments on why the US recession will be severe and protracted, lasting four to six quarters.
… later in the CNBC program Nobel Prize winner Joe Stiglitz explicitly agreed with my view that this will be the worst U.S. recession since the Great Depression. In some ways Stiglitz was even gloomier than I have been.
Later that morning on CNBC Mohamed El-Erian, co-CEO of Pimco, fleshed out the arguments on why this crisis is not over. That interview followed up his excellent op-ed column on the FT today where he argued that we are now moving to a new stage of the economic and financial downturn.Here is the Financial Times piece by Mohamed El-Erian: Why this crisis is still far from finished
… During the next few months there will be a reversal in the direction of causality: the unusual adverse contamination by the financial sector of the real economy is now morphing into the more common phenomenon of recessionary forces threatening to undermine the financial system.
Economic data in the US have taken a notable turn for the worse. Most importantly, the already weakening employment outlook is being further undermined by a widely diffused build-up in inventory and falling profitability. History suggests that the latter two factors lead to significant employment losses.
… The sharp slowdown in the US real economy will occur in the context of continued global inflationary pressures. As such, the Federal Reserve’s dual objectives – maintaining price stability and solid economic growth – will become increasingly inconsistent and difficult to reconcile. Indeed, if the Fed is again forced to carry the bulk of the burden of the US policy response, it will find itself in the unpleasant and undesirable situation of potentially undermining its inflation-fighting credibility in order to prevent an already bad situation from becoming even worse.
It is still too early for investors and policymakers to unfasten their seatbelts. Instead, they should prepare for renewed volatility.
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Many of us have thought that Bush ill stat a war with Iran in order to saddle the country with a dangerous situation in November, and create a condition where McCain seems like the candidate who need to win to save the country. Imagine at that time a McCain-Patreus campaign to win the “war” and bring us to peace.
Meanwhile the Democrats are showing, in my mind,the immaturity of Clinton and Obama, compared to people like Dodd, who never had a chance because the press sees no story in it.
The role of the press is despicable, but the weakness of the candidates shows the immaturity f the country. We are a cowboy society the world is coming to fear.
Not good.
The underlying real story is not Iraq, the election, race, or bitterness.
the underlying reality is still the shift of money upwards; the angling for advantage by selling bear sterns to oneself and trashing the economy with fake “gifts’ like the rebates which are not rebates of paid taxes, but charges loaned to ourselves to pay back.
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Finances dominate reality: the election is open because we don’t know how either candidate will respond to mind breaking challenges.
From Asian Times http://atimes.com/atimes/Global_Economy/JD22Dj02.html
There are certainly indications that the over-liquefied global system is not well situated today to handle more dollar liquidity (akin to throwing gas on a fire). Inflation and its consequences have quickly become major issues around the world.
With crude hitting a record $117 at the end of last week, there is every reason to expect that newly created global liquidity will further inflate energy, food, and commodity prices generally. The Goldman Sachs Commodities index has gained 21% already this year. But when it comes to monetary instability, our financial markets might just prove the unappreciated wildcard.
I just read a report, Human Capital Strategic Plan, March 2008, from The National Science Foundation. Because of my interest in the relationship between science and the broader society, I read it carefully.
First striking thing is the mission statement.
NSF Mission
To promote the progress of science; to advance the national health, prosperity and welfare; to secure the national defense (NSF Act 1950).
In this context “human capital” strikes this reader as being part of the problem. The word capital comes from Greek for head, and referred to the number of cattle in a herd. Capital became that which grows. Human capital reduces the human to the head, and their function to being used to grow by owners, not themselves.
This directly conflicts with the human welfare view of the mission. But typically the mission is unexamined for its assumptions and guidelines. The reductionist trend here is obvious, once you have an ear for the rends. The soul to mind to head to brain to (newest technology, such as computer) is the evolutionary line along which we are currently proceeding. This is not very adequate to real human welfare which requires an understanding of the human, which goes unexamined except insofar as the research fits the agenda of economizing the human.
and, from http://www.washingtonmonthly.com/
WHERE’S MY FLYING CAR?….Paul Krugman suggests that energy technology hasn’t advanced much in recent decades and then adds this:
I’d actually suggest that this is true not just for energy but for our ability to manipulate the physical world in general: 2001 didn’t look much like 2001, and in general material life has been relatively static. (How do the changes in the way we live between 1958 and 2008 compare with the changes between 1908 and 1958? I think the answer is obvious.)
Leaves out Internet and war technology. Otherwise, a photo of a party today and thirty years ago are hard to tell apart: dress is much the same, and no new tech is likely to be in the photo (but the photo is digital!).
More on science
BREAKING THE GALILEAN SPELL
By Stuart A. Kauffman
… Even deeper than emergence and its challenge to reductionism in this new scientific worldview is what I call breaking the Galilean spell. Galileo rolled balls down incline planes and showed that the distance traveled varied as the square of the time elapsed. From this he obtained a universal law of motion. Newton followed with his PRINCIPIA, setting the stage for all of modern science. With these triumphs, the Western world came to the view that all that happens in the universe is governed by natural law. Indeed, this is the heart of reductionism. Another Nobel laureate physicist, Murray Gell-Mann, has defined a natural law as a compressed description, available beforehand, of the regularities of a phenomenon. The Galilean spell that has driven so much science is the faith that all aspects of the natural world can be described by such laws. Perhaps my most radical scientific claim is that we can and must break the Galilean spell. Evolution of the biosphere, human economic life, and human history are partially indescribable by natural law. This claim flies in the face of our settled convictions since Galileo, Newton, and the Enlightenment. …
STUART A. KAUFFMAN, a professor at the University of Calgary with a shared appointment between biological sciences and physics and astronomy, is the author of THE ORIGINS OF ORDER; AT HOME IN THE UNIVERSE; INVESTIGATIONS; and REINVENTING THE UNIVERSE: A NEW VIEW OF SCIENCE, REASON, AND THE SACRED (Basic Books, forthcoming, May 5th).
[MORE]
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Back from Costa Rica. Trips to other places always worth while, but maybe not the energy used to get there. The future of air travel is difficult. Cost will lead the way, as in so many things, making the world more comfortable to the rich and less accessible to the rest of us.
–
A big world crisis, with Rwanda like consequences, would leave the environment in terrible shape. Desperate people will eat and burn in every direction. Those who think ‘at least it would be a solution” are not thinking seriously.
I was thinking…
The solutions to the problems we face with the economy, international relations, energy, environment, food and income distribution: basically a redesign of the US and the world economy and governance lie outside the boundaries of any conversation going on among the leaderships of either party.
This led to the suggestion that it would be potentially very useful to do a draft of the inaugural speech for January 2009.
It would begin with a story about the transformations of American Society: slavery, Indians, industrialization, a response to world markets, and the large wars of the 20th century.
Next would come an analysis of the problems facing us now.
Next comes an analysis of why our current institutions are not sufficient to meet the challenge.
A look back at the new deal, banking regulation, the WPA etc..
And last would come a series of proposals that would include but not limited to:
A new relationship between the president and working committees of Congress.
A new series of national advisory boards.
A proposal for flexibility centers in every town in America where local problems can be matched with people needing to change jobs.
An amnesty for all past taxes
A new proposal for home ownership without debt.
————-
and
In Lean Times, Biotech Grains Are Less Taboo
By ANDREW POLLACK
Soaring food prices and grain shortages are bringing new pressures to use genetically engineered crops.
Pasted from <http://www.nytimes.com/>
The issue is, crises will lead to embracing otherwise bad solutions. In this case, shifting ownership of agriculture to big corporations. Timing will be important.
and
Kudos to James Glanz and Alissa Rubin of the NYT for getting the story! They point out that the US and Iran are on the same side in southern Iraq, both fearful of the nativist Sadr movement. This correct narrative is completely the opposite of what Americans have been spoon fed on television and by Bush / Pentagon spokesmen. I had pointed out this Bush- Iran convergence last week and also pointed out that US intelligence analysis admits it. The article is the first one I have seen to say that Iran supports al-Hakim’s ISCI in its bid to create a Shiite superprovince in Iraq’s south. I’ve never been able to discover what the Iranians feel about this and had wondered if they weren’t at least a little bit worried about a soft partition of Iraq because of its implications for Iranian Kurdistan, which might become restive and seek to join Iraqi Kurdistan. But it is plausible that Tehran might risk this scenario in order to gain a permanent regional ally in the form of the Shiite Regional Government in southern Iraq.
Pasted from <http://www.juancole.com/>
and
Pasted from <http://delong.typepad.com/delongslides/2008/04/us-real-gdp.html>
Note that exports would mean viability for business but much lower wages for those doing the production.
One of the key drivers of world prices is China spending US dollars for material, energy, and food. This is the necessary fallout of the US relying on China stockpiling dollars the US paid for cheap imports.
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