March 6 notes

March 7, 2009 § Leave a comment

The issue has been drawn. No longer do we hear, "since the great depression", Because the crossing of the line has now happened.

The NYT today has

 

The acceleration has convinced some economists that, far from an ordinary downturn after which jobs will return, the contraction under way reflects a fundamental restructuring of the American economy. In crucial industries — particularly manufacturing, financial services and retail — many companies have opted to abandon whole areas of business.

 

“These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.


And we start to get published books that look for causes through blame, rather than systemic.

 

 Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover (Nation Books) by Katrina vanden Heuvel and the editors of The Nation

 

And David Brooks walked into the middle of it with a column brought out many responses.

 

In short, Burkean conservatism, unless it is tempered with an implicit liberalism (as Burke’s own conservatism arguably was, at least in part) amounts to a defence of the status quo, even when that status quo is itself the product of direct political manipulations. It doesn’t (and shouldn’t be thought to) provide a case against ambitious political measures (which fall short of major experiments in social engineering) without further – and quite specific – arguments as to why these measures are problematic. And Brooks doesn’t provide these arguments, or anything like them

 

And then

 

From Kansas City Fed President Thomas Hoenig: Too Big has Failed

We have been slow to face up to the fundamental problems in our financial system and reluctant to take decisive action with respect to failing institutions. … We have been quick to provide liquidity and public capital, but we have not defined a consistent plan and not addressed the basic shortcomings and, in some cases, the insolvent position of these institutions.

 

We understandably would prefer not to "nationalize" these businesses, but in reacting as we are, we nevertheless are drifting into a situation where institutions are being nationalized piecemeal with no resolution of the crisis.

 

Pasted from <http://www.calculatedriskblog.com/>

 

And

Seeor a map of states f initiatives on stimulus

And on jobs, not the old "create or save 3.5 million" Big difference.

And map of where the recession is.

 

and

 

I’m worried. We’ve just elected a talented young president with many good instincts about how to propel our country forward, extend health care to more people, make our tax code fairer and launch a green industrial revolution. But do you know what I fear? I fear that his whole first term could be eaten by Citigroup, A.I.G., Bank of America, Merrill Lynch, and the whole housing/subprime credit bubble we inflated these past 20 years.

This problem is more complicated than anything you can imagine. We are coming off a 20-year credit binge. As a country, too many of us stopped making money by making “stuff” and started making money from money — consumers making money out of rising home prices and using the profits to buy flat-screen TVs from China on their credit cards, and bankers making money by creating complex securities and leverage so more and more consumers could get in on the credit game.  

And, just for perspective,

http://www.bradshawfoundation.com/journey/timeline.swf

clip_image001

 

 

Middle Class: big trouble (long post)

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I found it interesting that President Obama has already identified the pressing need to rescue the middle class. Without a middle class, then government ceases to exist, because from the Roman Empire to the present, it is the middle class which pays the bulk of the taxes. The wealthy find waivers and exceptions via corruption and guile, while the poor pay little or nothing but extract much.

 

Pasted from <http://bayarearealestatebubble.blogspot.com/>

 

The Singapore government spent only 1.3 percent of GDP on healthcare in 2002, whereas the combined public and private expenditure on healthcare amounted to a low 4.3 percent of GDP. By contrast, the United States spent 14.6 percent of its GDP on healthcare that year, up from 7 percent in 1970… Yet, indicators such as infant mortality rates or years of average healthy life expectancy are slightly more favorable in Singapore than in the United States… It is true that such indicators are also related to the overall living environment and not only to healthcare spending. Nonetheless, international experts rank Singapore’s healthcare system among the most successful in the world in terms of cost-effectiveness and community health results

 

Pasted from <http://blog.jparsons.net/>

 

In the end, we learned two things. Periods without stock-market crashes are very safe, in the sense that depressions are extremely unlikely. However, periods experiencing stock-market crashes, such as 2008-09 in the U.S., represent a serious threat. The odds are roughly one-in-five that the current recession will snowball into the macroeconomic decline of 10% or more that is the hallmark of a depression.

 

The bright side of a 20% depression probability is the 80% chance of avoiding a depression. The U.S. had stock-market crashes in 2000-02 (by 42%) and 1973-74 (49%) and, in each case, experienced only mild recessions. Hence, if we are lucky, the current downturn will also be moderate, though likely worse than the other U.S. post-World War II recessions, including 1982.

 

Pasted from <http://blog.jparsons.net/>

 

The acceleration has convinced some economists that, far from an ordinary downturn after which jobs will return, the contraction under way reflects a fundamental restructuring of the American economy. In crucial industries — particularly manufacturing, financial services and retail — many companies have opted to abandon whole areas of business.

 

Pasted from <http://www.nytimes.com/2009/03/07/business/economy/07jobs.html?hp>

 

“These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.”

 

Pasted from <http://www.nytimes.com/2009/03/07/business/economy/07jobs.html?hp>

 

Much the same can be said for financial services, which gave up anoth
er 44,000 jobs in February. During the housing boom, banks hired tens of thousands of well-compensated traders, analysts and marketers to sell mortgage-backed securities and other exotic flavors of investments. That industry is unlikely to return to anything close to its former shape.

 

Pasted from <http://www.nytimes.com/2009/03/07/business/economy/07jobs.html?pagewanted=2&hp>

 

e economy lost 39,500 retail jobs in February, and has eliminated more than 500,000 in the last year.

 

Pasted from <http://www.nytimes.com/2009/03/07/business/economy/07jobs.html?pagewanted=2&hp>

 

“We have to seriously look at fundamentally rebuilding the economy,” Mr. Stettner said. “You’ve got to use this moment to retrain for jobs.”

 

Pasted from <http://www.nytimes.com/2009/03/07/business/economy/07jobs.html?pagewanted=2&hp>

 

And order cannot be restored, many economists say, until the Obama administration creates and executes a credible plan to remove the bad loans choking the balance sheets of financial institutions.

“The 800-pound gorilla is whether we face up to the bad loans in the financial system,” said Alan Levenson, chief economist at the trading firm T. Rowe Price in Baltimore.

 

Pasted from <http://www.nytimes.com/2009/03/07/business/economy/07jobs.html?pagewanted=2&hp>

 

The question that arises most forcefully now concerns the nature of capitalism and whether it needs to be changed. Some defenders of unfettered capitalism who resist change are convinced that capitalism is being blamed too much for short-term economic problems—problems they variously attribute to bad governance (for example by the Bush administration) and the bad behavior of some individuals (or what John McCain described during the presidential campaign as "the greed of Wall Street"). Others do, however, see truly serious defects in the existing economic arrangements and want to reform them, looking for an alternative approach that is increasingly being called "new capitalism."

 

Pasted from <http://www.nybooks.com/articles/22490>

 

Robert Harrison, from Gardens and the Human Condition has a review of John Muir in NYRB

 

"Will a greener technology transform our relationship t onature? Will a more sustainable  economy merely provide a more sustainable basis for our consumerisist sloth?  Those nature make any spiritual demands on us

 

 

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You are currently reading March 6 notes at Reflections on GardenWorld Politics Douglass Carmichael.

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