Misery Economic Theater 2011

[cheesehead]

Originally Posted by Zeta-Flux

Claiming that the GOP is acting out of ideological purity rather than reality (and by implication, without concern for the country) is just poison to the conversation (and untrue).

Here is yet another exposure of the unreality of the GOP's no-tax stance:

"Republicans’ No-Tax Stand Unsupported by History or Facts: View"

http://www.bloomberg.com/news/2011-0...acts-view.html

You would think that abysmal growth and jobs data, the first-ever downgrade of U.S. debt and heart-stopping gyrations in the financial markets would impel political leaders to at least take a second look at some of their assumptions about restoring confidence in the U.S. economy.

Sadly, you would be mistaken.

President Barack Obama called again this week for a deficit-reduction plan that includes both new revenue and spending cuts, a solution that he said would require “common sense and compromise.” Alas, we have seen little of either quality from Speaker John Boehner and the House majority leader, Eric Cantor. The Republican leaders reiterated their determination to oppose any solution to the U.S. fiscal mess that involves revenue increases.

Whatever one thinks of the validity of Standard & Poor's decision to downgrade U.S. debt, it contained an admonition that we should take seriously: Spending cuts alone won’t be sufficient to place the debt, and by extension, the economy, on a sustainable path. In a memo to his Republican colleagues, Cantor warned that S&P’s analysis put the party under “pressure to compromise on tax increases” on the ground that there is “no other way forward.” His response: “I respectfully disagree.”

As always, the Republican leaders justified their intransigence by invoking the demons of job-killing taxes that would suppress the dynamism of overtaxed Americans, hampering growth.

Low Taxes

This is partisan nonsense. First, consider the claim that Americans are being taxed to death. In fact, in terms of the economy as a whole, federal taxes are at their lowest level since 1950. The Congressional Budget Office estimated that federal taxes would account for 14.8 percent of gross domestic product in 2011.

That isn’t a one-year anomaly: Revenue was 14.9 percent of GDP in both 2009 and 2010. Compare that with a postwar average of about 18.5 percent of GDP, and an average of 18.2 percent during the administration of President Ronald Reagan.

Which brings us to a second dubious claim: Raising taxes in a downturn hinders growth. In 1982, amid a punishing 16-month recession, Reagan approved the largest peacetime tax increase in U.S. history. A booming economy followed in 1983 and 1984, enabling him to sail to re-election.

Got that? "amid a punishing 16-month recession, Reagan approved the largest peacetime tax increase in U.S. history. A booming economy followed"

‘Job Killer’

In 1993, President Bill Clinton forced a tax increase through Congress that Representative Dick Armey, then chairman of the House Republican Caucus, condemned as a “job killer” that would push the economy into recession. That increase was succeeded by the creation of 23 million new jobs, and the Clinton administration left a budget surplus of about $236 billion.

Got that? "President Bill Clinton forced a tax increase through Congress that Representative Dick Armey, then chairman of the House Republican Caucus, condemned as a “job killer” that would push the economy into recession. That increase was succeeded by the creation of 23 million new jobs, and the Clinton administration left a budget surplus of about $236 billion."

These are FACTS that ideologically-blinded conservatives prefer to ignore, preferring instead to believe in their comfortable protect-the-wealthy myths prescribed by conservative think-tanks that are funded by those very wealthy folks, and in a starve-the-beast strategy intended to force all of us to live in a one-sided conservative Strict Father ideological paradise whether we like it or not.

Conservatives are still parroting the "job-killing taxes" line in order to avoid rational reality-based discussion.

By contrast, President George W. Bush pushed through two rounds of tax cuts and created just 3 million jobs. He also turned the surplus he inherited into a $1.2 trillion deficit.

Obviously, today’s economic crisis is vastly more severe than anything Reagan or Clinton faced, thus the timing and scope of tax increases must be carefully calibrated. Over the long term, however, the Republican mantra of “no higher taxes, ever” is as senseless as are claims by some Democrats that we can solve our fiscal gaps simply by soaking the rich. Both spending cuts and revenue increases are required.

Got that? "Both spending cuts and revenue increases" That's reality, not the Tea Party's stonewalling absolutist ideology.

One of the oddest aspects of this debate is that the Republican position may not even be good politics -- at least outside safe Republican districts. Public-opinion polls show an increasing acceptance of the need to raise taxes to put the nation’s fiscal house in order. (A large majority of voters would like to see the wealthiest 1 percent raise their hands first.)

The American people are showing that they grasp a fundamental notion that still eludes some of their political leaders. As Justice Oliver Wendell Holmes said, “Taxes are what we pay for a civilized society.” That is well worth the price.

[only_human]

Lately I have been noticing articles about shelf companies in the USA (not quite the same as shell companies, but not that different either).

Anyway, with these methods to obscure things I have been reminded about reverse mergers that have been used to shoehorn Chinese companies onto American stock exchanges without the scrutiny that an IPO would entail.

I mentioned something about this back in January in this very thread
http://mersenneforum.org/showpost.ph...0&postcount=37

The other day, more was published on this story.Special report: The "shorts" who popped a China bubble

After spotting his first alleged China fraud - Universal Travel Group - Hempton says there was no turning back.

"They are so obvious that this is like shooting fish in a barrel. It's not going to remain that way. We are already finding it's tougher to find them in the U.S., and the ones that are really obvious are already mostly exposed. We are looking a little in Hong Kong now."

[cheesehead]

Originally Posted by imwithid

It is absurd to expect an immediate and similar change downward in the prices of gasoline subject to the market price change downward of oil.

Originally Posted by ewmayer

It is similarly absurd to expect immediate upward rises in gasoline prices when oil futures rise, and yet I daresay that phenomenon is well-known to most motorists.

You're both quite understandably missing key factors in explaining these apparent "absurdities":

(1) the discrepancy between (a) the time-length of the processing chain between crude oil purchase and gasoline delivery to consumers and (b) the rapidity with which news of oil price changes is disseminated, combined with

(2) the unique situation, compared to other commodities and their raw materials (e.g., bread and wheat), of gasoline and oil in this regard.

Several years ago, in an earlier Soap Box thread, someone else asked me to explain why gas prices rise so soon after crude oil price increases, even though it's impossible for the newly-more-expensive oil to actually have been refined yet into the newly-more-expensive gasoline pumped into a car's tank. I outlined a response, but set it aside because it wasn't quite right.

This is also related to explaining why oil companies usually have high profits in the quarters during and just after a jump in oil prices (bringing them unfounded "obscene profits" condemnation by uninformed or biased critics), but then have low profits, or even losses ("windfall losses"), just after a collapse in oil prices. That latter half of the phenomenon goes without comment by those critics of the former half.

Now I think I have a proper explanation in mind, but it needs just a bit of polishing. I'll post it as soon as it's ready.

[imwithid]

Originally Posted by Christenson

ew, imwithid is citing phenomenology with his assymetry ... this is the way it does happen, regardless of whether he thinks it is right or not.

That is all I was saying. I was trying to make a point before the damn was to be broken with comments pertaining to how much one pays for gas. One can open a new thread with that as the heading and a breakdown of how much one pays (I recall this was done with electricity prices elsewhere).

Originally Posted by Christenson

The only quibble I have with imwithid is that gasoline/petrol consumption has long-term elasticity, as people either stop travelling so much or buy more efficient vehicles, or car-pool, and net US consumption is down from the peaks at $4 per gallon.

This was implicit in my post. I merely discussed short term / medium term effects. As the time period increases, almost everything will have a price elasticity or demand / supply that increases in concert.

Originally Posted by Christenson

The rest ...

Excellent points.

[davieddy]

Apart from time scale, how does this differ from the maxim
"Buy Low - Sell High"?

David

[davieddy]

Originally Posted by ewmayer

Would any of our UK readers care to comment on the London (and now elsewhere) riots? It seems there is much more at work there than mere protests against against police brutality (the proximate-cause cited) or government austerity (the structural cause cited by many). Mish has a long piece and photo gallery on the riots, with his take:

"Sources report the exact cause for massive riots, now in their third day in London, is unknown. While the trigger may be a deadly shooting by police, I believe the cause is social-breakdown fueled by rising unemployment, loss of dignity, and a desperate realization that hope for a better future and for government to do something responsible about jobs and rising food prices is fruitless."

I have done so already

David

(Sorry Ernst, noticed that your post predates mine; but
as you say, it ain't simply economics)

[Zeta-Flux]

Originally Posted by cheesehead

Here is yet another exposure of the unreality of the GOP's no-tax stance:

"Republicans’ No-Tax Stand Unsupported by History or Facts: View"

http://www.bloomberg.com/news/2011-0...acts-view.html

Got that? "amid a punishing 16-month recession, Reagan approved the largest peacetime tax increase in U.S. history. A booming economy followed"

Got that? "President Bill Clinton forced a tax increase through Congress that Representative Dick Armey, then chairman of the House Republican Caucus, condemned as a “job killer” that would push the economy into recession. That increase was succeeded by the creation of 23 million new jobs, and the Clinton administration left a budget surplus of about $236 billion."

These are FACTS that ideologically-blinded conservatives prefer to ignore, preferring instead to believe in their comfortable protect-the-wealthy myths prescribed by conservative think-tanks that are funded by those very wealthy folks, and in a starve-the-beast strategy intended to force all of us to live in a one-sided conservative Strict Father ideological paradise whether we like it or not.

Conservatives are still parroting the "job-killing taxes" line in order to avoid rational reality-based discussion.

Got that? "Both spending cuts and revenue increases" That's reality, not the Tea Party's stonewalling absolutist ideology.

LOL. And you still don't get it.

I agree that raising taxes is the right thing to do (if we can ever get spending also under control) and those Republicans like Bachmann who are adamantly against any and all tax increases are hurting the nation due to their ideology. What I don't get is how one-sided your posts are. Try looking at the faults of the other party now and then without blaming it on the Republicans or Tea Partiers.

[Fusion_power]

This is well worth watching, but keep in mind that it is slanted quite a bit.

http://w3.newsmax.com/a/aftershockb/video.cfm

DarJones

[cheesehead]

Originally Posted by Zeta-Flux

LOL. And you still don't get it.

I don't get? Nay, it's you who have once again forgotten what I have consistently and repeatedly explained in this forum over and over during the past several years.

See below for another refresher of what you've forgotten seeing me say in the past.

I agree that raising taxes is the right thing to do (if we can ever get spending also under control)

1) Are you saying no tax raising until after spending is under control? 2) What is your definition of "spending ... under control"?

those Republicans like Bachmann who are adamantly against any and all tax increases are hurting the nation due to their ideology.

Well, thank you for that.

What I don't get is how one-sided your posts are.

As I have repeatedly explained for several years, and will now once again (* sigh *) explain for you today:

My goal as a former Republican^* is to see the Republican Party resume what I view as its proper role in balancing the Democratic Party's faults by telling the truth about conservative values. (Perhaps that could be categorized as Goldwater conservatism, but I'm not an expert on Barry Goldwater, so I don't know for sure.)

To do that, I point out what I see as Republican/conservative mistakes that interfere with their proper effectiveness. Their "War on Science" has done no long-term good for the conservative cause. Their overreliance on convenient mythology instead of reality has likewise hurt American society's long-term interests. I point out these things for the purpose of spurring conservatives to steer their party back on course.

I have never presented myself as any expert on the faults of liberalism, nor have I ever made any claim to be giving equal time to critiquing both sides. I presume that my readership is smart enough to be able to analyze liberal faults if they choose to do so, and I am under no obligation to spend equal portions of my time composing critiques of both sides.

Those, such as you, Zeta-Flux, who criticize me for not commenting on liberal flaws, are either too lazy to do so themselves and so are trying to draft me to do their work for them, or are making incorrect assumptions about my purposes, goals, and position and not bothering to check those assumptions against my plain written words to the contrary.

If there's still something you don't "get", what is it?

It seems to me that it's been only a short time since I last laid out this explanation for you, Zeta-Flux. Can you try to remember it a bit longer this time?

- - -

(Does anyone else have trouble remembering my POV on this stuff? Is there something about my explanation that is particularly hard to understand or remember?)

- - -

Try looking at the faults of the other party now and then without blaming it on the Republicans or Tea Partiers.

Do you say that because:

1) You are too lazy to write your own critiques of the faults of the "other party", so you keep raising a strawman of pretense that I have some obligation to double my workload to enable you to shirk your duty?

or

2) Did someone teach you, when you were very young, that every statement that is critical of one side must necessarily and always automatically be complimentary to the other side -- and you still believe that, unable to comprehend the possibility that a statement criticizing one side may actually have no relevance to the other side?

or

3) You genuinely have not comprehended my previous explanations that have been very similar to the paragraphs I wrote just above in this posting about my goal and purpose?

or

4) You're raising yet another straw man with this business of my supposedly blaming the faults of Democrats on Republicans? I am not blaming the faults of Democrats on Republicans; I'm blaming the faults of Republicans on Republicans. (If you disagree, please show us specific evidence to support your accusation next time.)

- - -

^* -- I voted mostly Republican when I first became eligible to vote. When I've taken those online tests that purport to show where one is on the political spectrum, I come out as being on or next to the triple intersection of libertarian, middle-of-the-road, and liberal. There used to be room for me in the Republican Party, but now there's not, and I resent that.

[Christenson]

I'm a liberal. My heart doesn't bleed...I've got better, much more selfish reasons than that....truth is, cities burning because the poor blacks in them have no opportunity because of discrimination isn't a good idea. (Detroit, NYC, Miami, LA over Rodney King). Truth is, i believe in streets being safe...but cops are a poor disincentive for violent crime, and throwing barely-functioning people in jail because they got caught doing small-time drugs doesn't help them function and RAISES TAXES since my government gets to house them and feed them and guard them. Relative equality does a little better. Truth is, SARS (sudden acute respiratory syndrome) scares the daylights out of me...I remember that the 1918 flu epidemic killed millions, and having everyone fairly healthy is part of preventing a repeat. Truth is, I drive too much, at the expense of exercising daily, and it doesn't take a scientist to show that there's a price for it. Truth is, we are spending more money shuffling claim forms for health insurance than we are on doctors, something is crazy about that. And we abuse doctors with internships, discouraging the best from becoming doctors in the first place. Truth is, if some obscure animial or a type of whale dies out, what is to say we aren't next? And what about the very useful drugs derived from rare plants, what if that plant that is dieing out has the next one, and all of us miss out? Truth is, if we don't stop feeding antibiotics to our cattle and chickens, and generally make antibiotic molecules rare in the environment, the bacteria evolve to get stronger, and soon humans die as a consequence. Therefore, antibiotics should not be available for animals that are not pets.

And truth is, there's a lot of pure luck involved in the opportunites that made me who I am....I thank my lucky stars for my good genes, my brains, my relatively good health, my ability to work, and my surviving all the hazards of childhood and a few of adulthood. Others may not be so fortunate, or may have lead paint in their houses destroying their brains, so it is my obligation to share the hope with them...for if not, bad things (like city-burning riots) will happen. Yes, a few will abuse that generosity, but there was a point where I needed it myself, and I know others who it has helped tremendously, making all the difference between someone who is part of the problem and someone who is part of the solution.

EW, could you look up some numbers for the expansion of the US prison system (at federal, state, and local levels) and tell me how much more we are spending on jails since 1980 or so? I claim (without support yet) that this is one excellent place for spending cuts.

This suggestion isn't a matter of religion, it is one of science...of examining the consequences of our actions. Mr Cheesehead's problem with the republicans, I think, is that repudiation of science and fine nuances in favor of religion and barely covert racism on many subjects, including drugs, sex, and now the budget.

Incidentally, growth is itself a religion...we all worship at the altar that the economy will grow, the population will grow...that companies must grow....that the stock market must climb....

[ewmayer]

Originally Posted by Christenson

EW, could you look up some numbers for the expansion of the US prison system (at federal, state, and local levels) and tell me how much more we are spending on jails since 1980 or so? I claim (without support yet) that this is one excellent place for spending cuts.

We aim to please here at MET central - this article is from last November:

The prison boom comes home to roost

WILL THE fiscal collapse that has laid bare gross inequalities in the US economic system lead to meaningful reforms toward a more just society? One answer is suggested by the bursting of what might be called the “other housing bubble,’’ for these two years have also brought to crisis the three-decade-long frenzy of mass imprisonment. If there was a bailout for bankers, can there be one for inmates?

It is commonly observed now that, beginning about 1981, during the Reagan administration, the wealth of a tiny percentage of top-tier earners sky-rocketed, while the wages of the vast majority of Americans went flat. A rapid escalation in the illusory value of homeownership soon followed. But an unseen boom began then, too — in American rates of incarceration, the housing bubble in prisons. A recent issue of Daedalus, the journal of the American Academy of Arts and Sciences, lays it out. In 1975, there were fewer than 400,000 people locked up in the United States. By 2000, that had grown to 2 million, and by this year to nearly 2.5 million. As the social scientist Glenn C. Loury points out, with 5 percent of the world’s population, the United States imprisons 25 percent of all humans behind bars. This effectively created a vibrant shadow economy: American spending on the criminal justice system went from $33 billion in 1980 to $216 billion in 2010 — an increase of 660 percent. Criminal justice is the third largest employer in the country.

The U.S. 11th Circuit Court of Appeals (based in Atlanta; the various judicial Circuit Courts are 1 level below the Supreme Court) just ruled against the individual mandate part of the Obama healthcare act, making the same point I have raised (first bolded section). Since there have been seevral disparate court rulings on the act, this is very likely going to the Supreme Court, but the key constitional issues are well-laid-out here.

From the ruling:

...For these reasons, we conclude that the individual mandate contained in the Act exceeds Congress’s enumerated commerce power. This conclusion is limited in scope. The power that Congress has wielded via the Commerce Clause for the life of this country remains undiminished. Congress may regulate commercial actors. It may forbid certain commercial activity. It may enact hundreds of new laws and federally-funded programs, as it has elected to do in this massive 975-page Act. But what Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.

It cannot be denied that the individual mandate is an unprecedented exercise of congressional power. As the CBO observed, Congress “has never required people to buy any good or service as a condition of lawful residence in the United States.”^{CBO MANDATE MEMO, supra p.115, at 1.} Never before has Congress sought to regulate commerce by compelling non-market participants to enter into commerce so that Congress may regulate them. The statutory language of the mandate is not tied to health care consumption—past, present, or in the future. Rather, the mandate is to buy insurance now and forever. The individual mandate does not wait for market entry.

Because the Commerce Clause is an enumerated power, the Supreme Court’s decisions all emphasize the need for judicially enforceable limitations on its exercise. The individual mandate embodies no such limitations, at least none recognized by extant Commerce Clause doctrine. If an individual’s decision not to purchase an expensive product is subject to the sweeping doctrine of aggregation, then that purchase decision will almost always substantially affect interstate commerce. The government’s five factual elements of “uniqueness,” proposed as constitutional limiting principles, are nowhere to be found in Supreme Court precedent. Rather, they are ad hoc, devoid of constitutional substance, incapable of judicial administration—and, consequently, illusory. The government’s fact based criteria would lead to expansive involvement by the courts in congressional legislation, requiring us to sit in judgment over when the situation is serious enough to justify an economic mandate.

On the "Best government money can buy" front:

Special interests gave millions to budget panel

WASHINGTON (AP) — The 12 lawmakers appointed to a new congressional supercommittee charged with tackling the nation's fiscal problems have received millions in contributions from special interests with a direct stake in potential cuts to federal programs, an Associated Press analysis of federal campaign data has found.

The newly appointed members — six Democrats and six Republicans — have received more than $3 million total during the past five years in donations from political committees with ties to defense contractors, health care providers and labor unions. That money went to their re-election campaigns, according to AP's review.

Supporters say the lawmakers were picked for their integrity and experience with complicated budget matters. But their appointments already have prompted early concerns from campaign-finance watchdog groups, which urged the lawmakers to stop fundraising and resign from leadership positions in political groups.

The congressional committee, created as part of the debt limit and deficit reduction agreement enacted last week, is charged with cutting more than $1 trillion from the budget during the coming decade. If the committee doesn't decide on cuts by late November — or if Congress votes down the committee's recommendations — spending triggers would automatically cut billions of dollars from politically delicate areas like Medicare and the Pentagon.

The lawmakers represent a large swath of political ideology and geography, but they have some things in common: They received more than $1 million overall in contributions from the health care industry and at least $700,000 from defense companies, the AP found. Those two industries, especially, are sensitive to the outcome of the committee's negotiations because the automatic spending cuts could affect them most directly.

And on a lighter note...

Dilbert on what it takes to run a successful hedge fund