Category: economy

Edward Harrison:

Of course the US deficits are too large. Come on: 10% deficits as far as the eye can see are unsustainable over the long-term. The key word, however, is long-term.

No one seems to understand the difference between short-term and long-term and the debate has become an ideological free-for-all.

Anyway, the point is that the US economy will not be able to sustain recovery for long without stimulus. The likely result of withdrawing stimulus is a recession that is deeper than the last one, a major depression.

He seeks to explain:

Policy is exogenous and deficits are endogenous.

What that essentially means is that when I think about government, I view it with suspicion and my inclination is to seek to limit its size and scope. That means I have an innate disaffection for big government, deficit spending, money printing, etc. – but not in an ideological way.  It all depends on the circumstances.

HA! You knew that.

via James Kwak:

“You’ve criticized the government for withdrawing from the economic and particularly financial sphere and allowing private sector actors to do whatever they wanted. Do you think the government should simply act so as to correct the imperfections in free markets? Or do you see a positive role for government in determining what kind of an economy we should have?”

“College works on the factory model, and is in many ways not suited to training entrepreneurs. You put in a student and out comes a scholar.” [link]

The session started off with a film from John De Graaf called, “What’s the Economy for Anyways?” which examined American society under the conclusions of Gifford Pinchot, the first Chief of the U.S. Forest Service who defined the economy as, “The greatest good for the greatest number over the long run.”

Using that metric, the US economy has done a terrible job since 1970.

The US leads the world in GDP but its citizens suffer on nearly every major health and quality of life metric.

The key point here is breaking down the GDP myth.

Matt Taibbi on how greed-is-good conquered America and the simply inevitable folly of brigands:

Even if he stands to make a buck, your average used-car salesman won’t sell some working father a car with wobbly brakes then buy life insurance policies on that customer and his kids.

As  Ayn Rand and Greenspan and foolish minions from Reagan to Bush put it:  ‘How To Buy A Car Without Rules’.

The Wonderful World of American Fraud:

You distract the dumbshits with free-market B.S. because hey, for whatever reason, that’s what the public likes to hear, it doesn’t really matter what lie you feed them so long as it’s the lie that puts them in a trance.

And then behind the scenes, you do the very opposite: You fix the game, you cover up this problem here with those funds there, you move shit around, you skim budgets and you subsidize the system, you cover up the bad shit and once in a while throw a has-been to the wolves to keep the public entertained—that’s the way the system works, and anyone who’s an adult understands that.

What surprised you the most as you researched the history of orange juice?

The degree to which consumers have bought the myths that the industry has created about orange juice.

You say in your book that consumers act like robots when it comes to orange juice. What do you mean?

Orange-juice drinkers are misinformed about what it is they are drinking.

Flavor packs are made from the chemicals of orange essence and oil. Flavor and fragrance houses, the ones that make high end perfumes, break down orange essence and oils into their constituent chemicals and then reassemble the individual chemicals to resemble nothing found in nature. Ethyl butyrate is one of the chemicals found in high concentrations in the flavor packs added to orange juice sold in North American markets, because flavor engineers have discovered that it imparts a fragrance that Americans like, and associate with a freshly squeezed orange.

Right now the formula for fresh orange flavors is just about as secret as the formula for Coke.

My intent was not to get people to stop drinking orange juice but to realize what it is they’re drinking.

The official death toll from the Chernobyl disaster is 4,000, but the true toll could reach tens or even hundreds of thousands. More than 25,000 emergency workers known as “liquidators” from then-Soviet Ukraine, Russia and Belarus have died.

“There are still more than two million people suffering from harmful effects of radiation exposure, of whom 498,000 are children.”

The dead reactor is still a threat because the concrete cover hastily laid over some 200 tonnes of spilled radioactive material is cracking.

John Rogers:

There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.

Immigrants hold one-third of America’s doctorates.

There’s talk of turning suburbs into agricultural centers:

In cities, agriculture might be able to take the place of vacant lots. And in suburbia?

Well, in 2008, the New Urbanism evangelist Andrés Duany, of Duany Plater-Zyberk & Company, architects and town planners, proclaimed that “agriculture is the new golf” a prescient and deliberately provocative claim that is helping frame the conversation about suburbia’s future.

“Only 17 percent of people living in golf-course communities play golf more than once a year.”

Local success is much of what’s missing in our economy. I don’t hang much with tyranny’s preachers, but I do track renovation and re-purposing of regional assets – unused labor and undreamt options in a great new variety of witty vendors.

A story on how we got coal:

It took about 160 years to lay down what is now a 1 ft thick layer of lignite coal; 260 years for a foot of bituminous, and about 490 years for a foot of anthracite. An eight-foot coal seam requires about 2,100 years.

CNNMoney: Although its international businesses netted a $10.8 billion profit and General Electric filed more than 7,000 income tax returns in hundreds of global jurisdictions last year, when push came to shove, the company owed the U.S. government a whopping bill of $0.

Yes. After Getting Bailed Out By American Taxpayers, General Electric Pays ZERO U.S. Taxes, Pretending that All of Its Profits are Overseas

Younger people bellyache about paying for Social Security, but the cost of kindergarten through college is an entitlement too. To pay for the education of the young that provides a lifetime of gains, today’s elderly experienced a net loss:

Using historical data and future projections, Lee and his research team calculated the net value of Social Security, Medicare and public education at all levels – minus taxes – for Americans born from 1850 through 2090.

They found that people ages 38 and younger – including those born 20 years from now – will make net gains in earnings of 4 to 6 percent over their lifetimes.

By contrast, those now aged 63 to 80 will have paid out more in taxes than they will have received in Social Security, Medicare and public education benefits, losing 1 to 2 percent in net earnings over their lifetimes.

Michael Lewis has put good effort into helping us understand why some people were able to see our  financial disaster while most were so blind.

His point is from Tolstoy:

The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of a doubt, what is laid before him.

A Pack of Fools, James Kwak prefers to say, is what was going on behind the scenes on Wall Street.

Free financial markets are supposed to create efficient prices.

Every argument about the benefits of financial markets (optimal allocation of capital, liquidity, etc.) depends on this one point.

But the prices in this market were being set based on the dealers’ own interests. Think about that.

Yes, it’s socialism and welfare. For whom? Do you know their names?

One of the most understated issues in American political discourse is is is surging extraction.

Plutocracy Reborn.

Annual water extraction is about 50% of the flow of our three largest rivers.

Little information is available on supply chain or indirect water use for the production of goods and services in the United States. Carnegie Mellon’s study noticed that it takes:

— 270 gallons of water to produce $1 worth of sugar
— 200 gallons of water to make $1 worth of pet food
— 140 gallons of water to make $1 worth of milk

Residential or domestic water use is 6.4% of total withdrawals. Irrigation, 34% of our total water usage, and power generation account for 90% of direct water withdrawals, the overwhelming majority.

Cornell researcher Robert Howarth calculates that, when methane leakage from hydraulic fracturing is included, along with secondary contributions from forest clearance and water transport are included, the carbon footprint of shale gas is slightly worse than coal.

Feels like rich uncles have moved into our master bedrooms.

ExxonMobile paid $36 billion in taxes last year. None to the USA.

Out of Chevron’s $19 billion paid out for income tax, just $200 million were paid to the USA. With sales of $157 billion, GE arranged an income tax loss of $1.1 billion. BofA took writedowns to show a $2 billion loss on $4.4 billion of taxable income. Hewlett Packard paid the USA $1.75 billion on its $115 billion sales.

Forbes’ Corporate Taxes in Pictures. I wonder if we will ever truly know if our costs to keep these companies is greater than what they provide?

Jonah Lehrer, on commuting:

A person with a one-hour commute has to earn 40 percent more money to be as satisfied with life as someone who walks to the office.

After Reagan’s 80s, public accounting has become an epic disaster !

But what if I was to tell you that I knew of a way to pay for health care, and more, without raising taxes or making any cuts at all?

Recall when Donald Rumsfeld told the world, September 8 2001, that the DOD couldn’t account for $2.3 Trillion?

That is much much more serious than the budget of our Healthcare.

It’s not that DOD flunks audits, it’s that DOD’s books cannot be audited. DOD aspires for the position where it flunks an audit. – Winslow T. Wheeler, Center for Defense Information

Payments that should not have been made, improper payments, were $100 billion in fiscal year 2009 alone.

“They have to cover it up,” he said. “That’s where the corruption comes in. They have to cover up the fact that they can’t do the job.”

As this graph explains our debt on defense, please note the institutions that gain the greater share.

We live in a gangster state, and our days of laughing at other countries are over.

In 1996, the average monthly sewer bill for a family of four in Birmingham was only $14.71. But that was before the likes of Bear Stearns, Lehman Brothers, Goldman Sachs and JP Morgan Chase.

As Matt Taibbi puts it in Rolling Stone, before they turned shit into pork under a blizzard of incomprehensible swaps and refinance schemes.

Hell, the money was so good, JP Morgan at one point even paid Goldman Sachs $3 million just to back the fuck off, so they could have the rubes of Jefferson County to fleece all for themselves.

Four megabanks hold about $7.4 trillion in assets, according to the most recent regulatory filings with the Federal Reserve. That’s grabbing about 52 percent of the nation’s total output last year alone.

Lies and Hypocrisy Alert.

Red states receive more subsidies from the federal government than they pay in taxes. It is the other way around with blue states.

Red States, Blue States and the Distribution of Federal Spending, by Jeffrey Frankel:

The top ten feeders are Republican: New Mexico, Mississippi, Alaska, Louisiana, West Virginia, North Dakota, Alabama, South Dakota, Kentucky and Virginia.

Republican ‘fiscal conservatives’ took the most farm subsidies to Nebraska, Kansas, Iowa, and Texas.

Sarah Palin’s Alaska is number one in per capita federal dole, and by far the most indebted of any state [chart].