The article Estimates Say Fewer Jobs, Larger Deficits If Republicans Were in Charge by Andrew Romano appears on the Newsweek web site. I don’t think Newsweek has a reputation for being a left wing, radical source.

Some key points from the article:

That brings the total Obama deficit to $3.784 trillion over ten years, and its GOP counterpart to — drumroll, please — $4.155 trillion.

In a report out this week, the CBO estimates that between 1.4 and 3.3 million fewer people would be employed right now if the American Reinvestment and Recovery Act had never made it through Congress.

The problem, as economist William G. Gale of the Brookings Institute has noted, is that “of 11 potential stimulus policies the CBO recently examined, an extension of all of the Bush tax cuts ties for lowest bang for the buck.” In fact, he continues, “letting the high-income tax cuts expire and using the money for aid to the states, extensions of unemployment insurance benefits [or] tax credits favoring job creation … would have about three times the impact … as continuing the Bush tax cuts.”

In the video clip from The Daily Show, Aasif Mandvi reports on a Mosque Controversy in Tennessee

Is it time for a wealth tax to help us get the idle resources of the rich back into the economy to stimulate consumer demand and job growth?

There is a very interesting explanation of wealth taxes on WikiPedia.

Of course there are negative aspects as well as positive ones on the idea of a wealth tax.  We do need to be careful about putting too big a burden on the accumulation of wealth.  After all there are some positive aspects for the economy as a whole in promoting some accumulation of wealth. Perhaps wealth under $100 Million ought to be exempt.

As an example of such a tax, before 2007, Florida had an intangibles tax. The Florida Intangible Personal Property tax. was a tax on many types of intangible personal property (such as mutual funds, stocks, and accounts receivable). I must admit that as a retiree with assets that sit in tax deferred accounts and whose tax on income is deferred, such a tax kept me from considering becoming a resident of Florida.  Of course they didn’t have a $100 million exemption, either.  That surely would have covered me and then some.

I came across a few articles about the economy that show the sad state of economic analysis in the media these days.

1. The stimulus is working — just not for you by Bruce Yandle.

   My comments on this article were:

   It all made sense until we got to “Had we wanted to stimulate the entire economy we would have seen tax cuts for all employers and employees, a sure-fire way to put money in the pockets of everybody. So while the sectors that were targeted with trickle-down money have done relatively well, the everyman is still looking for a better day.”

   With corporations sitting on approximately $800 billion in cash that they are not putting to work, why would we think giving them more cash in the form of tax cuts would have had any effect? Well it would have had an effect, it would have taken even more liquidity out of the economy and put it under corporate mattresses.

   Bruce Yandle seems able to criticize someone else’s policy, but he is not able to look at his own policy prescription with the same lack of bias.

   Did Bruce Yandle really expect anything from the bubble bloated construction industry but a decline after the bubble burst?

2. They Go or Obama Goes by Robert Scheer

   A comment on this post made a stronger accusation about companies sitting on cash than I did

3. A Reply to Jonathan Chait on Stimulus by Jim Manzi

   I guess the thing that at first disturbed me most about this piece is that the original link to this item was titled Jim Manzi: The Fatal Flaw in the Case for Stimulus Spending. The item does not live up to this title.

   Another thing that disturbs me is that the analysis of the projects on which the stimulus money was spent doesn’t seem to take into account that these projects were needed and had been previously short-changed by the free market and government underspending. In other words, there was no recognition of the shift from bubble creating spending to necessary spending.

This clip from The Daily Show is described as:

Is Fox News evil, or just plain stupid, to imply that its second-largest shareholder is a terrorist for donating to the so-called “Ground Zero Mosque”? The Daily Show attempts to settle the debate in last night’s episode.

I don’t usually link to articles in The Wall Street Journal, but I will make an exception this time.

The article Preparing for the Next ‘Black Swan’ by Jane J. Kim describes how other investors are adopting the strategy that Nassim Nicholas Taleb uses.

Darn, just as I read about how that strategy is implemented, there will be so many adopters of the strategy that it will no longer work.

In the article, Jane J. Kim does note:

Just because an approach worked last time doesn’t mean it will work in the future. Some of the new products launched in the past two years might not perform well under duress.

It seems rather obvious why this approach will no longer work now that the world has discovered it.  The approach used out of the money options way out on the tail end of the distribution of expected future prices. The reason the strategy could work so well was that these options were badly mispriced because other people badly estimated the probability of the “Black Swan” events.

Now that more people try to take advantage of mispriced options, the price will correct itself to correctly estimate the probability of these unusual events.  Thus the end of the outsized profits that can be made by the strategy.

This is what always happens to investing strategies that are suddenly discovered and are shown to have worked historically.  When everybody finds out about them, they no longer work.

plus ça change, plus c'est la même chose

In Frank Rich’s column he explains how Faux Noise betrayed General Petraeus with their trumped up Manhattan Islamic Cultural Center controversy.

So virulent is the Islamophobic hysteria of the neocon and Fox News right — abetted by the useful idiocy of the Anti-Defamation League, Harry Reid and other cowed Democrats — that it has also rendered Gen. David Petraeus’s last-ditch counterinsurgency strategy for fighting the war inoperative. How do you win Muslim hearts and minds in Kandahar when you are calling Muslims every filthy name in the book in New York?

Paul Krugman explains in his column how the Republicans’ plan gives a $680 billion tax cut to the rich that is not in Obama’s plan.

Making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years.

Only a tiny fraction of small-business owners would receive any tax break at all.

It’s hard to think of a less cost-effective way to help the economy than giving money to people who already have plenty, and aren’t likely to spend a windfall.

If you can listen to Vice President Biden’s address to the Democratic National Committee Summer Meeting with dry eyes, then you just might be a Republican.

To watch the whole speech in one piece you can look at the video on C-SPAN instead of the copy on YouTube.

HHS Sec. Sebelius also made a good speech at the DNC Summer Meeting. A video of her speech is also available from C-SPAN

I felt the following needed more prominent display than in my comment on RichardH’s post Mel Brooks and the bankers.

This comes from the article mentioned in Richard’s post.

In 2005, the white-collar criminologist, economist, and lawyer William Black published a book entitled “The best way to rob a bank is to own one”.

Mr. Black has listed the four main characteristics of fraudulent banks.

• They grow very rapidly;
• They make really bad loans at high yields (because only borrowers who have no intention of paying back will borrow at exorbitant interest);
• They pile up huge debts; and
• They set aside pitifully small loss reserves.