Monthly Archives: July 2011

The Centrist Cop-Out

In The Centrist Cop-Out, Paul Krugman ends with:

But making nebulous calls for centrism, like writing news reports that always place equal blame on both parties, is a big cop-out — a cop-out that only encourages more bad behavior. The problem with American politics right now is Republican extremism, and if you’re not willing to say that, you’re helping make that problem worse.

I am quite willing to say that and have been saying it for quite a while.

A tip of the hat to MardyS for posting this article on his facebook wall.

How To Get Rich With Risk Mismanagement

I am now reading the book Proofiness: The Dark Arts of Mathematical Deception by Charles Seife. It mines similar ground to the book Bad Science: Quacks, Hacks, and Big Pharma Flacks that I have previously written about.  I can see that this book is going to be a goldmine of examples that is  different from the  goldmine of examples in the other book.

The nugget I just came across was in reading the Risky Business chapter.

Every few years, tremendous cases of risk mismanagement extract money from average citizens and put it into the hands of the wealthy. Whether it’s the savings and loan scandal or Enron or the subprime mortgage crisis, the end is always the same. The people who are willing to lie about risks make themselves very rich, and the taxpayer suffers the consequences.  Even if one or two of the malefactors  wind up in jail, there are always many more who make themselves much better off at others’ expense and never suffered any serious consequences.

In fact this chapter is almost a handbook on how to get rich with risk mismanagement.  Having read this might make me a better investor, more able to recognize risk mismanagement when I see it.  I urge every honest person to read this chapter and every dishonest person to stay away from it.

Wouldn’t it be paradise if this knowledge also made our government regulations more cognizant of this repeated pattern?  Unlikely however, as the risk mismanagers have financial control of our politics where the laws to control this would have to be made.

Pelosi: Boehner’s Plan Is A Jobs Killer

Finally someone on the Democrat’s side use the key words. The Republican’s plan is a jobs killer. I have been trumpeting the idea all over this blog for weeks if not months that the jobs killer is the failure to get rid of the Bush tax cuts for the wealthy. Pelosi doesn’t say it in quite that way, but she’s close enough for starters.

Considering how much air time Mitch McConnell (minority leader in the Senate) gets, I wonder why we haven’t been hearing more from Nancy Pelosi (minority leader in the House) all along. From the time she was Speaker Of The House, it has been apparent that she is the only one in a leadership position on the Democratic side that has the guts to say what needs to be said.

The Money Melodrama in Washington

The article, The Money Melodrama in Washington, by Richard Reeves starts with the following premise:

Stating the obvious: Politicians know politics; that’s their business. Business is not their business, and any discussion about American presidents and economics has to begin with this discouraging word: American politicians, with a very small number of exceptions, don’t know anything about economics.

That is also one of the main contentions of my political blog here.

I think Reeves makes a common mistake in the following sentence:

In Washington, during the deficit debates for the past few weeks, politicians are guessing—as I think most economists and pundits are—and they seize on almost any deficit idea that sounds good at the time.

Politicians are guessing which is the right direction to go, cuts or tax increases for the wealthy.  I think most economists are guessing about a different matter.  They are guessing the size of the debacle when the politicians choose the well known wrong road.  Only diehard economists like the ones at the Chicago School of Economics dispute the fact that cutting spending and continuing the massive shift of wealth distribution to the wealthy is the road to ruin.

Unfortunately, President Barack Obama in the typical politician’s lack of knowledge of economics does not know how far out of the mainstream are his economics advisers from the Chicago School of Economics.  That is why Obama and the Right Wing are competing for setting the goal of how far down the wrong road we should go.

“Congressman Peter King Is An Asshole” Keith Olbermann

According to the above video, Congressman Peter King is getting people of his own kind, as he might classify them, killed in Norway, but that isn’t going to stop him. We wonder how Al-Qaida and the Taliban can kill their own people and consider it to their political advantage. The right wing nutters seem to have picked up another stupid tactic from the people we supposedly oppose.

More Proof That the Republicans Aren’t Serious About Fiscal Discipline

I got a kick out of the short piece in U.S. News & World Report by Brad Bannon, More Proof That the Republicans Aren’t Serious About Fiscal Discipline. Brad avoids any sugar coating with statements like the following:

Three weeks ago, GOP Speaker John Boehner walked away from the president’s proposal to reduce the deficit by more than $4 trillion. To be fair to the lame duck speaker, Boehner actually accepted the president’s compromise offer before he rejected it. But when the speaker ran back down Pennsylvania Avenue with his tail between his legs after his White House meeting, his boss Rep. Eric Cantor read him the Riot Act and the speaker backed down before the Tea Party caucus backed over him.

Bill Maher ‘terribly disappointed’ with Obama

In the above video clip, Bill Maher expresses his disappointment. At about 3 minutes and 45 seconds into the clip he complains about how Obama negotiates and argues his points Never arguing the Democratic Agenda.

Compare Obama’s methods to those of Franklin D. Roosevelt as shown in my two previous posts An Adult Conversation and Franklin Roosevelt – Second Bill of Rights. FDR demonstrates for the current President and for us all how to figuratively stand up for one’s principles. It is amazing that a President with polio who could not actually stand without braces has to show a basketball playing President how to stand up.

Misunderstanding The Nation’s Debt

McClatchy has published an article, Debt-limit friction a bad omen for tackling bigger crisis, which purports to explain the difference between internal and external debt and how that measures the seriousness of the current problem.

The article uses the following histogram to make some point. I am sure you are going to hear more about this chart in the coming days, so I thought I would give you a chance to try to figure out if there is any substantive meaning in it.

This graph raises more questions than it answers.  The graph is used by Alex Brill, an economist with the American Enterprise Institute, a conservative research center in Washington, which puts the whole thing into question right there. American Enterprise Institute, indeed.  The article also quotes Christopher Frenze, a former staff director of the American Action Forum, a conservative policy institute in Washington.

Greece, Italy, and Portugal are all countries that are considered to be on the verge of huge problems because of their debt.  They all have a debt as a percentage of GDP that is larger than the US.  However, Ireland and Spain are frequently lumped in with Greece, Italy, and Portugal as having problems, yet Ireland and Spain have lower debt to GDP ratios than the US.

Moreover, Japan, which is known to have very little external debt seems to have the largest ratio of external debt to GDP.  I looked up The Economy of Japan in Wikipedia.

For 2010 Wikipedia says Japan has GDP of $5.458 trillion, gross external debt of $2.2146 trillion and public debt of 225.8% of GDP.

So this works out to a gross external debt of 41.1% of GDP and a public debt of $12.324 trillion.  None of these numbers remotely correspond to anything in the chart used by McClatchy.

On second thought, the public debt of 225% from Wikipedia is in the ballpark of the 185% in the chart. Perhaps what OECD is calling external debt is what Wikipedia calls public debt. Perhaps this shows that no matter what you call it, the measure used in this article is not relevant as a measure of the seriousness of an economy’s immediate problems.

In analyzing private companies there is something known as the Quick Ratio. Investopedia provides the following definition:

Quick Ratio
An indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the better the position of the company.

The quick ratio is calculated as:

Quick Ratio

Also known as the “acid-test ratio” or the “quick assets ratio”

Perhaps we need a measure such as this to look at the country’s financial situation.

Speaker Boehner Is A Disgrace

On Truth Out the real title is Speaker Boehner’s Disgrace.

Here are a couple of paragraphs from the OpEd written by Robert Borosage, Campaign for America’s Future.

The President, Boehner said “can’t take ‘yes’ for an answer.” This risible comment from the leader of Republicans who have said no to the wrong-headed offer of $2.7 trillion in cuts in discretionary spending over 10 years (which will cut spending on education, the environment, food safety, affordable housing, cops on the beat and much more), plus a promise to set up a committee with extraordinary power to push cuts in Social Security, Medicare and Medicaid in exchange for LOWERING top tax rates and closing loopholes.

Boehner rejects what can only be termed an abject and unacceptable surrender by Senate Majority Leader Harry Reid because Republicans want only a six month extension of the debt limit, so they can play this game again prior to the 2012 election, and they oppose any consideration of increased tax revenues.

The most striking aspect of this “negotiation” is how far removed both sides are from the position of the vast majority of Americans. Poll after poll makes clear, Americans in overwhelming numbers want Social Security and Medicare and Medicaid protected from cuts. Most Americans support raising taxes on the rich, on the big corporations, ending big oil subsidies, lifting the cap on payroll taxes for Social Security, taxing big banks for the mess they created. Americans want jobs and growth.

We need to build an independent movement to represent this majority against the money politics and ideological blinders that are crippling Washington.