Daily Archives: August 19, 2011

Bernie Sanders – We need a bold program for job creation

Here is the video of MSNBC – Ed Show – GOP Criticizes Obama on jobs, having created none  interviewing Sen Bernie Sanders.

You can contribute to Senator Sanders on his web site.

I agree with everything Sanders says about infrastructure and the need for a bold plan.

Where he loses me is when he goes off on free trade. With regard to all the jobs outsourced from this country, I am afraid the horse is out of the barn on that one. I cannot imagine a sensible piece of legislation that would bring back jobs from other countries that are being done very well by workers who work for less than American workers.

Unless the balance of incentives in this country are changed to favor manufacturing over financial manipulation, even work for which we would be competitive will not be done here.

The effort to improve our competitive situation will not be changed greatly by tinkering with free trade agreements.

The problem lies in our tax structure. We shouldn’t have a tax system that makes it far easier to make huge profits in financial games rather than in useful lines of endeavor such as manufacturing, engineering, and infrastructure repair.

Our income tax gives highly favorable treatment to unproductive financial manipulations. Not only should this favorable treatment of these activities not be rewarded by treating hedge fund ordinary income as capital gains, but the tax code should be changed to put a little friction in the rapid trading of financial instruments such as stocks and possibly other items such as futures, derivatives, and other fancy financial instruments.

The Tea Party’s Modest Proposal

Here is one by Simon Johnson, The Tea Party’s Modest Proposal.

The irony of the Tea Party revolt, of course, is that it undermines the private sector more than it reins in “big government.” The S&P downgrade resulted in a “flight to quality,” meaning that investors bought US government debt – thus increasing its price and lowering the rate that the federal government pays to borrow.

It was the value of the stock market that fell sharply – which makes sense, given that counter-cyclical policy is now severely constrained. The government part of the credit system has been strengthened, relatively speaking, by developments over the past few months. It is the private sector – where investment and entrepreneurial activity are needed to generate growth and employment – that has taken a beating.

Unless and until America’s private sector recovers, investment and job creation will continue to stagnate. But today’s atmosphere of fear and aggressive budget tactics are combining to undermine private-sector confidence and spending power.

As Jonathan Swift put it in 1727, “Party is the madness of many, for the gain of the few.”

I highlight the above paragraphs partly because it expands on something that I have noted.  The Republican politicians, the Tea Party, and Financial talking heads on “news” shows  may not believe in Keynesian economics.  Maybe not consciously, but viscerally, the market does seem to believe in Keynesian economics.  The market sees the government austerity coming.  They know this will lead to a second dip recession, and they want out of stocks and into safe US Government bonds in a big way.

Scars Left by ‘Great Recession’ Will Be Hard to Erase

Scars Left by ‘Great Recession’ Will Be Hard to Erase on Yahooo!  Am I repeating myself often enough?  See the video below.

An excerpt from the article:

But there is hope, says Peck. There are things that can be done to erase these permanent stains and turn the economy around by putting people back to work: invest in infrastructure that is crumbling anyway, and create a Manhattan type project to create breakthrough innovation that will make the U.S. more globally competitive.

Unfortunately, these two ideas likely fall on deaf ears because it seems the current U.S. Congress is more prone to playing visceral partisan politics vs. working towards the good of the American people

Well, not really all of Congress. Just the Republican minority is bent on ruining the country for political and their own economic gain.

A Success Story as Big as Texas? Actually, That’s a Myth

A Success Story as Big as Texas? Actually, That’s a Myth from  Paul Krugman.

Of course, Texas has faster job growth than the rest of the country; it always does [because of immigration – added by ssg:]. The question is whether relative to that trend the state has done remarkably well. And it hasn’t: the unemployment rate in Texas is slightly higher than the rate in New York.

Krugman bases his analysis on three economic models.  I like the use of models.  Building electronic simulation models is how I made a career.

The President’s Bold Jobs Bill (Maybe)

The President’s Bold Jobs Bill (Maybe), yet another good one from Robert Reich. Of his ten suggestions, here are three I particularly like:

3. Create an infrastructure bank authorized to borrow $300 billion a year to repair and upgrade the nation’s roads, bridges, ports, airports, school buildings, and water and sewer systems.

4. Amend bankruptcy laws to allow distressed homeowners to declare bankruptcy on their primary residence, so they can reorganize their mortgage loans.

5. Allow distressed homeowners to sell a portion of their mortgages to the FHA, which would take a proportionate share of any upside gains when the homes are sold.

These article are  like Lay’s Potato Chips, I can’t choose just one.


How Austerity Is Ushering in a Global Recession

How Austerity Is Ushering in a Global Recession is another one from Robert Reich.

But chalk up a big part of Europe’s slowdown to the politics and economics of austerity. Europe – including Britain – have turned John Maynard Keynes on his head. They’ve been cutting public spending just when they should be spending more to counteract slowing private spending.

The United States has been moving in the same bizarre direction. Cutbacks by state and local governments have all but negated the federal government’s original stimulus, and no one in Washington is talking seriously about a second. The pitiful showdown over increasing the debt limit has produced the opposite: a Rube-Goldberg-like process for capping spending rather than increasing it, and a public that’s being sold the Republican lie that less government spending means more jobs.

It is getting to the point that it is  hard to choose just one article like this to post. Unfortunately, these types of articles can’t be written fast enough to counter the propaganda that makes people think they just know from common sense that cutting government spending is the solution to a lack of private spending in the economy. This kind of common sense is how stampedes are built.

This collapse is not just the pricking of a bubble, it is a bubble in reverse.  It is like a sealed, empty can that is suddenly cooled down.  It sucks itself in until it is crushed.