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), 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 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.

From The Boston Globe I learned that Elizabeth Warren forms Senate exploratory committee.

She has a web site where you can sign up and you can contribute as I have.

I take it that you know what to do from here.

I found the images below on her Facebook page.

You can watch the interview in the video below.

Economist Nouriel Roubini says the risk of a global recession is greater than 50 percent, and the next two to three months will reveal the economy’s direction. In an interview with WSJ’s Simon Constable, Roubini also says he’s putting his money in cash. “This is not the time to be in risky assets,” he says.

If you have a hard time understanding Roubini’s accent and low pitched voice, you may want to read the article, Nouriel ‘Dr. Doom’ Roubini: ‘Karl Marx Was Right’. (Of course that headline is enough to drive the tea partiers right out of their gourd without them even listening to what Roubini said.)

Companies, Roubini said, are motivated to minimize costs, to save and stockpile cash, but this leads to less money in the hands of employees, which means they have less money to spend and flow back to companies.

Now, in the current financial crisis, consumers, in addition to having less money to spend due to the above, are also motivated to minimize costs, to save and stockpile cash, magnifying the effect of less money flowing back to companies.

The (paradox)² is that if everyone followed Roubini’s solution of going to cash, we would have the self-destruction of capitalism that Roubini describes as a paradox. Rather than call it (paradox)² it might be better termed self-reflexive paradox à la George Soros.

Now that you have seen the play, you can read the script yourself at Is Capitalism Doomed?. This is a link to Nouriel Roubini’s blog post which he just about recited in the video interview above.

I picked out to post here just a couple of paragraphs from the article The Biggest Little Hypocrite in Texas.

The price of oil rose from $25 a barrel when Lt. Gov. Perry replaced the newly elected President Bush to $147 in 2008 and has stayed at more than $80 a barrel since, to the dismay of anyone who has to buy gasoline.
…
From the first days of statehood in 1845, Texas has maintained the strictest laws on home mortgages in the nation. The Texas constitution’s blanket ban on home equity loans, born of outrage over previous land grabs by banks, has been eased substantially over the years, but a firm commitment that the total amount in loans on a house not exceed 80 percent of appraised value, and other consumer-friendly restrictions on mortgage lenders, saved Texas from the home mortgage disaster visited upon many other states.

Of course a few facts won’t stop the American electorate from being fooled again, this time by George W. Bush’s successor as Governor of Texas.  It’s a good thing Bush mangled the old saw about being fooled twice, lest people be able to apply it to Governors from Texas.  I heard that Perry is just like George W. Bush, but without Bush’s intelligence and ethics.

To get a clearer picture of what privatization is all about, watch the video below.

I had to listen real closely to hear who the interviewee was talking about when at about 8:01 into the video he said that “… wasn’t stupid. He had ideas about liquidation, liquidation, liquidation…” He was talking about Andrew Mellon, the Treasury secretary from 1921 to 1932. Mellon thought that liquidation was the solution to the depression.

For those of you hungering for news about Elizabeth Warren, there is With ‘listening tour,’ Warren tests waters for a Senate run in The Boston Globe.

Will she be another Martha Coakley?

Those in attendance at a Dorchester home Monday night said she sprinkled her answers with punchy words about her time in Washington, where she fought for legislation creating a consumer protection bureau for President Obama in the aftermath of the banking crisis.

“She either wanted to get the bill as it was written or she wanted to leave with no bill but with ‘blood and teeth on the floor,’ ’’ said Joyce Linehan, a Dorchester activist who hosted the event at her home, where about 60 people shared Italian sandwiches and beer. “And for some reason, my friends have glommed onto that one [line] like no other.’’

As I said before, she’d better be careful to not be too rough on Senator Brown.  He’ll bring out that Jackie Cooper look and whine about how mean a grandmother Elizabeth Warren is.  (Or some kind of mother word for sure)

A very interesting OpEd piece, Brown’s account lacks accounting, by Scott Lehigh appears in The Boston Globe today.

Lehigh starts off with some quotes from Senator Brown.

“In 2001 to ’02, the bursting of the technology bubble hit the Massachusetts economy hard,’’ Brown wrote. “Our unemployment rate was growing faster than any other state in the country, and we faced a fiscal crisis that many experts said was the worst since World War II. The projected deficit for 2003 was nearly $3 billion.’’

And how did Massachusetts solve its problems? “[I]nstead of raising taxes . . . we tightened our belts and balanced the books by cutting spending,’’ Brown maintained. “It wasn’t easy, but . . . we turned our deficit into a surplus and the economy and jobs started coming back.’’

I’ll quote some of the analysis that Lehigh provides.

In fact, in 2002, the Legislature passed a revenue package worth about $1.1 billon – tax increases that took effect on Jan. 1, 2003. That was part of a balanced approach that saw the state reduce spending, raise taxes, and tap rainy day reserves, notes Michael Widmer, president of the Massachusetts Taxpayers Foundation.

…

Under Romney, the state hiked fees for permits and licenses and closed corporate loopholes to raise hundreds of millions in new revenues.

Those fees and loophole closings (closings that businesses certainly viewed as tax hikes) brought in more than $600 million. Include other one-time dollars, and the state used about $800 million in additional revenue to close the budget gap, Widmer says. Add in the fact that the budget problem turned out to be a third smaller than the preliminary projection of $3 billion, and the truth is clear: New revenues were a substantial part of the solution.

This appears to be another case of politicians spouting off about how the government in their own state works when in fact they have no clue.  See the other case in the post Texas Gov. Perry Got His Keynes On

The headline above is inspired by the text in the article whose actual headline is Texas and the government are chummier than you’d think. The article explains the meaning of the following histogram.

“Turns out Texas was the state that depended the most on those very stimulus funds to plug nearly 97% of its shortfall for fiscal 2010, according to the National Conference of State Legislatures.”

If Governor Perry doesn’t even understand how the Texas government works, then how is he going to make the federal government work?  In Texas the form of government makes for a weak governor.  Somebody else must be running the government.  Maybe that is why Governor Perry has about as much of a clue as Governor George W. Bush did.

As they say, you can look it up. Here is a paragraph from the University of Texas’ web page on Texas Politics – The Executive Branch.

The main source of the relative weakness of the Texas Governor can be found in the historical conditions surrounding the Texas Constitution of 1876. Mindful of the experience of Reconstruction – the period after the Civil War when Republican governors wielded extensive executive powers and were resisted by conservative elites in the state – the authors of the new constitution sought to rein in future governors. They did so by dispersing power that might otherwise be lodged in the chief executive’s hands among a vast array of independently elected officials. Broad powers over the legal system, state budget and finances, education, transportation, agriculture, public utilities, and land development are delegated to officials who need not share the policies nor even be of the same political party as the governor.

I have another post, Massachusetts Senator Brown’s Account Lacks Accounting, that shows we in Massachusetts have our own politicians who have no clue as to how their state works, but still want to apply their imaginary understanding to the federal government.

Here is a little video just to prove that not all Texas politicians are idiots.