Year: 2010

Yes, the Shrill One Is Shrill

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Paul Krugman compares the justification behind European austerity programs to the infamous French strategy in World War I.

He’s right, of course.

The statements by ECB President Jean-Claude Trichet that austerity in the face of a depression will win through the creation of confidence is much like the infamous Plan XVII envisioned by the French to win the war through the confidence and fighting spirit of the French citizen (élan), as described by Baraba Tuchman in her book The Guns of August:

Entirely offensive in nature, Plan XVII made extensive use of the belief in the mystical élan vital assumed to be instilled within every Frenchman – a fighting spirit capable of turning back any enemy by its sheer power.

Needless to say, Plan XVII was as meaningful an idea as the statement by a British General during the same period of something to the effect of, “A machine gun bullet cannot stop a horse.”

Republicans and Hookers Go Together Like Chocolate and Peanut Butter in a Reese’s

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We have another scandal in the GOP, this one involving embezzlement of Florida State Party funds, and we have now reached the now inevitable hooker stage of the story:

According to a female party official who spoke to investigators, Greer organized a men-only trip to the Bahamas with major donors and “women were involved and paid.” Gov. Charlie Crist, who was on the same trip and hand-picked Greer for the top GOP job in 2007, said today that the charge there were escorts or other paid women involved is “absurdly false.”

You know, if I had been a Republican party operative when I was single, I would have gotten a lot more action.

Hell, the debauchery would have continued after I got married if I had been a ‘Phant operative.

So, Are We Going to Repeat 1937?

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Why this picture does not scare the powers that be defies understanding
H/t Calculated Risk

Well, a quick rundown of this week’s data seems to indicate that if we listen to the austerity fetishists, we are.

In employment, the Thursday unemployment claims data indicates a continued weakening of the employment picture, with initial claims rising 13K to 472K, at least 100K more than what we need to see for meaningful job growth, and both the 4-week moving average and the continuing claims numbers went in the wrong direction too.

Additionally, the official job numbers for June came out, and the non-Farm payroll fell by 125,000, though the drop was because of the US Census winding down its temporary positions.

Private employment rose by an anemic 83,000, and the unemployment rate fell from 9.7% to 9.5%, though the latter was largely from people leaving the rolls because they had given up looking, and the hourly workweek fell.

Additionally, the Institute for Supply Management’s Manufacturing Index fell from 59.7 to 56.2, a 6-month low, though any number over 50 still shows expansion, and the Chicago Purchasing Managers’ index fell slightly as well.

Also, in yet another indication that the economy is running out of steam because the stimulus is running out, small business lending from the SBA has cratered following the expiration of its bonus program to lending banks.

Of course, the inflation hysterics hawks are saying that the bond markets are mad as hell, and that they are not going to take it any more, but if this were true, mortgage rates would not have fallen to their lowest rates in 50 years.

I would note that we are seeing the same thing in real estate, with 31% of all home sales being foreclosure or short sales, up from 1% at the height of the bubble, and these foreclosures are selling for a 27% discount relative to regular sales, which indicates that a recovery, either in price or in volume is still far away.

A Marxist Analysis of the Financial Meltdown

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It’s kind of like watching a dinosaur walking down main street

There is some things here that are right, and some that are wrong, and the hard part is determining which is which, but the white-board cartoons make it entertaining. (11:10)

To be true, I’m not sure just how “Marxist” the lecturer, David Harvey is.

I really don’t know him, and this lecture really sounds a bit more Fabian Socialist than full blown Marxist, but in any case it is a new way to look at what happened, and heterodoxy is what is needed here.

H/t Felix Salmon.

A Contemptible Excuse for an Educator…

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And a contemptible excuse for a human being.

And no, I am not referring to DC schools chief Michelle Rhee, who by all indications subscribes to a similar policy, but rather New York City schools Chancellor Joel Klein, because all he thinks that all that has to happen to fix schools is to make teacher’s jobs crappier:

Klein told Frederick Hess of the American Enterprise Institute last week that the D.C. contract is marvelous and in fact ground-breaking. ‘This deal slayed The three dragons. Seniority. Lockstep pay. Tenure. It got them all.’

(emphasis mine)

I understand that management does not like labor unions, and does not like the protections that union contracts afford to workers.

So I can understand how an administrator might see a weakening or destruction of a labor union as a step on the road to school improvement, or at least a step on the road to making his job easier.

That being said, what Mr. Klein is saying here is that crappifying the teacher’s working conditions is The Only Thing that is required to fix schools. That is what he is saying when he talks about the three dragons.

School reformers view education like investment bankers, and other chief executives, view their jobs: They have no obligation to work for the stake-holders, children and teachers for schools and the shareholders and employees for businesses, they simply have to work for their own personal benefit.

It’s not about education, it’s about making things more convenient for administrators, you see.

I can’t speak to whether or not Michelle Rhee holds the same opinions as her one time mentor Joel Klein,since she hasn’t explicitly stated that she holds this view, as Klein clearly has.

My guess is that she holds these views, particularly since she went out of her way to ensure that millions in private funding for the DC schools was dependent her continued employment as the Chancellor. (Scroll down past the snark about her fiancee.)

This is why, when I hear people like Rhee and Klein talk about accountability, or when I hear someone like Secretary of Education Arne Duncan sing the praises of charter schools (which, by the way don’t outperform public schools), I roll my eyes.

The culture of American management for the past 30 years or so has been to maximize personal gain at the expense of both the enterprise the society as a whole, and I guess that this is just a reflection of this warped value system.

While it is a revolting and reprehensible development as a nation-wide trend, it’s just plain evil when our children, and their ability to become thoughtful citizens to the alter of executive expedience.

Angela Merkel is Lucky That

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The bar for worst German leader ever is so high.

In the latest episode of this show, Ms. Merkel screwed the pooch on a political beauty pageant:

Chancellor Angela Merkel licked her wounds Thursday after rebels in her coalition turned a straightforward presidential election into a humiliating debacle that made her look weaker than ever.

In theory, Merkel’s coalition had more than enough votes in an assembly of lawmakers and public figures to secure comfortably on Wednesday an election of the conservative Christian Wulff to the largely ceremonial job of head of state.

She may have a future as a reverse barometer in her next job.

Economic Datapoint of the Day

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Iceland’s falling GDP


Iceland’s low unemployment

Matthew Yglesias, as an afterthought in a post highlighting one of the truly trippiest campaign videos ever, notes that despite Iceland’s plummeting GDP, unemployment remains relatively mild compared to the other European* red-headed step children.

The difference is, of course, the fact that Iceland is not a part of the Euro zone, and as such is not locked into a monetary union with the Germans who continue to pursue an export driven beggar-thy-neighbor policy with a zeal that approaches that of the Chinese.

The real question about the Euro has always been whether it would survive bad times, but perhaps the question should be whether or not the Euro made sense in the 1st place.

*Yes, I know, Iceland is an island, and not a part of Europe proper, but the same could be said for Cyprus, and Iceland is even more tightly tied to western Europe.

Congressional Dems Opt for No Guts And No Glory

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Congressional Democrats have just caved to Republicans on a tax to make banks pay for their next bailout:

Democrats on Tuesday planned to strip out a controversial tax from their landmark financial reform bill in order to win the swing votes needed to pass it through Congress.

With crucial Republican moderates threatening to withdraw their support, Democrats were weighing alternative ways to fund the most sweeping rewrite of the Wall Street rulebook since the 1930s.

Though a supposedly final version of the bill had been hammered out last week, Democrats in charge of the process called a fresh negotiating session, which got under way shortly after 5 p.m. EDT Tuesday.

Democratic lawmakers and aides said they planned to remove a $17.9 billion tax on large financial institutions. Instead, they would cover most of the bill’s costs by shutting down a $700 billion bank-bailout program.

Except, of course, that the next time that a big bank needs a bailout, they would get one.

Why Dems aren’t using ‘Phants coziness with the banks as a club with which to hit them is beyond me, except, of course, for the fact that President Hopey-Changey wants to have something on his desk soon, even if it sucks wet farts from dead pigeons.

Once again, keep Obama away from toilet paper, because he will sign anything.

Economics Update

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This may be the harbinger of an economic recovery


This is not a boating accident real estate recovery!

The The Chicago Fed National Activity Index [CFNAI] has risen to its highest level since March 2006 (see top pic) indicating that there might be some sort of recovery going on.

This is further reinforced by the fact that personal income, spending and savings all rose in May.

Of course on the other side the Conference Board’s Consumer Confidence index fell nearly 10 points between May and June, and first time home-buyer traffic has fallen off a cliff, indicating that the recent bump in home sales was, as the experts* noted, was merely a sale-price time shift, not a real recovery.

*And loudmouth blowhards like yours truly.