Wednesday, August 4, 2010

SAR #10216

When is it too late to change your mind?

Dead on Arrival:  Robert Shiller suggests the government should simply hire workers directly for public services, much as it did during the Great Depression.  For what it costs to keep the war in Afghanistan going we could put a million people to work here at home at $30,000 a year.  Try getting that past the GOPers.

Get Me Rewrite!   "All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside."   These first 28 words of the 14th Amendment have suddenly become anathema to the highest levels of Republican politics.   Mitch McConnell says “everyone” is concerned about birthright citizenship – lord knows I am.   After all, all Mitch had to do to become a citizen was to be born here, and look how that's worked out.

Mein Kampf:   How Monsanto (and Arthur Anderson) made the world safe for GM crops.  Or, lies, damned lies, bribery and coercion.  Bedtime reading.

Catch Me If You Can:  Some say there should be a limit – say $10 billion – to the liability of those who would drill holes in the bottom of the sea, because it is impossible to get unlimited liability insurance.  Besides it would prevent a lot of drilling, thus preventing a lot of jobs.  (And lots and lots of profit, which is the real point.)  The new defense is not “I'm not responsible”, it's “I can't afford to be responsible.”  Which explains why there is so much pollution, everywhere.

Viva La Difference:  On August 31 st US combat units will be renamed “Advise and Assist Brigades” instead of Combat Brigades. Presto, chango, no more US combat units in Iraq - just fully trained and armed infantry troops who are doing things that might look like combat to the unindoctrinated uninitiated.

Suggestion Box:  The Fed is seeking ways to support the housing market – now that Fannie and Freddie have been reduced to walking dead.  Using the proceeds from maturing MBS to buy new mortgages or to subsidize re-financing underwater mortgages have been suggested.  Please send in your suggestions – apparently they don't have to pass the laugh test.

Lies, Damned Lies and Electric Vehicles: Another story in the financial press today alleges that electric cars represent clean energy.  They do not, they simply take the CO2 emissions from the tailpipe and put them in a smokestack.  The free lunch will be delayed.

Grim Fairy Tale:   Old GOP'ers David Stockton and Greg Mankiw say it is time for the GOP to give up the “depressingly widespread” belief that cutting taxes increases revenue, claiming that those who believe this fiction are “charlatans and cranks.”  Now that Obama wants to do away with the Bush tax cuts for the rich the GOP will have to argue that the rich are somehow worthy of lower taxes than the middle class - as if that would bother them.  Stockman says:  If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing.

Facile Bullshit: Some guy on CNBC was claiming that “deflation is a very positive thing” for the working man. It is, he claimed, just like getting a raise.   Right.  In deflation real prices drop, companies can't invest (who would lend them money when the value of assets is falling?), the burden of debts – credit card and mortgage alike – becomes ever more onerous.  In a debt-based economy, deflation is the kiss of death – not “a very positive thing.”

Seed Corn:   About a trillion dollars has disappeared from money market funds and not shown up in other investment media.  Where'd it go?  Maybe it just went to ordinary folks, paying their bills with money they had set aside for a rainy day.  Don't look now, but it's been raining.

Depression:  If you think that customers are pessimistic, go talk to some small business owners – they see ever lower spending and ever lower employment ahead.  Private construction spending has fallen sharply.  How much did the market go up today?


Anonymous said...

Electric vehicles run on electrons. While you are quite correct that burning coal is our principal source of electrons in the U.S. today, as wind and solar power come on line they can also be used to run electric vehicles. An electric vehicle (a car, a subway car, an electrically powered railroad car) that uses coal power today could use wind power at some time during its useful life cycle. So I think you are taking a bit too hard a line.

Charles Kingsley Michaelson, III said...

Anony 8.19 - Yeah, so does First Reader (a Prius owner anxious to electrify). But "as wind and solar come on line..." Show me the money. Yes, at some future date we could get a tad more electricity from non fossil fuel sources: but that is "at some future date" and another 'could'.

The problem is co2 emissions and the problem is now. What could happen in some future decade is of absolutely no relevance unless we sharply curtail emissions today.

And we ain't gonna do that, not with $42,000 electric vehicles.

The real difficulty is that we think the solution to cars is cars of a slightly different flavor. The big growth of cars is in China which gets about 99.9% of its electricity from very dirty coal-fired plants.

So, yes, I think we're looking for love in all the wrong places.


Anonymous said...

What do you mean, powering a 3,500 pound vehicle is not an efficient way to organize personal mobility? Who could have known?

ibilln said...

On EV's: Ev's -can- use 50% less CO2/mi than internal combustion engines. If the electricity is generated by coal, the CO2 production is roughly even, and coal generates about half of US electricity. Efficiency drops with length and condition of the power grid. Bottom line: On average there is -some- non-trivial CO2 savings with EV's, but it's not dramatic (

Now, if everyone gets a windmill and solar pannels...

OkieLawyer said...

Re: Facile BS

The commentator on CNBC was talking to the wealthy people who watch the program during the day and make money from passive income. Deflation helps those who have lots of disposable wealth to spend (or invest). I saw a comment from London Banker on Sudden Debt a few months back saying that inflation hurts the poor the most. By the time I saw the comment, it was effectively too late for me to respond. But this is actually a corollary to the argument (read: lie) that deflation helps the poor.

If you follow the economic schools, you will notice that the Libertarian ones (Austrian, Chicago) both argue for asset deflation and against wage inflation. Look at it this way: cui bono (who benefits)? People who have lots of available cash (the wealthy) benefit the most from asset and wage deflation. One allows them to buy more assets (each dollar has more buying power) and the rentiers are also able to purchase more labor (or increase the profit from each unit of labor).

I know you already know this, but just wanted to flush it out for some of your readers who may not have thought about it this way.

Charles Kingsley Michaelson, III said...

OkieLawyer - Thanks, I appreciate you giving the class a leg up. i try to get them to do the homework but this is a non-credit course...


Anonymous said...

Love your blog but have to disagree with you on Deflation- it is a good thing. Prices on goods and services lower.. means the overall standard of living improves for people with stagnant wages and Govt. can Not tax it. All Good things.. As for loss of job.. that's an tired one.. Businesses fire people in large numbers in good times and bad. When the economy is bad, its called 'downsizing'.. in good times, its called 'restructuring'. The point is that its done no matter what, so why not allow the little guy to have a chance to buy more with his $$ or have extra $$ to pay debt or save. It all comes down to this.. if you believe the investor is the most important entity in the world like 99.9% of economic minded people sheepishly believe, then yes, deflation is 'bad'. If you believe the most important entity is the individual, specifically yourself, then deflation is needed.

OkieLawyer said...

Anonymous apparently doesn't understand the Pareto principle. Also known as the law of scarcity.

And, what's worse, is that in America today, the top 20% wealthiest people have 93% of all financial assets (read: money). This is far outside the expected Pareto distribution and deflation benefits them disproportionately.

Inflation is what allows debtors (read: almost all of the rest of Americans) to pay back their debts with cheaper dollars. Those who are owed money want less of it as it destroys their margins (or wipes it out).

The people who have the hardest time understanding this concept are Libertarian / Conservative ideologues or people whose salary is dependent on not understanding it. You know, people who usually like to comment Anonymously on blogs.

Charles Kingsley Michaelson, III said...

About those Advise and Assist troops - do they still get combat pay?