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Away (from blogging — the writing, not the reading) and the economy, and especially the stock markets, continues in free fall.

Everyone is on edge, if not downright frantic, because if you’re too young to be that concerned about your retirement account and pension, you very well might be looking over your shoulder for economy-related pink slips.

The presidential campaign continues its free fall, from idealism and straight talk to Republican distortions and lies, and increasingly strident (and quite rapid, altogether a nice improvement over the “gentlemanly” Kerry debacle) Democratic responses.

And chanting relentlessly about Bill Ayers to mad-dog mobs (did Sarah Palin bring out every last one of this country’s rednecks?) while 401Ks keep decaying and mortgages keep resetting  is making ordinary, moderate people downright angry.

Fiddling while Rome burns, indeed.

My approach to the meltdown? I just don’t look at my funds.

If you’re not spending it tomorrow, why make yourself crazy? If you live long enough, you’ll see the markets come back. And I’m not retiring until my 90th birthday.

Of course those now living off of their pensions and especially their IRAs and 401Ks have a right to be furious with the criminal class of plutocrats running (yeah, and ruining) this country’s biggest financial institutions. And the Republican politicians who made the world safe for their crimes.

I can imagine some really juicy show trials come January.

Meanwhile, I’m reading lots of good stuff, enough so that this past week I find myself rather tongue-tied as a result.

So, rather than fight to get the words out, here’s a laundry list of worthwhile reading.

Jason Buckley at Washington Interns Gone Bad is one progressive political site I check out frequently, either through the good offices of BlogExplosion.com, or better yet, through our blogroll.

A favorite read (also on our blogroll) is Len at First Door on the Left, who seems to find the good stuff first, and apparently has access to the mother lode of political cartooning.

The 12 Angry Men Blog had the most concise rundown of the contents of the ” $700 Billion Wall Street Bailout” (and I saw a funny [rueful] comment somewhere tonight that for Wall St. billionaires it’s a bailout; proposals that would pay off mortgages of average citizens is socialism); another site I just don’t get to frequently enough.

Just found Scott of The Coyote’s Byte in the last week or so, and I’m glad I did. He picked up (and, more to the point, beat yr (justifiably) humble svt to the punch) on McCain’s extraordinary call during Tuesday night’s debate for Meg Whitman, late of (soon to be late?) Ebay as a potential Treasury Secretary. The same week that Ebay announced 10% in personnel layoffs. Like McCain’s pal, Carly Fiorino, lately of (thankfully robust, despite Fiorino’s “best” efforts) HP, these two famous Silicon Valley women have proven themselves to be all hat, no cattle when it comes to running their businesses. I wouldn’t want them coming near running this economy.

Warren Buffett? Now there’s one septuagenarian I would trust with my money, and my country’s fate. Obama, be very persuasive!

Political Realm is one of the most useful comprehensive political sites. Important news and commentary to read and view there, day in and day out.

Finally, TomPaine.common sense sends me a daily newsletter, proving every day that there’s nothing that’s ever been more needed, but is less common and more difficult to find in today’s perilous world, than common sense.

And everyone’s pace, save yours truly, has picked up, reflecting the relentless countdown to what well might be one of, if not the most important of this generation’s tipping points, November 4, 2008.

So, faithful reader, there’s billions of pages to read, even if I haven’t updated in eight days. But thanks for not giving up on me.

And, thanks for voting.

It’s it for now. Thanks

–MUDGE

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MUDGE’s Musings

Confession: Yr (justifiably) humble svt has been watching these past couple of months of virulent right wing zingers aimed at Barack Obama, that are apparently drawing blood among responders to polls, with more than a little tinge of déjà vu.

The rabid Rovian mudflood machine buried John Kerry last time around, using his war record, and his wealthy wife, as its prime weapons. Now, enough true believers are buying Jerome Corsi’s latest fantasy smearfest to make it a best seller. Uh oh.

However, Obama is facing a war hero with a wife so wealthy that he can’t keep track of how many homes they own. Do the Democrats have the bare knuckled instincts to strike back against McCain’s rabid Rovians? Frank Rich of NYTimes is urging that the time for polite cheek turning is long past.

Last Call for Change We Can Believe In

Op-Ed Columnist | By FRANK RICH | Published: August 23, 2008

AS the real campaign at last begins in Denver this week, this much is certain: It’s time for Barack Obama to dispatch “Change We Can Believe In” to a dignified death.

This isn’t because — OMG! — Obama’s narrow three- to four-percentage-point lead of recent weeks dropped to a statistically indistinguishable one- to three-point margin during his week of vacation. It’s because zero hour is here. As the presidential race finally gains the country’s full attention, the strategy that vanquished Hillary Clinton must be rebooted to take out John McCain.

“Change We Can Believe In” was brilliantly calculated for a Democratic familial brawl where every candidate was promising nearly identical change from George Bush. It branded Obama as the sole contender with the un-Beltway biography, credibility and political talent to link the promise of change to the nation’s onrushing generational turnover in all its cultural (and, yes, racial) manifestations. McCain should be a far easier mark than Clinton if Obama retools his act.

Obama’s message of change needs an update, Rich says, and he makes a strong case.

The argument against Obama’s “going negative” is that it undermines his message of “transcendent politics” and will make him look like an “angry black man.” But pacifistic politics is an oxymoron, and Obama is constitutionally incapable of coming off angrier than McCain. A few more fisticuffs from the former law professor (and many more from his running mate and other surrogates) can only help make him look less skinny (metaphorically if not literally). Obama should go after McCain’s supposedly biggest asset — experience — much as McCain went after Obama’s crowd-drawing celebrity.

Use that rapier wit for more than rhetorical flourishes, Barry.

Op-Ed Columnist – Last Call for Change We Can Believe In – Op-Ed – NYTimes.com

Clueless John McCain has no idea how to effect change in this country, even should he want to, and we all know that he’s perfectly happy to effectively extend George III’s reign another four years. That is simply unacceptable, and most voters know that.

Another four years of bankers getting million dollar bonuses while 3,000,000 home owners abandon houses whose corruptly handled mortgages they can’t afford? Another four years (or 100!) of pointless bloodshed in Iraq? Another four years of watching China, at heart a repressive anti-democratic society wearing glossy Western makeup ascend while the golden beacon of American democracy and justice sputters? Hell, no!

If the Democrats can’t win an election where the parlous state of the economy is the primary concern of voters, than they don’t deserve to win an election for town dog-catcher.

Letting the hate mongers destroy John Kerry’s campaign — shame on them. Letting them get away with it this time — well, shame on us. There’s too much at stake.

The fierce urgency of the 21st century demands Change Before It’s Too Late.

It’s it for now. Thanks,

–MUDGE

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MUDGE’s Musings

As I begin it’s near the nominal end of a summer Saturday; normally I might have had the opportunity to create some kind of post much earlier, but today was not normal, but that’s acceptable. Today was a beautiful day, and it had very little to do with the weather.

Disposed of the usual Saturday morning errand, grocery shopping, in reasonable fashion although closer to noon, having slept in somewhat later than is common.

Picked up MUDGElet No. 3 at his studio in his grandmother’s basement, took him to lunch at a sandwich shop on the way north to my favorite annual outdoor art fair. Mrs. MUDGE had determined that she was going to pass on the opportunity, due to the 90/90 (degrees Fahrenheit/percent humidity) weather, and the dire state of our discretionary art budget, and I was glad of the company.

We didn’t spend a long time there, but he especially enjoyed our stroll up and down one small section of what usually is a sprawling affair spread across several suburban downtown streets and parking areas.

Distressed economy note: fewer exhibitors, and many fewer members of the visual art loving public today (in previous years this particular event has been wall-to-wall people), but those in attendance appeared to be having a good time.

So we headed back south after about an hour, and I dropped him off back at his studio and returned home, only to be happily surprised to find MUDGElet No. 2, and the lovely MUDGElet No. 2A, and our granddog the terrified (where men in general, and this man in particular are concerned) beagle.

Now, we’ve seen a lot of both of them (they do live nearby, I am grateful to report) this week, as they have been making use of our showers while their one and only bathroom is being rehabbed.

But, this visit was due to a neighborhood power failure, and they came over to see us, and oh, yeah, to cool off (90/90), and yeah, to shower.

But, it was fun seeing them, and they joined us for dinner, together with the J___’s, our friends of the absolute longest standing as a couple, having double dated with the future Mrs. MUDGE and yr (justifiably) humble svt before our respective marriages some 38 years ago — but who’s counting?

And just before the meal we were joined by MUDGElet No. 3, who is living with us these days, and it made for a delightfully crowded table.

So the blogging hours have been impaired.

Today, addiction or not, I didn’t miss them, really.

Family and old friends — doesn’t get much better than that.

Having a granddog who doesn’t scamper away when I raise an eyebrow in her direction: That just might be perfection.

It’s it for now. Thanks,

–MUDGE

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MUDGE’s Musings

We observe the first anniversary of the tragic collapse of the I-35W bridge in Minneapolis (August 1, 2007) with some sadness, and furious anger.

Sadness due to the thirteen lives lost, and 100+ injured.

Anger because the danger embodied in this country’s aging and dilapidated bridges, highways, levees and schools is criminally no closer to alleviation than 366 days ago.

Meanwhile, the economy is faltering: banks are failing, foreclosures are at record highs (three million empty houses!), the ranks of under- and unemployed growing apace.

What is it going to take to repair this country’s infrastructure osteoporosis?

What is it going to take to kick start the economy, to get people working and once again able to meet their mortgage obligations, perhaps even afford that $4.299/gallon gasoline?

It’s going to take a liberal quantity of bold.

I wasn’t there (my parents were young children) but this country faced a disturbingly similar crisis 76 years ago. Banks had failed by the thousands (defenestration became a popular Wall Street exit strategy). Millions of able bodied workers had no work.

The country, whose industrial and military might had tipped the balance and ended the bloody stalemate of the Great War, turned inward, closing off immigration, its historic lifeblood, and barricading trade, sending the entire globe into economic free fall.

The incumbent party (would you be surprised if I revealed that it was the Republican party?) wrung its hands and was the picture of abject futility.

A well-spoken and charismatic graduate of Harvard University stepped forward with some fresh ideas, promising a New Deal for the American people, and declaring that “the only thing to fear is fear itself.”

That New Deal served the country well for nearly 60 years. Hundreds of thousands were put to work to build highways, bridges, schools and dams. Labor and racial justice became the law of the land. Once again, this country’s industrial and military might prevailed in an even larger scale global war, the prelude to an economic and cultural explosion that became the envy of the world.

In many ways, it’s 1932 again. Bankrupted by pointless, and even worse, corruptly mismanaged war; hollowed out by energy policies set in Texas and Saudi Arabia for the benefit of the president’s oilmen sponsors; crumbling because the plutocrats have bamboozled citizens into believing that all taxes are bad, especially the ones that would make the plutocrats pay their fair share.

It’s going to take vision to fix the moral, the physical, the spiritual disrepair.

Hell, it’s going to take vision to recognize the mess in the first place, and vision to reach out for good plans from wherever they come (some of Roosevelt’s first programs, after all, were muscled up continuations of Hoover initiatives).

It’s going to take a liberal quantity of bold.

So, which party has the candidate with vision, who speaks with clarity, and seems to effortlessly engender inspiration and enthusiasm?

And which party has, despite its sober promises, begun swift boating and Rove-ing its way toward November?

So, where should our new president begin on January 20, 2009? That futile war needs to be contained, and ended, but that won’t happen overnight.

Al Gore and Boone Pickens won’t be severing our addiction to Middle Eastern petroleum in an instant, or even soon.

But those deteriorating bridges and roads, schools and levees: that’s an initiative that could begin Day One.

Put people to work, in the spirit of the reNEWed DEAL, rebuilding those highways and bridges.

Put people to work, in the spirit of the reNEWed DEAL, finishing with alacrity what the derelict administration of George III has disgracefully left incomplete, the restoration of New Orleans and its levees.

Put people to work, albeit with some training, in the spirit of the reNEWed DEAL, in those schools with too few teachers and too many underserved students, burying forever the lip service cynicism of “No Child Left Behind” and insisting that our children learn what they need to know, not what they need to pass dumbed down tests.

All this costs. Start by restoring equitable taxation on those of the plutocracy who have had a tax holiday for too many years. Ending that money pit called the Iraq Occupation, and getting smarter about resources and targets in Afghanistan will free up $zillions.

It’s going to take a liberal quantity of bold.

I believe I know from where bold might come from. I absolutely know from where it most definitely won’t.

It’s it for now. Thanks,

–MUDGE

MUDGE’s Musings

Frank Rich of the NYTimes eviscerated John McCain over both his supposed area of expertise, military affairs, as well as Sen. McCain’s admitted area of weakness, matters economic. It wasn’t pretty.

It’s the Economic Stupidity, Stupid

Op-Ed Columnist | By FRANK RICH | Published: July 20, 2008

THE best thing to happen to John McCain was for the three network anchors to leave him in the dust this week while they chase Barack Obama on his global Lollapalooza tour. Were voters forced to actually focus on Mr. McCain’s response to our spiraling economic crisis at home, the prospect of his ascension to the Oval Office could set off a panic that would make the IndyMac Bank bust in Pasadena look as merry as the Rose Bowl.

“In a time of war,” Mr. McCain said last week, “the commander in chief doesn’t get a learning curve.” Fair enough, but he imparted this wisdom in a speech that was almost a year behind Mr. Obama in recognizing Afghanistan as the central front in the war against Al Qaeda. Given that it took the deadliest Taliban suicide bombing in Kabul since 9/11 to get Mr. McCain’s attention, you have to wonder if even General Custer’s learning curve was faster than his.

Mr. McCain still doesn’t understand that we can’t send troops to Afghanistan unless they’re shifted from Iraq. But simple math, to put it charitably, has never been his forte. When it comes to the central front of American anxiety — the economy — his learning curve has flat-lined.

Rich follows similar economic criticism of McCain from Paul Krugman 12 days previously, before Phil Gramm elevated himself from has-been to economic advisor to get thee gone in just a few hours time.

Mr. McCain’s fiscal ineptitude has received so little scrutiny in some press quarters that his chief economic adviser, the former Senator Phil Gramm of Texas, got a free pass until the moment he self-immolated on video by whining about “a nation of whiners.” The McCain-Gramm bond, dating back 15 years, is more scandalous than Mr. Obama’s connection with his pastor, the Rev. Jeremiah Wright. Mr. McCain has been so dependent on Mr. Gramm for economic policy that he sent him to newspaper editorial board meetings, no doubt to correct the candidate’s numbers much as Joe Lieberman cleans up after his confusions of Sunni and Shia.

[By the way, the photo at the top of the column will hereby become Left-Handed Complement's official John McCain portrait.]

Carly Fiorina has picked up the economic cudgel from temporarily banished ex-Sen. Gramm. She comes with a wonderful track record: booted out of Hewlett-Packard after five years of big talk and miserable results.

Then Rich wanders into a long-time hobby-horse of this nanocorner of the ‘Sphere©, Michael Bloomberg, positing him a potential vice president on the McCain ticket.

Mr. McCain reminds us every day how principled he is. That presumably means he’d risk a revolt by his party’s dwindling agents of intolerance and do everything in his power to persuade Mr. Bloomberg to join his ticket in the spirit of patriotic sacrifice. The politics could be advantageous too. A Bloomberg surprise could impress independents and keep the television audience tuned in to a G.O.P. convention that will unfold in the shadow of Mr. Obama’s address to 75,000 screaming fans in Denver.

Op-Ed Columnist – It’s the Economic Stupidity, Stupid – Op-Ed – NYTimes.com

All this vice presidential speculation this year provides the usual column-inch filler during the summertime doldrums for the political junkies out here, but it’s also particularly of interest, in a year of unusually vulnerable presidential candidates. (Hey, if Hillary can point it out, so can I. I’m going to hate myself in the morning, though.)

But, hey, Frank Rich! I want Michael Bloomberg for the good guys.

It’s it for now. Thanks,

–MUDGE

MUDGE’s Musings

We’ve spent the past month or so watching the candidates come off their primary paces, attempting to rejigger their respective approaches to the general election, and taking some hits for the resulting adjustments.

The mishandled wars in Iraq and Afghanistan have been top of mind for many voters since the pointless charade of “Mission Accomplished!”

Paul Krugman reminds us, however, of another paramount issue in this election, the economy, and what its dire condition means to John McCain.

Our current economic distress has been covered in this nanocorner of the ‘Sphere© quite frequently, most recently while highlighting this glass-half-full analysis from two senior Federal Reserve Bank officials. The U.S. economic juggernaut didn’t get to its current poor state by itself. President Bush, and his Republican allies in Congress can take plenty of the credit.

Behind the Bush Bust

Op-Ed Columnist | By PAUL KRUGMAN | Published: July 7, 2008

By huge margins, Americans think the economy is in lousy shape — and they blame President Bush. This fact, more than anything else, makes it hard to see how the Democrats can lose this election.

But is the public right to be so disgusted with Mr. Bush’s economic leadership? Not exactly. We really do have a lousy economy, a fact of which Mr. Bush seems spectacularly unaware. But that’s not the same thing as saying that the bad economy is Mr. Bush’s fault.

On the other hand, there’s a certain rough justice in the public’s attitude. Other politicians besides Mr. Bush share the blame for the mess we’re in — but most of them are Republicans.

For Krugman, our crummy economy has many causes, but three of the most important are the housing/mortgage bubble, the cost of health care and high commodity (fuel and food) prices. And the seeds to the crises in all of these areas were sown, if not on George III’s watch, then under the constipated purview of the six years of Republican Congresses that immediately preceded Bush’s presidency.

Op-Ed Columnist – Behind the Bush Bust – Op-Ed – NYTimes.com

Whatever his strengths might be, the economy has not been McCain’s area of expertise. As a result, he’s fallen back on knee-jerk Republican economic thought (cut taxes for the wealthy, and the rest be damned) that has led us into this all-but recession. We’ll let Paul Krugman have the last word:

And bear in mind that John McCain has gone to great lengths to affirm his support for Republican economic orthodoxy. So he’ll have no reason to complain if, as seems likely, the economy costs him the election.

It’s it for now. Thanks,

–MUDGE

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MUDGE’s Musings

We begin this Independence Day celebration in the U.S. with a rather gloomy attitude.

We’re still losing good men and women to the misguided and mishandled Iraq and Afghanistan wars. Fuel and food prices seem to be climbing as we watch. Once my monthly bills from ExxonMobil, my gasoline purveyor of choice (the reason why this is so is worthy of a post of its own — soon!) were under $100. Now, maintaining the same or less driving, as I try to mitigate the costs of commuting with more days working from home, I’m relieved if that bill is under $200.

What we hear of the economy (job losses, inflation rate) and its thermometer (the Dow Jones Industrial Average) is disturbing. Aren’t we officially in recession?

Every one of us knows someone, or more than one, job-seeking.

And the news from the world outside our parochial boundaries is not much better. War news from Iraq, Afghanistan and Pakistan remains grim. The president of Zimbabwe, certain that he’d lose in a fair election, murdered thousands of opposition supporters, and sent his opponent fleeing to the Netherlands embassy for shelter. Israel seems to be seriously considering a preemptory attack on Iran’s nuclear bomb facilities. Gazprom, the Russian petroleum/natural gas giant, has its sights set on becoming the largest corporation in the world before long. How can any of that be good by any measure?

Well, a couple of chieftains at the Federal Reserve Bank have decided to show us a glass half full version of the part of the story they influence, the economy. And, it makes for some attention-grabbing reading.

How Are We Doing?

By W. Michael Cox and Richard Alm From the July/August 2008 Issue

The American economy is in a rough patch. But the long-term trends are good—and there is a price to economic pessimism.

When a presidential election year collides with iffy economic times, the public’s view of the U.S. economy turns gloomy. Perspective shrinks in favor of short-term assessments that focus on such unpleasant realities as falling job counts, sluggish GDP growth, uncertain incomes, rising oil and food prices, subprime mortgage woes, and wobbly financial markets.

Taken together, it’s enough to shake our faith in American progress. The best path to reviving that faith lies in gaining some perspective— getting out of the short-term rut, casting off the blinders that focus us on what will turn out to be mere footnotes in a longer-term march of progress. Once we do that, we see the U.S. economy, a $14 trillion behemoth, is doing quite well, thank you very much.

Cox and Alm go ahead and illustrate their thesis quite compellingly.

As Americans know, today’s rising food and energy prices are crimping household budgets. But there are other ways to understand the relative size of the rise of food and energy costs. For example, in terms of time worked at the average pay rate, the real cost of a 12-item basket of basic foods has hardly budged. And while the work-time price of gasoline doubled in recent years, a gallon of gasoline still goes for less than 11 minutes of work (Fig. 3). At 20 miles per gallon, an hour of work will get you 110 miles down the road; at 30 mpg, you can go 165 miles.

And, if you make the comparisons broad enough, we’ve come a long way in 58 years.

The lament-filled anecdotes about long hours and low pay just don’t stand up to the test of hard data. Real total compensation—wages plus fringe benefits, both adjusted for inflation—has been rising steadily for several generations (Fig. 4). Over time, the fringes have become a larger share of the rewards for work, dampening the statistics on wage increases. At the same time, we’re spending less time at work. An average workweek has fallen from 39.8 hours in 1950 to 36.9 hours in 1973 to 33.8 hours today.

The tables and graphs that accompany the story are worthy of study in their own right. The one showing EBay activity peaking during U.S. working hours is quite telling. Apparently, more than a little of our leisure time is spent while on the job.

The standard of living goes up, and so does safety, both on the job, and off. One number that pops out, though not a subject of the essay, is the comparison of deaths per billion miles between automobiles and airplanes. You are 100 times safer flying than driving. Too bad they never got around to inventing those flying cars the futurists have been promising for 100 years! And then there’s health care, the bugaboo of politicians everywhere.

Medical advances have brought down death rates for many diseases (Fig. 10). Gains have been made against heart disease and cancer in recent decades. Death rates from disease aren’t the only sign that Americans have benefited from rising healthcare spending. Since 1960, life expectancy has risen by seven years for men and six years for women. At a time when so many Americans are vexed by the high cost of healthcare, these gains suggest the country may be getting something for its money (Fig. 11).

The conclusion drawn by these fine gents from the Federal Reserve is that, despite the short term clouds, it’s been mostly sunny for a long time, and there’s no reason why this long-term trend shouldn’t continue.

So many data points add up to steady, continuing progress for average Americans—and there’s no reason not to expect the future will bring further progress. Bad news will pop up from time to time, just as it has in every decade of American history.

And if you read to the end, you get a nice reminder that, even with the Dow stocks taking something of a beating currently, that few investments beat stock investing in the long run. (As I used to respond to the calls from new brokers who cold-called me, I invest in commodities: hamburger meat and buns, lettuce, apples, milk. There’s nothing left for stocks!).

How Are We Doing? — The American, A Magazine of Ideas

Yr (justifiably humble svt takes all of this good news with some measure of skepticism.

I just love being strategic, taking the long view and all, but it really is difficult to reconcile the writers’ long-term positives with the day-to-day reality of $4.199/gallon gasoline, and the $5.23 box of bran flakes on the grocery shelf.

But, we’re all going to parade, or watch the parades (and this election year, those parades will be longer than usual since there will be plenty of smiling and waving photo opportunities for your favorite local and national politicians). We’ll sit on our picnic blankets and listen to the bands and ooh and ah over the fireworks.

For one day, at least, we can celebrate. In that spirit, of parades, band concerts, picnics and fireworks, we should enjoy this contribution to our entertainment by our friends in the Federal Reserve.

Monday, back to the real, glass half empty, world.

Happy Independence Day!

It’s it for now. Thanks,

–MUDGE

We embark this weekend on a business trip to a conference in Boston. As conferences usually take up a great deal of uptime, without the downtime associated with a normal schedule, we will probably cover many of our daily blogging deadlines with Blasts from the Past!

The conference itself, designed to illuminate the social networking phenomena in the context of business and corporate conduct, may provide the opportunity to blog, as blogging in the corporate environment is one of its key topics. So we may be able to mix business interests and responsibilities with our avocation in this space. Should be interesting!

There’s most read, and then there’s favorite. This is a post which yr (justifiably) humble svt is, regrettably, but not regretfully, not at all humble about.

Blast from the Past!

A post we really, really loved to write, and read, and re-read…

From last summer, originally posted September 10, 2007 and originally titled “China – Two interesting aspects”.

MUDGE’S Musings

China is always in the news. Two stories from the past few days illuminate why in some interesting ways.

First, from the LA Times, a look at how we have become victim’s of our unlimited appetite for everyday low prices.

Analysts expect prices in the U.S. to creep up as safety standards are reevaluated. Buyers and retailers may share the impact.

By Don Lee and Abigail Goldman
Los Angeles Times Staff Writers
September 9, 2007

SHANGHAI — Get ready for a new Chinese export: higher prices.

For years, American consumers have enjoyed falling prices for goods made in China thanks to relentless cost cutting by retailers such as Wal-Mart and Target.

But the spate of product recalls in recent months — Mattel announced another last week — has exposed deep fault lines in Chinese manufacturing. Manufacturers and analysts say some of the quality breakdowns are a result of financially strapped factories substituting materials or taking other shortcuts to cover higher operating costs.

Now, retailers that had largely dismissed Chinese suppliers’ complaints about the soaring cost of wages, energy and raw materials are preparing to pay manufacturers more to ensure better quality. By doing so, they hope to prevent recalls that hurt their bottom lines and reputations. But those added costs — on a host of items that include toys and frozen fish — mean either lower profits for retailers or higher prices for consumers.

“For American consumers, this big China sale over the last 20 years is over,” said Andy Xie, former Asia economist for Morgan Stanley, who works independently in Shanghai. “China’s cost is going up. They need to get used to it.”

The low hanging fruit of lowest prices for decent quality has run into a rising standard of living in China, and the results have been ugly.

The bulk of the world’s toys are made in southeastern China, where wages have shot up in the last couple of years amid greater competition for workers and increases in minimum wages and living costs. Booming demand has pushed up commodity prices. The appreciation of the Chinese yuan, up 9% against the dollar in the last two years, also has hurt some factories, as they are paid in dollars.

Follow the link to the rest of the story, reported from Shanghai.

[Per L-HC's reformed process, please click the link below for the complete article -- but then please come on back!]

Los Angeles Times: Fixing Chinese goods will be costly

So, what with rising wages, increases in commodity prices, the unexpected new costs of safety inspections, prices for toys, tilapia, luggage, and an entire big box store full of consumer necessities (and not so) will go up.

So, now let’s turn to the other side of the consumer equation, courtesy of the always perceptive Daniel Gross of Slate.

Pundits bemoan our trade deficit with China. But those container ships aren’t heading home empty.

By Daniel Gross
Posted Saturday, Sept. 8, 2007, at 7:59 AM ET

Economists make a big deal out of all the junk we import from China: tainted pet food, lead-laced toys, and enough cheap plastic tchotchkes to load up a landfill the size of Montana. And American industries are clearly being drenched by the rising tide of Chinese imports, which totaled $288 billion in 2006. But as imports from China loudly rise, American exports to China are quietly rising at an even more rapid pace. Would it surprise you to learn that a lot of those exports are … junk?

In an act of macroeconomic karma, materials thrown out by Americans—broken-down auto bodies, old screws and nails, paper—accounted for $6.7 billion in exports to China in 2006, second only to aerospace products. Junkyards may conjure up images of Fred Sanford’s ratty collection of castoffs. But these days, scrap dealers are part of a $65 billion industry that employs 50,000 people, who together constitute a significant arc of a virtuous circle. The demand of China’s factory bosses for junk—which they recycle to make all the junk Americans buy from China—creates jobs, tamps down the growth of the trade deficit, and might help save the planet.

Exports to China second only to aerospace products? Junk?

And this is a good story for all of you greens out there (MUDGE is always happy to assist his environmentally sensitive fellow citizens. Feel free to use yesterday’s post to wrap fish.):

The booming China trade isn’t simply good news for shareholders of Metal Management, whose stock is up 67 percent in the past year. It’s good news for tree-huggers. Every scrap of scrap put on a slow boat to China is one less scrap that winds up in a landfill or an incinerator. Asia’s insatiable demand for scrap has boosted prices, thus encouraging companies to suck more reusable junk out of garbage piles.

An interesting twist, eh? The imbalance is less so. That’s always good news.

Take a look:

[Per L-HC's reformed process, please click the link below for the complete article -- but then please come on back!]

The junk we send to China. – By Daniel Gross – Slate Magazine

A couple of things about this story are intriguing.

1) The story refers to corrugated paper, a key element of MUDGE‘s once family business. $130 ton for scrap corrugated boxes (the brown shipping containers everything wears to market) is an astounding price.

2) The idea of sending scrap overseas resonates in a slightly unpleasant way with us ancient curmudgeons. MUDGE was born after WWII (believe it or not!), but the lessons of that conflict were fresh.

In the years before Pearl Harbor projected the U.S. belatedly into a conflict that had started up in Asia in the early Thirties, scrap iron and steel in massive quantities made its way across the Pacific to, wait for it, Japan.

It was a bitter realization that many of those junked Model T’s and scrapped steam heating radiators were sent back to our combatants as Japanese aircraft and ships and bombs.

Is it too paranoid to make an association with cheerfully sending our scrap to a rapidly arming and increasingly assertive about its global destiny China?

So, two interesting China stories, one from each container port.

And did you catch the punch line from the LA Times piece?

Meanwhile, Skyway is gearing up to open a factory this fall in Vietnam, where wages are lower.

“I think the consumer will not accept the full impact of price increases from China,” Wilhoit said. “We’re going to have to do things differently, like Vietnam, to get the same quality stuff on the shelf and make money.”

The mind boggles.

It’s it for now. Thanks,

–MUDGE

Driving earlier this evening to pick up take out for dinner, found myself listening to radio news. Never do that, if I can help it. But this story sprang out at me.

It’s a crime story. Not usually a staple of this nanocorner of the ‘Sphere©. And it’s our next installment in a ever-lengthening series.

“Hold on, Mudge,” I hear faithful reader protesting. “What the devil does crime have to do with our deepening recession.”

Just about everything.

City crime statistics show increased violence

Violent crime is up 6% in first four months of the year compared with 2007, police say

By Angela Rozas | Tribune reporter |

4:52 PM CDT, May 16, 2008

Homicides in Chicago rose by almost 9 percent, while violent crime was up more than 6 percent in the first four months of 2008, compared with the same period last year, Police Supt. Jody Weis said Friday.

Weis blamed the uptick in violence on “unique” sets of multiple homicides, including two triple murders and a quintuple homicide, all in April. In April, there were 47 murders, compared with 34 the year before. A total of 134 homicides were tallied over the first four months of the year, compared with 123 in 2007.

Weis said the department is trying to combat the violence by improving coordination between patrol officers and specialized units and focusing more on the city’s hot spots to quell gang violence. He also said the department plans to conduct joint missions with specialized units and will deploy helicopters to patrol over the hot spots.
Some units have already been taking to the streets on weekends in battle dress, a visual deterrent to crime, Weis said.

First, some context.

The Chicago Police Department has required overhauling and reforming just about every 10 years. I don’t actually have the stomach to do the research for you, but the CPD wants to be a better department, but keeps falling short, in ugly ways. Detectives whose night jobs employed them as mob assassins. Cops whose methods for extracting confessions from suspects would sicken those hardened activists at Amnesty International. Etc.

Every few years, they bring in a new Superintendent of Police to clean house. The latest, who was appointed just over three months ago, has the oddly uncoplike name of Jody Weis, and came to Chicago from leading the Philadelphia office of the FBI.

So violent crimes are up. Yr (justifiably) humble svt is not at all surprised.

[Please click the link below for the complete article -- but then please come on back!]

City crime statistics show increased violence — – chicagotribune.com

In the mid-1990s, big city police departments took credit for a stunning reduction in crimes of all kinds, especially violent crimes. This occurred most emphatically in New York City under Mayor Rudy Giuliani and his hand-picked chief of police, Bernard Kerik. Kerik, a man who may yet go to jail himself, succeeded William Bratton, the man who in NYC and later in Los Angeles provided the clean sweeping broom in those cities, and whom Giuliani replaced when Bratton seemed to be getting more credit than Rudy for the improved crime statistics.

Okay, there’s no question that the NYC department required overhauling; they all seem to every few years. Every bureaucracy becomes set in its ways, resistant to internally driven change. When your bureaucracy carries batons and loaded sidearms, the need for radical change becomes more pressing.

But it’s my contention that the true cause of the incredibly steep decline in violent crimes in NYC and most big cities, including Chicago, was not improved policing, but a greatly improved economy.

Remember the 1990s? The Clinton White House took credit, perhaps deserved, for the boom times that only stumbled during the tech bubble of 2000-2001, and crashed as a result of 9/11, after Clinton’s watch.

But, they were good economic times, when essentially anyone who wanted a job could find one. Even the anyones who grew up in marginal conditions in fatherless households, where the most admirable role model might be the neighborhood’s bling-encrusted drug lord. In bad times, such drug-daddies are the employers of last resort in such environs. Such careers are often violent, extraordinarily dangerous and short.

In good times, there are usually conventional jobs for civilians, with predictable paychecks and regular hours where the dangers are usually limited to slick factory floors, carpal tunnel syndrome, or commuter-clogged highways.

Now faithful reader might recall another explanation for the diminished crime rate of the 1990s, presented by a University of Chicago economist, Steven Levitt, who later became even more famous for the publishing phenomenon of 2005: Freakonomics.

You see where I’m going, right? The headline tipped it off. Can’t avoid noticing that the economy has taken a severe hit, especially in the past several months.

Guys who had decent, if low-paying jobs in factories might have lost them to even lower paid factory workers in Sichuan or Vietnam.

High school dropouts, never anyone’s first choice for hire, are congregating on corners again. Can there be any wonder why crime statistics are climbing?

All of the bureaucratic and procedural overhauls in Bill Bratton’s manual (and Supt. Weis has replaced most of his direct reports in his first 100 days in the position) are not going to prevent the exurban (2-hours commute each way) metal-bending shop making cheap lawn furniture from closing its doors and putting its marginally employable janitors and day laborers back on the mean street corners.

And then back into the crime statistics.

As a lifelong resident of one of Chicago’s near suburbs, I wish Jody Weis well, for all of our sakes.

But history seems to be telling us that the best cure for violent crime isn’t more, better led policing. The best cure for violent crime isn’t to build more prisons (although this is, regrettably, one of the U.S.’s few growth industries).

The absolute best cure for violent crime is to put the people who want to work (and call me the un-MUDGE tonight, but I firmly believe that, give most people a chance and they’ll pick low-paid but honest and safe most of the time) to work.

There’s a country to rebuild, after all. Good, honest work for anyone who wants it. Then, watch the violent crime statistics plummet.

It’s it for now. Thanks,

–MUDGE

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Paul Krugman has appeared in this nanocorner of the ‘Sphere© quite frequently; he’s an economist, and an insightful writer, and a lot of news lately has been about our economy, and cries out for insight.

Since so much of the U.S. economy is driven by consumers, and has been, I’m imagining, since the end of World War II, when the bomber factories returned to stamping out annual cosmetic freshenings of shiny Fords, Plymouths and Hudsons to an eager population that couldn’t wait to “See the U.S.A in your Chevrolet,” consumer perceptions are a key indicator of economic health.

It’s no accident, I’m thinking, that the annual survey Krugman quotes, the Consumer Sentiment Index, comes out of the University of Michigan. Its Ann Arbor campus is nigh to the heart of that same automobile industry, and very little drives the economy like the sale of automobiles.

Pity that Detroit has taken so long to remember how to build a good car, but that’s a discussion for another time, or place.

Meanwhile, even Toyota sales are off… I’d say the consumer is downright depressed.

Crisis of Confidence

By PAUL KRUGMAN | Published: April 14, 2008

The Survey Research Center of the University of Michigan has been tracking American economic perceptions since the 1950s. On Friday the center released its latest estimate of the consumer sentiment index — and it was a stunner. Americans are more pessimistic about their situation than they have been for more than a quarter century….

Why are we feeling so down?

Our bleakness partly reflects the fact that most Americans are doing considerably worse than the usual economic measures let on. The official unemployment rate may be relatively low — but the percentage of prime-working-age Americans without jobs, which isn’t the same thing, is historically high. Gross domestic product is up, but the inflation-adjusted income of the median family is probably lower than it was in 2000.

Beyond that, perceptions of the current economy are strongly influenced by the public’s sense of the larger pattern.

Larger pattern. Let’s see: investment bank bail-outs. Foreclosures in a cul-de-sac near you. $zillion dollar payouts to executives who apparently couldn’t manage risk better than the sap plunging $50 his family needs for groceries on this week’s mega lottery. [Need I link to the quote? Not necessary. The lottery is a tax on people who failed to learn math.]

[Please click the link below for the complete article -- but then please come on back!]

Crisis of Confidence – New York Times

Mr. Krugman has been rather unimpressed over this presidential primary season with the candidates’ statements and position papers on the economy, and what they plan to do should the depressed public choose them come November.

The good news: should a Democrat win (and how odd it is to have to place this in the conditional), there could possibly be changes along the lines Krugman suggests: regulation with sincerity (mainly a joke these past 8 years); policies favoring labor (small ‘L’), perhaps ending some of the attractiveness of outsourcing and raising the minimum wage. Such steps could jolt us out of our doldrums, perceived and real.

Meanwhile, 300,000,000 doses of Wellbutrin, stat!

It’s it for now. Thanks,

–MUDGE

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I can’t help it — our turbulent economic news continues to cause concern.

And, as we’ve pointed out, it’s increasingly top of mind most everywhere.

As a topic, it has appeared here with depressing regularity (depressing topic but lively and insightful commentary, of course!):

Pointed here by American.com here’s a useful analysis that lays out the causes of the financial system’s deep crisis, and you might be surprised at the source: St. Alan Greenspan and the Federal Reserve that, directed by Greenspan’s successor, Ben Bernanke, now is portraying itself as our white knight.

The Roots of America’s Financial Crisis

by Jeffrey D. Sachs

CAMBRIDGE – The US Federal Reserve’s desperate attempts to keep America’s economy from sinking are remarkable for at least two reasons. First, until just a few months ago, the conventional wisdom was that the US would avoid recession. Now recession looks certain. Second, the Fed’s actions do not seem to be effective. Although interest rates have been slashed and the Fed has lavished liquidity on cash-strapped banks, the crisis is deepening.

To a large extent, the US crisis was actually made by the Fed, helped by the wishful thinking of the Bush administration. One main culprit was none other than Alan Greenspan, who left the current Fed Chairman, Ben Bernanke, with a terrible situation. But Bernanke was a Fed governor in the Greenspan years, and he, too, failed to diagnose correctly the growing problems with its policies.

Most unusual about the boom that developed when the Fed dropped interest rates after 9/11 is that it was concentrated in one sector of the economy: housing.

A lot of eggs in a very large basket, made even larger by the deregulated greed that led many very smart finance guys to develop increasingly “creative” financial instruments.

Housing lending was so easy to come by, that bankers cheerfully forgot to perform due diligence on the loans they so cheerfully scarfed up.

The result: meltdown as the “get-me-dones,” who had snapped up mortgages from brokers who didn’t require proof of credit worthiness or even income (since they were making their money on the commissions paid to them by the banks and weren’t ever concerned about such minor details as, will the loan ever be paid back?) found themselves unable to meet their obligations. And the cascade of foreclosures finally woke up the banks to the house of cards their assets had become.

[Please click the link below for the complete article -- but then please come on back!]

Project Syndicate

It’s always been about the money. Perhaps next time I’ll take a look at the points in U.S. history where banking excesses and shenanigans tore the entire economy to pieces: 1873, 1907, of course, 1929. These are the events that finally caused the outcry that couldn’t be ignored, and that led to the creation of such institutions as this very same Federal Reserve Bank that purports to know what’s best for us.

See, financiers and investment bankers are wizards highly skilled in the alchemic arts of spinning gold from dross, until they get caught out. And then their failures and greed become a general economic nightmare.

And of course, those financiers who begged the government to deregulate the industry so they could be free to make the profits that let so many of them buy those islands in the Caribbean, were first in line for Fed assistance when the gravy train abruptly derailed.

So while Dr. Bernanke and his Fed continue to throw liquidity at the crisis, the primary outcomes are inflation, record commodity prices, and a murderously devalued dollar.

I am not impressed with Doc Bernanke, Hank Paulson, and the rest. I am, in fact, quite concerned.

Nine months, 17 days until Jan. 20, 2009, and a new broom. Hope we all get there with a roof over our heads.

It’s it for now. Thanks,

–MUDGE

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I’d always heard it was a Chinese curse: “May you live in interesting times.” Wikipedia.org is not so sure.

Notwithstanding the source, I think we’re there.

We’ve written increasingly on the recession that has arrived, and the depression that might be lurking. Perhaps it’s time for a nanocorner of the ‘Sphere© link table.

Jon Taplin, who always has interesting, big picture points of view, has a big word to teach us.

The Interregnum

Jon Taplin’s Blog – March 31, 2008

Financial apocalypse seems to be in the air. NBC Nightly News has a new nightly segment called Hard Times, which provides economic “survival strategies” to the viewers.

We have entered The Interregnum.

It’s more than simply a presidential election year. Taplin calls it a “hinge in time.” It’s not simply an administration, or perhaps a majority political party that’s about to change.

The next four months will tell the tale of whether we are in a recession or a depression. We should concentrate on what kind of society we want to live in if the crisis stresses our democracy. Never underestimate the ability of an unemployed populace to look for scapegoats. In simple terms, democracy is at risk everywhere.

Democracy itself is very much at risk.

[Please click the link below for the complete article -- but then please come on back!]

The Interregnum « Jon Taplin’s Blog

Seven months ago we touched on the tipping point, the hinge in time if you will, that we find ourselves confronting, and the physical danger that democracy-loving citizens may be facing should unemployment, foreclosures, and the general collapse of trust of private and public institutions take their logical course.

Way too interesting. Is your passport in order?

It’s it for now. Thanks,

–MUDGE

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He could have spoken anywhere; that’s what the communications age is all about. Perhaps he should have spoken in Pennsylvania; after all, its April 22nd primary represents the next towering challenge to his candidacy.

But, he spoke in New York City, because that’s where beats the economic heart of the country (and not too long ago, the planet). And his speech was about our economic distress, the Wall Street half of the equation, where “pain trickled up.”

An interesting site, new to Left-Handed Complement, “The Reality-Based Community” has been added to our blogroll with alacrity. There, yr (justifiably) humble svt found some incisive analysis, and, usefully, a transcript of this powerful statement.

Obama on the economy

March 27, 2008 | Posted by Mark Kleiman

Public images, once established, are hard to change, and it isn’t going to be easy for Barack Obama to escape the “pretty words, no substance” label that his opponents and some journalists have tried to pin on him. But if anything could do it, today’s Cooper Union speech ought to.

Those familiar mainly with the Obama of the stump speeches, the election-night speeches, and the Ebeneezer Baptist Church address on MLK Day — the Obama of the “Yes We Can” music video — will find the Cooper Union lecture a significant change of pace. No soaring images, not much poetry, few applause lines, lots of analysis and substantive proposals, only one Obama-esque turn of phrase in describing the current crisis in mortgage-backed paper:

“What was bad for Main Street was bad for Wall Street. Pain trickled up.”

The speech itself: workmanlike, serious, substantive.

For those who like pictures to go along with the words, here’s the video. For all the words in print form, click the link below.

[Please click the link below for the complete article -- but then please come on back!]

The Reality-Based Community: Obama on the economy

Obama began his talk with a brief history lesson, going back to the Founding Fathers.

It’s this sense of history that drew him, I’m certain, to Cooper Union, the scene of a very influential speech by a then little-known presidential candidate named Lincoln, in 1859.

Consider Barack Obama.

A speaker unafraid to share substantive ideas, rather than the usual politician’s sloganeering, in adult language.

Boldly framing his context to the designers of this country, most relevantly Alexander Hamilton, one of history’s great polymaths and a great economic actor too little appreciated today.

And choosing to speak in a locale subtly redolent of presidential history, a reflection of our greatest president, who was in that place 149 years ago magnificently eloquent in his own time of American crisis.

And, Michael Bloomberg introduced him.

What a ticket that would be!

It’s it for now. Thanks,

–MUDGE

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Can’t escape it.

Oil at $100 per barrel. And planted well over $3 per gallon at the pump.

Stock market with more bad news than good.

Another bank lost $billions last quarter, due to the mortgage fiasco that is shortening breath and whose ripples are washing ashore around the world. A bank in England with the oh so modern name of Northern Rock caused the first run on a British bank in 200 years last fall and had to be bailed out by Her Majesty’s government; U.S. subprime mortgages the cause. How unseemly!

How do you feel about your job? More and more entry level positions in MUDGE’s IT field have “right sourced” (love those euphemisms) themselves to Bengaluru and environs; where do they (the suited euphemizers in the corner offices) think that their own successors will come from? What, me worry?

A presidential election that for more than a year seemed so much a referendum on the Republican party’s mishandling of Iraq has, as elections often do, and as this preposterously lengthy election season guaranteed, morphed into another arena altogether.

It’s the economy, stupid!

Fred Siegel points this out in the latest City Journal.

Fred Siegel

The Globalization Election

Voters are showing their anxiety about the economy and immigration.

10 January 2008

The common thread that ties Mike Huckabee’s come-from-almost-nowhere victory in Iowa to Hillary Clinton’s unexpected resurgence in New Hampshire is a shared ability to speak to widespread middle- and lower-middle-class economic anxiety. In Iowa, Huckabee effectively disparaged Mitt Romney—who made a fortune at Bain Capital and outspent him 20 to 1—as someone who couldn’t possibly understand “people at the lower ends of the economic scale,” who fear that they’re losing ground in the increasingly globalized economy. And in New Hampshire, while Barack Obama’s rhetorical flourishes spoke most effectively to the young and to the “creative class” that has flourished in the global economy, Clinton—like her husband before her—felt the middle class’s pain, devoting most of her campaign events to highlighting economic issues and offering narrowly tailored programs to address everything from the rising cost of tuition to mortgage defaults. And it paid off: she defeated Obama by ten points among those who felt they were falling behind financially.

Clinton’s comeback aside, the most surprising fact to emerge from New Hampshire was that voters in both parties named the economy as the Number One issue. New Hampshire, where more than 81 percent of the voters have at least some college education, is prosperous by any standard. It enjoys the lowest poverty rate in the country, one of the lowest unemployment and taxation rates, and is in the top echelon of income. Yet only 14 percent of its Democrats and half of its Republicans believe that the economy is doing well, while a stunning 98 percent of voters in the Democratic primary and 80 percent in the Republican primary were “worried” or “very worried” about the economy.

Siegel has very perceptively connected our economic (skyrocketing oil, plummeting home values) shpilkes with the issue of illegal immigration, tosses in terrorism, and calls it the globalization election.

[Please click the link below for the complete article -- but then please come on back!]

The Globalization Election by Fred Siegel, City Journal 10 January 2008

In the end (290 days and a couple of hours from now) it will come down to which of the smooth (or not) talkers convince the voters that s/he understands the gravity of the issue Siegel calls “globalization” and has a plan to make all of our troubles vanish.

For all the talking we’ve heard, I don’t think any one of the candidates has convinced enough of us.

It will be an interesting 290 days…

It’s it for now. Thanks,

–MUDGE

Faithful reader might be interested in how MUDGE came up with that 290 day number.

Got to the second page of Google results before the answer popped up – a site I’ve depended on for years.

Global as yr (justifiably) humble svt is, accurately knowing what time it will be in Sydney when it’s 7:00pmCST next week is part of the job. Long years ago, I came to depend on a terrific website, timeanddate.com to accurately deliver that information. On its Personalized World Clock page, one can specify up to 25 cities around the world, and you get a page that displays them. As I write this, it’s 5:58pm Friday in Honolulu, 1:58am Saturday in Sao Paulo, 11:58am Saturday in Beijing, and 2:58pm Saturday in aforementioned Sydney. Very cool.

Well, the site also has many other useful calculators. And, doh!, a days between two dates calculator. Also very cool.

And, a theme we’ve used here before, it’s only 31,795,200 seconds, give or take a few thousand, until a new president is inaugurated.

Can’t come soon enough.

Really, now, it’s it for now. Thanks,

–MUDGE

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On more and more minds, and lips, lately is that dreaded R-Word, recession.

First some news that we won’t have to work too awfully hard to relate to the topic at hand.

1. A critical gear in the export engine gets stripped

The aerospace competition between Europe’s Airbus and the U.S.’s Boeing has been hard-fought (think: Saturday-night saloon, brass-knuckles style) commercial dueling of a classic nature.

Boeing, complacent after lucrative decades owning global airline sales was embarrassed when upstart Airbus, an amalgam of several European aerospace firms unable individually to compete with the Boeing colossus began to outsell the arrogant giant.

Thus it was with no small satisfaction that Boeing watched Airbus announce delay after delay delivering its latest product, the immense 600-passenger A380, finally released to its first customers late in 2007.

Now, the shoe is on the other foot, as Boeing yesterday was forced to admit that its latest product, the new-age, environmentally sensitive 787 Dreamliner, has encountered delivery glitches of its own, the impact of which will push deliveries back to 2009.

Here’s the word from Boeing’s home-town paper, the Seattle Post-Intelligencer (sorry, Chicago Tribune, but Boeing’s head may have relocated, but its heart remains in Washington State).

Boeing explains new 787 delay

Company ‘underestimated’ time to finish partners’ work

By JAMES WALLACE
P-I AEROSPACE REPORTER

It was 90 days ago Wednesday that Boeing troubleshooter Pat Shanahan took over the 787 program after then-Dreamliner boss Mike Bair was sacked.

A week earlier, The Boeing Co. had announced an embarrassing six-month delay, with the first Dreamliner deliveries to airlines slipping from May until the end of 2008.

Boeing believed at the time that it would be able to complete work on the first plane in its Everett factory and have it flying by the end of March. It is the first of six that will be needed for the flight test program before the 787 can be certified by regulators to carry passengers.

The story rings true enough; the 787 is a new aircraft, being assembled a new way.

The 787 represents a new way of building airplanes for Boeing, which turned over most of the manufacturing and assembly work to key partners in Italy, Japan and elsewhere in the United States.

But those partners were unable to complete a significant amount of work before the unfinished sections of the first of six test-flight planes arrived in Everett for final assembly. Boeing has struggled to catch up on all this “travel” work.

Typical complexity issues, perfectly understandable, if disappointing.

[Please click the link below for the complete article -- but then please come on back!]

Boeing explains new 787 delay

It will take a more adept macroeconomist than yr (justifiably) humble svt (not a very high bar to scale either) to tell us the effect of this delivery delay on the economy. Exports are an important piece of the economic pie, and Boeing a critical element of that slice.

Boeing sneezes, and we all should start looking around for our Nyquil.

2. Okay, it’s a recession. Which candidate makes the most sense?

There’s a presidential election campaign going on, you may have noticed.

NYTimes’ Paul Krugman, one of our favorite economic analysts, takes a look at their positions. Voters are getting nervous; tell us you know how to make us feel better:

Responding to Recession

By Paul Krugman | Published: January 14, 2008

Suddenly, the economic consensus seems to be that the implosion of the housing market will indeed push the U.S. economy into a recession, and that it’s quite possible that we’re already in one. As a result, over the next few weeks we’ll be hearing a lot about plans for economic stimulus.

Since this is an election year, the debate over how to stimulate the economy is inevitably tied up with politics. And here’s a modest suggestion for political reporters. Instead of trying to divine the candidates’ characters by scrutinizing their tone of voice and facial expressions, why not pay attention to what they say about economic policy?

In fact, recent statements by the candidates and their surrogates about the economy are quite revealing.

And he proceeds to get to the heart of each candidate’s economic sound bites.

• McCain: ruefully admits he doesn’t know what he doesn’t know about the economy
• Giuliani: his cure, a huge tax cut, isn’t
• Huckabee: just wrong
• Romney: who just might know something, won’t say anything, fearing to offend
• Edwards: driving the agenda with a clearly designed policy
• Clinton: following suit
• Obama: after an awkward false start, now has a plan, although less progressive than the other leading Dems

[Please click the link below for the complete article -- but then please come on back!]

Responding to Recession – New York Times

Can’t help but wonder what Michael Bloomberg thinks… Mike, Mr. self-made billionaire, what get’s us out of our funk, fast?

3. Recession: Bitter but necessary medicine?

Another of MUDGE’s favorite economists, Daniel Gross of Slate, weighs in on our looming distress, and how it could provide a wake-up call to U.S. business:

The Good News About the Recession

Maybe it will finally teach Americans how to compete globally.

By Daniel Gross | Posted Wednesday, Jan. 16, 2008, at 11:53 AM ET

A sign of the housing slump

A recession may be upon us, which would mean fewer jobs, declining tax revenues, and sinking consumer confidence.

But for some (congenital Bush-bashers, the Irvine Housing Blog, critics of rampant consumerism), the parade of bad news is an occasion for schadenfreude….

(By the way, schadenfreude is defined thusly. Admit it, you always wanted to know but never bothered to look it up. Sequitur Service© at your service!)

… They enjoy seeing inhabitants of the formerly high-flying sectors that got us into the mess—real estate and Wall Street—being laid low. Others hold out hope that a recession will iron out distortions in the housing market, thus allowing them to move into previously unaffordable neighborhoods. Some econo-fretters hold out hope that reduced imports and the weaker dollar—both likely byproducts of a recession—will help close the trade deficit. And a few killjoys believe recessions can be morally uplifting. “High costs of living and high living will come down. People will work harder, live a more moral life,” as Treasury Secretary Andrew Mellon put it in the disastrous aftermath of the 1929 crash and ensuing Depression. Not for him stimulus packages and enhanced unemployment benefits. “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” (Thanks in part to such comments, voters liquidated Republicans for a generation.)

With the exception of a few gleaming stars, like our friends Boeing, U.S. companies have been woefully ineffective at selling to global markets.

The world is running away from us. The volume of global trade in merchandise has been increasing rapidly. And it’s not just the United States importing goods from China. It’s China importing natural resources from everywhere and building infrastructure in sub-Saharan Africa, sub-Saharan Africa buying oil from the Persian Gulf, Dubai investors purchasing Indian real estate, Indian builders buying German engineering products and services, and German engineers buying toys made in China. With each passing day, an increasing number of transactions in the global marketplace do not involve the United States. We’re still a powerful engine. But the world’s economy now has a set of auxiliary motors.

We know we’ve been floundering; the way out may well be to find business leaders with global skillsets.

[Please click the link below for the complete article -- but then please come on back!]

The good news about the recession. – By Daniel Gross – Slate Magazine

It’s going to be an uphill fight. We’ve earned our way into this economic distress: outsourcing our jobs instead of figuring out how to become competitive; living high on borrowed money that is now coming due big time; wasting geopolitical and real capital, and thousands of young American lives, on a poorly designed, inadequately executed, military misadventure in Iraq.

The R-Word

We hope you enjoyed this week’s three-part episode, and hope to heaven that we don’t have to do run too many more of them!

It’s it for now. Thanks,

–MUDGE

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