mm328: Today’s economics lesson: Depression 101

March 25, 2008

MUDGE’s Musings

Paul Krugman of the NYTimes is an economics professor who has a clear grasp of the big picture. Guess that would be macroeconomics, wouldn’t it?

And he has a way with words.

For yr (justifiably) humble svt, as a child of children of the Depression, its lessons were removed by time, heavily insulated by the cornucopia of plenty that followed the cleansing and rebirth that was World War II for the U.S.

Only those who were very young during the Thirties, certainly not policy makers, are around now, so it’s good that Prof. Krugman is here to teach us some important lessons.

nytimes

Partying Like It’s 1929

By PAUL KRUGMAN | Published: March 21, 2008

If Ben Bernanke manages to save the financial system from collapse, he will — rightly — be praised for his heroic efforts.

But what we should be asking is: How did we get here?

Why does the financial system need salvation?

Why do mild-mannered economists have to become superheroes?

Read the rest of this entry »


mm265: It’s a Bush administration; the wealthy get wealthier while the poor suck hind tit

January 25, 2008

MUDGE’S Musings

The number crunchers are beginning to weigh in on the administration’s latest economic stimulus plan.

Can one really be surprised that the stimulus mainly impacts those who need it least?

Paul Krugman had the following observations in the NYTimes, and on his blog:

Stimulus Gone Bad

By PAUL KRUGMAN | Published: January 25, 2008

House Democrats and the White House have reached an agreement on an economic stimulus plan. Unfortunately, the plan — which essentially consists of nothing but tax cuts and gives most of those tax cuts to people in fairly good financial shape — looks like a lemon.

Specifically, the Democrats appear to have buckled in the face of the Bush administration’s ideological rigidity, dropping demands for provisions that would have helped those most in need. And those happen to be the same provisions that might actually have made the stimulus plan effective.

In his related blog (linked to in the Times, and full of a series of useful comments on the stimulus plan) he reproduces the chart that the nonpartisan Tax Policy Center created after analysis:

rebateshare

Predictable:the top 40% of income earners would get 58% of the proceeds. It’s just so typically wrong-headed. We’re headed toward rough seas; let’s take the motors off the lower-deck lifeboats, so that the upper deck lifeboats have two!

And the Democratic leaders in Congress, as has been typical for them since they assumed majority status after the 2006 elections, caved. No stomach for a fight, Ms. Pelosi? If not, you certainly are in the wrong place at the wrong time!

Krugman points out that getting money to people who really need it “does double duty: it alleviates hardship, and also pumps up consumer spending.”

The result: a program that isn’t helpful where most needed, and fails in its goal as an economic stimulus.

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

Stimulus Gone Bad – New York Times

You needn’t be a card-carrying curmudgeon to be disgusted.

I just love the FDR quote, at a time when spats-wearing plutocrats were desperately clinging to their customary piracy – er, business – as usual:

“We have always known that heedless self-interest was bad morals; we know now that it is bad economics.”

When will it end, you ask? timeanddate.com tells us: 360 days, 15 hours: Noon Eastern Standard Time, Tuesday, 20-January-2009.

It’s it for now. Thanks,

–MUDGE

Share this post : del.icio.us it! digg it! reddit! technorati! yahoo!


mm257: The R-Word – Not that racy television show…

January 17, 2008

MUDGE’S Musings

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).

seattlepi

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:

nytimes

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:

slate

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

House for saleA 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

Share this post : del.icio.us it! digg it! reddit! technorati! yahoo!


mm190: U.S. Health Care – Excuses, not facts

November 11, 2007

MUDGE’S Musings

Access to affordable health care. Five words. Easy to write. Rolls off the keyboard fluidly even. Simple phrase; political cesspool. Can universal access to affordable health care ever happen in the U.S.?

Paul Krugman, the economist whose columns appear in the Opinion section of the NYTimes, this week reminds us that the failings of our health care system are manifest: we spend more, but get less – fewer covered and lower life expectancy than in any other western economy.

Moreover, the usual suspects (our lifestyle) and the usual bugbears (socialized medicine!) are distortions and outright lies.

krugman

By PAUL KRUGMAN | Published: November 9, 2007

The United States spends far more on health care per person than any other nation. Yet we have lower life expectancy than most other rich countries. Furthermore, every other advanced country provides all its citizens with health insurance; only in America is a large fraction of the population uninsured or underinsured.

For those fortunate enough to have health insurance, premiums keep rising, and employers are beginning to push employees to pay more of the freight, or even to start to pay additional for their lifestyle choices.

For example, several cases have hit the news recently where employers have fired, or failed to hire, otherwise qualified people who are smokers.

Aside from the disturbing privacy concerns, the entire concept of group insurance (where the large numbers of average members in good health balances those few with greater needs) is at risk here.

But, as Krugman tells us, what apologists and politicians like Rudy Giuliani have done is blanket us with excuses, not solutions, and inaccurate and downright wrong excuses at that.

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

Health Care Excuses – New York Times

As a reluctantly, increasingly active consumer of the U.S. healthcare system, one of the luckiest ones covered through a plan 80% subsidized by my employer, I take for granted that I see medical professionals regularly, for the cost of a nominal co-pay up to that 20%. For what is spent, my experience should be the rule and not exceptional.

Armed with Paul Krugman’s excuse-busters, let’s all work to shed light to undo all of the misinformation out there on this subject.

It’s it for now. Thanks,

–MUDGE