Rationale for a nightmare

“This notion that the economy is self-stabilising is usually right but it is wrong a few times a century. And this is one of those times….” Lawrence Summers, Obama economic advisor in today’s Financial Times.

This is the wrong argument, one that supports unregulated markets most of the time. Rather, we’ve learned that the balance of market and regulatory power is something that cannot remain static over time, that constant retooling is needed. IF we want to think differently, it’s time to acknowledge that mixed markets are the healthiest and that, once this crisis is over, there is no “going back,” because the unregulated economy has demonstrated it is a ruinous economy.

Warren Buffett agrees: “We want to err on the side next time of not allowing big institutions to get as unchecked on leverage as we have allowed them to do.”

What if we just declare “jubilee”?

I’ve been thinking about something a realtor friend told me last night. Yesterday, three homeowners called a banker she knows and said that, if the banks were going to be bailed out, they weren’t going to pay their mortgage. These were regular mortgage payers with no history of credit problems. They have simply given up on the relationship between the economy and themselves that they’ve believed all their lives.

So, I looked into the total US debt, the total of debt owed by low-income countries, the total mortgage debt in the United States and other factors, such as total consumer debt, in the clusterf*^%$k we call the economy.

The United States has $10.2 trillion dollars of national debt as of today. Only $5.9 trillion of that is held by the public, the rest is intragovernmental debt, held by various government entities as part of borrowing conducted to keep things going.

As of August, there was $2.5 trillion in U.S. consumer revolving and nonrevolving debt. Low-income nations owe about $523 billion to rich countries, including the United States.

What if we call it all even? Just erase all debts, including all debts owed by developing nations, except those U.S. Treasury notes held by the public Continue reading “What if we just declare “jubilee”?”

Legislators from both sides agree: Rip-off

It may be needed, but the bail-out shouldn’t come in the form of a give-away to the banks, Congress says.

This is when the vaunted “bipartisanship” Republicans demand at every turn actually becomes a real debate and negotiation. In this case, the only people in favor of the bail-out in its current form are the Bushies. This is why we need a strong Congress, not a unitary executive.

Low unemployment? Then where’d all the workers go?

Mark Thoma at Economist’s View tackles a question I’ve been wondering about: The number of new jobs it takes to sustain full employment.

That is, how many jobs does the economy have to add in a month to keep the unemployment rate steady. In recent years, since the beginning of the “Bush recovery,” the number of jobs added has been suspiciously low. This past month, 92,000 jobs added brought the U.S. to the lowest level of unemployment in five-and-a-half years. yet, it used to take 150,000 to 200,000 jobs added each month to do the same thing.

The Wall Street Journal reports the Federal Reserve now says only 110,000 jobs added is sufficient to sustain current employment rates. But this seems to me to be the result of the increasing politicization of the Fed, which seems more concerned with supporting White House messaging than managing the economy that actually exists.

Economist’s View: What Level of Job Creation will Sustain Full Employment?:

The change from 150,000 to 110,000 is fairly recent. Michael Moskow’s speech, the first time I heard the revised estimate, was in June, 2006, a year and a half after the trough shown in the graph below. Moskow said:



With overall population growth continuing to slow and labor force participation not expected to rise, we probably need to adjust our benchmarks for what level of employment growth is consistent with economic growth near potential and a steady unemployment rate. It used to be that increases in payroll employment that averaged 150,000 per month were consistent with flat unemployment. Now that number may be closer to 100,000.

Here’s the overall participation rate, and it doesn’t seem to support such a large change in estimate of the job growth needed to hold unemployment steady (to two-thirds of its previous value)… read the rest.

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Turn up the global heat, turn down the global economy

My comment: Keep in mind, this five-to-twenty percent less economic activity figure is if we do nothing. If we invest and solve the problem, it’s the key to making the massive gains of the industrial era looking like child’s play. Why would we not invest to end global warming? It means clean power, perhaps unlimited power to drive generations of progress, not just lower sea levels.

Global warming, economic cooling? | Economist.com :

SIR NICHOLAS STERN, the head of the British Government Economic Service, has produced the world’s first big report on the economics of climate change. … Sir Nicholas’s argument is that, far from undermining the American way of life, attempts to mitigate climate change may help preserve it. He argues this by setting the costs of allowing climate change to happen against the costs of mitigating climate change.

Previous estimates of the costs of climate change—as a result of more hurricanes, more floods and rising sea levels, for instance—have been somewhere between nothing and 2% of global GDP. But Sir Nicholas says those figures were wrong, for two reasons. First, the science has changed, and global warming seems to be happening faster than was previously believed. Second, those estimates have looked only at the likeliest outcomes from climate change, not at the outlying catastrophic possibilities. As a result, Sir Nicholas maintains that if greenhouse gas emissions go on increasing at their present rate, global output is likely to be between 5% and 20% lower over the next two centuries than it otherwise would have been.

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$33 more a month for typical retirees

Social Security Checks to Rise, Inflation Slows – washingtonpost.com:

Social Security payments will increase 3.3 percent next year, a smaller cost of living hike than last year for the more than 53 million Americans who receive monthly retirement or disability checks, the government announced today.For retirees, the cost of living adjustment will mean an extra $33 a month beginning in January, with the typical payment jumping from $1,011 to $1,044.

Imagine the leisure opportunities that extra $33 opens wide before the American senior…. Just imagine.

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Over at ZD Net, Monday, October 16, 2006

As part of your humble publisher’s ever-increasings efforts to make reading convenient and pleasurable, here are excerpts the postings I did at ZD Net in the last day (click the headline to read the whole article):

Knowing a lot less than your readers

I’ve resisted getting into another confrontation with Dave Winer, preferring to leave it to Nick Carr and Donna Bogatin to respond to one of the dumbest overgeneralizing “insights” Dave has ever published, that journalism is “like cooking dinner” and that it is “easier for readers to become reporters than it is for reporters to become readers.”

Then, I read this obituary for murdered Russian journalist Anna Politkovskaya:

SHE was brave beyond belief, reporting a gruesome war and a creeping dictatorship with a sharp pen and steel nerves. It may be a chilling coincidence that Anna Politkovskaya was murdered on Vladimir Putin’s birthday, but her friends and supporters are in little doubt that her dogged, gloomy reporting of the sinister turn Russia has taken under what she called his “bloody” leadership was what led to her body being dumped in the lift of her Moscow apartment block.

Winer wrote last week, in a posting I’ll take point by point…

Taxonomy: Will practice make perfect?

Renee Blodgett points to the upcoming Taxonomy Boot Camp, where David Weinberger (author of the upcoming Everything Is Miscellaneous) will be giving the keynote. David’s thoughts are always useful and frequently blindingly insightful. I’d like to be at the conference, but have a conflict. So, I’ll just inject the comments I’d offer if I could go….

The topics at the event include “How to create and implement a successful taxonomy,” which poses an interesting challenge for David’s talk, because he has been at the forefront of the folksonomy movement. Is it possible to “create and implement a taxonomy,” which implies extensive planning and management? Well, sure, if you have to create a closed system, I suppose it is possible, but the collaboratively produced taxonomy is more about the creation of a setting in which purposeful discussion and compromise can happen, because few things can be uniformly tagged and categorized to deal with all situations….

News of puppets?

I’m a big fan of Second Life. But I wonder about a Reuters bureau for SL, which was launched, along with an SL news page where stories have the gushing quality of a press release, like this:

Philip Rosedale and his team at Linden Lab have almost godlike powers in Second Life that Alan Greenspan (right) could only have dreamed of, but they have much the same job managing its fast-growing economy.

With the Second Life economy growing by a red-hot 10 to 15 percent a month, roughly in line with its overall population, Linden Lab is keen to avoid the hyperinflation that has often tainted both real economies and virtual ones.

I understand writing about new products that connect Second Life to external events and covering business and virtual business, because money is really changing hands, but I doubt that requires this kind of production Reuters—or, rather, its reporter—is undertaking to seem relevant to the community he covers. After all, one can certainly report on events on Second Life without having a virtual bureau—seems like the best way to be flooded with cheesy PR pitches to me….

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