presenting the case for anti-cycylical fiscal policy; and fiscal retrenchment now would be pro-cyclical, making a weak economy with a huge output gap all the weaker
Are profits hurting capitalism? Yves Smith and Rob Parenteau, NYT.
picks up and expands on a point made in an article i linked to yesterday by Steve Waldman, re: capitalists not being capitalists enough.
Equities for the LOOOONNNNGGGG run. Jake, Econompic Data.
over the last 30 years, 10-yr strips have outperformed stocks
My Tea Party. James Howard Kunstler.
normally i would just link to this, but this post is well worth posting in full:
Now that congress has passed a fake financial reform bill that will accomplish absolutely nothing to correct a recently engrained culture of swindling, I want to start my own tea party. I don't want to associate it with the other tea parties that have already formed because I am allergic to much of the idiot ideology they express - especially the bent for merging Christian fundamentalism with governance.
One of the few things I agree on with the existing tea parties is that the Republicans and Democrats have made themselves hopeless hostages of political money and bargained away their legitimacy. In line with my general belief that American life must downscale or die, I'm not wholly persuaded that federalism can survive in any case - but assuming it will lumber on for a while anyway, the two major parties cannot retain their monopoly on power. Indeed, it is in the natural order of things that this country must periodically endure a realignment of political ideas and political power. This tends to occur during moments of cultural convulsion, and that is exactly the moment we are in as the sun sets on the fossil fuel based industrial extravaganza and we enter a crisis of intense resource austerity.
The other tea parties have been silent on the war because of the ties between Christian fundamentalism and military chauvinism. This is due, I suspect, to the tea parties first emanating out of Dixieland, where an old Scots-Irish "cracker" belligerence persists in a romantic view of violence - and where, coincidentally, there happen to be so many US military bases, and families dependent on careers connected with them. The confusions of hellfire Christian theology with governance form an overlayment on this, so you end up with a political culture favoring military adventures abroad and pushing citizens around at home on matters of social behavior (while mouthing a lot of disingenuous nonsense about "liberty").
I don't like that political culture and I'm not in favor of continuing our adventures on the fringes of the Middle East. The half-assed occupation of Afghanistan cannot be resolved in a way consistent with our fantasies and wishes. To put it as simply as possible, we can't control the terrain there and we can't control the behavior of the population. Our campaign to turn that remote and impoverished land into a governable democratic state is an exercise in futility that we can't afford. No doubt there are strategic wishes pinned to it - mainly a wish to influence and moderate neighboring Pakistan - but that appears to be back-firing with the minting of evermore Islamic maniacs seeking to blow up anything that presents a target, including their own women and children.
Iraq is a somewhat different story, but I suspect the bottom line is that we can't afford to run a police station there forever. In the worst-case of our leaving, Iran might attempt to step in and control the place (and its oil), but that would only produce a bloody collision of Arab and Persian culture - and the side effect of that might actually be to our benefit. Anyway, my tea party would shut down that operation ahead of schedule.
My tea party would reduce legal immigration to a tiny trickle and get serious about enforcing sanctions against people who are here without permission. A New York Times editorial last week expressed the Democratic-progressive view in typically tortured style, saying of the recent Arizona law:
..it makes a crime out of being a foreigner in the state without papers -- in most cases a civil violation of federal law. This is an invitation to racial profiling, an impediment to effective policing and a usurpation of federal authority....The fine distinction they want to apply in this matter between civil and criminal law is the same as NPR's house style of referring to illegal immigrants as "undocumented" - leaving the impression that the only problem for these people is a some bureaucratic glitch rather than a transgression of law. The truth is that neither party really wants to do anything about the extraordinary influx of Mexican nationals because they want to pander to a growing segment of Hispanic voters (or secondarily want to maintain the pool of cheap labor for US businesses). My party does not believe in unbounded multi-culturalism. My party also views the lawlessness of the current situation to be corrosive of the rule-of-law generally. My party views the global population overshoot problem as a condition that requires a more rigorous defense of US territory, sovereign resources, and even whatever remains of American common culture.
My tea party would systematically dismantle Too-Big-To-Fail banks into smaller units subject to real reforms that would prevent any further "socialization" of losses by financial buccaneers. In effect, my party would re-enact the Glass-Steagall laws - and get rid of the 3000-page bundle of prevaricating crap in the current "Fin-Reg" law, which has been constructed with all the guile and mendacity of a collateralized debt obligation. My party would seek the return of banking to its function as a
utility, while letting investment freebooters gamble with their own funds without any government back-up. (You'll see the investment houses get small fast that way.)My tea party would get the government out of the housing business. The main effect of 70 years of federal intervention for the sake of "affordable" housing has been to drive the price of housing up far beyond the ability of normal people to afford a place to live. And the current policies devised during the bubble crackup crisis have only served to prevent the price of houses from returning to a level where people might be willing to buy them. Of course, the whole process has also encouraged local governments to jack up property taxes to a level that can only be described as intolerable (in the 1776 sense of the word).
My party would undertake a rebuilding of the US passenger railroad system - not a flashy new "high speed" system, which we cannot afford, but the system that is lying out there rusting in the rain waiting to be fixed. This is imperative because we are on the verge of very disruptive problems with our oil supply which are going to put our beloved Happy Motoring matrix out-of-business. We also face the end of mass commercial aviation (even if flying remains an option for the wealthy). A restored passenger rail system will not solve all the problems connected with the demise of mass motoring, but it will help a lot, and would be an aid to the necessary re-activation of our small towns and cities as suburbia inevitably loses its value and utility.
The leaders of my tea party from the president on down would make a concerted effort to inform the public in straight talk about the real problems that we face involving peak oil and debt. My tea party would promote reality-based politics rather than techno-grandiose fantasies and wishful thinking. My tea party would encourage the necessary downscaling of all the critical activities of American daily life, including the re-localization of food production, the rebuilding of local commercial networks, the revitalization of the small towns and cities, and the difficult transition out of extreme car dependency. My tea party will do everything possible to construct a coherent consensus about what is happening to us and what we can do about it. My tea party is based on the true spirit of 1776 - the binding together of common interests and common culture - not the destruction of them as in the spirit of 1861.
late additions:
James Montier Resource Page. EuroShareLab.
Bond market worried about 1930s echo? Leo Kolivakis, Pension Pulse.
Will austerity be the catalyst for war? Dylan Grice, SocGen, via zerohedge.
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