Political Economy category archive

Paul Krugman reports on the austerity myth. A nugget:

In the spring of 2010, fiscal austerity became fashionable. I use the term advisedly: The sudden consensus among Very Serious People that everyone must balance budgets now now now wasn’t based on any kind of careful analysis. It was more like a fad, something everyone professed to believe because that was what the in-crowd was saying.

And it’s a fad that has been fading lately, as evidence has accumulated that the lessons of the past remain relevant, that trying to balance budgets in the face of high unemployment and falling inflation is still a really bad idea. Most notably, the confidence fairy has been exposed as a myth.

For all practical purposes, no change:

Initial jobless claims declined by 23,000 to 452,000 in the week ended Oct. 15, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance fell, while those getting extended payments rose.

The pace of firings has persisted since the start of the year, indicating it will take longer to reduce an unemployment rate that’s near a 26-year high. A Federal Reserve report yesterday showed the economy is growing at a “modest pace” with companies still hesitant to hire, a reason central bankers may ease monetary policy.

From the website:

In the second edition of White House White Board, Austan Goolsbee, Chairman of the Council of Economic Advisers, looks back at the President’s record on the economy through the perspective of the last three years in private sector employment.

From Shaun Mullen. A nugget:

A friend has appropriated the perfect term to describe the people who are sucking the middle class dry from their big corner offices in skyscrapers across America. He calls them the Vampire Elite. They represent a far greater threat to our security than feckless domestic terrorists or even Al Qaeda, yet most Republicans are in their thrall and most Democrats too cowardly to face them down although nothing less than the future of the American Dream is at stake.

The Obama administration was going to have a dickens of a time getting the U.S. back on the road to prosperity after his predecessor gifted us the worst recession since the Great Depression.

But it is the Vampire Elite — the corporate big shots and bankers and stockbrokers and their super-rich clients — who are the greatest impediment.

Addendum, That Same Evening:

Skippy.

Trumpets sounded, cheers reverberated and burly workers wiped away tears as foreman Hubert Baer lifted a statue of Saint Barbara — the patron saint of miners — through a small hole in the enormous drilling machine thousands of feet underground in central Switzerland.

At that moment, a 35.4-mile tunnel was born, and the Alpine nation reclaimed the record from Japan’s Seikan Tunnel. Television stations across Europe showed the event live.

And we can’t manage a two mile-long tunnel under a river because building it means that folks who have lots more money than they know what to do with might end up with merely having more money than they know what to do with.

Warning: Mild Language.

This is the “entitlement spending” that needs must be controlled (emphasis added):

One of the Navy’s most trouble-plagued ships, the San Antonio, won’t deploy next year as planned, a four-star admiral announced Thursday.

(snip)

The first ship of its class, the San Antonio has been beset with problems since its commissioning more than four years ago. It cost more than $1.4 billion, 70 percent more than originally budgeted, and came in two years late.

(snip)

The repair bill for the latest fixes will top $39 million, the Navy has said.

The first ship of its class. No doubt its successors will be even classier.

The cost of this one rust bucket would run Amtrak for more than two years or feed thousands of hungry persons or replace dozens of failing bridges and roads.

Instead, we have a crew of sailors with nothing to sail and a hole in the water absorbing endless money.

The foreclosure-based economy (see below) continues its path of job creation:

Jobless claims rose by 13,000 to 462,000 in the week ended Oct. 9, Labor Department figures showed today in Washington. The total number of people on unemployment insurance rolls decreased to the lowest level since November 2008, while those getting extended benefits declined.

And more to come:

Lenders took over 102,134 properties last month, RealtyTrac Inc. said in a report today. That was the highest monthly tally since the company began tracking the data in 2005, surpassing the August record of 95,364. Foreclosure filings, including default and auction notices, rose 3 percent from the prior month to 347,420. One out of every 371 households received a notice.

Addendum, That Same Evening:

Zandar points out that the revised unemployment numbers seem always to be significantly worse than the initial ones.

Thoreau has a suggestion. Please read his entire post for context–it’s worth the two minutes:

If it really is so screwed up beyond recognition that nobody has the ability to establish ownership (either to give title to those who pay their loans or to foreclose on those who don’t) then I am tempted to say that perhaps those mortgages should just be forgiven and everybody owns their homes, given the tough economic times. If nothing else, it would teach a lesson to bankers who cut corners on documentation. . . .

Writing in the Philadelphia Inquirer, Joel L. Naroff takes a look at economic myths. Here’re two out of the five he discusses:

Tax cuts will boost the economy and shrink the deficit: Alas, the economic literature clearly shows that cutting taxes increases the deficit, especially in the near term.

(snip)

Spending cuts will increase growth and reduce the deficit: Reducing government spending does not increase growth in the short term. A dollar not spent – no matter who doesn’t spend it – is a dollar not spent. This is what economists call contractionary fiscal policy, because it causes the economy to contract.

Expect more stories like this if the wingnut assault on public services succeeds:

Federal investigators say concerns over firefighting costs slowed the U.S. Forest Service’s initial response to a Southern California wildfire that killed two firefighters and destroyed 89 homes.

New Jersey Republican Governor Christie threatens to scuttle a new commuter terminal between New Jersey and New York City.

Bob Herbert comments:

There have been many times when the U.S. has stunned the world with the breadth and greatness of its achievements — the Marshall Plan, the G.I. Bill, the world’s highest standard of living, the world’s finest higher education system, the space program, and on and on.

Somewhere, somehow, things went haywire. The nation that built the Erie Canal and Hoover Dam and the transcontinental railroad can’t even build a tunnel beneath the Hudson River from New Jersey to New York.

Because, you see, the tunnel would benefit persons who can’t afford to have chauffeurs.

Via Atrios.

Republican millionaires have claimed for years that teachers and cops and other government employees making, say, $30-50,000 a year are overpaid. (See some comparative pay statistics; it’s a little dated but it was the clearest I could find that focused on numbers, not on rants.)

They’ve finally figured out what to do about it.

Crash the economy.

State and local governments from New Jersey to California are firing workers to balance their budgets as declining property values and slowing economic growth squeeze tax revenue.

Public schools in New Jersey were set to start the academic year down 10,000 jobs, including 7,000 educators who chose to retire, Steve Wollmer, a spokesman for the New Jersey Education Association, a union that represents teachers, said in August after Governor Chris Christie slashed $1.3 billion in aid to schools and local governments.

(Link fixed.)

Via TPM.

From the Booman, a chart contrasting actual wealth distribution with Imagined wealth distribution by members of different income levels, sexes, and voting groups.

No one estimates the reality: that the very rich own almost everything:

Click the image to read the Booman’s complete analysis.

Under 450k for the first time in weeks, but just barel. Bloomberg:

Jobless claims dropped by 11,000 to 445,000 in the week ended Oct. 2, the fewest since July 10, Labor Department figures showed today in Washington. The median forecast or 47 economists surveyed by Bloomberg News projected 455,000 new claims last week. The total number of people receiving unemployment insurance decreased and those getting extended payments jumped.

(snip)

The four-week moving average, a less volatile measure than the weekly figures, dropped to 455,750 last week from 458,750, today’s report showed. It was the sixth consecutive decrease.

The beatdown goes on.

Zandar thinks it’s all about the Scary Black Man. I think his rhetoric is somewhat extreme. But only somewhat.

Tea Partiers don’t give a damn about the fact that cash is being poured into the system by conservative groups with unlimited donation power, and that’s because Tea Partiers don’t give a damn about fiscal responsibility. They just want Obama gone, and they don’t really give a damn how it’s accomplished.

All of the rest is a ruse. Yes, if this means Christine O’Donnell is in office, they don’t care what she does, as long as Obama is removed from office.

People need to recognize the driving force behind Tea Party anger is getting rid of Obama.

What you are getting for your defense dollars: Do-Overs:

The latest round of repairs aboard the Norfolk-based amphibious ship San Antonio will run the Navy at least $39 million, far more than the $7 million officials originally estimated, the service said Friday.

The San Antonio, commissioned in 2005, has been under continuous repair since December.