This piece by Amity Shlaes on Bloomberg is an interesting defense of austerity as a way out of recession, depression, it shows that historically austerity can work well and there is no reason to think that it will not work today. Given our problems this strengthens my feeling that austerity (and cutting gov’t and its entitlements sharply) is the way forward.
Category Archives: Economics
The Lady is Not for Turning
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Photo from UK Daily Telegraph original AFP
Great synopsis of the mistakes driving the collapse of the Eurozone…punditry is now betting on collapse of some form.
This is a very clear explanation of what went wrong with the US Housing market over a very long time.
Big problems rarely appear from nowhere….this piece from the American Interest jives with many other articles, puts it in a longer context.
Fannie, Freddie and the House of Cards
By Mary Martell
“Fannie Mae and Freddie Mac (collectively the two largest “GSEs”, or government-sponsored enterprises) have engaged in a broad range of residential mortgage activities for many years.1 The economic disaster of recent times has drawn considerable attention to Freddie and Fannie, which is not surprising considering the role that the mortgage sector of the U.S. banking system played in that debacle. Together the two institutions hold or pool about $5 trillion worth of mortgages, and so sketchy were their operations that in September 2008 the U.S. government had to bail them out and place them in conservatorship to keep the entire mortgage market from imploding. While the U.S. government has by now been made whole by TARP-assisted banks, it is not clear whether the billions of dollars provided to keep Fannie Mae and Freddie Mac afloat will ever be returned to the U.S. Treasury.”
Read the whole thing
Where goes California there goes the U.S. I hope Not!
Interesting article looking at the state of the regulatory state bell weather (California.)
Space the lost frontier? Losing other things…
There was a flurry of space interest coinsidering with the shutdown of the Shuttle and the announcement of the Senatorial Launch System, then some good traffic on visiting asteroids etc. Now it seems to have fallen of the face of the earth. It’s this kind of thing that drives me nuts, we live in such a press release driven world that there tends to be these booms and busts of interest and its all about as artificial as much of the rest of the so-called news. I know that I can in fact keep up on what’s going on via various web sites and blogs, but I find it disturbing that the there is no concerted effort to keep space front and center in the american people’s attention.
And no I am not saying NASA should be flogging its programs, but the rest of the space world should be, not only US but the world, there is interesting stuff going on around the world, from the first Chinese docking, to the flyby of the big rock tomorrow etc, etc, that there is never a paucity of things that could be used to keep people’s interest tickled.
I am a bit afraid that the likely coming downturn (recrash…zombie cat bounce…) is going to crush eSpace, maybe not, most are probably fairly well isolated but maybe not if things really go bust.
On another topic…….
Talking about busts I have a feeling that the administration and others may have absolutely no idea the devastation they are looking at if the military downturn turns into a bust due to one force or another. A huge amount of the US industrial base depends on defense spending for some of its more profitable work. Maybe (hopefully) not its base, but the stuff that really makes the books sing every once in a while. I know the vendors who do work for the company I work for, while they may curse us quite frequently, also love us for the ‘quality’ of the work with contract out as well. Us and dozens of other defense related companies.
Generally the economic multiplier effect of a defense dollar is over ten, in space or aviation it can be nearly twenty, things like green tech are probably decent but sub ten, automotive is in the same range, but get to more basic stuff and its a few turns at best. And if you start subtracting a lot of those 10 to 20 X multiplied dollars and either don’t spend them or spend them on more basic products, you are going to see a much more massive downturn than expected.
Hopefully the grownups all realize this and are planning for it…….Oh, yeah, there are no grown ups….there is only us. Maybe we’re in trouble.
If it all happens with virtual #’s do you hear the ‘Earth shattering Kabooom’?
Economist blog Free Exchange discussing current Euro(pean) implosion…. A quote “from the International Strategy and Investment Group, explain the political dynamics: Papandreou’s motives are understandable: So far the opposition has provided no support for the measures that he has been forced to push through, and he and his party have been left alone facing the public anger. The opposition’s tactics are in a sense similar to those used by the Portuguese opposition earlier this year. There the opposition forced the government to fall, took over power, and promptly implemented policies very similar to what the previous government was going to do anyway. Papandreou knows that story, and his decision can be interpreted as a refusal to be the victim of the same game.”
The Gov’t is here to help…relieve you of your (fill in the blank)
This Forbes piece is in violent agreement with yesterday’s post. I guess more and more people see the problem the way I do…though I don’t think the gentlemanly solution is going to get us where we need to be, but might keep the problem from getting as bad as quickly in the future when the people have taken their eye off the ball to deal with other important issues.
Be Here Now
How did we get here? Why is this happening now?
The Here and Now is a phonograph needle tracking the wobbles in the groove that all our yesterdays laid down.
Is there a way out?
There is only foreward there is no going back.
There is a Destiny which has the control of our actions, not to be resisted by the strongest efforts of Human Nature. (From)
GEORGE WASHINGTON, letter to Mrs. George William Fairfax, Sep. 12, 1758
Not sure I agree at an individual level all the time, but on the aggregate in the immediate time frame I would. Perhaps its like this: Science tells me that most of my actions are planned a significant fraction of a second ahead of my consciousness recognizing what is going on. It is impossible to change what you do not know is coming but if you plan ahead you can control what happens at a future point in time and space.
And what we do individually and locally does matter nationally and globally, at least a little and if not now then sometime in the future.
Does that mean I demand “Word Gov’t Now!” how stupid do you think I am?
We need more self-control, personal control, local control and less regional control, national control and global control. We do need norms and some way of enforcing them for such things as : life, liberty and the pursuit of happiness, and such easily debased things as contract enforcement, property rights, ecological cost accounting, financial cost accounting…a few others…maybe
But….the old bureaucratic model, relying on a plethora of relatively well paid trustworthy functionaries to enforce norms is becoming unaffordable.
Laissez-Faire – let it be – management doesn’t work, it doesn’t work in regulation either.
Why has the US Constitution remained important for more than 200 years? Because its simple, basic, lays out fundamentals and leaves the rest for interpretation but by being fairly simple, constrained and pragmatic it is actually possible to interpret it to cover very large sets of cases.
We have to get over the belief that you can make life perfect if you can just tune your laws/regulations/rules just right and get the humans out-of-the-way. We used to know better, I think that most scholars know better. But somehow many folks have come to believe that if not all, then the one specific law they care about can be perfected, and since they care about it passionately they push it forward, usually through a system that has no time to really understand the consequences of this law when combined with that law and this social reality, etc. And with each law becoming more complex because of fiddling to tune it to perfection, the way they interact becomes utterly unknowable. And the law becomes harder to obey and easier for smart lawyers to subvert.
So….
So where do we go from here?
Start to build down the complexity we have built up at every level, what about:
- For every new rule, two old ones have to be eliminated and no double dipping?
- Limit the length of any law/rule/regulation to two double-sided 8 1/2 by 11 sheets one inch margins typed in 11 point Times New Roman with the option of an extra sheet of readable graphics?
- Eliminate mandatory this, no tolerance that, rules that have become a pox on our society?
- Make Judges accountable to other Judges and the Bar with impeachment by the people an option?
You can think of more, I know you can!
Cheers
Move along, nothing original to see here…. but maybe some interesting links..
As Russel Mead at Via Meadia writes to great effect the Great Loon, the Duck of Death is dead.
And here is Russel Mead’s interesting take on protests etc. A very insightful piece that hit home once more regarding something that puzzled me… ” There was a time long ago when political protest really mattered. The Vietnam protests didn’t end the war (and didn’t keep Nixon from carrying 49 states against George McGovern in 1972), but they helped end the draft. The civil rights movement led to some of the most profound social changes this country has ever seen. Before that, there were labor and suffragette marches…” ” But these days the old style protests remind me of political conventions: empty and pointless (though noisy and publicized) rituals. “ And he draws a comparison to the conventions. Once the conventions were important, before mass media and instant communications, but now they are just rituals the politic druidic class still hold. In the old days a mass rally meant something, life for the working class was twice todays and wages closer to subsistence, and brutality was expected of the police, going to a rally meant something. Today it’s not much more than a smelly holiday. Not to say that there aren’t some grievances and suffering…but OWS is more theater than struggle. And then Amity Shales had this to say about what these folks want, vs what they need.
I am never going to be the blog-media-news miner that Instapundit is. Here is the latest on the SLS fiasco from Rand Simberg, the Space Launch System is a works program, yes well paid and aerospace is effective economic multiplier but the money could be spent to so much better effect!
(edits, still not getting all of this right the first time)
“Here’s the problem: there are no grownups. “
I have a new hero! I love this line, maybe it was just a matter of right words at the right time on the right topic but it is perfect. Bob Krum was discussing the euro debt crisis among other things (like stupid questions on ‘presidential debates’) in Stop Waiting for Superman.
There are no grownups; there are just folks (blokes in Brit speak) like us, imperfect humans who are lucky to make a right decision (on issues more complex than whether to turn into the path of that oncoming Mack truck or not) much more than 50% of the time (and we don’t always make the right one regarding the Mack truck.)
What does that mean? Many things but one of them is that overly complex political, financial, social, technical…etc constructs are asking for problems. Stable systems are ones that are essentially self organizing, a pile of sand will settle into the same conical shape every time because its stable in its environment. Small c capitalist, old meaning liberal economies, are self organizing and stable. The euro zone is a complex web of overly constrained systems that like some cartoon Rube Goldberg steam plant is constantly threatening to blow a gasket and it requires a genius just to know where to apply the next tourniquet.
In the last few decades we have made vast strides in understanding ourselves and our world (in a thousand different dimensions.) Then we have often reacted to this increased understanding by thinking we can control more things and implementing more and more rules. The effects of those rules are often individually complex and unintended but the interactions between them is (IMHO) utterly outside of our ability to cope with. Among other things I rather suspect that every one of us (barring a newborn baby maybe) is technically a criminal, having violated at one time or another various laws, rules or regulations most of which we had no idea existed or had no way to follow.
Somehow we have become inured to the regulated world, see it as natural, but it’s probably reached its practical limits and is now in the process of imploding. We have the tools to creat a more self organized – de-bureaucratized world but have not yet quite figured out what it really looks like and how to transition from where we are to where we need to be.
Maybe that’s just wishful thinking….fueld by a frustration at the idiocy that seems to have become institutionalized in so many places. But change ‘is in the air,’ though it may still be some years away. I just hope that the transition can be made relatively peacefully, there are far too many people on this orbiting rock (7Billion!?) for a major disruption to be anything other than catastrophic for far too many.
There is no utopia waiting over the brow of the next hill, and there was never a golden age that we have somehow lost (one man’s golden age was someone elses hell.) We can’t go back to a past that never existed, and refusing to live and work today because the day after tomorrow will be better is foolish and self-destructive. Tomorrow never gets here, let alone the day after, and your vision of the world will never occupy a future today unless you work for it in the today you find yourself in. Live in the now with a vision of where you want to end up.
This World and Others 