Archive for the ‘Weekly Drive-By’ Category.

Friday Morning Musings

Well first it is nice to see someone else start to notice that the conservative musing of Abby Huntsman on MSNBC are based upon a shallow reading of conservative blogs, which are shallow readings in and of themselves, not real economics (See Abby, Abby, Abby!). Dean Baker takes her on with her fear of dire consequences of the Social Security entitlements with facts. Oh, those pesky facts. It is a prime example of pseudo science applied to politics. On the other hand, it is the prime mode of thinking these days just about everywhere.

Speaking of wild speculation masquerading as fact, we had a moment of calm in the search for Malaysia Flight 370 when one expert actually told us that based on the known facts, speculation about what happened is just wild ass guessing. But today we have the specter of possible human intervention as a cause, and wild speculation of hijacking has commenced. You know pings from a satellite system leads to a nefarious plot. I guess from my perspective, I still have questions about what are facts and if the pings are verified as true indicators of engine operation. In other words, what a mess.

Meanwhile Putin seems to be trying to reinvigorate the Cold War and prove that the capitalist West is gutless. Now I think he will find that trying to control a new Soviet Union is going to be a disaster, but in the meantime we have to see if the West has the stomach to enforce economic sanctions. If it affects the bottom line of many of our corporations, well then let the people be subjugated. It will be interesting to see if this is really just about the money and we all lose.

It was interesting to see Paul Ryan try to walk back his words about the poor. You really have to pay attention to the first thing he says, not his clarifications because he said what he really means the first time. The poor are lazy and helping them makes them more lazy. End all entitlements because it just enables them. That is what he means.

Finally, as President Obama tries to get businesses to pay a fair minimum wage and to actually recognize and pay overtime, let the squawking begin. The basic argument is that this will hurt stockholders. Said another way as productivity increases along profits, they don’t want to share that with workers. The other argument is that workers choose these jobs in a “fair” marketplace and the government shouldn’t intervene. Fair would be defined as it was in the South before the Civil War or in the 19th century when the robber barrens turned workers into indenture slaves.

Oh, and all those entitlement programs like Medicaid and Food Stamps are not give aways to lazy poor people. They are give aways to corporations so people can work at slave wages and still survive. Think about it. Wine time.

The Friday Drive-By

Let’s see. This week has been eye opening if you are awake, which sadly most Americans are not because they no longer read anything but their Iphones. And if you listen to the news, well the media is still stuck on he said/she said. So with that in mind, I will just present you with a few odds and ends that might actually be quite clarifying about where and who we are:

  • Senator Rob Portman, Senator from Ohio has changed his position on same sex marriage after his son told him he was gay. It’s all about that empathy thing. Conservatives don’t experience empathy. Unless they have an actual personal experience, they don’t get it. That is how it is so easy for them to disenfranchise gays, the poor, elderly, illegal immigrants, deny global warming, not send aid to Sandy victims, and think a gun keeps you safe. Until they understand shit happens to all of us or that gayness is not a choice, just a state of being, it must be because they made bad choices (NYT)
  • This week we really got three possible budgets for the way forward, two of which are realistic, one from fantasy land. The fantasy land one would be from Paul Ryan. Happily the pundits are figuring out this thing does not make sense or even add up this time. The other two are the one from the Progressive Caucus (Back to Work Budget) and the one from the Democrats in the Senate. The one from the Democrats in the Senate is really Republican lite, but livable, while the one from the Progressive Caucus is really one to put our country back to work. Sadly the pundits will not figure out that reality lies somewhere between the Progress Caucus budget and the Senate Budget and completely write off the Republican Ryan approach (Krugman)
  • John Boehner was calling out for leadership from the President on the budget. That is the new talking point from the Republicans as I heard S.E. Cupp say the same thing. This is called projecting. The Republicans have no budget plan. The Ryan Plan does not add up, and does not identify cuts or tax savings. The Republicans refuse to list what they want cut or put a plan forward that can be marked by the GAO, but they want leadership from the President to come up with an all cuts plan that does their work for them. They want Obama to be Judas for the Democrats. Now who exactly is lacking leadership in proposing some sort of compromise position since the Democrats are offering one? By the way, on a search of Google on John Boehner calling on the President to lead, you find references on the debt talks, the fiscal cliff, and just about everything else. Maybe John ought to look in the mirror. (Washington Post)
  • The bill to ban assault weapons and limit magazine clip sizes got through the Senate Judiciary Committee with all Democratic votes. On this no-brainer issue, the no-brain Republicans could not vote for it. Be assured they will filibuster it in the Senate. What more do you need to know about Republicans? McClatchy)
  • An amendment, introduced by Senator Bernie Sanders, would establish a deficit reduction reserve fund that would seek to ensure that large profitable corporations cannot use loopholes to entirely avoid income tax, and direct savings recovered from closing such loopholes to deficit reduction. Over two dozen major corporations “remained in the no-federal-income-tax category over the 2008-2011 period.” It passed the Senate Committee with no Republican votes. You think they are going to compromise on anything but cuts to spending if they can’t close this no-brainer loophole? Washington Post
  • And last but not least, if you think Republicans are rethinking anything, you have not been paying attention to the speeches at CPAC. Now granted they are playing to the Republican loony base, but they control their primaries and if they don’t move that base, well, nothing changes. Texas Governor Rick Perry got big applause explaining why they lost the election by not nominating a “real conservative”. That would probably be Atilla the Hun. And Marco Rubio’s big idea is that we don’t need to change, just re-embrace our “Americanism”, whatever that means. Meanwhile they don’t think immigration reform should include a path to citizenship. It’s that empathy thing again. Oh, I just can’t wait to see what Sarah Palin and Mitt Romney have to grace our intellect

So if you are thinking both sides are the problem or that the Democrats just need to compromise, take a long look and who is just saying no to change, any change. It would be nice if America would wake up to the disaster the Republican Party and conservatism has and is raining on America.

Random Thoughts on News of the Day

Hugo Chavez is dead and I have very mixed emotions. He was a giant thorn in America’s side, he may of been a bit of a tyrant, albeit, a popular one that was democratically elected even given some gerrymandering, but he cared about the poor. And he didn’t just care about them, in many ways he made their lives better at the expense of the 1%. We have a society that is based around the 1% and our approach to capitalism is transferring more and more of our wealth to this 1%. So for all his warts, Hugo was a counter to that ideology and the question to be answered, if you define good as the good to the most people, who is doing more good. Is it possible that from Hugo and yes even Fidel, we could learn something about taking care of all our citizens?

The President is looking for a grand bargain again and I recoil at the thought. Well let me explain. A grand bargain that recognized cutting right now, at least with a meat cleaver is bad, that some focused cutting, along with tax reform and reinvestment of most of the savings in jobs, and an automatic trigger around the unemployment rate to be invested in bringing down the deficit (as a % of GDP) would be a grand idea. I would even go along with cutting the cost of entitlements through a reform in how the program operates to control costs (not in the entitlements themselves). All of this is achievable and I would say most Americans would support it if they understood it.

But the grand bargain that is more likely to be on the table is just a milder form of the sequester, with some tax revenues, and cuts to both Social Security and Medicare/Medicaid. But as Gregg Sargent pointed out this morning, this may not be such a bad idea if it demonstrates how intransigent the Republicans really are. The reality is that as Ed Schultz on MSNBC said last night, the Republicans (at least in the House) are not going to agree to anything because it would be seen as a win for the President and they are back to the Mitch McConnell strategy of a one term president, failing to recognize he is in his second term. When it comes to have the Republicans learned anything from the last election, that answer is a resounding no. Nothing has changed in the basic structure of the Republican Party that would allow a change in ideology. See Jeb Bush revise his stance on citizenship for immigrants.

Tom Friedman had an Op-Ed this morning on the mixing of lecture and class room with web learning. Tom scares me from time to time because he spends a great deal of time with business types so in one sense, he is focused on producing worker drones for the economy, not on what the economy should be producing or what is a quality life. But having said that, this is probably the future of education for the masses and could work. I have some reservations though that need to be considered and that is what is the real function of education. Well, I know that answer, but I don’t think Tom does. He is looking for people who have skills for the economy of tomorrow. I am looking for people who have two things, critical reasoning skills, and the ability to learn all their lives.

Imparting facts is one thing, but knowing how to think critically with those facts is a whole other thing. I only think that comes from interaction and challenge, not something you read on the web. That is not to say this cannot be achieved with this type of mixed learning, just that it is what has to be achieved. The second part of the equation is to be a learning machine. To be equipped to change and learn new things. The stuff I learned in college is a basis for my profession, but without continued learning, I would not be much of an engineer today. I would add that much of our critical learning will come from the humanities and arts, not from the techno education necessary to man the businesses of tomorrow. Knowing what we do with our wealth is so much more important than knowing just how to acquire it.

Finally, Paul Krugman had an interesting quote from John Maynard Keynes in his blog this morning that is worth repeating. He was talking about the criticism he has received for using “picturesque language” (example: zombie ideas) to describe some of the positions of those in charge, and how sometimes this language is necessary to shake people out of their complacency tree. Professor Keynes said:

Words ought to be a little wild, for they are the assault of thoughts on the unthinking.

Amen to that brother.

Weekend Drive-By

If you want to be frustrated, watch the Sunday talk shows as we continue to miss the point and discuss the trivia.  The newspapers weren’t much better.  So for better or worse here are my Sunday thoughts:

  • Howard Kurtz of CNN’s Reliable Sources was working hard again at missing the point.  The first thing they discussed was whether the White House criticism of Fox as no longer a news channel was effective, instead of a real examination of how Fox manipulates the news.  Howard criticizes the lack of fact checking and he doesn’t do his own.  See The Fox Propaganda Network.
  • On the same program they discussed how the bogus story about the Chamber of Commerce reversing their stand on global warming and climate protection tricked the mainstream media.  I listened to a journalist whine about the pressure to get the news out fast.  Well, sweetheart, it isn’t news if it’s false.  They have yet to examine their role in this problem.  Their job is not to megaphone what other’s say, but to provide us with relevant stories that are fact checked.  The operative words here are relevant and fact checked.
  • The New York Times reported that small businesses are facing up to 20% increases in their health insurance costs with no real reason why.  Meanwhile that moron Mitch McConnell says he won’t vote for the health care reform bill because it would raise rates.  Let’s see, rates are going out of sight without reform, and he won’t support reform because it will raise the rates.  Hmmm.  Sadly the public option the glacial Congress is considering will not allow private business to be part of it.  This is such a no-brainer yet we just refuse to face a single payer system.  (Small Business Faces Sharp Rise in Health Care)
  • The Huffington Post (Leaderless) reported that our gutless President has decided to go with a Public Option that would only be available with a trigger mechanism.  Talk about failure to lead.  Meanwhile others talk about a public option with a “level playing field”.  What that means is raise the cost of the Public Option so the insurance industries are still able to rake off large profits.  When oh when will we figure out that providing health care is not appropriate to the profit motive, just like police and fire protection?
  • Meet the Press today did highlight one important fact and that is the Administration’s focus on executive pay in the banks is just eyewash and is not real reform.  Until they structurally reform the system so that nobody is too big to fail, the government will always be the lender of last resort.  See Regulating Banks.
  • In a really scary story, the New York Times (Prosecutors Turn Table on Student Journalists) reported that in Illinois, local prosecutors have subpoenaed the grades, grading criteria, class syllabus, expense reports and e-mail messages of the journalism students from Northwestern’s Medill Innocence Project, which has helped lead to the release of 11 inmates.  You can read the article, but what we have here is shoot the messenger, not examine the message.  To me it is clear they are trying to stifle this kind of embarrassment by trying to sully the program instead of dealing with the factual findings.  If you don’t see the connection to this and the State’s Secret Act and the problems with it, then call yourself a Republican.
  • Finally on a positive note, it was nice to see Frank Rich echo my sentiments about the media and the balloon incident (The Fox Propaganda Network), while Maureen Dowd echoed my sentiment that the Catholic Church is trying to recruit the small minded from the Anglican Church (Bashing Organized Religion).  Every now and then I actually hit on something.

Another week where the rich get richer, the poor get poorer, our President fails to lead, and the media and the nation continuing their glide to oblivion shunning critical thought.  All in all not many cheery thoughts.

Weekly Drive-By

Another week where the crazies become more empowered by a media that can’t do critical reporting and sift fact from fiction.  To wit:

  • In a report in the Washington Post on health care reform, unnamed White House officials were quoted as saying:  “I don’t understand why the left of the left has decided that this is their Waterloo.  We’ve gotten to this point where health care on the left is determined by the breadth of the public option. I don’t understand how that has become the measure of whether what we achieve is health-care reform.”  I never thought of myself as left of the left and our dear President made the point that the Public Option was critical to a level playing field.  Oh I don’t know, maybe it is the fact that we can save 30% by taking profit out of the insurance industry that has got us all head-up.  They do live in a bubble, they operate on group-think-speak, and it will be their downfall.
  • In another report in the Washington Post Presidential spokesperson Robert Gibbs defended the right of citizens to be packing guns at presidential events.  Here again we have pandering to the extreme right that just weakens the progressive agenda they were elected to carry out.  I have three guns either inherited or bought to deal with coyotes that ate one of my dogs.  But I know that taking guns to public debates is insanity.  I would not pander for the rights of these fruitcakes.  This whole gun-carrying-in-public phenomenon is an attempt to take law and order into your own hands.  It has never worked and if this White House cannot stand for anything including responsible public behavior, they will not be in office long.  I don’t know what they are thinking.  The fruitcakes are never going to vote for them and the rest of us are appalled.
  • A couple of recent polls pointed out a wonderful fact.  The majority of people against health care reform watch Fox News.  These same people, when polled about some of the outright lies about the health care plans being considered, 3 out of 4 of these viewers believed these lies.  Isn’t it great that most of the opposition is deluded about what is in health care and from this basis of misinformation, real debate cannot occur.  Congratulations Republicans and your noise machine.  You have done a great job of dumbing down the nation.  Onward to lower expectations and even smaller results!
  • John Stewart, the only guy I think that is still in the real news business, showed us on Tuesday night how far the “real” news media has fallen in their coverage of real issues in order to attract ratings and be trendy.  The trouble is, as he so humorously points out, is that they are trivializing the debate on serious issues.  Maybe that explains the morons at the Town Hall Meetings.  Watch the video at the Huffington Post.
  • Speaking of Town Hall Meetings, there was an op-ed piece in the New York Times Monday (Town Halls by Invitation)  that brought some rational thinking to these obvious failures to gather the real sense of a Congressman’s District as they are packed with the fruitcakes.  What he proposed is to get a real sample of the District invited so that the Congress person could get a real sampling of the opinion, not a biased one.  As the author put it, “scientifically selected microcosm of a lawmaker’s constituents under conditions conducive to thinking about issues”.  The author described the process as follows:  “When the (participants) first arrive at the deliberative poll, attendees answer a confidential questionnaire assessing their positions, before being divided up for small-group discussions. This is key: in the current town hall format, shrill voices can easily silence the rest. But during a deliberative poll, trained moderators make sure that every voice is heard and that the group carefully and thoughtfully narrows in on its most pertinent and pressing policy questions. When all the participants finally assemble with the lawmaker, the result is a serious and productive conversation well beyond what we’ve seen in town halls lately.”   Gee, a debate based upon fact.  Is that the American way?
  • Today starts the voting in Afghanistan.  As several area experts have opined, the outcome may not be good for the United States (Afghan Vote Carries Big Risks for US).  I don’t see how any outcome can be good unless they elected a slate of women and that is exactly what they are not going to do.  Afghanistan is a backwards-tribal society based upon a backward religion.  Standing behind a theocracy that treats women as property so we can “win the war against al-Qaeda” seems rather hollow to me.  Are we really willing to spend trillions of dollars and who knows how many more lives over about a 20 year period to bring this country into the 20th century (unlikely they will reach the 21st for about 50 years)?  Not me and I think if they become a stronghold for al-Qaeda we actually have a model for how to deal with them.  It worked back in 2002.
  • Scottish Justice Minister Kenny MacAskill said he had informed the families of the victims that he had come to a decision about what to do with the terminally ill  Lockerbie bomber Abdel Baset al-Megrahi, the only convicted conspirator in the terrorist  plot to bring down the 747 in Lockerbie, Scotland (Lockerbie Bomber to Go Free).   Apparently this decision is to release him to die at home in Algeria.  Needless to say the families of the passengers on that ill fated 747 are outraged.  But I would ask them this:  What good does revenge and hate do you?  Are you more in tuned with the New Testament or the Old?  We can act like the terrorists and continue blood feuds forever or maybe we can teach them something about compassion.  Easy for me to say?  I lost a daughter to a drunk driver and I learned a long time ago you have to let your hate go.  It would be nice if the so called Christians could practice their own religion.

Another week where we just continue to backslide after so much hope and promise from the 2008 election.  I have to listen to music more and start reading fiction.  Glass of wine anyone?

Vine/Wine Friday

Vine: Spring work in the vineyard is in full swing.  I finished a herbicide spray, going after weeds and unwanted growth along the rows using a backpack sprayer to spot spray the evil demons.  When it is wet (a couple of weeks ago now), the big weeds can be pulled out by hand, but now that we are starting to experience typical Northern California weather (dry till October), Roundup® is essential.  One of my friends wants me to go all-natural and hoe these weeds out, but for one guy on three acres it would be an all consuming job.  What I find is that if I spot spray and stay ahead of it, it minimizes the use of the herbicide, and keeps the really repugnant weeds out of the vineyard.

The next chore is some initial thinning of the new shoots.  While it is too early to thin to two shoots per spur, the plant is putting out new buds and shoots in all sorts of unwanted places including at the base of the trunk.  The good news is that most of this new growth can be easily rubbed or broken off.  One needs to be a little careful and not get over exuberant in thinning because between now and when the canes start to harden and get pushed up through the wires, some will break off due to wind or other acts of violence.  So I don’t want to limit my choices too early.  You also want to see which shoots are producing grapes and are growing hardily.  But there are obvious choices for removing like on the trunk, base of the trunk, or out of old wood that would not produce grapes anyway.  The only exception to that is that sometimes the growth out of last years new wood (spur) is weak and you may want a new spur especially if it is better positioned.  Then you would leave that shoot even though it will not produce grapes this year, but will next year.  Remember the rule, grape producing shoots usually only grow out of last year’s new wood.  Note on the picture on the right, there are two well positioned new shoots growing out of the spur.  If you look closely you can see a grape pod on the shoot on the left.  You can also see some unwanted buds on the cardon (horizontal trunk of the syrah) that will need to be removed.

Walking through the vineyard removing unwanted shoots gives you a chance to really look at each plant and see how it is growing.  Right now the shoots are growing at about an inch to two inches a day, and with the forecast 90° weather next week, I could be up through the first wires by the end of next week which means lots of work for me.  The vineyard is full of ladybugs right now and they are eating all sorts of bad critters.  The cover crop is slowing starting to turn brown and die out. No it is not from lack of water because the soil is holding plenty of moisture.  It is just their cycle. I have to wait another two or three weeks until the seed heads have fully developed before mowing the whole vineyard so I get a good dispersion of seeds for next year.  It won’t be long before I will have to do one of my other dreaded chores, which is spray for powdery mildew (sulfur).  More about spraying and irrigation next time.  See, isn’t owning a vineyard glamorous?  Its hard work if you love the plants.

Wine: Well for wine this week I have a recipe selection for you which goes well with a high acid white.  We have a local fisherman who fishes in the bay and ocean and then sells fresh fish on Saturdays at our local outdoor market.  During the winter, he will tell you (via internet) what is available this week and you can order.  This week we ordered fresh shrimp and monk fish.  Candace was craving shrimp so here is a very simple and excellent recipe for a quick and simple fresh green bean and shrimp dinner.   The green beans can be fixed several ways and this time I added mushrooms.  Basically you trim off the stems of the green beans, and then boil them for no more than five minutes and then immediately remove them from the heat and soak them in ice water to stop them from cooking.  Dice a couple of shallots and several cloves of garlic.  Just before you are going to serve the shrimp, brown the shallots in a large sauté pan for about 2-3 minutes.  In a separate pan cook the mushrooms in some olive oil and butter (the mushrooms will produce juice which you don’t want in the sauté pan).  Throw in a pinch or two of the garlic and a touch of white wine and cook until the mushrooms are just turning soft.  In the meantime, add the rest of the garlic to the sauté pan and cook for only about a minute over medium heat to release their flavors.  Then turn the heat to high and add the green beans and mushroom and cook about 2-3 minutes, tossing frequently, until the beans are hot and the flavors have been absorbed.  The alternative to the mushrooms is to grate about a teaspoon of lemon zest and add it with the green beans instead of the mushrooms and it gives the whole dish a fresh crisp flavor.

For the shrimp, it is really easy.  Heat the oven to about 400°.  Put the shrimp (shell removed and deveined), on a cookie sheet lined with aluminum foil and coat in olive oil and salt and pepper to taste.  Then simply roast them about 6-8 minutes and they are ready.  Serve with a high acid white wine like a Sauvignon Blanc or a blend of Viognier and Roussanne.  I would recommend the Tamarindo from a Donkey and Goat, a 2007 Roussanne from El Dorado.  Yes I know, in the picture there is a red.  I am incorrigable.  Carpe Diem

Note:  If you click on the pictures (they are all high resolution) you can zoom in to see any details that might interest you.  Clicking multiple times will zoom your view.

Protecting Business to Death

The conservative mantra is that over regulation of business by government kills innovation and makes our businesses less competitive.  There are actually two sides of this coin, because Democrats are just as guilty of this mindset when they claim they are protecting local jobs.  But do either of these sides ever consider that their protection of business and the status quo of business as usual is actually stifling innovation and making our industry, what’s left of it, antiquated?

What got me thinking about this is was a story in the New York Times describing how China was now has the lead in clean coal technology.  Now I would be the first to tell you that clean coal technology is mostly an oxymoron because no matter how you burn coal, CO2 is still a byproduct and there are other energy choices for us that bypass this problem of sequestering CO2.  But then you have China whose energy industry is primarily coal and you realize that in the short term, this is the most viable way of controlling greenhouse emissions.  So with the estimated largest coal reserves in the world, and 50% of our energy presently being produced by coal fired power plants, how come we are not the leader in clean coal technology and we could be selling this technology to the Chinese?

Well, the answer to that question is what I suggested at the start of this piece.  Businesses mostly have a very short-term view of profit.  Their stock prices and maximizing profits for shareholders is their primary goal, and any change to their industry that impacts their short-term profit is to be avoided at all costs.  Bottom line here is that most of our industries fight innovation and upgrading if it impacts the bottom line.  In many ways the business model that is being driven by stock market prices and maximizing short-term stockholder profits is, by definition, short term and counter productive to long-term health.  Enter our politicians who because they are driven by either conservative ideology, or short-term votes, and of course the money they can raise to obtain those votes, have exacerbated this stifling of innovation and growth.

First we have conservatives who feel regulation just adds cost to doing business, makes businesses less competitive, and stifles innovation.  So they have fought government energy regulations that might, in fact, actually make our industries more competitive.  Look at the cap and trade proposal to put an incentive into the market place to be more energy efficient and decrease green house gases.  The argument you hear is that this will just add costs to businesses that will be passed on to the consumer, and in affect be like a new tax (note the pejorative use of the word tax as in any tax is bad).  What they are really protecting is the status quo that inhibits innovation.  China on the other hand is requiring that every new coal power plant be built with this new technology; expensive now, and extremely cost and environmentally friendly in the future.  That is why they are leading in the clean coal technology.

Then there are the rust belt Democrats or the Southern Democrats who are either slaves to the industries that fund their elections, or to the workers in industries that will be affected by regulation.  The obvious example here is the automobile industry.  Had the government been successful at establishing tighter gas mileage standards many years ago, we might actually have cars that are competitive with foreign imports.  The biggest hurdles to doing this were the Democrats from Michigan.  But in a misguided effort to protect industries in their state from regulation, they have in fact signed their eventual death warrants.

In this new world that neither Republicans or conservative Democrats seem to be able to comprehend, it turns out that regulation may in fact be the engine that drives innovation and makes our industries competitive.  This is a whole new paradigm for the way we think about government intervention and regulation of businesses.  But sadly, the Chinese are leading the way, while our stuck-in-the-20th-century politicians continue to protect the status quo and sound the death knell for many of our industries.  Maybe in world where everyone is looking to maximize profits in the short-term, only the government can provide the incentives for business to invest in their future.

Sunday Funnies and More Economy

What is on everybody’s mind, the Economy, was the focal point of discussion this Sunday morning, but the discussion was more political than policy based.  On Meet the Press we had Lindsey Graham and Chuck Schumer laying out familiar political positions.  Yawn.  The round table discussion was a little more interesting in that they included Liaquat Ahamed, the author of Lords of Finance, who raised the issued that back in the 1920’s the failure of a major European bank was really the beginning of the Great Depression.  He raised the issue of the collapse of the Eastern Europe Economies and the fact that while we are looking inward, this is a global crisis and focusing on saving us may not save us even if we do all the right things.

On GPS we had an eclectic group led by Niall Ferguson (Assent of Money) who was arguing that our expanding of the deficit to solve the slow down in our own country will actually exacerbate the problem as it robs capital from the rest of the world.  What they didn’t tell us was that if that is the case, what is the way forward.  David Frum was trying to make the point that this wasn’t the Republican’s fault.  I do think they made a very valid point that the real problem is global, but decisions on how to solve it, whether in China or America, is political and thus locally focused.  Meanwhile John McCain is railing against the earmarks in the budget (less than 3%) as though this is our problem.

Reliable Sources took on the real issue of whether the press and CNBC were trying to use instantaneous market fluctuations as unfair evaluations of the President’s policies.  The answers were sadly predictable based upon the pundit’s political persuasion.  The automaton from the Washington Times (conservative Washingtown voice) thought it was just fine, while the rest of the pundits thought we may need to step back and wait and see.  She (the Washington Times blogger) even tried to play down the Jon Stewart satire of CNBC’s financial predictions that went bust (See Two Pieces of Wisdom from Jon Stewart).  Sad that politics blinds us to our own failures in logic, myself excluded of course.

So what have learned?  Not much.  Apparently most Americans are looking for a quick fix in America for a global problem that will probably get much worse before it bottoms out.  What we really need is to understand just how serious the problem is, that the problem and the solution are global, and a general agreement on the way forward.  The political arguments we are having are the cart before the horse when we should first listen to dueling economists and historians so we understand the problem. What we are getting now is moderate steps in one direction, amid political arguments that we are all tired of.  When the Sunday shows start bringing in historians and economists, maybe then the political babble will end and we can have a rational discussion about the way forward.

For what it is worth here is my two bits:  Ignore the Republicans.  Doing what Herbert Hoover did in 1929 is not a way forward.  They are locked in their political ideology and their ideas, or lack thereof, are a result of mental constipation.  It is a global problem, but I am not sure that the U.S., even if we knew the correct solution, could bring the EU and China along.  The one example we have of getting out of this is the Keynesian solution, which is deficit spending.   When we did massive borrowing to run World War II, we did it all internally by borrowing from our own citizens.  The conventional wisdom is that we will be borrowing from the Chinese this time and they may redirect their money to their own problem, forcing us to raise interest rates to get the required cash.  Unless you haven’t noticed things are getting very bad in China and unrest is quite possible.

Having said that, we could always print money which causes inflation, which if things get bad enough, may not be such a bad idea since inflation forces people to buy things since they need to spend their money before it is devalued.  At any rate I think we need to proceed with the Obama solution which has three legs; stimulus, banks, and housing, only much more aggressively.  As Tom Friedman wrote in one of his columns when he described the scene in Jaws where one of the major characters (Richard Dryfus) sees the shark for the first time and tells the boat captain, “we need a bigger boat”.  Well, we need a bigger stimulus package.

The next stimulus package will be about the size of the last one, but forget the tax cuts and focus on investments that will create jobs that will be about the economy of the future.  That would be infrastructure, education, energy, and climate.  We need to get that in place right now and the only infrastructure spending would be either repairing what has to be repaired or new green transportation systems.  Continuing to build transportation systems that are petroleum centric is counterproductive.

For the banking system, ditherating is not an answer.  The fear of a domino effect must be overcome (or ameliorated) and we have to identify and remove the bad debts out of the system (along with the present management structure).  Investors, bondholders, and taxpayers must all share in this burden (read pain).  Whether this is some form of the bad bank/good bank scenario or nationalization, it must be done quickly.  One aside here:  One guest on GPS raised the issue of class anger in the United States.  We let the rich get richer because we believe the lie that we would all profit and they squandered everything.  It will be imperative that those who profited from our downfall are seen to pay dearly in fixing the system or there will be rioting in the streets.

Finally the same medicine is going to have to happen in the mortgage industry.  Decide on a reasonable interest rate for all loans, say 4%-5% and establish it.  Then re-evaluate the market worth today of the property and reset the principle balances.  Use a liberal value assuming some middle ground between the present principle balance and a realistic actual worth.  Those that can qualify for these new loans, then fine.  Those that can’t get foreclosed on.  Waiting for the marketplace to do this under foreclosures just extends our problems.  Note that this is almost a double-edged sword because once this is done, much of the banking problem settles at what those toxic assets are really worth and what the federal government should insure them for.  This not only settles the worth of the Collateral Debt Obligations (CDOs) but the Credit Default Swaps (CDSs) and allows us to estimate the real worth of these investments.

Okay, maybe these ideas are a little naïve considering the complexity of the problems, the interconnectiveness of our economies, and the impact of global problems, but why aren’t we having this discussion instead of endless discussion about what is politically possible instead of what needs to be done and making it politically possible?

As much as I see this as a global crisis, and although we need to stay engaged and try to work with the EU and China to solve the problems, the real place where our actions can make a difference is at home.  The critical issue is that this must be our focus and we need to get on with it, aggressively.  Any other delay or Republican obstructionism, and we are doomed. Note there is a bright side.  If we have a global depression, Iran won’t be able to afford nukes, North Korea will starve, and Al-Qaeda will be broke.  This says to me it is really time to start solving our own problems instead of saving Iraq and Afghanistan from themselves by emptying out our treasury.

Two Pieces of Wisdom From Jon Stewart

“I have a theory that if the economy keeps tanking, the middle is going to get a lot more capitalist and get very angry.”  This was Chris Mathews on Thursday and all I could think of is the man is an idiot.  He, like the rest of the panicking hoards watching the Dow continue to drop, want instantaneous results on the economy (See It’s My Money and I Want It Now).  They still don’t want to understand that problems we face have been building up for 30 years, there are massive bad debts and over valued equity in the system, and the only way out is a slow deflation of our economy (we had better hope it is slow).

What most amazes me about his idea is that those capitalist policies that he thinks people will lean more toward are the same capitalist policies that Herbert, Let Them Fail, Hoover put in place in 1930 and ran unemployment up to 25%.  The idea of withdrawing and letting many of these banks and industries fail has a real chance of destroying our economy.  Hopefully, he has this exactly wrong, which would not be that uncommon for Mathews.  He has a tendency to run populist anarchist, meaning he reacts to how someone or something looks and overreacts emotionally instead of rational consideration of an issue (form over substance).

But what gives me hope is that Jon Stewart in his wonderful way of using humor to point out the inconsistency and illogic of the conventional wisdom.  He first took on the Economic pundits on CNBC in this wonderful piece on how their advice is the last thing you want to be listening to:

Then he got tired of listening to the moronic idea that the DOW reflects instantaneously whether the economic moves of the Obama administration are the correct ones:

Russia and More Conservative Dead Ends

In the last few blogs on the economy I have pointed out how conservative thinking on the economy is outmoded and as a result is the cause of many of the problems we are now facing.  The same is true for our approach to foreign affairs and that was on display during the Russian incursion into Georgia.   John McCain came out with a bellicose, “We are all Georgians” and Sarah Palin with her statement that we might have to confront them militarily.  It is vintage 1980’s stuff that is totally removed from where the world is today.

I have maintained in earlier blogs (“John McCain Experience?” and “Ticking Time Bombs”) that the reaction exhibited by John McCain and the conservatives is cold war thinking that has not evolved as the world has changed.  My contention is that Russia may find, as we did in Iraq, that these kinds of expeditionary adventures are extremely expensive and counter productive.  While the Neocons are seeing Russia as this big monolithic threat that must be met at the door, many others are understanding this will only exacerbate things when a more cool and calculated response will be much more effective.

First and foremost this was an exercise of Russian power near their borders on what they see as an ever-increasing United States threat.  How would you feel if Russia put missiles on our borders as we are doing in Turkey?  Oh, I forgot, they did and it was the Cuban missile crisis.  Secondly have you ever asked yourself what NATO does anymore and wouldn’t you be threatened by the expansion around your borders.  Of course Russia’s move was thuggish although goaded on by Georgia’s imprudent acts in that volatile region.  It is also funded by their oil wealth which we are contributing to.  But the reality is that it was counter productive.  Consider what Fareed Zakaria said on his show GPS:

From Caucasian countries like Azerbaijan, to Poland and Ukraine, to the Baltic republics, everyone has been rattled by Russia’s behavior, and now seek stronger ties with the West.  Europe and the United States are more united than at any point in two decades. And outside the West, no country in the world has followed Russia and recognized South Ossetia and Abkhazia.

Moscow must be looking at all this and realizing that it has racked up huge costs for little benefit.

If there were to be another cold war, the outcome is preordained. The combined GDP of the West is now $30 trillion. Russia, meanwhile, has an economy that is just under $2 trillion, and that, too, artificially inflated by high oil prices.”

Consider what Tom Friedman (“Hot, Flat, and Crowded”) said in an interview on the same show one week later:

“For me, as someone who opposed NATO expansion at the time, because I felt that it was basically saying to the Russians, look, the Cold War is over for you, but not for us. We’re going to keep pushing our alliance in your face.

At the time they were weak. And at the time, you know, the administration told us, oh, don’t worry. The Russians — they’ll accept it. They’ll get used to it.

Well, guess what. They got strong, and they were never used to it. It was a humiliation. And so, it doesn’t surprise me to see what Putin is doing today.

It’s not an excuse. Putin’s got to get out of Georgia. I think the market’s actually going to punish him a lot more than he realizes and a lot of others realize.”

The bottom line here is that John McCain’s “experienced” response, reflective of the conservative’s view of world politics, is the wrong approach that will simply make things worse.  We need to understand that the Russians have real concerns we need to not just flip off.  Second we need to understand that in a world economy, Russia’s thugism will have negative consequences for the Russians.  The last thing we need to do is start another cold war to reinforce their thugism.  Even more important, we need Russia on our side.  As Tom Friedman put it:

I looked at the world and I said, is there any problem in the world that we can solve without Russia? Any big problem, whether it’s Iran, Iraq — is there any problem we could solve without Russia?”

Our policy in the future is not reliving the past which is what the conservative Republicans will bring us, but looking for new ways to deal with aggression in a world where that aggression is becoming more and more counter productive as our economies and the welfare of our people are more and more entwined.  Or as Fareed said,

“A calm and deliberate policy toward Moscow is what the world needs, not hysterical overreactions.”

We are not all Georgians.