A Mighty Stimulus

I’m going to be a bit more wonky than usual because I’m going to be making the case that we may need a bigger stimulus package that either the Democratic party or Republican party may be prepared to pass.  Right now, it appears the only thing that will get by the Senate right is a package of extended unemployment benefits.  I’m going to have to use two concepts that are extremely important to fiscal policy that make all undergraduate students tremble.  The first is the concept of a fiscal policy multiplier.  The second has to do with sorting through labor markets to get at more than just the unemployment rate to find possible ‘automatic stabilizers’.   Both are tedious exercises in basic economics.  Both have never been so significant as now due to some structural changes in the U.S. economy since the 1980s.

An open letter to President Roosevelt

  John Maynard Keynes is the the father of modern macroeconomics and Roosevelt’s New Deal.  His suggestions to President Roosevelt during the depression are still regarded as the map that led us our country out of The Great Depression.  The UK Guardian just did a reprint of parts of it and it made me think.  So, on celebrating our thanksgiving, I thought I’d reprint this letter he wrote to President Roosevelt that first appeared in the NY Times on New Year’s eve in 1933.  I know I’m a wonk, and this is a weird thing to be thankful for, but just think of all the bad things that would be happening right now if Keyne’s hadn’t continued to bug President Roosevelt to try some new and radical things.

Even Milton Friedman, whose later reformulation of the Quantity Theory of Money led to his Nobel Prize said that “We are all Keynesians now.” in recognition of this man.  I’m closing out on yet another semester of teaching undergraduates the lessons of Keynes.  My father who majored in economics used Keyne’s book as his textbook.  This was after his return from the European theatre in a tour of duty on a US bomber as the bombardier.  I remind my students that had I taught them Keyne’s in the 1920s, I most likely would’ve wound up on a ship to Russia and branded a Leninist.  He was THAT radical.  Today, he’s at the root of everything.

Brilliance as an expression of Humanity

just because …

Italian Text

Nessun dorma! Nessun dorma!
Tu pure, o, Principessa,
nella tua fredda stanza,
guardi le stelle
che tremano d’amore
e di speranza.
Ma il mio mistero è chiuso in me,
il nome mio nessun saprà!
No, no, sulla tua bocca lo dirò
quando la luce splenderà!
Ed il mio bacio scioglierà il silenzio
che ti fa mia!
(Il nome suo nessun saprà!…
e noi dovrem, ahime, morir!)
Dilegua, o notte!
Tramontate, stelle!
Tramontate, stelle!
All’alba vincerò!
vincerò, vincerò!

 

English Translation of “Nessun Dorma”

Nobody shall sleep!…
Nobody shall sleep!
Even you, o Princess,
in your cold room,
watch the stars,
that tremble with love and with hope.
But my secret is hidden within me,
my name no one shall know…
No!…No!…
On your mouth I will tell it when the light shines.
And my kiss will dissolve the silence that makes you mine!…
(No one will know his name and we must, alas, die.)
Vanish, o night!
Set, stars! Set, stars!
At dawn, I will win! I will win! I will win!

In Pursuit of Gross National Happiness

Whenever I teach my undergraduates the meaning of measuring the economic development of nations, I always mention the one country that does it differently.  This is the tiny Himalayan nation of Bhutan.  I know that you all think I’m biased here, because I am a Buddhist in the tradition of the Himalayan region.  (My Guru is a Tserpa Lama from Nepal and my lineage’s monastery is from a mountain vally of Mt. Everest.)  However, I’m always pleased when Bhutan lives up to and beyond my expectations. Both Nepal and Bhutan are among the world’s newest democracies.  Nepal has had many struggles (some violent) to achieve its new form of government.  I’m pleased to say my Lama’s wife, Ang Dawa is now sitting in its newly formed parliament.  I’m even more pleased to hear the words of Bhutan’s first elected prime minister.  Among these is that he is still measuring the country’s progress by not only the Gross National Product, but by its Gross National Happiness.  This was something the  last monarch held in esteem.   My Lama is always trying to convince me to come to Nepal to live and teach; something I will most certainly do in the future when the last daughter is firmly planted in her life.  However, if I could choose a country to work with, it would be Bhutan.

Jigmi Y. Thinley is now Bhutan’s first democratically elected prime minister.  He sees his first job is to prove to his constituents that democracy is worthwhile.  He was elected in a very uneventful campaign between two highly similar parties.  He was recently interviewed by the WSJ (see above link) in New York City.  I found this quote inspiring.

Mr. Thinley outlines his idea of good governance: “We have to ensure that in the first five years of our governance we act completely within the confines of the constitution . . . that the rule of law prevails under any circumstance. . . . We will respect and ensure the absolute separation of the three branches of government, that’s the judiciary, executive and the legislature.”

He describes the process of drafting the constitution — there was a committee that referred to the constitutions of the world. Mr. Thinley says the U.S. constitution “defined the conceptual framework within which all other constitutions have been drafted. And so the United States Constitution was certainly a major document that inspired and that was referred to by the constitution committee.”

It is refreshing to hear that new democracies realize what our recently ‘elected’ leaders have forgotten.  It is all about the rule of law.  It is about the Constitution above all.  When you consider that Bhutan has provided refuge to many Tibetans fleeing religious and economic persecution by the Han Chinese,  it is wonderful to hear an elected official that gets it.

Democracy, according to Mr. Thinley, boils down to “the empowerment of the people, the freedom of the voter. . . . giving the capacity to the individual citizen to determine his or her own destiny,” he says. “Now if these are what democracy provides, then I would say that regardless of what culture you belong to, democracy is essential.”

Prime Minister Thinley is not giving up on the idea of promoting Gross National Happiness–something that it seems only a benign monarch could grant to his beloved peoples.  This is probably most telling about a leader who believes he was elected to serve the people; not have the people serve his ego.

Mr. Thinley will continue to implement the government policy of GNH. Happiness is not hedonistic, “it is not the kind of fleeting pleasures that we seek.” It has to do with “being able to balance material needs of the body and the spiritual needs of the mind.”

He says the conditions for the pursuit of happiness have four pillars: Equitable and sustainable socioeconomic growth; conservation of the fragile Himalayan economy and environment; cultural preservation and promotion — and good governance.

Mr. Thinley admits that there’s a limit to what the government can deliver. It can try to create the right conditions, but “the individual himself and herself must pursue happiness.”

I wish Mr. Thinley and the people of Bhutan nothing but continued growth in both GNP and GNH.

Never Surrender the Pink!

I was driving across the bayous today listening to NPR on my way to campuswhen the most empowering and delightful story happened.  It was about the “Gulabi Gang”  or the Pink Sari Ladies that have decided to take on the corrupt and ineffective men running Northern India.  They wear bright pink saris and carry sticks.  These gangs of empowered women not only go after corrupt officials but men who abandon or beat their wives.

My thought is we’re seeing the Indian equivalent of PUMAs.  They have no political party affiliation and even refuse to work with NGOS.  Leader Sampt Pal Devi refuses to to deal with them because ” they are always looking for kickbacks when they offer to fund us.”

The movement is about two years old and has gained ground to the point that Ms. Devi can push to the front of a line of local men to complain to officials about lack of electricity or corruption in the distribution of grain to the poor.  They even stormed a police station to free an untouchable man that they felt was being held only for purposes of getting money for his release.

Another interesting pink lady movement in India is the pink cabs in Bombay driven by women for women.  This has started an entire movement of entrepreneurial women.

“This is an unmet need,” Renuka Chowdhary, the Minister of Women and Children in India, said as the service started yesterday. “We have had a higher reporting of crime against women passengers. This is also a non-traditional job for women, so they are breaking out and becoming earning members for their families. We are confident it will catch on.”

Many of the women overcame the disapproval of friends and neighbours who thought that they should stay at home to look after their husbands and children.

Shweta Shinde, 42, applied for the job with the backing of her family and said that it had fulfilled her ambition to learn to drive. “For so many years, I wanted to have a car,” she said.

In the scheme, each woman puts down a 19,000 rupee (£232) deposit on a 369,000 rupee air-conditioned car, subsidised by Tata, the Indian conglomerate.

By paying off the balance on the low-interest loans, the women will own their taxis. They are expected to earn about 25,000 rupees a month, nearly three times the salary of a chauffeur and five times the pay of a domestic maid.

Read both the links up top to learn more about the pink ladies of India seeking to empower themselves and other women. I think it will make you smile and know that there is a worldwide sisterhood of pumas out there.

Another Notch for Nawlins …

Business Week just named New orleans one of the Best Cities for Riding out a Recessions.  These are some of the facts included in the article.

New Orleans, La.

Share of jobs in strong industries: 40%
Number of workers: 101,752
Metro area unemployment rate: 4.7%
Agriculture jobs: 1.21%
Professional, Scientific, and Technical jobs (legal, accounting etc.): 7.17%
Education jobs: 12.23%
Health-care jobs: 13.50%
Public Administration (Government) jobs: 5.85%

New Orleans has plenty of challenges as it recovers from 2005’s Hurricane Katrina. The population has shrunk, putting pressure on university enrollments and hospitals. And tourism is way down. But the unemployment rate remains low. The city’s banks, which did not make a large number of risky loans during the housing boom, are relatively healthy. And firms are investing heavily in construction projects in the city, rebuilding levees and building a new refinery.

Now if we could just convince Mayor Ray Nagin and all his cronies to move to Dallas, we might actually make some progress.

Meanwhile, our Governor, the exorcist, Bobby Jindhal is going down the rabbit hole of Iowa.  He’s been seems to be on the Republican’s sweetheard list of up-and-comers.  Frankly, y’all can have him.  Last year he was saying the state was so awash in funds that he wanted to get rid of the income tax.  This year, we’re looking at tremendous cutbacks and dipping into the state’s emergency fund.  This is another one of those guys that the press falls in love with but refuses to cover the whacky side.  This guy coverted to Catholicism after participating in an exorcism and has been known to say things that make Pat Robertson look enlightened.   Maybe he and Huckabee can work their voodoo in Iowa and fall into a black hole.  I’d like to see that state lose its first in the nation status and its caucus system.  They’ve been responsible for so many travesties that I think we could hold them for Treason.

Anyway,  New Orleans is still here!  Come visit us!

mardi gras float  and music at Vaughn’s

Where’s the Lone Ranger when you need him?

We have not entered uncharted territory in the economy yet.  I suppose that should be reassuring in a world where uncertainty seems to rule the day.  The deal is this, while economists have charted the territory, we’ve never be in the position of stopping so many things from heading that direction.  That is what is worrying me right now.  That is also why I am relieved that among the advisers the next president has picked is Hillary Clinton and some very good economists.  I’m not sure how much good this is going to do because I still am not sure if President Elect Barrack Obama is going to be up to the task, but I think that the measure of how huge of task lies ahead of him might be sinking in.  I think there’s a realization that he’s going to need a lot of help.  That in itself says something.  After a few inklings of Pritzker for Commerce Secretary or Larry Summers for a repeat performance as Treasury, President Obama changed direction.  To me, that was a good thing.

I keep looking at the volatility in the market, the problems that face the dollar as the world’s currency, the collapse of GM, and the challenges that face us globally, and I’m glad Hillary is there at the table.  I’m glad some of the best bureaucrats that came up in the Clinton Administration will be there too.  I may not like Barrack Obama, but I certainly do not want him to fail.  If he is smart enough to realize that what is going on is far bigger than anything he is prepared to handle, than that is good first step to regaining some solid ground.

There is realization that the Fed can no longer wonk the economy into a stable state.  Its primary tools are the dollar and interest rates.  Interest rates are so low they have lost their ability to translate stimulus into the part of the economy where jobs are created and food is bought.  The dollar is facing its own set of challenges.  Due to the enabling of export economies like Saudi Arabia, Japan, and China, the United States has been able to avoid tax increases, support growing wealth among its richest citizens, and preserve the dollar as the international currency.  This has been true since the Reagan years.  Countries like these have given us money so we can turn around and buy their products.  They have basically agreed to lower living standards in their countries so that they could hook into the benefits of a stable US economy with its safe financial system and lack of financial dramas.  This  is no longer the case. 

There has been a huge accumulation of dollars in these countries.  There has also been a huge foreign investment in the Treasury bills and bonds that have funded two wars (with no tax increases) as well created an extremely well-paid financial sector.  Meanwhile, we’ve agreed to seeing manufacturing jobs transferred  abroad while replacing those jobs with low-paying service jobs.  We do not have a free market or a free trade system with floating currencies (even though they like to tell us we do).  We have a bunch of countries holding informal agreements to rules that have sustained us for maybe  20 years.  The US has huge trade deficits while they fund our budget deficits.  The export countries accept a low standard of living so they can grow the countries with exports using the drama-free dollar.

Is this situation on the verge of a game change?  I think it is.  Who better to work these issues out than Hillary Clinton and a team of first rate economists.  If we have to endure fireside chats with Obama to get the Treasury and the State department out there ahead of this disaster, than I say, fine … I’ll just change the channel and hope she gets the job done.   Meanwhile Richardson can negotiate the next industry looking for a hand out.  That’s going to be the real dirty job.   What a great person to get the blame for the next taxpayer’s check to a Corporate Welfare Queen.

Meanwhile, I’m glad to see the appointment of Tim Geithner at Treasury.  As the president of the NY Fed, he’s already been a part of the team carrying out monetary policy and the Wall Street Rescue and is already on the ground running.  He’s worked in the gut operations of both the IMF and the Treasury.  From folks that know him, I hear that he’s not a person that ever feels the need to prove himself and is a person that does not make judgements until he understands the situation. 

It’s a grim situation out there in both the equity and the credit markets. Last week, we broke thru two ‘psychological’ levels in the markets.  The situation with the S&P 500 is beyond troublesome.  Many of these stocks are so cheap now that institutional traders will no longer be allowed to hold them in portfolios.  They’ll be forced to sell.  We’re seeing the lowest treasury yields ever.  There’s not just a flight to quality, there’s a stampede.  I’m glad to see the main team for the next administration on deck.  What we need now is both the Bush and the Obama administration to work together and show some leadership and announce some joint policies as well as folks that will work to transition together.  Obama cannot afford to sit in Chicago and look pensive nor can Bush sit in Crawford and look any more lame.

This is getting more serious by the day.  I’ve been avoiding the “d” word because I know we know what it takes to fend that off.  I just need to see movement by the folks in charge right now that shows they know it too.  We do need some major stimulus and the two camps better sit down and get it started right now.

Who is this man and why is he harshing Obamalot’s Mellow?

Gerald Celente is one of those folks paid to spot trends.  He correctly predicted the stock market crash of 1987 and the fall of the Soviet Union.  You’ll start a farm and buy a rifle if you watch this video and take his predictions seriously.  He says within four years there will be food riots and tax rebellions in the US.  His major message is that we are on the path to becoming the world’s biggest undeveloped nation.

He believes that this year will be the year that Americans start seeing Christmas as something less than a shopping mall buy spree because they are tapped out. Celente suggests that homemade gifts will replace the electronic gadgets and that the most pressing concern by Christmas 2012 will be putting food on the table.

“We’re going to see the end of the retail Christmas….we’re going to see a fundamental shift take place….putting food on the table is going to be more important that putting gifts under the Christmas tree,” said Celente, adding that the situation would be “worse than the great depression”.

“America’s going to go through a transition the likes of which no one is prepared for,” said Celente, noting that people’s refusal to acknowledge that America was even in a recession highlights how big a problem denial is in being ready for the true scale of the crisis.

This is the Obama voter gene pool …

One of the best laughs I got all year was watching a Howard Stern video on youtube that got a ton of voters to agree with basically everything John McCain had said and done–including the choice of Sarah Palin for VP–simply by ascribing it to Barack Obama.  The video I posted below is along that vein but isn’t meant for humor.  It shows the level of knowledge present in many Obama voters.  Be afraid, be very afraid.

Several times during the last few weeks, I had a very dear friend of mine send me this list of what they considered ‘notable’ things so that I would just suddenly realize that none of the problems that I had with obama were based on anything but my refusal to admit I’m a closet bigot.  The first time I read it, I thought it was a joke, much the way that I thought the Howard Stern thing was a joke.  When I got it the second time with the question that I really hadn’t pondered Sarah Palin’s qualifications for vp in all my blogging threads, I realized it wasn’t a joke.  I had a difficult time coming up with a response because, again, my first reaction was you’ve got to be kidding me. 

So, tell me I’m not the only one that thinks that having your family up on stage with you, including your pregnant unwed daughter is no big deal.  Why is it considered ‘parading’–an obviously prejorative word?  All candidates appear on stage with their family.  What difference would it make if it were Obama instead of Palin?  The list just gets nuttier and nuttier.  Who cares if you make a living being a beer distributer?  Running illegal booze during prohibition certainly didn’t hurt the Kennedy family.  People get addictions to all kinds of things all the time … that knows no racial boundaries?  Many past first ladies had problems with alcohol and drugs.  Why would it make any difference to me if it were Cindy or Michelle?  Goodness no!

I really laughed hard at the Keating Five thing since I will still point out to the THREE advisors (including Pritzker) on the Obama board that were major players in this current financial crisis.  If the Keating five thing disqualified McKain, then the current problems of FNMA, Freddie Mac, and the investment banks should’ve disqualified Obama.  Let’s not even go into the Rezko thing and his two ‘religious advisors’: Wright and Pflager.

The Obama supporters I know felt Palin to be completely unqualified to be VP but never addressed my issue of why they think Obama was qualified to be president?  I always hear the Harvard thing, but he was a legacy, just like Dubya.  Since we never have seen any of his transcripts or scores, it’s difficult to say he did anything more than graduate.   Even George Bush managed to graduate from Harvard.  It has a longstanding reputation as the hardest school to flunk out of and you know that if you’ve ever been privvy to university jokes. 

So I finally sent my response back to my long time friend saying I found this list of things to ponder pretty ridiculous.  I also felt that it came from some one suffering from severe holier-than-thou syndrome that is typical of the delusionally religious.  I was not interested in folks divorces, addictions, and bad boy behavior in college.  Finally, the charismatic, eloquent speaker thing only happens when there’s a teleprompter around, in case you hadn’t noticed.

But then it occured to me, how could any of these folks actually notice any of this?  I’d bet none of them read papers and magazines other than maybe USA Today and People.  They probably get what little news the read from the AP wire in their local newspapers and the same feed to their local news stations.  So, when they get all haughty about Palin, ask them what they read?  Ask them if they know who controls congress, who is the speaker of the house and the senate majority leader?  Ask them what they think of the Bush Doctrine?  My guess is that unless they’re out here in blog land with a few of us, you’d better switch to asking football questions if you really want answers.

 

Ponder the following:
 
What if the Obamas had paraded five children across the stage, including a three month old infant and an unwed,  pregnant teenage daughter?
 
What if John McCain was a former president of the Harvard Law Review?
 
What if Barack Obama finished fifth from the bottom of his graduating class?
 
What if McCain had only married once, and Obama was a divorcee?
 
What if Obama was the candidate who left his first wife after a severe disfiguring car accident,  when she no longer  measured up to his  standards?
 
What if Obama had met his second wife in a bar and had a long affair while he was still married?
  
What if Michelle Obama was the wife who not only became addicted to  pain killers but also acquired  them illegally  through her charitable organization?
 
What if Cindy McCain graduated from Harvard?
 
What if Obama had been a member of the Keating Five? (The Keating Five were five United States Senators accused of corruption in 1989, igniting a major political scandal as part of the larger   Savings and Loan crisis of the late 1980s and early 1990s.)
 
What if McCain was a charismatic, eloquent speaker?
 
What if Obama was the one who had military experience that included discipline problems and a record of crashing seven planes?
 
What if Obama was the one who was known to display publicly, on many occasions, a serious anger management problem?
 
What if Michelle Obama’s family had made their money from beer distribution?
 
What if the Obamas had adopted a white child?
 
You could easily add to this list.  If these questions reflected reality, do you really believe the election numbers would be as close as they are?
 
This is what racism does. It covers up, rationalizes and minimizes positive qualities in one candidate and emphasizes negative qualities in another when there is a  color difference.

The Press, Wall Street, Politicans, the DNC, Banks: ALL MIA

Riverdaughter assigned all PUMAs and Confluencians a project:  figure out where to go from here so we can continue forward as a movement with relevancy.  Being a scientist, I always look for the roots of the problem.  I check for the problem and the catalysts.  You can get frustrated by the symptoms but you never solve the actual problem without checking out the primal event.  So when you saw MIA did you think Missing in Action?  When You think PUMA do you think People United Means Action?  Let’s just switch out the word action for a moment so that it reads ACCOUNTABILITY because there seems to be a lot of that missing recently.

I give my bank my money.  I expect them not to lose my deposits and make bad loans. I expect them to answer the phone and attend to my needs.  I expect after years of giving them money and seeing them happily deposit my checks that they should have no problem knowing that will continue so I deserve a loan.  I give the government my taxes.  I expect the roads to be fixed.  When I dial 911 and I’m in true need, I expect the police to show up.  I expect the levees they built with my tax dollars to provide the level of protection as promised.  When politicians swears to uphold the constitution, I expect just that.  When the electric company says it will use part of my bill to ensure the system is upgraded, I expect them to do as promised to me and to their regulator. 

I’m not quite sure when it started, but none of these things happen any more and no one takes responsibility, apologises and fixes it.  Worse than that, I have very few ways to make them accountable any  more.  The Army Corps of Engineers still refuses to be held accountable for the levee failure here in New Orleans.  GM management does not want to be held responsible for making bad decisions and worse cars.  The Press still hasn’t dealt with its drumbeat to the Iraq war, it’s skewering of both Hillary Clinton and Sarah Palin,  and its biased coverage of the 2008 presidential campaign.  When President Elect Obama falls flat on his face on challenges that will be well above his experience and education level, they will undoubtedly go “who US?”

I try to call my bank and my electric company.  If I’m lucky I can get pass the computer to hear some one try to help me that barely speaks my language and can’t solve any problems even if they had a phd. in it.  If it’s not something in the manual of the top ten stupid questions, they are lost.  I have been promised all kinds of things by service reps, only to find no one has a record of it, and I have no recourse.

There has to be a way to hold all these monsters accountable.  Everything now is so big, so impersonal, and so screwed up that they can turn you off or send you off to jail if you don’t just send the monthly payment, but you can’t get from them ANYTHING they’ve promised.  So, every windy or rainy day now, my electricity shuts off for hours, even though I pay nearly $300 a month now for electricity.  I can’t make any bad decisions because the student loan is still due, the mortgage is still out there, and the IRS is brutal.  You can’t leave or enter the country now with just your birth certificate.  You have to have a passport and any government agency with an axe to grind with you can stop you from getting it.  Oh, and thanks to President Elect Obama, those agencies can listen in on your phone conversations, read your mail, and search your computer activity.  Can you hold them similarly responsible when they screw up counting your votes?  I didn’t think so.

I always try to be thoughtful in my blog threads.  I think long and hard and try to gather data and information and other ideas before I present them to you.  Today, I’m just going to share my rant.  When was the last time you felt you could hold any of these bad boys accountable for the way they behave?

So, Riverdaughter and my PUMA friends… I’d like the DNC to be held accountable for taking votes from Michigan and Florida when they really mattered, for stacking primaries and caucuses with a weighting system that was easily gamed by a Chicago mobster, and all that misogyny and sexism and race-baiting.  How about it?  Why don’t we figure out some strategies in the future to hold them all to accountable?