To a Better Next Year

One good thing about the 2000s was the expansion of the blogosphere - the quality of available commentary has never been better, and we can access expertise and insight that otherwise would have been limited to a particular college lecture hall or small-circulation speciality magazine.  So here's to folks I unambivalently celebrate as creators - Ted Newton and his conceptualization of hypertext, Tim Berners-Lee and the universal resource locator, and the thousands of others who put the Toile together as they say in French.

On the decade itself, Krugman's Zero Decade pretty much sums it up for me so nuff said.  Zero economic progress, intellectual suspension between paradigms, no answers to 1990s questions about how to have a productive economy and decent, sustainable life without monopoly rip-offs and exploitation of the global South - actually questions barely asked by the ones in power.  The gap between intelligence and leadership seems as large as ever in my lifetime, and I'm old enough to remember Richard Nixon.

On the absence of establishment intelligence in the United States, Jane Hamsher puts it well:

the right, whose numbers are relatively small and whose views are generally far outside of the main stream, has dominated politics for the past 30 years because they made an alliance with the corporations. It’s only natural that Democrats have sought power by replicating that model, even at the price of destroying the illusion that they’re the “party of the people” and fracturing the support that put Obama in office.

The Democrats are trying to secure their political ascendence by tying up the money, no different than Tom DeLay did. But whereas the Democratic Party represented a net to collect and unite those disaffected with the kleptocracy of George Bush, the actions of the Democrats since securing the White House this time around have dimmed the hopes that the Democrats present a real alternative.

The Bush Republicans flogged social issues in order to obviate the need for populist economic measures. They satisfied the base by treating them to a banquet of God, guns and gays while they looted the taxpayer trough. The Democrats, however, are making a sacrifice play on social issues and enabling corporatism by triangulaing against their own base.  . . . the White House positioned themselves as “centrist” after the widely popular public option was dispensed with, simply because it was something “liberals” seemed to want too.  What they’re forcing, however, is a situation where there is no place for populist liberal discontent to rationally go.

Hamsher ends by seeing a populist alliance opposing "kleptocracy"of the republocrats, but given the 2-party lock this can only be a domestic "war that will last for years."

On the coming War Decade, one need only extrapolate from Glenn Greenwald's piece on the Five Wars and the absence of clear thought about what to do. See also Juan Cole's Top 10 Middle East Crises, which are a fitting epitaph for the decade overall.  Obama seems even more manipulable than Bill Clinton by any accusatory nonsense the Right can dream up about his lack of masculine will to kill the terrorists and their infinite threat.  I'm also old enough to remember the Cold War, when the hysteria could at least base itself in a opposition to a real superpower, the Soviet Union, and its utterly unconquerable unappeasable ally, Red China.  Today's global mobilization against a crazy college dropout who lit his pants on fire only to be subdued by his fellow passangers, all of whom landed safely, and this deranged young man's several dozen committed al-Qaeda allies in Yemen, is frankly pathetic.  Some sorryass superpower we turned out to be, shouting and ranting and flagellating ourselves in public over a security lapse, and making ourselves feel better with threats of world war. 

The worst part is the shock and rage each time that someone obsessed with the US presence in the Muslim world tries to kill some Americans.  What exactly do we expect?  Either we are trying to rule the Muslim world by supporting dictatorial governments and reactionary monarchies everywhere, deploying dozens of military bases and advising local governments in the arts of political repression, scrambling for resources in competition with Europe and Asia, and backing Israel no matter how much it colonizes and mistreats its neighbors, in which case a portion of the affected populations will naturally try to kill us.  Or we will try to get them not to kill us by creating relations of economic equity, sustainable development, and political democracy with real local control (and hence disagreement with U.S. policy and favoring of local rather than U.S. businesss).  Can we grow up enough to even see that there is a choice here?  Not very soon, since the rage that suppresses thought is in sync with the loss of collective intelligence we suffered during the Cheney Years.  Obama doesn't have the chops to escape.

Hopefully, however, we do. Happy New Year no matter what.

The Era of Permanent Discontent

Thanks to Juan Cole for writing up the Top-10 "worst things about the wretched period" of the 2000s - for me the Top-10 signs of decline.  Yes, it was a truly bad start to the new millennium for which we have many dumbass electorates and self-serving elites to thank.  The decades' leaders replaced negotiation with belligerence wherever they found it convenient to them - really, with Iraq, whenever it felt right.  The same goes with finance now and the end - Cole's top 1% who reaped 2/3rds of the gains of the 2000s are getting a free pass from the Obama admin to do as they like.  The same goes with the environment, where the failure of Copenhagen to produce targets and timetables in an utterly quantified management culture that responds only to these will mean the reinflation of fossil fuel use - oil sands, clean coal, the whole 9 yards.

The decade began the Era of Permanent Discontent.  There were mass protests and opposition to policies like the Iraq war that political and business leaders systematically ignored.  Individuals like Dick Cheney were more openly contemptuous of public opinion than others, but it's hard to think of a national or state-level leader who has recently opposed his or her small inner circle or the Ring of Lobbyists - on any issue in order to back a majority view.

Continuing the cycle, obvious rejection of popular positions then produce further protests and widening gap between leaders and the vast majority they claim to lead.  Polling data picked it up: rulers implemented positions accepted by a minority of the public, and this is happening again with the health care "reform," where a "clear marjority" wants a public option (October 2009, December 2009), and where political leaders don't, and so there won't be one. In Europe they call this "post-democracy." In California, it is called minority rule, and a UC professor George Lakoff has started an initiative to end the Proposition 13-based supermajority rule for budgeting and taxes.  This is a great idea. But it needs to confront an electorate that has no experience with or trust in real majority rule.

The twin of permanent discontent is Permanent War.  Bush's "war that will go on for years" has become Obama's Afghanistan escalation and similar rhetoric of standing, dispersed dangers to global security.  Apparently no American executive can govern without Cold War-style insistence that the country is in grave danger from all over.  The benefits to the military and industry are obvious, and so are the benefits to executive authority.  Obama's Wars now involve escalating the drone attacks and secret military incursions into Pakistan that echo the Nixon-Kissinger incursions into Laos and Cambodia that hardened and widened the Vietnam war that they too claimed to be winding down.  In the context of majority demands for public health care, better infrastructure, cheaper higher education, green technology, more and better jobs, war has an important role to play.  The function of war i to make all popular things impossible.

It's worth nothing that finance has come to play a similar spoiling role. Its absorption of somewhere between $17 and 24 trillion has already killed off any new New Deal for the states and their outmoded intrastructures and social systems (the US ranks 12th to 16th in the social distribution of its own core technologies, broadband access).  Finance is increasingly acknowledged to invest largely in unproductive assets, so it's not like we need its domination over the economy because they are about to give back to society - give back new industries, high productivity growth, better living for all.

But the financial sector is good for the political executive function. It concentrates wealth and concentrates the power that goes with it.  Wall Street's importance magnifies Washington's importance, and the leaders of each get enormous personal benefit from the acute stratification of their sector, where all meaningful decisions are made at the top.  The concentration of finance into a few banks that are too big to fail is also good for the military, which operates on the same principle.  Having a superconcentrated financial sector run by insiders has long stabilized corrupt, crony-ridden governments in places like South Korea and Japan. It provides the same function in the United States.

The epoch battle now shaping up is between innovation and control.  Concentration and hierarchy are good for control and bad for innovation.  You can't spread broadband across income groups if you can't distribute and share because your broadband industry is a plutonomy of interlocking monopolists.  But most of our innovation industries, starting with IT, have become oligarchies built up around monopoly rents, and the innovation economist David Mowery has pointed out that software developed with market shares of 80 percent at home and 65% abroad (p 14).  Innovation depended on acquiring monopoly control in the post-war market environment - and on large amounts of military funding.

Where are the forces of innovation that can do without this kind of control?  Mostly lodged in our permanent discontent.  My hope - and fear - is that they will remain dormant until they enter into open revolt against the control-focused governance that now pervades every corner of politics and the economy.

In 1009, Egypt's Fatimid caliph al-Hakim leveled Jerusalem's Church of the Holy Sepulchre to the ground. He then "hacked the church's foundations down to bedrock."  The church was rebuilt in 1048, but it's initial destruction became the cornerstone of the crusade preaching of the Catholic Church. His successor would rebuild the church ing 1048, but Hakim's rash act stirs demands in Europe for a Christian crusade to recover the Holy Land from the "infidels." In 1096, the First Crusade would leave Europe for the Holy Land with more than 30,000 men, and would crystallize the anti-Islamic hostilities and salvific-warrior mentalities that seek to control our destiny today, a thousand years down the road.

Dissociation in a Bad Decade

A few posts this week get close to the heart of the problem.  Fr. Frank's Sunday sermon provides the frame - "As we say farewell to a dreadful year and decade," we have to recognize the following:

The men who played us for suckers, whether at Citigroup or Fannie Mae, at the White House or Ted Haggard’s megachurch, are the real movers and shakers of this century’s history so far.

Fr. Frank replaces Time Man of the Year Ben Bernanke - "as big a schnook as every other magical thinker in Washington" with Tiger Woods, the age's typical con man who piles up tens or hundreds of millions of dollars in personal wealth with a skill base prosthetically extended via an image fabricated by extremely expensive media machinery that is at complete odds with reality.

This blog's technical term for the state of mass suckerdom has been dumbness.  This is a word I also use for dissociation, the systematic though often unconscious concealment of intersubjective reality behind a screen image of the real.

The most effective means is obviously the mass media in general and its hyperdeveloped skill at producing idealized simulacra of reality - simulacra so perfectly cleansed of anomalies that they fit the definition of hysteria.  The source is often a trauma. Thinking of US history in general and of 9/11 in particular, I would say that dissociation is a response to a trauma that suppresses the subject's own role in having produced the trauma.

Everyday examples of dissociation can be found in Fr. Frank's descriptions of hero-worshipping of male sports stars and of faith in Weapons of Mass Destruction in Iraq.  The other huge example that we're very much living with is the securities industry, in which values for securities that brokers made up were assigned through exchanges via mimetic thinking and mutually reinforcing professional networks.

Fr. F rightly starts the dismal decade with the Enron scandal rather than 9/11: 2001 was the year in which its "assets" came gradually to be seen as accounting fabrications.  He gets good play out of the accounting firm Accenture's use of Tiger Woods as its sole emblem of all things virile and triumphant, and then its attempt to scrub Tiger Woods from every piece of company material as though the relationship never existed.  Fr. Frank doesn't mention that "Accenture" was the name that emerged when accounting giant Arthur Andersen had to scrub itself out of existence as the disgraced accounting firm for Enron Inc.

There is an Orwellian aspect to these total reversals: we worship Tiger Woods; we look down on Tiger Woods.  Enron is America's most innovative company; Enron is America's most fraudulent company.  As an educator, I notice first and foremost the absence of learning.  We just go onto the next thing: from Enron's "special purpose entities" to Lehman's "structured investment vehicles," from day-trading in equities to zero-down real estate investing.  The pattern is reinforced by our leaders, who depend on it to maintain their own position.  A recent example was Obama's justification of the escalation in Afghanistan by trying to suffocate reflection with a thick blanket of primal innocence: "unlike the great powers of old, we have not sought world domination."

In his amazing novel 2666, one of Roberto Bolano's main characters, a Spanish specialist in German literature and in particular the works of the elusive Archimboldi, returns to his hotel room in a Mexican border town, puts down

rugs on the bed he didn't sleep in, then . . . sat on his bed and for a fraction of a second the shadows retreated and he had a fleeting glimpse of reality.  He felt dizzy and he closed his eyes. Without knowing it he fell asleep.

Why are we still sleeping?

The effect of the Big Sleep appears in another great framing moment, Glenn Greenwald's continuation of his critique of the Obama administration on health care. He argues that Obama is systematically continuing Clinton's Third Way, which Greenwald defines as corporatism.

It's about more than just letting corporations do what they want.  It's about affirmatively harnessing government power in order to benefit and strengthen those corporate interests and even merging government and the private sector.  In the intelligence and surveillance realms, for instance, the line between government agencies and private corporations barely exists.  Military policy is carried out almost as much by private contractors as by our state's armed forces.  Corporate executives and lobbyists can shuffle between the public and private sectors so seamlessly because the divisions have been so eroded.  Our laws are written not by elected representatives but, literally, by the largest and richest corporations.  At the level of the most concentrated power, large corporate interests and government actions are basically inseparable.

The health care bill is one of the most flagrant advancements of this corporatism yet, as it bizarrely forces millions of people to buy extremely inadequate products from the private health insurance industry -- regardless of whether they want it or, worse, whether they can afford it (even with some subsidies).

Greenwald is right about this "centrist" Democrat philosophy, and about its authoritarian overtones. It's also important to figure out where this corporatism comes from.  Part of it is the media simulacra, of course, providing all the comforts of Babyland for an infantile population.  The deeper harder part comes from systematic and self-protective dissociation from anything that conflicts with an airbrushed image of America that helps us all confront absolutely nothing the country or its leaders actually do - like "seeking world domination" around financial markets, military power, UN climate policy, and so on.

The area where the country's middle classes are being continuously damaged is finance itself.  The financial system created untold trillions of dollars of assets that its own participants determined in the summer and fall of 2008 to be worth little or nothing.  Collapse was averted because governments led by the US Treasury and the Fed stepped in to provide unconditional guarantees that these assets would be worth close to face value.  This was the importance of Treasury Secretary Tim Geithner's "giveaway" (also here, here and here) of 100 cents on the dollar to AIG's counterparties. Even if it wasn't a giveaway, it signaled Total Commitment to whatever fictions finance had been using to pile it high and deeper.  In other words, to avoid collapse, the feds supported dissociation.  This meant the rapid forgetting of what we had momentarily learned about the non-value of financial values through their real support with taxypayer-supplied direct payments, loans, and guarantees. The forgetting continues to this day, when it is hard to find any commentary on the problem assets that remain on everybody's books, because we are now dissociatively engaged in an economic recovery.

How do we make it stop? The old Left mechanism was the exposure of false consciousness through immiseration.  The lie of prosperity (for the large majority) would be exposed through the truth of suffering.

We have plenty of suffering in the dying states.  In the Left Business Observer, Doug Henwood writes,

According to a new ABC News/Washington Post poll, one in three U.S. households reports that a member lost a job over the past year. The effects: 90% report higher personal stress; 62%, anger; 58%, depression.  That translates into 83 million Americans experiencing stress; 58 million, anger; and 52 million, depression, as the result of recen job loss. Not quite four in ten of the job losers report having foudn a new job - and of those who do, half say it's for less pay.  For those unable to find a new job, the emotional effects are severe: 70% are depressed.

The obvious problem is that suffering that leads to depression doesn't lead to change.  Anger is more useful, but can easily be reversed into depression, particularly in a culture like that of the U.S. in which everyone is held personally responsible for failure and there are no structural problems really or exploitative ruling classes etc etc - except the ones you see when you are really angry, and then even your friends avoid you for being the loser you are.

The Left is not doing well right now in defining a new architecture for a egalitarian economy that develops the whole society. It also needs to do better at confronting the psychological blockage to imagining what that would be, starting with acknowledging our own role in getting us here.  I think the key to ending dissociation is ending the threat of being a loser by confronting the fact that in the current situation that is exactly what nearly all of us are.

Getting Rolled AGain

Glenn Greenwald outdoes himself in this unrelenting slam of the Emmanuel-Obama Axis of Nixonism -  except Nixon was more of a New Dealer.  Here's a particularly nice summation:

In essence, this reinforces all of the worst dynamics of Washington.  The insurance industry gets the biggest bonanza imaginable in the form of tens of millions of coerced new customers without any competition or other price controls.  Progressive opinion-makers, as always, signaled that they can and should be ignored (don't worry about us -- we're announcing in advance that we'll support whatever you feed us no matter how little it contains of what we want and will never exercise raw political power to get what we want; make sure those other people are happy but ignore us).  Most of this was negotiated and effectuated in complete secrecy, in the sleazy sewers populated by lobbyists, industry insiders, and their wholly-owned pawns in the Congress.  And highly unpopular, industry-serving legislation is passed off as "centrist," the noblest Beltway value.

 Digby's quite nice on this too.  The key here is the middle section of the paragraph: Obama can directly and coercively give the taxpayer's money first to the "F" in FIRE (finance) and now to the I (insurance) because of the pathetic psychological state of progressives - so pathetic that it's hard to even know if they are progressives or not, or if they know. Would these people respond if exposed and pounded on by a thousand Greenwalds and 10000 Digbys?  How much more failure is it going to take? My only disagreement with Greenwald is that he doesn't sufficiently stress the apparent causal power of a mass mental break.

It's true that Obama is more to blame than Lieberman, but why is Lieberman able to act like one of the regional tyrants that could blackmail the emperor as the western Roman empire disintegrated (e.g. throughout all of the 400s).   This is a sign that Obama has already lost most of his authority, if he ever had it in the first place.  It's also more evidence for Fire Dog Lake's important claim for the practical failure of the Rahm Emmanuel strategy of crippling the left and even the center so they can cut deals with the right.  They have achieved almost nothing this way - unless what they want is in fact FIRE corporatism instead of government.

There are a lot of parallels with Clinton, of course, but it reminds me more of Tip O'Neill's disastrous accommodation of a not-yet-strong Ronald Reagan during the recession of the early 1980s, when instead of fighting him on the air traffic controllers and tax cuts, he found lots of local advantages in caving in. The Dems haven't ever really recovered on the level of strategy or of ideology, and that was almost 30 years ago.  And of course O'Neill was still running scared from the McGovern debacle, which they never analyzed correctly - as is Obama in his desire to be Nixon rather than McGovern (or Carter) in Afghanistan . . .

I like FDL's virtual whip project but am not sure how to scale up opposition to a DC that is completely off the rails and selling itself to the highest bidder as quickly and totally as it possibly can. (This view is compatible with Nick Silver's good rationalist analysis of progressive failure.)  Obama's vaunted Internet strategy was built to campaign the masses and not to rule the brokers in the capitol.  A starting point would be for Obama to engage in a public slicing and dicing of his enemies in a major national address - really hang them by their heels from the telephone poles on the road to Woody's Creek,  as Hunter S. Thompson used to say -  but he's already lost the spirit to rule in the midst of all his orthodox calculations  of compromise, to say nothing of implementing any actual renovative ideas.

Decline And Fall - For No Reason at All

Pretty much the whole sad story of Obama, War President of the Nobel Peace Prize is wrapped up by Glenn Greenwald, so no need to expend extra thought there.  This Greenwald is required reading on the foreign policy portion of the current rapid Democrat slide into Republican policy hell - all for basically no political reason, since the Repubs are widely despised. (See also David Cortright here.)

Same goes for Obama's Republican economic policy - Matt Taibbi this time on the" economic team made up exclusively of callous millionaire-assholes an economic team made up exclusively of callous millionaire-assholes [that] has absolutely zero interest in reforming the gamed system that made them rich in the first place."  Thank you.  Taibbi links the names, a simple way of showing the painful marginalization of any critical thought - finally as insidious and life-sapping a trend in modern America as the pervasive, half-veiled faith in violence. The sorry outcome is that all those Dems from Obama to Frank et al can't move ahead unless, as they were in Fall 2008, they are prodded by simple fear.  With the visible threat past for the immediate Finance Family, it's back to their laissez-faire.

The result with the Obama admin is, as one person puts it, ""Rather than having a team of rivals, they've got a team of Rubins."  How much clearer could it be that Obama is finished as an indepenedent force in US politics?  Rolled like that, you never recover.  At least he won't.

Amidst all the enforcing of progressive timidity by Rahm Emmanuel et al is the sheer timidity of the conventional wisdom here.

Why would leading congressional Democrats, working closely with the Obama administration, agree to leave one of the riskiest of all financial instruments unregulated, even before the issue could be debated by the House? "There was concern that a broad grant to ban abusive swaps would be unsettling," Frank explained.

On this point, Obama foreign policy is even worse than Obamanomics.  Greenwald wraps up the Nobel speech like this:

Indeed, Obama insisted upon what he called the "right" to wage wars "unilaterally"; articulated a wide array of circumstances in which war is supposedly "just" far beyond being attacked or facing imminent attack by another country; explicitly rejected the non-violence espoused by King and Gandhi as too narrow and insufficiently pragmatic for a Commander-in-Chief like Obama to embrace; endowed us with the mission to use war as a means of combating "evil"; and hailed the U.S. for underwriting global security for the last six decades (without mentioning how our heroic efforts affected, say, the people of Vietnam, or Iraq, or Central America, or Gaza, and so many other places where "security" is not exactly what our wars "underwrote").  So it's not difficult to see why Rovian conservatives are embracing his speech; so much of it was devoted to an affirmation of their core beliefs.

The more difficult question to answer is why -- given what Drum described -- so many liberals found the speech so inspiring and agreeable?

 And then the 64 dollar observation: "Yesterday's speech and the odd, extremely bipartisan reaction to it underscored one of the real dangers of the Obama presidency:  taking what had been ideas previously discredited as Republican or right-wing dogma and transforming them into bipartisan consensus."

Dissociation, fear, mindless nationalism, avoidance of solutions to economic problems that would require change, mindless nostalgia, cultural stupidity so deep that it endangers the country: what is it ?

Fr. Frank's Sunday sermon points out that our "particular darkness" is "the disconnect between the corporate culture that is dictating the firing and the rest of us."  And there is the total immunity from the "consequences of their actions."

There's some kind of death knell here for even the illusion of the Dims as a second and oppositional party. There's the Dead Zone politics to come, followed inevitably by far more unrest than we've seen in the US in quite some time.  See the U blog for the local versions unrest - or this poll report for majority desire for the New Deal now abandoned -  as the pseudo-recovery continues to squash the little people and their chldren.

With this in mind, we have to start facing the fact that Obama, who rapidly moved from "change we can believe in" to disappointment to sell-out (to Wall Street), may be entering the territory of "worst thing to happen to the Democrats in decades."

Oursource Traders and I-Banks Too

Dean Baker had a nice short bit called "Toyota's CEO Works for Less":

The NYT told readers that GM may have trouble getting a new CEO because of the limits the government has imposed on CEO compensation. It would have been worth mentioning that the CEO of Toyota and other successful auto manufacturers work for pay that would likely confirm to the government limits.

This suggests that CEOs in the United States have simply priced themselves out of the market. The obvious solution would be to outsource top management, as was done with Chrysler.

Same goes for the banks themselves. At some point we may tire of claims that huge bank bonuses during the Great Recession they caused are necessary because you can't get a trader to exert his god-like powers for less than 500x the median annual wage. We'd then ask that all trading be sent to back offices in Banglore and Ho Chi Minh City, just down the road from where the banks got industry to send US and UK manufacturing jobs years ago.

Obama Kills His Better Half

Obama's decision to escalate in Afghanistan was sad and stupid, and made stupider by the bollocks he talked in justifying the dumb murderous thing.

There was

• "the waving of the bloody shirt" - the oldest presidential gesture in US histor - around  9/11. 
  
• the repetition of Bush's fradulent claims of The Terrorists' immediate threats to American security.
• the phallic backdrop of West Point, the martial imagery, the sentimental militarism, the "using [of]American soldiers as props" by yet another president who feels insuffficiently martial for warrior nation, the grotesque ass-kissing - "it's an extraordinary honor for me to do so here at West Point" - hello, you're the elected president, we still have a civilian government don't we?
  
• the standard self-righteous vision of America's own saintly and hence preeminent leadership in all actions, thanks to its absolute innocence of selfish motives behind violent acts ("unlike the great powers of old, we have not sought world domination"). 
  
• no recognition of the failure and uncertainty of military interventions (cf Bacevich)
  
• no recongition of the absurd double standard of the US military presence in 130 or more countries - you must check with us about everything; we do whatever we want
  
• no recognition of blowback (Reuters found multiple expressions among Afghans within a few minutes of the speech's end)
• no recognition that the US, in escalating its occupation of a Muslim country, is doing exactly what a credible authority named Osama bin-Laden said provoked terror in the first place - occupying a Muslim country
• no ability to see that 130,000 US troups in a country is an occupation. For god's sake.
  
• no recognition of the mindless destructive waste, the death trip, the death drive.
• no recognition that noone in other countries believes any of this bullshit - strictly no one, none of it, especially not the pathetic washing of the blood off the hands at every public opportunity as though the whole world were a fundamentalist church.

Aside from the futility of the policy itself (see the whole Democracy Now broadcast December 2 for the many reasons why), it's also finished for Obama - he's cooked his own goose.

Historical evidence for this unpleasant conclusion was nicely condensed by Rep. David Obey in his honorable attempt to impose an Afghan wartax (squashed by House Speaker Nancy Pelosi):

if we don’t pay for it, then the the costs of the Afghan war will wipe out every other initiative that we have to have to rebuild our economy. That’s what happened with the Vietnam War which wiped out the Great Society. That’s what happened with the Korea War that wiped out Harry Truman’s Square Deal. That’s what happened to the progressive movement back before the 20s when we went into World War I. In each case costs of those wars shut off the ability to afford anything else.”

Obama has deliberately embraced the wiping out of his own domestic policy. And that is what he will get.

Obama is going down.  During our latest undeserved ordeal, try at least to enjoy Onion stories about our most recent Teleprompter President. The big question remains:  how will we avoid going down with him?

Ye Olde Split Between Top and MIddle

"Top" here means the White House and the Congressional leadership, whom Krugman describes as being pulled away from job creation and other recovery politics by the banks, who in a growing number of accounts have conquered the U.S. Government.   Max Keiser's "Goldman Sachs are scum . .. they've basically coopted the US Government, the US Treasury Department, the US Federal Reserve functionality, they've coopted Barack Obama" -the second part, about banker cooptation, apprears on the pages of many daily newspapers.

The middle - here rank-and-file Congressional Dems - rebelled a bit.  They passed a measure in the House Finance Committee requiring an audit of the Fed's many enormous bailouts of insolvent banks, whose sums and recipients remain undisclosed. They passed the measure over the opposition of House Finance Committee Chair Barney Frank.

There are lots of good ideas around about how to fix things.  One of many examples is Dean Baker's idea of how to actually go about revaluing the Chinese yuan. The problem isn't that nobody knows what to do, that it's all so complicated. The problem is that the top doesn't want to do the things that could be done to fix things.  These things would cost them money.  

The outcome is the sort of phony helplessness that now pervades US policy in finance, job creation, higher education - take your pick.  It only works on the assumption that most of us are pretty dumb.

Disaster in Plain Sight

It's interesting to see the category "financial elites" used as a natural object by the New York Times. On top of that, Bob Herbert nicely summarizes the clearly visible problem with the current "recovery":

It was the financial elites who took the economy down, and it was ordinary working people, the longtime natural constituents of the Democratic Party, who were buried in the rubble. Mr. Obama and the Democrats have been unconscionably slow in riding to the rescue of those millions of Americans struggling with the curse of joblessness.

Amidst an underemployment rate of about 25% for Blacks and Latinos, and a poverty rate of 35% for Black children, "Wall Street can boast about recovery all it wants, [but] much of America remains trapped in economic hell."

I think it's worse than that, actually.  The "investment" and "employment" economies have been divided for some time: attempts to save the company by firing workers, the national stroke of managerial genius of the 1970s, became attempts to loft the stock price by firing workers.  The markets divorced the industrial employment base a long time ago,and they have long gone in opposite directions.  The crisis has given the financial sector the chance to perform the most complete dumping of the employment economy in modern history.  It's not sustainable, but finance doesn't care.  Without some kind of upheaval, by the time the political sector shifts a little emphasis back to the employment economy,  all of the political sector's money will be gone.

Dismal Dems

Driving the point home about the failing Democrats, John Nichols blogs in the Nation that Obama and the Congressional Dims "continue to make the mistake of treating unemployment as an afterthought rather than the most serious issue facing the nation."  Writing about last week's Republican victories, he points out that " in New Jersey and especially in Virginia, where Republican candidates in high-profile races focused tightly on economic issues and job creation, they won." And Fr. Frank's Sunday sermon notes,

The system is going back to the way it was with a vengeance, against a backdrop of despair. As the unemployment rate crossed the 10 percent threshold at week’s end, we learned that bankers were helping themselves not just to bonuses as large as those at the bubble’s peak but to early allotments of H1N1 vaccine.  . . . both parties have their own delusions, not the least of which is the Republicans’ conviction that Tuesday was a referendum on what Obama has done so far. If anything, it was a judgment on just how much he has not.

Unhappy Obama Anniversary

It's Obama's one-year birthday as president and I like many others am not celebrating this week.  Afghanistan escalation, Guantanamo closure, the ongoing fiasco in Honduras,  non-existent financial reform, health care with no public option, you name it.   The middle-classes are shrinking and falling as before.  Obamanomics has split Main Street off from Wall Street in order to protect Wall Street, which is busy reinflating various bubbles and is back paying its people like an aristocracy superior to everyone else on earth.  Public higher education is sinking fast.  As Avery put it, what in practice is better after a year of Obama than before?

There are no doubt federal institutions that are better because they are no longer being run by sworn enemies of government.  There are many many fewer appearances by George W. Bush. There are no doubt improvements in the judiciary.  But the top-level decisions have been uniformly disappointing.

This impression is beginning to circulate in Europe as well.  The American economist Jeff Madrick had an interview published in Le Monde on November 4 in which he deplored Obama's reflexive attempt to find the middle way even if it is a dead end.   The problem is not that Obama compromises too easily, but that he is what Cass Sunstein a while ago called a "Chicago Democrat." He wants government to set some rules for a "market" that he conceives to be the source of all economic value and which therefore must be as free as possible. In practice this means as unregulated and as unaccountable as possible.  This is exactly what we are getting.

See Paul Krugman's mournful description of Obama's strategy, which might be called "one bridge too few."  "The Democratic base, so energized last year, has lost much of its passion, at least partly because the administration’s soft-touch approach to Wall Street has seemed to many like a betrayal of their ideals."  538.com discusses statistically visible "democratic disgruntlement" -

Current data showing strong disapproval of the Democratic-led Congress by rank-and-file Democrats could be given voice as follows: I realize that when Democrats first took control of Congress, Bush was still President, and Congress, even though dominated by Democratic partisans, had their hands tied. But now, with Obama as president and increased majorities in Congress, you're still not getting stuff done that I care about? And, when are you guys (expletive deleted) gonna focus on what we need most—jobs! You wanted complete control, and that's what you finally have. And this is what we get?!

I stick to my description one year ago of Obama One, a near-reincarnation of Bill Clinton.  The proposed gutting of Sarbanes-Oxley this week - by Democrats - may become a fitting monument.  When we face this fact, we may really get back to working on something better.  Grace Lee Boggs had a nice passage on this.

I think that the only answer to the counterrevolution . . .  is to begin creating a new concept of hope, not to talk about recovery. We don’t need to go back to a society that is concentrated on economic growth, that dehumanizes us, that makes us consumers only and is threatening all life on this planet. We need to be thinking about something new.

Warlord Schoolboy

I'd almost forgotten what a dunce David Schoolboy Brooks is because I never read him anymore, but this terrible piece was somehow unavoidable.  In it, Schoolboy offers no actual argument for escalating in Afghanistan. He just refers to unnamed gladiators like himself to taunt and bully Obama with that great question of modern statecraft: "are you man enough to go to war"?

Glenn Greenwald has previously sent Schoolboy to the corner for chest-beating in class.  He does it again this time (as does Amy Davidson at the New Yorker), so I'm reluctant to mention the man again.  The problem is that Schoolboy spent the Bush years not only defending all pointless invasions but also establishing himself as the national spokesperson for middle-class values.  In other words, he has specialized in defining extreme right-wing positions - particularly military conflict-resolution and economic plutocracy - as the foundation of bourgeois utopia. 

A few people call Schoolboy on this publicly, and Greenwald is exemplary in railing tirelessly against the weird, myopic hypocrisy of media and political elites who are happy to spend money we don't have for war but not for health care.  To me they sound like the clueless leaders of France during Napoleon III's mid-19th century Second Empire, a period when France should have been democratizing and developing its social capacities for various kinds of economic and social development, and when it instead became increasingly militaristic and economically second-rate.  Schoolboy's term "tenacity" accidentally invoked not Churchill but Nixon in Vietnam.  The middle-class lets people like Brooks speak for it only at its own mortal peril.

Schoolboy published the day after his own paper shone yet another light into the cesspool of Afghan leadership with a story revealing that Ahmed Wali Karzai, already suspected of being a major opium trafficker, is a CIA operative who helps them run a paramilitary force in Kahdahar province. The past couple of weeks have seen increasing exposure of Afghan and "AfPak" reality, including Jane Mayer's report that the CIA is also running a U.S. drone campaign in Pakistan (see also UN Special Rapporteur Philip Alston), Secretary of State Hilary Clinton's unpopular visit to Pakistan, marked by the market bombing in Peshawar (and Clinton pushing "the button on a computer that randomly chose more than 700 lottery winners"),  and the U.S. visit of Afghan democracy activist Malalai Joya, whose book, A Woman Among Warlords, is a reminder of the costs of the real-world version of the armchair warlord schoolboys.
 

Devolution through Dumbness

Thanks to Michael for linking me to the great Glenn Greenwald piece, "American Priorities, by the Beltway Elite," which gets at the heart of why the U.S. is moving backwards and is no longer a model for aspiring countries anywhere.  The heart is simple antihumanism, directed at our own population, in this case by the editors of the Washington Post.

Universal health care, however desirable, is not "fundamental to the defense of our people." Nor is it a "necessity" that it be adopted this year: Mr. Obama chose to propose a massive new entitlement at a time of historic budget deficits. In contrast, Gen. McChrystal believes that if reinforcements are not sent to Afghanistan in the next year, the war may be lost, with catastrophic consequences for U.S. interests in South Asia. U.S. soldiers would continue to die, without the prospect of defeating the Taliban. And, as Mr. Obama put it, "if left unchecked, the Taliban insurgency will mean an even larger safe haven from which al-Qaeda would plot to kill more Americans."

As Greenwald points out,

We have absolutely no ability to pay for our Afghan adventure other than by expanding our ignominious status as the largest and most insatiable debtor nation which history has ever known.  That debt gravely bothers Beltway elites like the Post editors when it comes to providing ordinary Americans with basic services (which Post editors already enjoy), but it's totally irrelevant to them when it comes to re-fueling the vicarious joys of endless war.

There's some civilizational madness reflected in these beltway editorials - the death trip we keep trying to understand.

The Media's Quagmire

Mark Weisbrot's slam of the amazing establishment bias in the media was a nice end to my computer day.

Senator Carl Levin of Michigan, a Democrat, was apparently intended to represent the "other side" of the debate. Here is what he said: "Clearly we should keep the number of forces that we have. No one's talking about removing forces."

"No one" in the above sentence refers to the American people, whom Levin understandably sees as nobody in the eyes of the US media and political leaders.

And he goes on to make a crucial distinction between Obama catering to elite media and Obama catering to polls, which might lead him sometimes to do what large popular majorities actually want:

If you want to know why Obama has not fought for a public option for healthcare reform, why he has caved to Wall Street on financial reform, why he has been Awol on the most important labour law reform legislation in 75 years (despite his campaign promises), just look at the major media. Think for a moment of how they would treat him if he did what his voters wanted him to do. You can be sure that Obama has thought it through very carefully.

Obama's whole political persona is based on media strategy, and on not taking any risk that the major media would turn against him. That is how he got where he is today and how he hopes to be re-elected. Many analysts confuse this with a strategy based on public opinion polling. But as we can see, these are often two different things.

Inequality as Theft

Marcus Baram has this nice chart at Huffpo that compares the growth in financial sector bonuses to non-growth in salaries.

Back in 1985, the average annual salary for all workers across the country was actually a bit higher than the average bonus ($19,000 to $13,970). (Note: these numbers are not adjusted for inflation).  How times have changed - while the average bonus soared almost 14 times higher (by 2006), the average salary has essentially been stagnant sine the mid-1980s.

 Meanwhile, the Obama administration got pissed at the insurance industry for its open attack a couple of weeks ago on even the weak reform plan. Obama lit into them, and on This Week White House advisor David Axelrod repeated the basic argument:

we need these reforms. In the last year—in the last ten years, premiums have doubled. You’ve seen the insurance companies take—ten years ago, fifteen years ago, they spent 95 percent of their premiums on healthcare, now 80 percent. More of the money is going to bonuses, salaries, administrative costs. This is not a sustainable path for this country. So we need reform, and that’s what he is arguing for.

Turns out politicians can in fact discuss parasitism in America, but only when the deal with the newly proclaimed parasites has fallen apart. When will Axelrod substitute "insurance companies" with "banks" in the same phrase?

Sick of the Job

A new report confirms what we all know but aren't allowed to take too seriously: bad your job hurts your health. Workplace decline, inhumane treatment, bad psychological vibes affect you and then the whole country. The president of the Families and Work Institute, which sponsored the report, said, "You have to pay attention to the small things, the way people treat each other, whether there are opportunities to learn, whether people’s input is asked for and considered.’’ Obvious in theory and avoided in practice.

The theory is well understood.

Nearly 40 percent of employees in a highly “effective’’ workplace - where people are trusted and supported - report being in excellent health, double the number of those who say they’re in the best health at less effective companies. The institute defines an effective workplace as one offering a climate of trust and respect, learning opportunities, worker autonomy, work-life fit, supervisor support, and economic security. High work-life support and flexibility are especially linked to good health outcomes.

Rehumanizing US society will build from a lot of places, and one is fixing the workplace, which has slid into barbarism and authoritarianism for way too many people.

Inequality as Policy

This is the title of a CEPR report that is clearer than most that inequality has not been an accidental byproduct of high-tech growth and the "service economy" but has been a deliberate strategy.  I elaborate on this in a book on the decline of the paramount middle-class institution, the public university, and am very glad to have this company.

Privatizing Baseball

Baseball has always been a sport dominated by club owners and business goals, but Bob Herbert has a nice piece on the meaning of the replacement of affordable old stadiums with new corporate parks, all publicly-supported at some point in their construction.  Yankee season tickets for a family of 4 were initially priced at $800,000.  Herbert note a familiar pattern of absolutely upside-down priorities: "the auto industry is on its knees and we’ve got school buildings in sorry shape and we can’t even rebuild a public hospital in New Orleans. But the Dallas Cowboys have a brand new billion-dollar-plus domed stadium that looks like something out of “Star Wars.”

Banker Noir

First it's Dean Baker (see his good links), and now the mainstream press is going noir on this banker business.  "Bailout Helps Fuel a New Era of Wall Street Wealth" says on NYT headline, which makes for a decent summary of where we are right now.

• The banks' new big money comes from Washington - the taxpayers, in the form of direct cash, loans, loan guarantees, and zero-percent interest that they can loan back at 5% or so. 
• They are making money now doing exactly what they were doing before the crash 14 months ago - "making fortunes . . .  trading stocks and bonds, rather than in the ho-hum business of lending people money."  That is putting speed-trading, currency speculation, commodities arbitrage, and a bunch of much more clever stuff euphemistically.
• No new regulation has taken place: "So even as big banks fight efforts in Congress to subject their industry to greater regulation — and to impose some restrictions on executive pay — Wall Street has Washington to thank in part for its latest bonanza." or: “'They are able to charge more for all kinds of services because companies need banks and investment banks more now, and there are fewer strong ones to help them,'” said Douglas J. Elliott of the Brookings Institution."
• Surviving banks are making monster profits on monster spreads: "Banks that have waded back into the markets have been able to exploit large gaps in the prices of various investments, a feature of the postcrisis financial markets. The so-called bid-ask spreads — the difference between the price at which banks are willing to buy things like bonds, and the price at which they are willing to sell — are roughly twice what they were two years ago.
  

The noir reading is this: 9/08 was banker 9/11.  They didn't do it on purpose, but they used it to increase financial power over the economy.  US economic leaders, having stopped being able to generate 1950s-1960s profit margins by making better products and beating the global competition head-to-head, squeezed wages, benefits, and social investments of every kind. These elites made up for the damage done to the general incomes of their own customers with a combo of lootings and bubbles - S&L pillaging in the 1980s, dot-com bubble of the 1990s, real estate bubble of the 2000s, that maintained consumption and middle-class living through easy borrowing against inflated assets.  Now there are no more bubbles. The "green economy" of Van Jones and others would help the environment but also raise wages by rebuilding industries that pay decent wages, and that cost finance money!  If there's no bubble for Main Street, cut Main Street loose. That's what we have now: the barnacled ship has been cut loose from the government tugboat, and is sinking steadily, while the finance sector is being towed ahead even faster than before.

The new cover story is the V-shaped recovery.

Finance is supposedly helping the gigantic resilient rebound.  But in fact it is not putting money into the economy with lending and is taking money out with enormous trading profits for which some losing party pays.   All the faltering Vs are aspiring to ideal V-ness. The ones who will succeed - like China - are the ones whose banks are most completely under political control.
 The government money not being spent on banks is being spent on our two unwinnable wars, which are also financed by banks.  Depressing dumbness floods in from everywhere, as in the McChrystal folly in Afghanistan, which assumes the power of a rich kid country that has in spite of its self-image failed repeatedly at military control, and will spend whatever we have left failing again.
That's noir. It signals the moment where the rotten foundations of the most powerful forms of success become visible to pretty much everybody.

Addendum: noir also assumes the permanent ignorance of the little people. Fr. Frank hits this note on Goldman Sachs in his Sunday sermon

there is one other significant way that our 21st-century vampire squid differs from Rockefeller’s 20th-century octopus. Americans knew what oil was, and they understood how Standard Oil’s manipulations directly affected their pocketbooks. Even now many Americans don’t know what Goldman’s products are or how it makes its money. The less we know, the easier it is for reckless gambling to return to capitalism’s casino, and for Washington to look the other way as a new financial bubble inflates.

Another one of my Capitalist Pals has a good piece on the new order's new big winners ("three sets of players look positioned to do the same in the US today, mostly based on the amazing set of “carry trades” available if you have access to large amounts of cheap short-term funding").  The piece starts by describing US equities as an "emerging market":

The US increasingly displays characteristics that we have seen many times in middle-income “emerging markets” – new dimensions of vast inequality, forms of financial instability that benefit the best connected, and consistently easy credit for the privileged. But this raises the question: who exactly is going to dominate our economic and political landscape moving forward?

Noir as a genre flourished historically as the U.S. transited from a banana republic to a more routinized industrial one, while keeping many of the banana features.  Now Simon Johnson concludes, "Many states have been taken over by bankers; there is no shame in fighting and losing against what Jefferson called the “monied aristocracy. But few governments, even the weakest, have handed over the keys as quietly as we did. "

The noir conditions flourish again.

Love is Worth It

Democracy Now had a great sequence yesterday on the Gay Rights March in DC, starting with Lt. Dan Choi's speech about coming out, "love is worth it."  He's facing discharge for telling even though he wasn't asked, and his crescendo in DC can be seen on the website:

But when we’re telling the truth about our love, our country slaps us in the face and orders us, “Don’t ask,” and orders us, “Don’t tell.” Well, I am telling you that the era and the time for asking is over. I am not asking anymore! I am telling! I am telling! I am telling! Will you tell with me?

On the show, he talked about coming out to his parents.

Well, when I came back from Iraq, I finally understood what love was when I started a relationship, my very first one. And I didn’t want to lie about that anymore. I didn’t feel that if I respected my parents—and I respect and love them—that that kind of a relationship should be based on anything other than integrity and full disclosure. They should be a part of it.

The principle here is crucial: respect means you tell the truth even or especially when it will produce disagreement and conflict.  The same holds for politics and economics as well: the continuous lying we face as part of the growing orbital divergence of our two economies, finance and everything else, is an exercise of continuous disrespect. It paralyzes us, but only in the short run. As Lt Choi proves, when the paralysis ends, the truth-teller activates not only himself but everyone he or she touches.  That process of upheaval in both love and finance is slowing turning its bow towards the way out of the harbor.

This Year's Nobels: Better than Usual

The Swedish Bank's "Nobel Prize" has gone to two more Americans, including what I believe is the first woman ever to get a "Nobel" in Economics, Elinor Ostrom, of Indiana University. Her work was honored for its contribution to the possibility of "governing the commons" and of inputting user knowledge into the rule-making process.  Good. UC Berkeley's Oliver Williamson was co-winner for his work on non-market economic activity, which is of course grossly underappreciated in the neoclassical tradition that the Swedish Bank has generally recognized, and that has lopsidedly dominated US economic theory for decades.  The public write-up is pretty good. It would be too much to say that these are anti-Chicago School economists, but in the Swedish "Nobel" context, they are.  It's a good sign.

Bubble Brains

Robert Schiller has some interesting evidence that people haven't given up on huge coming profits on buying and selling houses. It confirms that pathetic story about Arizonans bankrupted by house flipping  trying to make it back by buying foreclosed houses in the hope of future flips.  As Schiller says in his understated way, "At the moment, it appears that the extreme ups and downs of the housing market have turned many Americans into housing speculators. Many people are still playing a leverage game," still hoping they can win by timing the market.

I would only add that people is dumb because a) dumbness used to pay, but also b) they don't have anywhere else to turn. Are they supposed to invest in the green economy?  Look for solid annual pay increases by reskilling for a job in the big new American industries that are coming on line? Take heart in the solid new economic strategies pondered in Washington? Trust their retirement to Wal-Mart?  

People don't in reality have any of these things to turn to, especially not new economic policy.  Bank regulation hasn't happened, and won't, as the foxes still manage the chicken coop, and policymakers, timidly caught by conventiontional deficit worries, are going to tighten money rather than dynamite their way to recovery with a stimulus so big it will actually allow the paying down of the future deficit.

People rely on bubbles because the American economy and its backward leaders still, over 2 years into the surfacing of the crisis in August of 2007, have nothing else to offer them.

Why Obama Got the Nobel Peace Prize

My friend Ricki has the best one-sentence explanation: Europe wanted to say thank you for beating Bush.

Maureen Dowd is funny in a mock comiseration session between Clinton and Bush.
Fr. Frank's wrangling with the propaganda war on Afghanistan positively reeks of Vietnam

Whiffs of Doom

In France, the only story about the U.S. right now is its fragility.  There's generally incredulous coverage of the health care debates, with marvelling at Obama's inability to either defend or get support for a "public option" variant on the universal public coverage that Europe takes for granted.

There's the relentless transformation of Afghanistan into Vietnam, the pouring of resources down a rathole that will do nothing but create more enemies, suffering, and poverty. There will be one difference from Vietnam. This time the poverty will also be America's.

Then there's the pitiful dollar.  As I've noted before, the world hates the dollar. Currency traders are as contemptuous of US economic conditions and policy as the Taliban are of our Afghani statebuilding, and at the first sign of recovery this spring they began to sell the dollar.  Some of the reason is that rock-bottom interest rates encourage the carry-trade (borrowing a low-interest currency to buy assets in a higher-interest currency), and some is just sheer fear of the US's infinite deficit funding.  I would add that the real problem is not deficits as such but deficits with no "real economy" revival or reindustrialization anywhere in sight. Hence daily stories like the Financial Times - "Asia steps in to support dollar."  And hence the daily fretting of my Capitalist Pals - "Is the United States on Sale?"

The issue is the absence of bottom-up vitality in the U.S. The cliche summary is that Wall Street thrives while Main Street dies. That's pretty close to the truth, as my university blog is documenting with sickening ease. 

I thought about this on a trip to Florence, Italy has weekend.  The L.A. boy in me always remembers the dismal intersection of Normandie and Florence, ground zero for the 1992 Rodney King revolt, an image of the U.S. borrowing with names a cultural capacity it lacks in fact.  Florence Italy was an unruly republic that in the 1200s started to build a palace for its elected officials. The officials lived there for 2 months day and night while they did the job of governing. Afte 2 months they no longer had the job, and were replaced by other citizens.

The republic was replaced by the rule of great families, the Medicis being the most important of these. By the mid-1500s, Cosmo I had anointed himself grand duke of Tuscany over all, and moved his court into the formerly-republican palace.  The English-language tours don't even mention this fact, as though  the distinction between republic and art-loving tyranny would be lost on us.

Florence's wealth had been established through the combination of mass creativity and an early Medici's financial brilliance - usurious lending to various royal families and creative financing that supported trade.  In other words, its wealth rested in large part on the massive upgrading of craft expertise in the arts and the trades - the invention of perspective is the most famous, but there were countless other improvements devised and developed by thousands of unsung heroes of technico-artistic transformation.  This is where the Duomo comes from, as well as everything else - not from the Medici sponsorship as such, though that was crucial, but from consistent craft innovation widely distributed through the general population of Florence and beyond. 

Cosmo had a couple of tiny studies where he supposedly kept in touch with higher things, including his own thoughts.  I was struck by one painting and looked it up later.  This is a version of Alexandre the Great meeting the philosopher Diogenes, who supposedly lived in a tub.

The solider-king approaches the philosopher and asks, "is there anything that I can do for you?"  Diogenes supposedly replies, "yes.  You can move. You're blocking the sun."


Florence was flooded with competing philosopher-kings and yet the spirit of the place is the tacit immunity of the artists and artisans and philosophers to royal power.  The solider-kings tore up one beautiful city or another on a regular basis.  The artists and artisans put them back together, better than before.

In the US, the whiff of doom comes from the absence of this artistic-artisinal counterpower in political practice, and also in political theory.  It's a series of powers that lie in wait everywhere, but that in general don't recognize themselves as counterpowers at all. 

Then there are my artist friends Cora, Erik, and Ines, who do.

Corporate Suicides in France

About 24 employees of France Télécom have killed themselves in the past 18 months, and most of them have been tied directly to the workplace environment, and particularly insecurity and stress. The story has been well-covered in France, and the NYT has a piece in English on what has become a huge story about the effects of workplace unhappiness that underlies the bollocks about "lifetime employment" and how good everybody with a job really has it.

Productivity gains are often attributed to technology, but the are more likely to come from overwork and other conditions that cause stress.  The U.S. professional workforce has more or less abandoned the 40 hour week - and they don't get paid for extra hours.  The toll on quality of life is basically ignored, because in the post-Cold War period quality of life has taken a back seat to sheer production, growth, and wealth as the measures of all things, drowning out peoples' voices and actual experiences that should be making the rules and not the other way around.

Inequality Takes Another Bow

forever on the rise, now fueled by the recession near you, and with predictable effects on the middle: 

Household income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997.

Future of Housing?

At Calitics, Robet Cruickshank has a nice piece on boomer housing fortunes and looming failures - the housing boom as a short-cut to wealth that has helped wreck California and that won't save their retirement either.  It's more  relearning of the old lessons we stuipidly forgot, and maybe too late . . .

Here's his summary of the dumbness:

After having spent 30 years steadfastly refusing to pay higher taxes to help provide to younger generations the affordable education, health care, and other benefits [boomers] themselves enjoyed when they were younger, they have now created a situation where they'll either have to live in their paid-off houses without the ability to provide for their own needs, or will have to sell for cash at fire sale prices in a marketplace without enough buyers.

thanks to Michael M for the link

Why Must We Relearn the Obvious?

Fr. Frank's piece today on Obama's Afghanistan-Vietnam made me sad.  It's a typically learned and perceptive reflection on the historical parallels for Obama's increasingly obvious quagmire in foreign policy.  By why does he have to work so hard to lay out what any 8-year old outside the beltway can see? The US in Afghanistan is a way to kill innocent people, piss off absolutely everyone, block economic recovery, throw away whatever money the public has left, destroy his own presidency, and revert the Dims to an imitation of Republican hawkishness that will lose in 2012. 

I felt compelled to write a whole book about failing cultural capacity in the US - the reduced ability to learn quickly, retain what we learn, and apply knowledge when it is actually relevant.  Afghanistan.  Just say the word.  How stupid can we really be?  Where's the bottom of our stupidity?

"White House Near Chosing U.S. Location to Hold Gitmo Detainees" Am I really reading this headline today, and not three years ago when Cheney was Prez and we were winning the war for hearts and minds in Iraq?

I heard multiple interviews this week in English and French from leaders trumpeting the G20 reforms.  But the best analyses were first, from Lori Wallach of Global Trade Watch, who pointed out the contradictions between reigning in finance and letting do whatever the hell it wants, i.e. more of what we have; and then a citation in a  John Authers column in the Financial Times, this of one David Bowers of Absolute Strategy Research in London, describing the equity markets right now:

It’s the last game of pass the parcel. When the tech bubble burst, balance sheet problems were passed to the household sector [through mortgages]. This time they are being passed to the public sector [through governments’ assumption of banks’ debts]. There’s nobody left to pass it to in the future.

That's where we are now, with no plan from the top, except for pointless military interventions and additional threats, which utterly undermine Obama One's promises of an era of rebuilding. 

We are going to have to start that work by ourselves.

Reforms that Weren't, Reforms to Come

President Obama's speech about reforms in the financial sector was disappointing, to put it mildly.  There were no plans for implementation and no ongoing developments that might actually change the system that blew things up. The consumer agency has nothing to do with stopping problems with overleveraging, opacity, internal fragility, and the unbelievable social costs of the extreme profits involved in financial speculation. Obama appears to be assuming a trickle-down recovery, although evidence at the state level is very much to the contrary. See California's tax revenue stream, for example:

I assume folks who track spreads in lending rates, loan volume and the like could clarify the "two economies" divergence that is crushing a lot of regular folks. You'd think Obama would at least have figured out that the backlash against his health care reforms are fueled by very reasonable economic fear and panic enabled by his non-existent financial reforms.

There's more hope in the report of the Stiglitz commission to the French government on moving from narrowly economic to broader measures of social progress.   See also the interesting papers on the commission's website.

It would be nice to be able to say at some point in my lifetime that the US was back on the front lines of economic thinking. That time still looks a long way off.

Dumbest Health Care in the World

Thank you Matt Taibbi for this opener:

Let's start with the obvious: America has not only the worst but the dumbest health care system in the developed world. It's become a black leprosy eating away at the American experiment — a bureaucracy so insipid and mean and illogical that even our darkest criminal minds wouldn't be equal to dreaming it up on purpose.

 Keep reading.  Taibbi combines a certain gonzo directness with lots of lucid detail on political processes that people really need to know in order to understand what is happening in their government.

We are still so screwed

Thus spaketh the Congressional Budget Office's projections, in which ballooning deficits don't buy us lower unemployment.   When are policymakers going to get really upset about this and actually do some New Deal public works and general rebuilding of the kind our decrepit public infrastrucure actually needs?

Republicans have absolutely nothing to offer on the economy, health care, education, you name it, as Arnold proves every day in California.  Their operatives are making Americans insane. The president of the US wants to give a speech to children about how school is important.  In the Insane Country, saying school is good becomes controversial. Hundreds or thousands of people spend their working day considering what to do about this.

In Florida's Indian River County, the superintendent met with local officials up to the 11th hour to determine how to treat the broadcast. According to the Press Journal, school officials last week decided that the speech had to be taped and reviewed before showing students, meaning it would not be shown live.

And these people are allowed to run schools for children?  They are completely dumb.

Obama rose to the occasion with this crescendo:  "I expect great things from each of you," he said. "So don't let us down -- don't let your family or your country or yourself down. Make us all proud. I know you can do it."

"we" can. they can't.

Krugman Softpedals the Woes of Economics

Paul Krugman has a lot of good moments in his big think piece on the many failures of the field of economics.  He sums up his thesis early on:

Few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems. More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy. During the golden years, financial economists came to believe that markets were inherently stable — indeed, that stocks and other assets were always priced just right. There was nothing in the prevailing models suggesting the possibility of the kind of collapse that happened last year. Meanwhile, macroeconomists were divided in their views. But the main division was between those who insisted that free-market economies never go astray and those who believed that economies may stray now and then but that any major deviations from the path of prosperity could and would be corrected by the all-powerful Fed. Neither side was prepared to cope with an economy that went off the rails despite the Fed’s best efforts.

The blindness of a whole field was possible because of a wholesale "retreat from Keynesianism and a return to neoclassicism."  

There's some handy simplified intellectual history here, but the best feature of the piece is Krugman's linking of even those liberal economists who rejected hard core neoclassicism (and its key mathematical axiom, the efficient market hypothesis) to a debilitating consensus.

But the self-described New Keynesian economists weren’t immune to the charms of rational individuals and perfect markets. They tried to keep their deviations from neoclassical orthodoxy as limited as possible. This meant that there was no room in the prevailing models for such things as bubbles and banking-system collapse. The fact that such things continued to happen in the real world — there was a terrible financial and macroeconomic crisis in much of Asia in 1997-8 and a depression-level slump in Argentina in 2002 — wasn’t reflected in the mainstream of New Keynesian thinking.

The lesson here is that moderation is blindness.  Moderation enforces the intellectual limits of the consensus.  In this case, "the New Keynesians, unlike the original Keynesians, didn’t think fiscal policy — changes in government spending or taxes — was needed to fight recessions. They believed that monetary policy, administered by the technocrats at the Fed, could provide whatever remedies the economy needed."

Then there's the not so good. The first weakness is the total lack of novelty in the critique of economics as delusionally neoclassical.  People outside economics have been saying this for years or decades.  They are often called sociologists or anthropologists, and have always thought that the models had lost touch with institutions, people, and also of course power and coercion, which played huge roles in setting up actual economies.  In addition to the recent book by Curious Capitalist Justin Fox, there is also Doug Henwood, longtime editor of Left Business Observer, whose classic 1996 book Wall Street offered a much more thorough intellectual history and critique than Krugman even hints at here. 

More importantly, Krugman blames "beauty" for leading economics astray.  He offers the philistine tag line, "As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth."  In reality, economists mistook money for truth.   Models that made important people lots of money had to be true.  Krugman only superficially considers the possibility that financial incentives corrupted the heart and soul of the economics profession.  Some of this corruption was personal and some was collective - it's hard to argue with what seems to be success.  But economists are like all scholars in being paid to look past the surface of things to the real forces at work. They have flopped big time, and they

Finally, Krugman's cure is little more than a weaker form of the disease:

So here’s what I think economists have to do. First, they have to face up to the inconvenient reality that financial markets fall far short of perfection, that they are subject to extraordinary delusions and the madness of crowds. Second, they have to admit — and this will be very hard for the people who giggled and whispered over Keynes — that Keynesian economics remains the best framework we have for making sense of recessions and depressions. Third, they’ll have to do their best to incorporate the realities of finance into macroeconomics.

These are three ways of saying that economists have to admit that markets aren't perfect. This may well get them into a freshman sociology or culture or history course, but it won't get them to the point of explaining how our economies actually work or how to keep them from being giant factories of social inequality and environmental destruction.  Moderation is blindness, even when it comes from Krugman.

What if We Don't Shop?

The NYT published this piece about fundamental changes in US consumption.

Millions of Americans spent years tapping credit cards, stock portfolios and once-rising home values to spend in excess of their incomes and now lack the wherewithal to carry on. Those who still have the means feel pressure to conserve, fearful about layoffs, the stock market and real estate prices.

I've wondered for years what  most Americans like to do besides shop their way up the commodity ladder to bigger or more expensive. I don't know that many people who did this full time, but the ones who do seem to make the rules for everyone else.

We're seeing a forced slowdown, but no real shift in desires - are we?  Are consumers as totally inflexible as bankers, who a year after the big meltdown have taken all the government's money, maintained all the rules, and blocked all reform?

The main difference seems to be that bankers have more money - including more public money than the public has.

Even Economists Wonder: Is this NOT a Recovery?

Here's a doubting Stiglitz.  W-shapes, anyone?

There's some good stuff in this June piece by Marshall Auerback on why our bank bonanza isn't an economic bonanza, and will never be.

And here's a piece by one of my Supply Sider Pals on the "Non-Stimulating Stimulus." He, being a supply sider and a Poverty Denier, thinks the non-stimulus is good, because all government spending is by definition bad.  But his data is interesting - only 12% of the stimulus is going into new purchases of goods and services.  This helps explain the non-stimulus.

Bombing the Black 'Burbs

Credit itself is valuable and not parasitic, but huge returns in banking service areas like mortgage lending ARE parasitic. Obviously fat profit margins raise the cost of any product to consumers, though this basic idea seems to be lost on the dumb bunnies that line the streets throwing confetti on the CEOs that pocket tens of millions a year in personal income to run the U.S economy into the ground. The human toll is huge (see this New Haven story as one small example, or today's LA Times on California state workers pushed out of their houses by furloughs), U.S. bank's subprime policies have done all the marxist work any critic could ever want, and Friday's Democracy Now had several particularly good segments on their greedy dumbass antics that have pushed big chunks of the black and brown middle classes back into poverty.

The short version is that folks got tired of waiting around for the raises they hadn't had since 1973, jumped into miracle loan products that were invented so they could be packaged and sold to pension funds and other huge buyers as mortgage-based securities, and were assured that their house value could only go up so that they could always refinance before their balloon payment or interest rate reset bankrupted them. And here we are with housing prices down over 50% in centers of black home buying like Las Vegas, and the bottom 1/3 of the market still falling at about a 25% annual rate.

DN has one segment on how the feds' Making Home Affordable program is giving $21 billion to 25 banks to get them to restructure troubled mortgages - 21 of which were major subprime lenders to begin with. See the report by John Dunbar of the Center for Public Integrity - the biggest chunk, over $5 B, going to B of A's infamous, recently-purchased unit Countrywide.

There's a segment with Wells Fargo subprime whistleblower Elizabeth Jacobson. Some highlights:

• Wells Fargo had a separate subprime loan division. Commissions there were 3-4 times higher than in the prime loan division. Interest rates could go from 6% to 12% in two years, had extra origination points, etc. raising customer cost along with commission. Additional revenues were built in by structuring the product to induce a new loan every two years.
  
• "As a company, Wells Fargo pushed the subprime loans, because it was their goal to have the subprime division pay for the fixed costs of the whole company. So there were [subprime] quotas to be met."
  
• deception at the top: "I happened to see a news report with the CFO of Wells Fargo, and he was questioned about the subprime division and denied at that point that Wells Fargo even had a subprime division. So here he is, the chief financial officer, where the subprime loans were supposed to be paying for the fixed costs of the company, and he’s denying that Wells Fargo even did subprime loans."
• targeting minority communities: bank management "would encourage the loan officers, the subprime loan officers, to go into Baltimore city and target the churches, the African American churches, to get a relationship going with the minister or the reverend at the church and try to get that person to schedule some sort of meeting. They would call it a “wealth-building seminar” to get the parishioners of the church to attend. And any loan that was funded by Wells Fargo, whether a purchase or a refinance, $350 would then be donated to the church. And so, that was the incentive for the church to want to have these seminars there."
  

One small silver lining is that Elizabeth Jacobson is now defending victims of foreclosures in Maryland state proceedings. But meanwhile, watching the big dogs that are still in charge, the little dogs keep feeding - on themselves.