Economic Outlook

Although the Times still is publishing an extra section to cover election "news," and a lot of young people in urban centers haven't figured out that you're supposed to organize and get active before bad things happen, the dust is beginning to settle.

Somebody seems to have assured Wall Street that our next president will not be starting any trade wars, so the markets have stabilized.  Given Tr*mp's anti-regulatory instincts and the promise of even more tax advantages for the rich, a bit of a bull market certainly isn't out of the question.  Economically, it looks like Republican-as-usual on the horizon.

The narrow Republican majority in the Senate means that Obamacare, such as it is, will be safe for a while — although steady defunding seems inevitable.  In a way, it's a shame: the total elimination of Obamacare could pave the way for genuine national health insurance down the line.  The biggest beneficiaries of the ACA were those newly qualified for Medicaid, and it's pretty clear that letting market forces determine health spending continues to be unworkable.

I wonder how successful Tr*mp can be in moving expensive infrastructure projects past the deficit hawks.  They even might balk at a substantial expansion of border controls.  Forget the "wall" altogether: if there is any real progress towards seizing remittances to Mexico, invest in virtual currency exchanges — or, perhaps, organized crime cartels.

The biggest damage will be done to the fight against climate change — but even there, it seems to be too late to save the coal industry.  Hopefully, though, the industry's last gasps won't be a prelude to our own.

Less Evil?

Corporate America doesn't care whether or not blacks get equal justice, nor whether or not women have access to abortion services. It is okay with current immigration law, but wouldn't mind if it got more or less welcoming.  It has made peace with Dodd-Frank, well aware that a law is only as good as its enforcement.

People who plan to "make do" with Hillary Clinton for fear of some ideologue from a dysfunctional Republican party winning the presidency are playing right into corporate America's hands.  If Clinton becomes president, the revolving door between the SEC and Wall Street will remain firmly in place.  Some petty criminals may serve five-year sentences instead of ten, but corporate executives guilty of enormous financial crimes will continue to avoid any threat of jail, paying impressive sounding but realistically negligible fines out of the pockets of stockholders.

Military contractors will continue profiteering as our new president continues to prove her figurative "balls" by encouraging military adventurism.  (Secretary of State Hillary Clinton overcame objections from Secretary of Defense Robert Gates to take us on our ill-fated adventure in Libya, and is likely to take us back there again.)

If Hillary wins the Democratic nomination, I, personally, won't have to decide between her and, say, that little turd Rubio.  I live in New York, so I can keep my conscience clear by voting for Jill Stein of the Green Party (again.  My friends are familiar with my politically incorrect reference to Barack Obama as "Clinton in blackface."  Hillary will be "Obama in a pants suit," only more hawkish.)

In today's Times, Elizabeth Warren stopped short of endorsing Bernie Sanders, but discussed some of the political problems we would continue to face under President Hillary.  It's worth a read.

The Clinton Conundrum

Hillary or Billary?

Hillary and Bill have been a political team from the start.  Remember Bill's "two for the price of one" comment?  We can't be sure how much impact Hillary had on Bill's presidency (except for the health insurance screw-up); similarly, we can't be sure how much influence Bill will have should Hillary become president.  Are they ideologically similar — even interchangeable?  Are they ideological at all, or just political?  Will another Clinton administration be, well, another Clinton administration?  Is there any way to know?

At the most recent Democratic debate, when Bernie questioned Hillary about her financial backing from Wall Street, her "9/11" response was laughable at best — but what would be her relationship to the financial industry?  Would it be Robert Rubin redux, or are her recent leftish gestures for real?

When Bill Clinton climbed into bed with Phil Gramm to create the deregulation that brought us the financial crisis of 2008, was Hillary keeping his feet warm?*  Can "today's" Hillary be trusted to represent the interests of the non-billionaire classes?

I think the best we can hope for is that she will opportunistically take some actions to mollify the liberal Democratic base while never going quite far enough to alienate her plutocratic backers.  While I'm doing my best to stay sworn off predictions, and also doing my best to believe in Bernie as hard as children are asked to believe in Tinkerbell, I'm not especially optimistic about post-Obama America.

*  (Phil's wife Wendy certainly was keeping his feet warm.  She is best remembered for deregulatory agitation from the Mercatus Institute at George Mason University, and as an Enron board member.)

Summers drops out! Hooray!

Just this morning, I sent a message to Chuck Schumer, reminding him that Larry Summers bore significant responsibility for the crisis of 2008.  Summers was one of the great champions of bank deregulation during the Clinton administration, and we all know where that got us.

Thanks to a few Democratic senators not attached by an umbilicus to Wall Street (Schumer not among them), it seems Larry got a little nervous.  He's not accustomed to rejection, and doesn't handle it well.  Anyway, I'm especially glad the next Fed chair is likely to be Janet Yellen.  According to Larry, girls don't do math.

If Barack picks that other "potential," whose name I can't remember now, I hope Michelle gets Barack alone in some remote room in the White House (the Fillmore room?) and beats his ass.  I don't support Yellen because she's a woman, but because she will provide the kind of continuity we need to get out of our current mess.  I hope she will lead in establishing some regulations Bernanke thought were out of reach, without throwing everything out of kilter.

Can the Fed address income inequality?  Really, I don't see how.  That's Congress's job, and the "People's House," like the people, are mostly assholes.  (By the way, the three most assaholic members of the House were in Egypt last week, blaming the Muslim Brotherhood for 9/11.  The people who vote for Louie Gohmert, Michelle Bachman, and Steven King, in my opinion, are excellent arguments against representative democracy.)

Regarding Inequality

Inequality in the USofA has been getting more than a little press lately.  That makes sense, of course, since we haven't been less equal in these parts since before the Great Depression.  Needless to say, it doesn't really matter how much inequality there really is, only how much inequality the public perceives there is.  Anyway, here's the Pew Research Center's latest polling data.

I guess I just don't understand Republicans.  The largest number of them, by far, are middle class — and a good many of those are lower middle class.  It's widely said that ideology trumps reality, albeit we have to assume that's just as true of Democrats as it is of Republicans (and, perhaps, even moi.)  Nevertheless, it would be illogical to assume that reality lies somewhere in between Republican and Democratic perceptions.

How much power is too much power?  Here's something both parties might agree to: too much is however much it takes to disable or demolish our democratic institutions.  Personally, I'm of the opinion that democracy and finance capitalism are incompatible.  Are there some among the wealthiest who will refrain from corrupting the political system?  I hope so.  Are there some who are irredeemably corrupt?  Read the news.

What is fair, economically speaking?  Warren Buffet apparently thinks it's unfair that he pays taxes at a lower rate than his secretary does.  I think it's unfair that my 2011 tax rate was higher than Mitt Romney's.  On the other hand, I'm sure Paul Ryan or Mitch McConnell can point out reasons why Buffet's and my interpretations of "fairness" are off the mark.

As for Wall Street, more evidence for its corrupt practices is reported every day — but how much corruption is too much corruption?  Could our economy survive without it, for example?

Your perception may be as good as mine — but I'll never admit it!  ;-)

999?

Herman Cain has been shooting himself in both feet from quite a few different angles lately, but now that some major media have started paying attention to what econometricians make of his 999 plan, we should not have to wait too long for the shot to his head. Although all of 999 is a shameless giveaway to the rich, the real "killer" is the national sales tax.

Even innumerate Americans can understand that a 9.1% federal sales tax on every gallon of milk, every pair of new shoes, every gallon of gas, and everything else except for "used" items (used milk?) will cost them a hell of a lot of money. Ordinary Americans, who spend most (or all) of their incomes would be hit the hardest. Even those willing to ignore how a 9% income tax would devastate the working poor will come to view that sales tax with horror.

The rich, of course, whose incomes far exceed whatever they conceivably could spend, would pay an even smaller proportion of their incomes in taxes than they do now. I'm far too lazy to do the math and construct a chart showing the impact of "999" on people in different income brackets, but I assume somebody will do it fairly soon — probably some anonymous somebody from the Romney campaign. (It won't be the Obamanistas, who will be happy to see Republican infighting go on for as long as possible.)

In the meanwhile, most of the Wall Street money is going to Romney — and as far as politics is concerned, Wall Street money is the smart money. Needless to say, though, the financiers are hedging their bets by contributing to Obama as well. Then again, once there's a clear leader — of whatever party — they'll flood him with money. They always like the winner to think he couldn't have won without them. (It sure worked with Obama!)

* * *

Following up on my previous post: recent polling shows that a majority of Americans are sympathetic to the "goals" of the Occupy Wall Street movement — which shows that you really don't need specific policy goals to win public support. Most Americans don't have specific policy goals. They just get it.

Hey, what happened?

While I've been calming down from that last post — not to mention the consummation of that Faustian bargain I mentioned — it seems many others have been getting a bit more excited. Today's market plunge may be just more of the "volatility" which indicates that nobody knows what the hell is going on. On the other hand, it just may be that investors finally have figured out that austerity is not likely to be good for their investments.

After all, the corporate world has been sitting on its money and spending bupkes for the past couple of years, and plutocrats tossing their loose change around at Bergdoff-Goodman and Tiffany do not an economy make. When the United States joined Europe in the cult of what Krugman calls "the confidence fairy," it appears many Wall Streeters decided it was time to listen to the economists rather than the Koch brothers.

Then, of course, there's the SUPER-COMMITTEE, whoopie doo! Since the Republicans already have sworn that no tax increase supporters nor loophole closers will be appointed to their six, one supposes they are assuming at least one of the Democratic appointees will be an Obamesque anilinguist (and one assumes that we all can assume they are correct in that assumption. And, okay, I haven't calmed down all that much.)

I know I swore off making predictions a while back, and hence I will refrain — but I just can't see anything good coming out of any of this.

Regulating Wall Street: things looking up!

Judging by how upset Barack and his Banker Buddies have been in recent days, the financial reform bill coming out of the Senate is likely to be a lot stronger than most of us expected. Sherrod Brown and Ted Kaufman's proposal to reimpose caps on deposits and liabilities a single bank can have on its books looks like it will be part of the final bill; and while Blanche Lincoln's proposal to force banks to divest themselves of their derivatives desks is far from a sure thing, it is doing well enough to make Tim Geithner squirm.

Most encouraging is that support for these and other new restrictions have bipartisan support, showing that members of both parties have noticed the popular rage against big finance, and are afraid to buck it. There is support on both sides of the aisle for the Volcker Rule, which would bar banks from proprietary trading; support on both sides for reinstating Glass-Steagall separation of commercial and investment banking; and an extraordinary alliance of the left and the right calling for expanding GAO powers to audit the Fed.

The bank lobby — with full support of the Robert-Rubinesque contingent of the Obama administration — is working mightily to construct "placebo amendments," substitute proposals senators could vote for that would make it appear they support reform while continuing to serve the plutocrats.

So, stay alert. As many have noted, we have a once-in-a-generation opportunity to rein in the banks. If it doesn't happen this time, it won't happen until the next mega-recession comes along.

Jobless "recovery"

Now that the senatorial election in Massachusetts has tossed Obama's lame-ass health care bill into the toilet, nothing will help the Democrats but some aggressive action against the bankers. How can that be done, considering that Wall Street is a major funder of candidates of both parties?

Beats me. Frankly, I see the plutocracy remaining firmly in control. As you may have noticed, I tend to be bearish on America.

Shit.

Here's why the recovery is jobless:

1. Productivity — When employers figure out that they can get more work out of decreasing numbers of desperate workers, that's exactly what they do. In case you haven't noticed, that's exactly what they're doing now. Why hire more?
   
2. Low Interest Rates — The low rates now being maintained by the Fed are supposedly going to make it easier for businesses to borrow, expand, and hire more workers. Nope, not quite. Low interest rates make it easier for businesses to afford the machines that replace workers. Why spend money on some smelly, angry guy who wants health insurance when you can have a machine that demands nothing?
3. That Whole Globalization Thing — Maybe you can train an out-of-work factory worker to be a telephone customer service representative, but cost-benefit analysis still will send the business to Mumbai or Calcutta. The whole argument that better education will improve the American economy is crap, because, whatever it is, we can't do it for less then they can.

So where do the jobs come from in this "recovery?" Beats me — and if the jobs are scarce and pay minimum wage, who has money to buy the services (we can pretty much forget about goods, except for export) the alleged recovery will produce? The Chinese? Maybe we could retrain unemployed Midwest factory workers to speak Chinese, so they can work the telephones for Chinese collection agencies.

Nah. The Indians will get those jobs.

So what is a cafe au lait president who promised change and so far has delivered just more and more of the same to do?

Me, I'd start by firing Larry Summers, Tim Geithner, and anybody else who ever was attached to Robert Rubin's teats. I'd replace Summers with Joseph Stiglitz. As for Treasury, Paul O'Neill would be a pretty amusing choice, and could help Our President continue his idiotic pretense of seeking bipartisanship.

Frankly, I don't think the Democrats have the guts to enact health care reform via reconciliation, so unless one of those oddball Republican women from Maine crosses over to the "dark" side, health care reform is as good as dead. All that's left to rescue Democratic candidates in 2011 is a really hard, stinging slap at Big Finance — accompanied by a lot of rhetoric about Republicans sucking Wall Street's balls. Since the Republicans will be sucking Wall Street's balls, the only obstruction to using this approach will be the difficulty Democrats will have disentangling Wall Street's balls from their own tonsils.

If you're looking for work — good luck. If you need health care and don't have insurance — good luck. What the hell — if you're living in contemporary America, good luck! You'll need it.