You know, I think people would think better of politicians if they actually tried running their own campaigns, instead of hiring consultants to do their thinking for them. (At this point, I suspect Hillary Clinton wishes she'd run her own campaign -- she was very poorly served.)
Yes, I know the strategists advise presidential hopefuls to run to their bases -- liberals for Democrats, conservatives for Republicans -- during the primaries, and then move to the center for the general election. It's a sensible strategy except for one thing: it leaves the candidate sounding just like a, well... like a politician -- a self-serving, pandering hypocrite.
Barack Obama had me gagging recently when he commented on a couple of Supreme Court decisions. Yes, Barack, nobody likes child rapists -- but when you suggested that the Court was wrong to deny states the right to execute them, you were criticizing exactly the sort of Justices you've pledged to appoint. Oh, right, your consultants were afraid the Republican attack machine would portray you as in favor of raping children! Or perhaps you genuinely believe states should have the right to execute people who haven't taken a life, but whose behavior the public finds especially distasteful. Well, just how distasteful does an act have to be? If we give up the "life for a life" standard, a very wide range of behaviors could put a person on death row. Is that what you want?
Then, after you pandered to the "kill anyone I don't like" crowd, you pandered to the "pry my gun from my cold dead fingers" crowd when you appeared to support the Court's rejection of Washington's hand gun ban. Come to think of it, they're really pretty much the same crowd -- and I don't see too many of them voting for you anyway. Hell, their alternative is a macho white war hero!
Face it -- you're not going to convince anybody you're a secret conservative. You're just starting to look less and less like an "agent of change," and more and more like the same old empty suit.
Monday, June 30, 2008
Saturday, June 28, 2008
Are you stimulated yet?
The Fed, apparently, believes we've been stimulated enough, and finally has ended it's orgy of rate cutting. A hint that interest rates might even be going up in the not too distant future was enough to panic the stock market into bear country, although word of more write-downs by major banks certainly contributed to that panic.
Consumer spending has been flat at best, despite $152,000,000,000 in stimulus checks -- and even the habitual optimists are expecting the current economic malaise to be with us for another three quarters. At the same time, higher rates of inflation are inevitable as ballooning energy costs are passed along by businesses to their customers. What's a Fed governor to do?
The answer, apparently, is to try to restrain inflation rather than trying to goose a little more life into a moribund economy. As we learned in the seventies, monetary policy is not particularly good for addressing stagflation, so you address the greater threat.
Yes, yes, I know! There's no wage-price spiral this time, so we won't be getting the double-digit inflation of the seventies, and so I shouldn't be characterizing the current mess as stagflation -- but what else do you call simultaneous recession and inflation? Ralph?
Whatever you call it, the pain is likely to be the same. In the seventies, at least the union workers -- the wage part of the wage-price spiral -- were managing to stay even. This time, the inflationary pressures won't come from wages, and the pain of higher prices may be distributed more equitably. After thirty years of contraction, the unions still with us don't have much bargaining power left. Lately, all labor seems able to do is trade wages and benefits for a little more job security -- then discover that the "job security" was an illusion all along.
Along with energy, the force driving inflation this time will be the futures markets -- not because "speculators" are out of control, but because investors are looking for safer places to put their money than the stock market. If somebody is willing to pay 75 bucks for a pork belly delivered in August, you can bet that come August bacon will cost more.
When the banks finally are finished writing down all the bad loans, and house prices have bottomed out, and the wave of personal and business bankruptcies subsides, things will get better. Higher interest rates and higher credit standards will restore some value to the dollar, and people will learn to get by on a lot less gasoline. Until then, we just have to ride it out.
Consumer spending has been flat at best, despite $152,000,000,000 in stimulus checks -- and even the habitual optimists are expecting the current economic malaise to be with us for another three quarters. At the same time, higher rates of inflation are inevitable as ballooning energy costs are passed along by businesses to their customers. What's a Fed governor to do?
The answer, apparently, is to try to restrain inflation rather than trying to goose a little more life into a moribund economy. As we learned in the seventies, monetary policy is not particularly good for addressing stagflation, so you address the greater threat.
Yes, yes, I know! There's no wage-price spiral this time, so we won't be getting the double-digit inflation of the seventies, and so I shouldn't be characterizing the current mess as stagflation -- but what else do you call simultaneous recession and inflation? Ralph?
Whatever you call it, the pain is likely to be the same. In the seventies, at least the union workers -- the wage part of the wage-price spiral -- were managing to stay even. This time, the inflationary pressures won't come from wages, and the pain of higher prices may be distributed more equitably. After thirty years of contraction, the unions still with us don't have much bargaining power left. Lately, all labor seems able to do is trade wages and benefits for a little more job security -- then discover that the "job security" was an illusion all along.
Along with energy, the force driving inflation this time will be the futures markets -- not because "speculators" are out of control, but because investors are looking for safer places to put their money than the stock market. If somebody is willing to pay 75 bucks for a pork belly delivered in August, you can bet that come August bacon will cost more.
When the banks finally are finished writing down all the bad loans, and house prices have bottomed out, and the wave of personal and business bankruptcies subsides, things will get better. Higher interest rates and higher credit standards will restore some value to the dollar, and people will learn to get by on a lot less gasoline. Until then, we just have to ride it out.
Saturday, June 21, 2008
The price of oil
First, let me make it clear that I'm not at all upset by the rising price of gasoline. For the first time since the 1973 OPEC oil embargo, Americans are driving fewer miles -- only 1.8% fewer, according to what I heard on NPR, but perhaps if prices continue to increase so will that percentage. Better yet, manufacturers are selling fewer trucks and SUVs, and small, fuel efficient cars are in great demand. In urban areas, more people are using public transportation.
I've made big changes in my driving habits from last summer. Now my favorite beach is too far away for frequent visits, and so is Boner the Wonder Dog's favorite dog park. Most often we swim together now, combining our excursions at a park much closer to home. I've decided that five MPH over the speed limit is fast enough. Most of us can find ways to save on gasoline without too much effort -- although the impact of trucking costs on the prices of virtually everything we buy will be pretty unpleasant, and I'm afraid there will be a lot more people who won't be able to afford to heat their homes next winter.
One thing is certain -- the current situation is different from anything we've encountered in the past. As an official graybeard, I remember the last time we Americans changed out driving habits, and it wasn't the same at all. Back in 1973, during the embargo, there actually was a shortage of oil. We lined up at gas stations on alternate days, depending on whether our plate numbers were odd or even. Gas prices were up, but the main reason we drove less was because there just wasn't enough gas to be had.
Today, though, there's plenty of gasoline to go around -- anyplace you go, worldwide, you can pull into a gas station and fill up. Considering that total mileage driven by US drivers has dropped only 1.8% from last year and gas prices have doubled, it's pretty clear that the kind of supply and demand you learned about in high school doesn't apply.
Oh, yeah, we're supposed to blame the speculators.
Well, think about this: if your real wealth is vested in something with only nominal value, and that nominal value is going down, doesn't it make sense to transfer your wealth into something with real value? Dollars have only nominal value. People actually need to consume commodities, so their value is real. Moving wealth from dollars (or the financial institutions that deal in dollars) to commodities like oil and wheat and copper isn't some sort of evil plot, it's just common sense.
If you need somebody to blame, try Allan Greenspan. He really never was as all-powerful as he wanted us to think he was but, what the hell, blame him anyway. He got the credit during the so-called "good" years, so he might as well get the blame now that everything has come crashing down. It was cheap, easy, unregulated credit that made it possible for now tanking hedge funds and investment banks to create one bubble after another. It was cheap, easy, unregulated credit that made it possible for those hedge funds and investment banks to "leverage" their limited assets at rates of twenty to one.
The moral of the story is that credit has been too damned cheap, and "leverage" has to cost more. There already have been too many cuts in interest rates, and the dollar has fallen too far. We can deal with recession, because the alternative is worse. Strengthen the dollar now, and the crazy food and fuel prices inevitably must fall.
This is not your usual political crisis, so our usual political response won't do the trick. We need Ben Bernanke and the other Fed governors to bail us out of a problem politics can't solve otherwise. We need higher interest rates for a stronger dollar -- and only that will pull gasoline prices back down to something that feels vaguely normal.
I've made big changes in my driving habits from last summer. Now my favorite beach is too far away for frequent visits, and so is Boner the Wonder Dog's favorite dog park. Most often we swim together now, combining our excursions at a park much closer to home. I've decided that five MPH over the speed limit is fast enough. Most of us can find ways to save on gasoline without too much effort -- although the impact of trucking costs on the prices of virtually everything we buy will be pretty unpleasant, and I'm afraid there will be a lot more people who won't be able to afford to heat their homes next winter.
One thing is certain -- the current situation is different from anything we've encountered in the past. As an official graybeard, I remember the last time we Americans changed out driving habits, and it wasn't the same at all. Back in 1973, during the embargo, there actually was a shortage of oil. We lined up at gas stations on alternate days, depending on whether our plate numbers were odd or even. Gas prices were up, but the main reason we drove less was because there just wasn't enough gas to be had.
Today, though, there's plenty of gasoline to go around -- anyplace you go, worldwide, you can pull into a gas station and fill up. Considering that total mileage driven by US drivers has dropped only 1.8% from last year and gas prices have doubled, it's pretty clear that the kind of supply and demand you learned about in high school doesn't apply.
Oh, yeah, we're supposed to blame the speculators.
Well, think about this: if your real wealth is vested in something with only nominal value, and that nominal value is going down, doesn't it make sense to transfer your wealth into something with real value? Dollars have only nominal value. People actually need to consume commodities, so their value is real. Moving wealth from dollars (or the financial institutions that deal in dollars) to commodities like oil and wheat and copper isn't some sort of evil plot, it's just common sense.
If you need somebody to blame, try Allan Greenspan. He really never was as all-powerful as he wanted us to think he was but, what the hell, blame him anyway. He got the credit during the so-called "good" years, so he might as well get the blame now that everything has come crashing down. It was cheap, easy, unregulated credit that made it possible for now tanking hedge funds and investment banks to create one bubble after another. It was cheap, easy, unregulated credit that made it possible for those hedge funds and investment banks to "leverage" their limited assets at rates of twenty to one.
The moral of the story is that credit has been too damned cheap, and "leverage" has to cost more. There already have been too many cuts in interest rates, and the dollar has fallen too far. We can deal with recession, because the alternative is worse. Strengthen the dollar now, and the crazy food and fuel prices inevitably must fall.
This is not your usual political crisis, so our usual political response won't do the trick. We need Ben Bernanke and the other Fed governors to bail us out of a problem politics can't solve otherwise. We need higher interest rates for a stronger dollar -- and only that will pull gasoline prices back down to something that feels vaguely normal.
Sunday, June 15, 2008
Psychodrama?
There's a term Barack Obama uses in "The Audacity of Hope" that's been getting some media play recently: psychodrama. Here it is in context:
“In the back-and-forth between Clinton and Gingrich, and in the elections of 2000 and 2004, I sometimes felt as if I were watching the psychodrama of the baby boom generation –- a tale rooted in old grudges and revenge plots hatched on a handful of college campuses long ago -– played out on the national stage.”
I think I'm offended. Having claimed the title of America's First Baby Boomer (born in January 1946), and having actually attended a memorable psychodrama conducted by Jacob Moreno himself back in the seventies (and having been offended by that), I wonder where an upstart GenXer, whose chief memories of the Nixon Administration are dominated by the trials and tribulations of puberty, gets off identifying my generation's political struggle with a briefly trendy bit of neo-Freudian gobbledegook. (Whew! That was one hell of a sentence!)
More to the point, though, what if Obama really believes that the competitions between Bill Clinton and Newt Gingrich or between George W. Bush and John Kerry were personality conflicts rather than political conflicts? Granted, Bill Clinton was far from my favorite president, and I had a lot more respect for John Kerry when he was just back from service in Vietnam and working with other veterans to end the war -- but both of them, at least, shared a basic belief in democracy. Gingrich and Bush, on the other hand, always served the plutocrats. Is genuine ideological blindness at the root of Obama's "post-partisan" rhetoric? Let's hope not. Let's hope (audaciously) it's just another example of sleazy political cupidity designed to impress college kids and other Kumbaya singing circle-jerkers.
Speaking of hope, wouldn't it be nice if Obama really turned out to be the unrepentant liberal McCain and his buds over at the Elephant's Graveyard say he is? And wouldn't it be nice if candidates didn't feel obliged to lie their way into office? (Okay, start up a chorus of Kumbaya.)
As I interminably ranted a couple of posts below, the United States underwent a revolution over the past quarter century, and the bad guys won. While it was happening, a major chunk of Generation X was oblivious to what was going on -- but now it's catching up with them. They work longer, harder, and more productively than workers in any other developed country in all of history, but they still struggle to put gas in the tank and food on the table. If Obama doesn't understand how that came about, how can he do anything to change it?
“In the back-and-forth between Clinton and Gingrich, and in the elections of 2000 and 2004, I sometimes felt as if I were watching the psychodrama of the baby boom generation –- a tale rooted in old grudges and revenge plots hatched on a handful of college campuses long ago -– played out on the national stage.”
I think I'm offended. Having claimed the title of America's First Baby Boomer (born in January 1946), and having actually attended a memorable psychodrama conducted by Jacob Moreno himself back in the seventies (and having been offended by that), I wonder where an upstart GenXer, whose chief memories of the Nixon Administration are dominated by the trials and tribulations of puberty, gets off identifying my generation's political struggle with a briefly trendy bit of neo-Freudian gobbledegook. (Whew! That was one hell of a sentence!)
More to the point, though, what if Obama really believes that the competitions between Bill Clinton and Newt Gingrich or between George W. Bush and John Kerry were personality conflicts rather than political conflicts? Granted, Bill Clinton was far from my favorite president, and I had a lot more respect for John Kerry when he was just back from service in Vietnam and working with other veterans to end the war -- but both of them, at least, shared a basic belief in democracy. Gingrich and Bush, on the other hand, always served the plutocrats. Is genuine ideological blindness at the root of Obama's "post-partisan" rhetoric? Let's hope not. Let's hope (audaciously) it's just another example of sleazy political cupidity designed to impress college kids and other Kumbaya singing circle-jerkers.
Speaking of hope, wouldn't it be nice if Obama really turned out to be the unrepentant liberal McCain and his buds over at the Elephant's Graveyard say he is? And wouldn't it be nice if candidates didn't feel obliged to lie their way into office? (Okay, start up a chorus of Kumbaya.)
As I interminably ranted a couple of posts below, the United States underwent a revolution over the past quarter century, and the bad guys won. While it was happening, a major chunk of Generation X was oblivious to what was going on -- but now it's catching up with them. They work longer, harder, and more productively than workers in any other developed country in all of history, but they still struggle to put gas in the tank and food on the table. If Obama doesn't understand how that came about, how can he do anything to change it?
Sunday, June 8, 2008
Farmer's market
As our mothers used to remind us when we didn't finish our dinners, people are starving in (fill in country of your mother's choice.) The odds are excellent, whichever country she used as an example, that people are indeed starving there. The price of food is up significantly worldwide, and the very poor can't afford to buy it.
The reasons cited to explain high food prices include increased demand, higher costs of production because of the spike in oil prices, a drought in Australia, diversion of food crops to the production of ethanol, speculative movement of capital from erratic stock and bond markets to commodities, and more. Farmers in both the United States and Europe are earning record profits from sales -- and raking in more cash from government subsidies.
Why, you may ask, should we subsidize agribusiness when it's making record profits? You can't argue that farmers need subsidies, either to stave off bankruptcy or to encourage production.
But wait, cries the farm lobby. If you cut off our subsidies, food prices will go even higher!
On the surface, that seems like a reasonable argument. Look a little deeper, though, and you can find the holes. Farm subsidies by wealthy nations long have undercut agriculture in the developing world. When it costs less to buy cheap, subsidized imports than to grow food at home, local farmers can't compete. The only agriculture that survives is the production of cash crops like coffee, cacao, and coca. Then when imported food becomes prohibitively expensive -- as it is now -- there are no local farmers left to fill in the slack.
In the United States, even programs to provide food for famine victims in other countries have been little more than another agricultural subsidy. The food we provide to other countries, by law, must be grown in the United States and shipped only via United States shipping lines. By the time it finally arrives in, say, Africa, many of those who needed it are beyond help. At the moment, there are proposals to allow "as much as" one-third of U.S. food aid to be purchased in the area where it is needed, but the farm lobby is fighting even that.
There's no reason to think the situation will improve if Barack Obama becomes president. Obama, a loyal soldier in the service of agribusiness, fought hard to preserve the high tariff on imported ethanol when the Bush administration proposed eliminating it. (Would the Bush administration have made the proposal if there had been any real chance of passage? It's impossible to say, but I suspect the answer is no.)
The reasons cited to explain high food prices include increased demand, higher costs of production because of the spike in oil prices, a drought in Australia, diversion of food crops to the production of ethanol, speculative movement of capital from erratic stock and bond markets to commodities, and more. Farmers in both the United States and Europe are earning record profits from sales -- and raking in more cash from government subsidies.
Why, you may ask, should we subsidize agribusiness when it's making record profits? You can't argue that farmers need subsidies, either to stave off bankruptcy or to encourage production.
But wait, cries the farm lobby. If you cut off our subsidies, food prices will go even higher!
On the surface, that seems like a reasonable argument. Look a little deeper, though, and you can find the holes. Farm subsidies by wealthy nations long have undercut agriculture in the developing world. When it costs less to buy cheap, subsidized imports than to grow food at home, local farmers can't compete. The only agriculture that survives is the production of cash crops like coffee, cacao, and coca. Then when imported food becomes prohibitively expensive -- as it is now -- there are no local farmers left to fill in the slack.
In the United States, even programs to provide food for famine victims in other countries have been little more than another agricultural subsidy. The food we provide to other countries, by law, must be grown in the United States and shipped only via United States shipping lines. By the time it finally arrives in, say, Africa, many of those who needed it are beyond help. At the moment, there are proposals to allow "as much as" one-third of U.S. food aid to be purchased in the area where it is needed, but the farm lobby is fighting even that.
There's no reason to think the situation will improve if Barack Obama becomes president. Obama, a loyal soldier in the service of agribusiness, fought hard to preserve the high tariff on imported ethanol when the Bush administration proposed eliminating it. (Would the Bush administration have made the proposal if there had been any real chance of passage? It's impossible to say, but I suspect the answer is no.)
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