The Problem with Keynesian Economics

The problem with Keynesian economics, sad to say, is that it's incompatible with democracy. Ordinary citizens of a democracy — or of any other political system, for that matter — always like more, and never like less. Hence, only half of the Keynesian formula ever is implemented. (Well, maybe "ever" is a slight overstatement, because Bill Clinton sort of moved in the right direction during the boom years of the nineties.)

Until very recently, Keynesianism was almost an automatic response to recession: cut taxes and increase government spending to stimulate the economy. The problems always arose during the good times — the boom times. That's when, according to Keynes, we're supposed to raise taxes and cut government spending, to keep things from overheating and build up a reserve to see us through the next recession.

Unfortunately, that second part of Keynesianism is the hard part. When incomes and profits are up, and lots of tax money is flowing into government coffers, the suck-up politicians of democratic governments say, "Hey! We've got the money! Let's make the voters happy by cutting their taxes and tossing lots of bucks around! While we're at it, we can toss even more bucks at the special interests who pay for our election!"

Everybody's doing better (except for those "fixed income" suckers and the minimum wage crowd, who can't handle the inflation), so everything goes swimmingly until the next recession. It's been going on for about eighty years now.

Note, however, that during those boom times the big benefits go to the special interests — and the most special of those interests, at least since Reagan was president, have been the very rich.

Yeah, I know — if you read this blog, it's not exactly news to you.

So now we're at a point when Keynes (like most contemporary economists) would recommend stimulus. Thanks to eighty years of getting Keynes wrong, though, our national debt is a bit on the high side. The "democratically elected" pols — Republicans, especially, but plenty of Democrats as well — are righteously demanding austerity. But why, especially when we need stimulus so badly, and interest rates are so low?

The answer, of course, goes back to those extra-special interests — the people and institutions that own that debt. They can never be losers, of course, so the rest of us have to pay.

I'm too old and lazy to start a revolution and, frankly, I wouldn't know even where to begin now that revolutions seem to start on Facebook and Twitter. I have to tell you, I'm not optimistic. Any suggestions?

Rick Perry

I know I'm not allowed to make predictions anymore, but I really think Rick Perry is the most likely Republican presidential candidate for 2012. Needless to say, it has nothing to do with policy, promises, or, for that matter, politics.

He's tall. He has good hair. He's aggressive. He's Texan tough.

Oh, crap! He's the perfect candidate! Not only can he win the Republican nomination, but he can beat Obama in 2012. Americans, by and large being assholes,will ignore the fact that his brains are up his ass, that he's a total lackey of the corporate elite, and that he doesn't believe in climate change, evolution, women's rights, or the scientifically established age of the world.

Those of you old enough to remember when Clinton beat Bush the First will remember the most important advantage Clinton had: back then, they called it "the wimp factor." Yes, G.H.W.Bush was widely regarded as a wimp. Now, let's consider our current chief administrator.

Oh, shit! This time around, wimp is an understatement.

"President Perry" is, to me, about as awful a situation as I can imagine. If he really is the Christian airhead he portrays himself to be, we're in for big trouble. If he's actually the shit eating dog of the capitalist establishment I suspect he might be, we're in for much bigger trouble.

Wimp-in-Chief Obama seems to be trying to grow a set of, at least, marble sized ones lately, but he'd better grow them a lot faster if he wants to hold onto his office. Once, as I recall, he said he'd rather be a good one-term president than an ineffective two-term president. He didn't mention the possibility of being an ineffective one-term president.

But, on the other hand... Rick Perry?

What next for Libya?

Now that NATO has enabled the "Libyan rebels" to push Qaddifi (aka Gadaffi, Ghadafi, Khadaffi, etc.) out of Tripoli, it is time to start wondering who will be running the alleged "country" in the future. According to the New York Times, "Colonel Qaddafi proved to be a problematic partner for international oil companies, frequently raising fees and taxes and making other demands. A new government with close ties to NATO may be an easier partner for Western nations to deal with."

This motivation for the invasion has been clear enough from the beginning, but the question remains: who will govern Libya now that Qaddifi, albeit uncaptured and not thoroughly vanquished, is out of power? The situation might prove more problematic than dealing with the old Colonel himself.

The "Transitional National Council," currently "speaking for" the "rebels," seems to consist of expatriates from Europe and the United States, a few defectors from Gaddafi's government (one of whom already has been assassinated), and a couple of tribes traditionally opposed to Ghadiffi's tribe. They are not the stuff of a unified government.

Well, whatever "government" emerges from the wreckage, I suppose there will be some contracts negotiated for Libyan oil. My suggestion, similar to my suggestion for Afghanistan, is that the western powers let the tribes work it out for themselves. Tribalism is the basic political motif for the middle east, so the best idea is to go with it. (Afghanistan, by the way, needs a loya jurga, not an "elected" government, to get it back on the road to nationhood.)

Meanwhile, though, let us all hope that Libya can begin to ship oil again — so that European (and world) oil prices can decline a bit. Will it make up for the expenditures of the Libyan War?

Who knows.

Volatility

Up, down, up, down, up.

My usual advice regarding the stock market: ignore it. The bitter truth about the stock market is that is has virtually nothing to do with the real economy of people trying to earn a living so as to keep food on the table and a roof over their heads. The markets may affect the sales of Louis Vuitton accessories and all the crap indispensable for accessorizing those accessories, but sales of rice, beans, and gasoline will stay fairly constant.

Granted, it's hard to ignore the market if you're trying to eke out the final few years of your life of thankless labor on the proceeds of a 401k — but equally needless to say, anything you try to do now will be much too little, much too late.

Forget the "confidence fairy." Forget all the conjecture about the impact of this, that, or the other barf-out of the latest "economic data." It doesn't take an economist to figure out that things are, in a manner of speaking, fucked up — and you don't have to be an economist to recognize that your personal investment in the stock market amounts to chicken shit by comparison with the investments of banks, hedge funds, and similar corporate straw men for the plutocrats.

And, no, it NEVER "trickles down."

So what's with the volatility? Okay, there are assholes out there trading for their own accounts, and some of them must be dumb enough to panic when others seem to be panicky and to buy high in bursts of irrational enthusiasm only to see their investments droop like a certain national leader's limp dick. How much can that explain, though, when a great majority of the buying and selling is institutional, and when most of that institutional buying and selling is program trading?

Who has the best algorithm today? Who is the fewest microseconds distant from today's Biggest Board? I'm just guessing that it's not your retirement fund, so how you're doing amounts, pretty much, to pure chance. Just bear in mind, though, that there's a great deal of money to be made in volatile markets — and that somebody is making it.

The Riots Across the Pond

I've been listening to the BBC for coverage of the rioting/looting in London and other English cities, and I've come to think that nobody over there actually gets it. In case you hadn't noticed, the class system over there is quite pronounced (including "clahhss," "clawws," "clows," and several others.) The rioters, according to David Cameron's "clahhssmates" from Oxbridge, are the "lowest of the low." They are young, uneducated, and unemployed. They are white, black, and various shades of brown. They are just knowledgeable enough to realize that the only way they ever are likely to have a few nice things is to steal them.

I think it was my favorite senator, Daniel Patrick Moynihan, who first coined the (now very politically incorrect) term, "underclass." Back in Moynihan's day, the "underclass" in the USofA was predominantly black, since race and class were even more closely correlated then. I know I heard that very term on the BBC today, spouted by some Tory twit or another, whose argument seemed to be that "the lowest of the low" are congenitally defective, with no regard at all for their lower-middle-class neighbors struggling to keep their beauty salons and falafel stands unburnt.

It's true. They couldn't care less. They'll never have a beauty salon or a falafel stand. A more upscale Blackberry or pair of sneakers is their height of aspiration.

Cameron and the Conservatives are committed to austerity. So are our homegrown plutocrats and their political allies, from both parties. Here in the USofA, as the rate of teen unemployment and the widening gap between rich and poor continue to increase, our ability to pretend that we really don't have a class system is falling apart. As state and local governments, strapped for cash, cut back on policing, fire fighting, and education, things can only get worse.

'Ow's 'at 'it ya, guvner?

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.

Punk-ass Pussy President Sucks GOP Cock Again

I am sorry that the most visceral words that signify great cowardice in the English language are either misogynistic or homophobic. I'm in a very visceral frame of mind.

Barack Obama is not an idiot, so I assume he realizes that the Faustian bargain he just struck with Boehner and Co. will make anything resembling economic recovery impossible at any time in the foreseeable future. Thing can, and will, get much worse before they get better.

The only hope I see is that Congress turns down the alleged "compromise," forcing Obama to act like a mensch and use executive power to raise the debt ceiling on his own — but would he do it even then? I don't know.

Immediately after publishing this post, I intend to fax my representative in the House to request that he vote "no," but he's a complete party hack who narrowly held onto his seat in 2010, so I don't expect him to comply with my request. After that, I suppose I'll fax the White House so they understand that they can't count on their left-leaning base after such a complete betrayal. I wouldn't vote for Barack Obama again even if it meant risking the election of, say, Louis Gohmert, who is so stupid his district has to send him to Congress on the "little bus."

I may use some visceral language.