China is not well known for its economists, despite having the world's second largest economy. There are those inclined to blame the Chinese for the current round of economic turmoil, but really, it's a bum rap. They're just caught up, like the rest of us, in a worldwide, probably inevitable fuckup.
China blooms with new housing complexes in various states of completion, most of which seem likely to crumble into decay before ever being occupied because the Chinese can't afford to buy them. They were built (and continue to be built, in some areas) to provide employment for those losing jobs in the export industries that were the engine for China's rapid growth over the past few decades.
China's exports have suffered partly because of competitors who can pay even lower wages than Chinese manufacturers, but more because of decreased demand for cheap manufactured goods in the West. It seems that the consumers of cheap manufactured goods just don't have as much money as they did in the past, and the Westerners with lots of money are too few in number to buy much — even if they were interested in cheap Chinese goods, which they're not.
Still, all that money accumulated in the bankrolls of the few had to go somewhere, and genuinely safe investments (like US bonds) were paying bupkis. The result was a roughly seven per cent rise in US stock prices — which started to look a lot like bubble territory. Another result was a rush to buy quite risky dollar denominated debt from developing countries.
Well, in recent days, stocks have lost almost everything they gained in the run-up, and those third-world borrowers look a lot like they're getting ready to default, no longer able to sell raw materials to contracting Chinese industry. By the way, the main investors in that developing nation debt were mutual funds, so retirees depending on returns from such funds for survival may wish to start shopping for discounted cat food — just watch out for the stuff from China, which may not be especially safe.
I could go into a lot more detail, but you're already bored, so I'll just summarize: the massive transfer of wealth from workers to oligarchs has fucked up the entire world.
Here's one thing I can say for China, though — Xi is going after the Chinese oligarchs and slapping them down for being the corrupt reptiles they are. There is no reason to believe that our own oligarchs are any less corrupt or reptilian — but there's nobody in a position to swat them. Pity.
Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts
Sunday, August 23, 2015
Wednesday, July 11, 2012
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! ;-)
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! ;-)
Friday, September 2, 2011
The Speech
We don't know what Barack Obama will say to draw viewers away from the opening game of the NFL season next week, but Robert Reich has thought about it. You will find his thoughts here.
Sadly, his ideas would require that Our President grow a set of balls. I don't see much chance of that happening, of course.
Read Reich. He says it a lot better than I could.
Sadly, his ideas would require that Our President grow a set of balls. I don't see much chance of that happening, of course.
Read Reich. He says it a lot better than I could.
Tuesday, June 7, 2011
Poll numbers
According to a Washington Post/ABC News poll, 60% of Americans do not approve of the job President Obama has done in managing the economy. My question is, "Who the hell are those people in the other 40%?"
The right insists that Obama can't do anything right, and the left is not far behind in its disapproval. Long-term readers of this blog may remember that Obama lost my support when he surrounded himself with the Robert Rubin gang before he was elected.
Granted, the president doesn't actually manage the economy — the Fed does the monetary policy and the Congress does the fiscal policy. On the other hand, one ought to be able to look to the president for some leadership. Leadership has been notably absent as Obama has consistently crumbled under the weight of Republican demands even before sitting down to play at negotiation.
Yes, I said play. If any authentic negotiation has taken place, I haven't noticed it. Right now, as the Republicans hold hostage the economic health of the entire world by refusing to increase the debt ceiling, the only real discussion seems to be about just how austere the austerity must be. Nobody at all is talking about the need for further stimulus.
For most Americans, though, Obama's negatives are based not on any particular policies. Their poor opinions are based on looking around — at the unemployed and underemployed, at the way wages have lagged behind the price of staples like food and energy, and (despite a good deal of shouting about the need to shrink government) reductions in government services that have an adverse impact on quality of life.
So, who are those people in the approving 40%?
Some have to be Obama loyalists who will support him no matter what he does — there's a lot of cognitive dissonance theory at work among those who drank the Kool-Aid in 2008. Then, I guess, there are the respondents who are doing reasonably well at the moment and don't much care what's happening to others. Finally, I suspect, there are those Democrats who tell the pollsters they approve in the hope that the poll results won't look too bad.
The same poll had Mitt Romney ahead of Obama among registered voters, but nobody liked him very much either, and the other Republican hopefuls fared considerably worse. It's not looking like employment is going to pick up much, if at all, by next year; and if we have to wait for the housing market to recover for the economy to recover, the next presidential term will be just as much a downer as the current one.
Okay, I seem to recall swearing off predictions a while ago. Let's just say that, like a lot of others, I'm not feeling optimistic.
The right insists that Obama can't do anything right, and the left is not far behind in its disapproval. Long-term readers of this blog may remember that Obama lost my support when he surrounded himself with the Robert Rubin gang before he was elected.
Granted, the president doesn't actually manage the economy — the Fed does the monetary policy and the Congress does the fiscal policy. On the other hand, one ought to be able to look to the president for some leadership. Leadership has been notably absent as Obama has consistently crumbled under the weight of Republican demands even before sitting down to play at negotiation.
Yes, I said play. If any authentic negotiation has taken place, I haven't noticed it. Right now, as the Republicans hold hostage the economic health of the entire world by refusing to increase the debt ceiling, the only real discussion seems to be about just how austere the austerity must be. Nobody at all is talking about the need for further stimulus.
For most Americans, though, Obama's negatives are based not on any particular policies. Their poor opinions are based on looking around — at the unemployed and underemployed, at the way wages have lagged behind the price of staples like food and energy, and (despite a good deal of shouting about the need to shrink government) reductions in government services that have an adverse impact on quality of life.
So, who are those people in the approving 40%?
Some have to be Obama loyalists who will support him no matter what he does — there's a lot of cognitive dissonance theory at work among those who drank the Kool-Aid in 2008. Then, I guess, there are the respondents who are doing reasonably well at the moment and don't much care what's happening to others. Finally, I suspect, there are those Democrats who tell the pollsters they approve in the hope that the poll results won't look too bad.
The same poll had Mitt Romney ahead of Obama among registered voters, but nobody liked him very much either, and the other Republican hopefuls fared considerably worse. It's not looking like employment is going to pick up much, if at all, by next year; and if we have to wait for the housing market to recover for the economy to recover, the next presidential term will be just as much a downer as the current one.
Okay, I seem to recall swearing off predictions a while ago. Let's just say that, like a lot of others, I'm not feeling optimistic.
Saturday, October 31, 2009
Not My Fault!
Okay, at the beginning of the week I proclaimed that the market improvement we've seen recently looked like just another bubble to me — then, at the end of the week, all the indices take big hits.
Honest, though, I didn't do it. Blame somebody whose blog actually has readers. (I do this for the sake of posterity or, more to the point, so I can check on how right or wrong I've been over the years.)
Okay, again — and for the sake of "posterity" — I still think the markets are overpriced by 15 to 20 percent. When the financials finally are forced to write down their losses, I can't see how the markets won't wind up taking another big hit. If Congress and the Administration ever agree on a financial regulatory bill with some real teeth, that will impact the numbers as well. With some sensible reserve requirements, the big banks won't be able to play quite so fast nor so loose.
Continuing in my usual pessimistic vein, I'll also predict that the recent rise in GDP will fall off again — that the "recession is over" news was the product of a little stimulus package and a big statistical blip. I just hope the upcoming bad news is not sufficient to inspire voters to give the Republicans another try in 2010 — the goddamned Democrats are bad enough.
Honest, though, I didn't do it. Blame somebody whose blog actually has readers. (I do this for the sake of posterity or, more to the point, so I can check on how right or wrong I've been over the years.)
Okay, again — and for the sake of "posterity" — I still think the markets are overpriced by 15 to 20 percent. When the financials finally are forced to write down their losses, I can't see how the markets won't wind up taking another big hit. If Congress and the Administration ever agree on a financial regulatory bill with some real teeth, that will impact the numbers as well. With some sensible reserve requirements, the big banks won't be able to play quite so fast nor so loose.
Continuing in my usual pessimistic vein, I'll also predict that the recent rise in GDP will fall off again — that the "recession is over" news was the product of a little stimulus package and a big statistical blip. I just hope the upcoming bad news is not sufficient to inspire voters to give the Republicans another try in 2010 — the goddamned Democrats are bad enough.
Monday, October 26, 2009
Economic reform?
Why are the stock markets doing so "well" lately? Clearly, it's not because the businesses whose shares the markets trade are posting increased profits. Some of the increase in stock prices may be accounted for by the falling value of the dollar — as the dollar weakens, it takes more dollars to buy anything — but that's not the whole story.
Who, we may wonder, is bidding up the price of stocks, and where are they getting the money to do it in this economic environment? Look no further than the investment branches of our banking behemoths, using cheap, government guaranteed credit. To me, it's looking like another bubble — and given the poor shape of a lot of American businesses, it seems pretty obvious that their price to earnings ratios over the past few months have been falling like it's the nineties again.
A lot of people are blaming a handful of conservative Democratic senators for the lame, half baked efforts coming out of Congress for reforming the financial system. I suppose they have their part to play, but the real fault lies with the White House.
If the Obama administration genuinely wanted to bring Wall Street to heel, it could be making a far more aggressive effort than we've seen. Fiddling with executive pay packages may score a few populist points, but in the long run (or even the short run), it means nothing. Some of us remember that the whole corrupt bonus system arose out of efforts to rein in executive pay during the Carter administration.
As for regulating derivatives, there are enough holes in the proposed legislation to accommodate every rat looking for a way through — and damned near as many in the proposal for the consumer protection agency. Instead of breaking up the institutions that were "too big to fail," government has helped them grow even larger through mergers and acquisitions.
Paul Volcker has been out there, crying in the wilderness for genuine reform — rolling back the Clinton administration's gutting of whatever remained of Glass-Steagall, and separating banking's commercial and investment sectors again. The White House will not be doing that anytime soon — at least not as long as two of the three Clintonistas who engineered that gutting remain in power. Robert Rubin may be gone, but he left Larry Summers and Tim Geithner behind to look after the interests of the Wall Street power brokers.
Well, viva Volcker. The White House is ignoring him, but at least he's getting some attention in the press.
Who, we may wonder, is bidding up the price of stocks, and where are they getting the money to do it in this economic environment? Look no further than the investment branches of our banking behemoths, using cheap, government guaranteed credit. To me, it's looking like another bubble — and given the poor shape of a lot of American businesses, it seems pretty obvious that their price to earnings ratios over the past few months have been falling like it's the nineties again.
A lot of people are blaming a handful of conservative Democratic senators for the lame, half baked efforts coming out of Congress for reforming the financial system. I suppose they have their part to play, but the real fault lies with the White House.
If the Obama administration genuinely wanted to bring Wall Street to heel, it could be making a far more aggressive effort than we've seen. Fiddling with executive pay packages may score a few populist points, but in the long run (or even the short run), it means nothing. Some of us remember that the whole corrupt bonus system arose out of efforts to rein in executive pay during the Carter administration.
As for regulating derivatives, there are enough holes in the proposed legislation to accommodate every rat looking for a way through — and damned near as many in the proposal for the consumer protection agency. Instead of breaking up the institutions that were "too big to fail," government has helped them grow even larger through mergers and acquisitions.
Paul Volcker has been out there, crying in the wilderness for genuine reform — rolling back the Clinton administration's gutting of whatever remained of Glass-Steagall, and separating banking's commercial and investment sectors again. The White House will not be doing that anytime soon — at least not as long as two of the three Clintonistas who engineered that gutting remain in power. Robert Rubin may be gone, but he left Larry Summers and Tim Geithner behind to look after the interests of the Wall Street power brokers.
Well, viva Volcker. The White House is ignoring him, but at least he's getting some attention in the press.
Tuesday, October 21, 2008
Yikes!
As much as I hate to admit it, occasionally I'm wrong. Very occasionally, I'm extremely wrong.
As gasoline prices drop below $3 a gallon, commodity prices in general crash, and the CPI comes in unchanged, I have to consider the possibility that my fears regarding inflation (and the concomitant stagflation I've ranted about) well may be unfounded. On the other hand, all of us might be in better shape if I'd been right.
Gasoline prices fell because the price of oil is down, due, we're told, to a steep drop in demand. And how much of a drop in demand does it take to bring about a 50% drop in the price of a barrel of light, sweet crude? Since oil is valued in dollars, the calculation is easy -- 50% -- and we know it can't be just from people cutting back the mileage they put on their SUVs.
(Yes, I know -- gasoline prices have fallen by about a third, not by a half. So where has that extra money gone? Give it a little thought. It will come to you.)
Since we haven't exactly gone green in the past few weeks, demand for oil ought to be a pretty good indicator of the world's level of economic activity -- which leads one to surmise that the global economic slowdown might be a good deal worse than we've been told. Also, consider that if the CPI has dropped again the next time the figure comes out, we'll have entered the realm of deflation. Bye bye recession, hello depression.
Apparently, a new stimulus package is in the works. I sincerely hope there are no "checks in the mail" to individuals this time, given how little multiplier effect there was last time. Previously, I called for aid to the states, tied to infrastructure spending, to get the construction trades back to work. Now, I say, just give the money to the states -- no strings attached. A lot of it easily can be spent on infrastructure -- not even by creating new projects, but just by continuing existing projects. Did you ever notice how the roads always seem to get repaired in the months just before an election? Keep fixing those roads, governor! Build us some new schools, and repair some bridges! Even if all the contracts are assigned by patronage, and half the federal aid is used to pay relatively unproductive bureaucrats, people who otherwise might be unemployed will be working instead.
Of course, nobody actually has a clue what's really going on in the economy. Bernanke really seem to be playing it by ear, and Paulson changes direction as often as John McCain. Movement in the stock markets, as you've noticed, is totally erratic. Marketplace should forget about playing "We're in the Money" or "Stormy Weather" when it reports the Dow and the NASDAQ, and just play Willie Nelson's "Crazy" every time.
Way back in my youth, there was a frequently quoted fortune cookie that went something like this:
Well, whatever. Life sure is interesting these days -- but I can't help but hope that out of this painful mess may arise a kinder, happier, post-capitalist world.
As gasoline prices drop below $3 a gallon, commodity prices in general crash, and the CPI comes in unchanged, I have to consider the possibility that my fears regarding inflation (and the concomitant stagflation I've ranted about) well may be unfounded. On the other hand, all of us might be in better shape if I'd been right.
Gasoline prices fell because the price of oil is down, due, we're told, to a steep drop in demand. And how much of a drop in demand does it take to bring about a 50% drop in the price of a barrel of light, sweet crude? Since oil is valued in dollars, the calculation is easy -- 50% -- and we know it can't be just from people cutting back the mileage they put on their SUVs.
(Yes, I know -- gasoline prices have fallen by about a third, not by a half. So where has that extra money gone? Give it a little thought. It will come to you.)
Since we haven't exactly gone green in the past few weeks, demand for oil ought to be a pretty good indicator of the world's level of economic activity -- which leads one to surmise that the global economic slowdown might be a good deal worse than we've been told. Also, consider that if the CPI has dropped again the next time the figure comes out, we'll have entered the realm of deflation. Bye bye recession, hello depression.
Apparently, a new stimulus package is in the works. I sincerely hope there are no "checks in the mail" to individuals this time, given how little multiplier effect there was last time. Previously, I called for aid to the states, tied to infrastructure spending, to get the construction trades back to work. Now, I say, just give the money to the states -- no strings attached. A lot of it easily can be spent on infrastructure -- not even by creating new projects, but just by continuing existing projects. Did you ever notice how the roads always seem to get repaired in the months just before an election? Keep fixing those roads, governor! Build us some new schools, and repair some bridges! Even if all the contracts are assigned by patronage, and half the federal aid is used to pay relatively unproductive bureaucrats, people who otherwise might be unemployed will be working instead.
Of course, nobody actually has a clue what's really going on in the economy. Bernanke really seem to be playing it by ear, and Paulson changes direction as often as John McCain. Movement in the stock markets, as you've noticed, is totally erratic. Marketplace should forget about playing "We're in the Money" or "Stormy Weather" when it reports the Dow and the NASDAQ, and just play Willie Nelson's "Crazy" every time.
Way back in my youth, there was a frequently quoted fortune cookie that went something like this:
"May you live in interesting times."
-- ancient Chinese curse
-- ancient Chinese curse
Well, whatever. Life sure is interesting these days -- but I can't help but hope that out of this painful mess may arise a kinder, happier, post-capitalist world.
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