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October 12, 2010

Financial Briefing: The Road to Hell Is Paved With Good Intentions

The Joker: "Nobody panics when things go according to plan. Even if the plan is horrifying."

The curious incident of the 300m bushels of corn. Put your pistol in your pocket and come quickly, Watson! The game's afoot!

Perennial broke-dick dog is the Democrat jobs model for the entire US economy. Pull quote:

Start with the fact the Postal Service is a great jobs machine, employing 712,000 people at an average annual compensation, including wages and benefits, of $83,000. And those hefty pay checks are a great source of political contributions for Democrats. In 2010, almost 90 percent of the approximately $4 million contributed to campaigns by postal unions went to Democrats. Take a guess where much of the opposition to reform comes from.
But of course to read the natterings of a certain child-man economic dullard, one of the primary functions of a government is to pay one guy to dig a hole and pay another guy to fill it back in. In the Democrat mind, this is somehow a net economic gain. (Actually, they'd have to hire two hole-diggers and two hole-filler-inners, because it's probably a union gig and you know how that is.)

Three balding dudes with bad eyesight win a prize, or something. The only thing I took away from this is that Pissarides must have been a tough name to grow up with. Junior High gym class must have been a living hell. Just think of the roll call, as you're standing there with your pale birdy legs sticking out of your too-big shorts: "Mister Piss-a-rides? Am I pronouncing that right? Piss-a-rides?" Then the snickers start, and the thyroidal hulk next to you laughs out loud in a way that promises great violence on your person in the near future. All because your immigrant Greek great-grandfather couldn't bend his goddam pride a notch and change the family name to Smith. Later, as you contemplate the porcelain depths of the toilet bowl during the "down" portion of a swirly, you resolve to lead a life of the mind if you can ever escape this teenaged torture-chamber.

"I will state categorically that through an aggressive program of lying, bribery, theft, embezzlement, double-dealing, fraud, usury, blackmail, shady accounting, threats, intimidation, vicious beatings by thugs with truncheons, and good old Irish grit, we will avoid financial catastrophe." Or words to that effect.

You can't always trust the French...but you can always trust the French to act like Frenchmen. (I do admit a grudging respect for a certain dead Frenchman, one Charles Maurice de Talleyrand, who said, "Speech was given to man to disguise his thoughts.")

One of the problems with the American economy is that our currency is too strong, which among other things makes our exports more expensive. The solution would seem to be to weaken the dollar. But the rest of the world can't handle a weaker dollar. There isn't enough demand to go around, as Pritchard says. QE2, in Pritchard's view, is America's weapon against China. "Either appreciate your currency," this theory goes, "or we'll flood your market with liquidity and overheat your market." It comes down to employment: in the US and in China. Many politicians and economists feel that China is unfairly keeping their currency at a low level to prop up their vital export business, which in turn hurts US competitiveness on the world markets. I don't buy it (entirely), but it certainly seems to be consensus among Fed, Treasury, and White House officials. China may try to get out of the jam by promising some minor adjustments, but the US is apparently getting pissed off enough to insist on a substantial appreciation of the Yuan. The Chinese, on the other hand, are terrified of the stresses a strong Yuan would place on their society, and may not allow it. Get ready for a trade-war, kids. Just in time for Christmas! (Oh, more good news: King Dollar may not be long for the world if the EU, Russia, and China have anything to say about it.)

A wizened little troll right out of a Brothers Grimm fairy-talePaul Krugman insists that the stimulus didn't fail...because it wasn't actually tried. Pull quote:

Here’s what you need to know: The whole story is a myth. There never was a big expansion of government spending.
The relief! And here I thought that we'd just pissed away a trillion or so dollars doing approximately fuck-all over the past two years! What a load off! [SARCASM OFF] Krugman won't be happy until the Federal Government controls and spends every dollar you earn. Tutto nello Stato, niente al di fuori dello Stato, nulla contro lo Stato -- where have I heard that phrase before? Scratch the paint on a liberal and you always see the authoritarian/socialist undercoating.

Horrifying chart-fu, you say? I got your horrifying chart-fu right here. Pull quote:

[M]ore than ever, personal income is comprised of government transfer payments, not actually real income derived from the productive part of society.
Atlas isn't shrugging; his back is broken.

You know how the key to bringing the housing market out of the doldrums is to clear out the huge inventory of foreclosed/nonperforming properties? Yeah, about that....

Economist Greg Mankiw explains the math of higher taxes to Democrats, who had been told that there would be no math in this Administration. Democrats apply the tax rate like a club to a recalcitrant mule: they hope that more pain equals more work. But at some point the mule will simply stop working; the beatings are the same if he works or stands still, so why not just stand still?

Welding jobs may be plentiful, but that's no help to you if you're not a welder. This is called "structural unemployment", and it has no real short-term solution. It results from a disconnect between current worker skills and employer requirements. It's really a form of malinvestment. Students train in subjects like Postmodernist Literary Theory and The Hermeneutics of Lesbian Cinema, but the job market is asking for engineers and plumbers. Workers in fading industries won't or can't retrain. The last time this problem cropped up was during the 1982 recession: the old manufacturing jobs were gone, and the hundreds of thousands of Rust Belt factory workers -- many now middle-aged, with high union wages and benefits packages they didn't want to lose -- either could not or would not re-train into other fields. This led to a long cycle of stagnation in which the American upper midwest remains mired to this very day. Pull quote:

Victor Calix Cruz, 51, has been job hunting for two years after being laid off from construction work in Miami. He, his wife and their two teenage children are “surviving” on his wife’s disability and his unemployment payments, he said. While he heard of openings at hotels, he hasn’t applied because the pay and benefits aren’t as good as what he had before.
I don't imagine that your unemployment check matches what you were making before either, Chief. It's like the old Rolling Stones song: you can't always get what you want.

Hold still; this is gonna hurt.

How boned is California? This boned:

DeMaio reports that 70 percent of San Diego's payroll budget goes to benefits for retirees, which leaves little for current employees. In the private sector, any company with this imbalance would find itself answering to a bankruptcy judge. But in the public sector, which operates mainly for the benefit of the people in the system, services get cut so the employees and retirees don't have to scale back their lifestyles. The report found that some San Diego pensioners are receiving four public pensions at once, many are receiving more in retirement than they earned while working, and some politicians are receiving retirement payments at age 35.
Time to fetch your gun and take Old Yeller out behind the shed, Travis.

-----------------------------

Somewhere in a lonely hotel room
there’s a guy starting to realize
That eternal fate has turned it's back on him
It's two a.m.

It's two a.m. the fear has gone
I'm sitting here waitin' the gun still warm
Maybe my connection is tired of taking chances
Yeah there's a storm on the loose sirens in my head
I'm wrapped up in silence all circuits are dead
I cannot decode
my whole life spins into a frenzy

Help I'm steppin' into the twilight zone
The place is a madhouse
Feels like being blown cloned
My beacon's been moved under moon and star
Where am I to go
Now that I've gone too far

digg this
posted by Monty at 07:21 AM

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