Just parking this to refer to at a later point

If we do nothing, on the other hand, the budget deficit shrinks a lot. As Annie Lowrey recently explained, “[D]oing nothing allows all kinds of fiscal changes that politicians generally abhor to take effect automatically.” David Leonhardt added, “As federal law currently stands, some significant tax increases are set to take effect in coming years.” 

This isn’t popular to say, but if policymakers simply leave the status quo in place, and let nature take its course, taxes will return to Clinton-era rates, the Affordable Care Act will save us a lot of money, and the deficit will shrink considerably. | Benen |

Well that's just great. Just... great.

World's Stocks Controlled by Select Few

WASHINGTON -- A recent analysis of the 2007 financial markets of 48 countries has revealed that the world's finances are in the hands of just a few mutual funds, banks, and corporations. This is the first clear picture of the global concentration of financial power, and point out the worldwide financial system's vulnerability as it stood on the brink of the current economic crisis.

A pair of physicists at the Swiss Federal Institute of Technology in Zurich did a physics-based analysis of the world economy as it looked in early 2007. Stefano Battiston and James Glattfelder extracted the information from the tangled yarn that links 24,877 stocks and 106,141 shareholding entities in 48 countries, revealing what they called the "backbone" of each country's financial market. These backbones represented the owners of 80 percent of a country's market capital, yet consisted of remarkably few shareholders.

"You start off with these huge national networks that are really big, quite dense," Glattfelder said. “From that you're able to ... unveil the important structure in this original big network. You then realize most of the network isn't at all important."

via livescience, img via spineyhead

Taking the "P" out of "GDP"

Recorded in our humble blog of record:

The financialization of the American economy has been a disaster. Forget all that stuff about the hollowing out of our manufacturing base or increased global competition or waves of immigrants taking away our jobs. Those are all legitimate issues of one stripe or another, but the far bigger issue is that a gigantic chunk of our productive capacity — Wall Street — is deployed almost solely to make money for one sector of our economy: Wall Street. Until that changes, until the financial industry is focused primarily on providing capital and services toother people, we're always going to suffer from either (a) underperformance in the real economy or (b) an endless boom and bust cycle. Take your pick.

There's one key metric that will tell us whether financial reform is working: the size and profitability of the FIRE sector. (That's Finance, Insurance, and Real Estate.) If it shrinks considerably, it means financial reform, despite all the watering down, has basically done its job. But if the FIRE sector remains enormous, it hasn't. We'll know in a few years. | Drum, emphasis mine |

It is an enduring mystery to me how we have sufficiently abstracted our economy to the point that a huge segment of our economy is devoted to producing exactly nothing. "Services" are a legitimate segment of the economy, but "services" are there to serve people, not rob them.

img credit

Like a rock

The big news today, of course, comes to us from bankruptcy court. After months of denials, finger pointing, and not-so-veiled threats, an American icon is in bankruptcy, hoping to come out stronger and more viable. I'm talkin' about the Dude here.



Dykstra clarified on his web site:

Although I am saddened and a bit embarrassed that I had no choice but to resort to this action, at least I am in good company. . . .
Two of our greatest presidents, Thomas Jefferson (filed several times) and Abraham Lincoln, were able to restructure their lives through bankruptcy and went on to do great things such as helping to establish the University of Virginia and abolishing slavery.
Ulysses S. Grant went bankrupt after leaving office when a partner in an investment-banking venture swindled him. (I can certainly identify with this one.)
William McKinley filed for protection while serving as Ohio’s governor in 1893. He was in debt to the tune of $130,000 (an insurmountable sum in those days!) before some friends eventually helped to bail him out. Three years later, he occupied a desk in the Oval Office.
Other prominent men who made the list and later went on to huge successes:
- Mark Twain
- Donald Trump (2 timer)
- Henry Ford
- William Crapo Durant (founder of GM)
- Walt Disney (up to bat several times)
- Burt Reynolds
- H.J. Heinz
- Milton Hershey
- P.T. Barnum
- Lenny K. Dykstra (coming soon!)

So if I'm reading this correctly, Lenny Dykstra will be President in 2012

Oh, also, some company named GM has emerged from bankruptcy protection and has already shown their commitment to new ideas by reforming as a reimagined entity called GM.

How bad is the economy?

An actual real employment wanted ad published today in the Ann Arbor Business Review:

Mature Telemarketer / Interviewer SEEKS Hourly Job. Refs. avail. XXX-XXX-XXXX Leave msg.

In other news, AABR reports that Ann Arbor is slated to receive $300,000 in stimulus money to fight urban blight.

and thus i cannot sleep

A correlation has been observed between the US GDP and the number of sunspots as well as between the Dow Jones Industrial Average and the number of sunspots. The data cover 80 years of history. The observed correlations permit forecasts for the GDP and for the stock market in America with a future horizon of 10 years. Both being above their long-term trend they are forecasted to go over a peak around Jun-2008.©2007 Elsevier Inc. | via |

The Sun is the dimmest it has been for nearly a century.

There are no sunspots, very few solar flares - and our nearest star is the quietest it has been for a very long time.
...
Last year, it was expected that it would have been hotting up after a quiet spell. But instead it hit a 50-year year low in solar wind pressure, a 55-year low in radio emissions, and a 100-year low in sunspot activity.

According to Prof Louise Hara of University College London, it is unclear why this is happening or when the Sun is likely to become more active again.

“There’s no sign of us coming out of it yet,” she told BBC News. | via |

It begins

CHICAGO - Laid-off workers at a Chicago factory have occupied the building and are demanding assurances they'll get severance and vacation pay owed to them.

About 200 employees of Republic Windows and Doors are staging the sit-in in shifts after learning earlier this week the plant would close Friday.

Leah Fried (LAY'-uh FREED'), an organizer with the United Electrical Workers, says Republic failed to give 60 days' notice required by law. And, she says, the company claims Bank of America is preventing it from paying wages for those 60 days and earned vacation time.

Bank of America says it's not responsible for Republic's financial obligations. |Chicago Tribune|

Green tooling

More like this please:

Obama: The news coming out of the auto industry this week reminds us of the hardship it faces, hardship that goes far beyond individual auto companies to the countless suppliers, small businesses and communities throughout our nation who depend on a vibrant American auto industry.

The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil.

I would like to see the administration do everything it can to accelerate the retooling assistance that Congress has already enacted. In addition, I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the United States of America. |CNN|

While we're at it, let's replace our broken farm subsidy program with one that subsidizes producers who are small, green and integrated into local and regional distribution networks.

It's Maddow's America now, Mr. Greenspan

"A financial expert says what?"

"What?" Burn.

Seriously, isn't it time to start replacing our lawyer jokes with financial expert jokes?

But, my friends, this is not the point of my hasty instabellman post. Since before the meltdown started, er, melting, Matthew Yglesias has been pointing out that, for all the money and status we allocate to the wizards of the financial services sector, what we have actually purhcased is our current shit sandwich. 

I think he has a pretty good point. And just so one of these instances is recorded here on the Blog of Record, I give you Matt Yglesias:

I think Fareed Zakaria’s efforts to look on the bright side of the economic crisis probably go too far, but I certainly agree with this point:

The financial industry itself is likely to shrink, and that’s not a bad thing, either. It has ballooned dramatically in size. Curry points out that “30 percent of S&P 500 profits last year were earned by financial firms, and U.S. consumers were spending $800 billion more than they earned every year. As a result, most of our top math Ph.D.s were being pulled into nonproductive financial engineering instead of biotech research and fuel technology. Capital expenditures went into retail construction instead of critical infrastructure.” The crisis will stop the misallocation of human and financial resources and redirect them in more-productive ways. If some of the smart people now on Wall Street end up building better models of energy usage and efficiency, that would be a net gain for the economy.

Indeed. I mean, in principle taking a large proportion of quantitatively skilled people and having them apply their technical chops to the financial markets could be a good thing if doing so ushered in an exciting new era of genuinely superior financial wizardry. But instead, Keynes observation that “The game of professional investment is intolerably boring and over-exacting to anyone who is entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the appropriate toll” seems just as true today as it was two or eight decades ago. Meanwhile, smart scientists and engineers are still producing useful stuff.

Compare and contrast

It was a stunning rejection of reality. This nation is mired in two wars it does not know how to end. It is struggling to escape the worst economic crisis since the Great Depression. The federal government is staring at record deficits, with no plausible plan for financing the retirement and health-care needs of a giant generation of retirees. Our transportation and education systems need help, and we are dependent on other countries for the energy we use.

In the face of all this, Obama and McCain are stubbornly repeating promises they made in happier times -- broad tax cuts, new health benefits, big government-financed projects.

To govern is to choose, and next year, the trade-offs will be much tougher than usual because of the mess the Bush administration is leaving behind. At a moment when few Americans can muster much confidence in the leaders in Congress or the White House, McCain and Obama have used two of their three debates -- three hours when they had the attention of millions of voters -- to conceal more than they revealed about their agendas. |Broder|

---

...you hear all the time from people making an argument against deficits a line about how your family needs to live within its means and so the federal government should, too. Now as it happens, I think there definitely are situations in which deficit reduction is the right policy. But no matter what, that analogy is never right. The United States of America is effectively immortal, it can coerce people into giving it money, it can print currency, and it is in a million other highly relevant ways not remotely analogous to an ordinary family or even an ordinary business enterprise. |Yglesias|

Oh shit

If I'm understanding the debate in the British House of Commons correctly, Britain's Chancellor of the Exchequer doesn't believe Iceland's attempt to bail out its banks -- they call it 'the Icelandic scheme' -- can be capitalized. He has therefore, for the purpose of insuring British depositors in Icelandic banks, moved to freeze Icelandic bank assets in Britain.

In related news:

Iceland may ask for money from the IMF after failing to get ``the response that we felt that we should be able to get'' from European governments and central banks, Haarde said.

The central bank ditched a currency peg equivalent to 131 krona per euro after failing to convince investors it could maintain it. Earlier, the government said it canceled the purchase of a 75 percent stake in Glitnir and handed the lender over to regulators, saying it was in bigger trouble than previously estimated. |Bloomberg|

Scene from a Taco Bell

I stopped by the Taco Bell on campus last Friday afternoon. Just as I got to the front of the line the manager, who happened to be a white guy, said to nobody in particular, "Can anybody stay for a couple more hours?" All three of the crew on shift, who just happened to be African Americans, shot their hands into the air. The manager took a look at the schedule.

When the manager looked up he told the one male crewmember that he couldn't do it because it would put him over hours for the week. The crewmember went back to the line to work on my tacos, which ended up having a lot more meat and cheese than I would had expected.

Next, the manager told one of the female crewmembers that she couldn't do it because he needed someone who was trained to work the line. Her expession, which had been hopeful, fell. For the rest of the time that I was there she stood motionless with a scowl on her face.

The last female crew, who had managed to pull a few more hours of minimum wage work, beamed and bubbled like nobody's business. It was like she had won the lottery.