Tag economy
Iceland (And Latvia) One Year Later
Like the proverbial canary in the coal mine, the nation of Iceland was one of the first places to be brought to its economic knees by the global recession last year. I posted about the situation just as our own stock market was free-falling last October and again back in March of this year (last item in the post).
Now, a year on, the Times of London looks at the events of the last twelve months in Iceland. Because the story ran in the “Women’s” section, there’s a somewhat odd slant of the story as it talks about the election of the current prime minister, Johanna Sigurdardottir, and the replacement of most of the cabinet ministers with women, but if you can get beyond the patronizing tone of that part of the article, it’s a good review.
Relatedly, The Nation has this article about the state of the Latvian economy, which also went tits-up last year and has been struggling quite badly since. Like Iceland, Latvia had been experiencing a boom through financial speculation, even as Latvia had been experiencing emigration of its labor force to the rest of Europe (Latvia joined the EU in 2004). Unlike Iceland, which has a very homogenous population and culture, Latvia has a very large Russian minority as a legacy of its forced inclusion in the Soviet Union, and political stability has been far less easily maintained than in placid, plodding Iceland.
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It’s Only A Recession If You’re Poor
Some shining examples of the utter cluelessness and total contempt for humanity that propel the engines of capitalism:
The 2009 baseball season has entered its last phase, and by now we have all heard about the exorbitant luxury section at the new Yankee Stadium, but this feature piece on ESPN.com really drives the point home: it’s not that the rich can’t AFFORD $2500 seats, they don’t want to be SEEN sitting in them. (thanks to MetaFilter for this link)
Similarly, Rolling Stone columnist Matt Taibbi has a hell of a paragraph about the new Cowboys Stadium, as quoted by Professor E. Wayne Ross on his blog (because the RS piece itself is not online yet):
Dallas’ opening home game against the Giants, in which their hideously commercialized mall palace known as the new Cowboys Stadium was unveiled to the world, was a genuinely terrifying broadcast event of a kind not seen since the premiere of Triumph of the Will. This was like a debutante ball for America’s new idiot fascism. Still, there was something weirdly compelling about seeing 100,000 Texans cheering historical footnote George W. Bush as they christened what promises to be about 490 years of municipal sales-tax payments, all so that Jerry Jones can see a 160-foot wide image of his own surgery-tightened face on the world’s biggest HDTV. At the home opener, ticket-holders got to see Tony Romo throw three interceptions against the backdrop of multiple corporate billboards lining the field. Then there was the specter of 100,000 people watching a giant taxpayer-funded TV while sitting at the live event. If this is the future, could America be any more fucked?
This morning’s New York Times lays out the latest brainstorm from Disney now that their management has been completely assimilated by the Borg…revitalized by Apple: they bought back their dying mall retail stores and are going to spend $1 million per store to turn them into “interactive theme parks”. Killer pull-quote:
“The world does not need another place to sell Disney merchandise — this only works if it’s an experience.” — Jim Fielding, president of Disney Stores Worldwide.
Meanwhile, in Louisville KY, 10,000 unemployed workers recently showed up to apply for 90 job openings at a General Electric factory, and in Detroit over 65,000 people have applied for a federal aid program that will only be able to give the aid to 3,500 (again, thanks to various posters at MetaFilter for the links).
It’s too bad Barack Obama isn’t an actual Socialist, because then maybe he’d be doing something about this instead of looking the other way while he collects his Nobel Peace Prize.
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“You’re All In On It”
Yes, every blog in the world, it seems, has a link to the clips of the tete-a-tete between Jon Stewart and Jim Cramer on last night’s “The Daily Show”. And, yes, so do I.
Read more
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Maybe The Message Is Getting Through, Maybe Not
Did you happen to read Tom Friedman’s op-ed in yesterday’s New York Times? Check this out:
Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”
Now, I don’t think Tom Friedman reads my little blog, but didn’t I basically say this just the other day? This is not just a downturn, it’s a threshold for changing the entire paradigm, kiddies, and throwing money at rich people isn’t going to cut the mustard.
Now the drums are starting to pound in the faraway hills, calling for the head of Treasury Secretary Timothy Geithner. While Geithner undoubtedly has the support and blessings of President Obama, and Obama needs to take some heat on this too, it has been Geithner as the supposed “go-to guy” on the banking crisis who is starting to make Hank Paulson look like a freaking Chatty Cathy. Financial commentator Henry Blodget rants on at length about Geithner’s failure here and comes up with the following indictments:
Before taking office at the end of January, Tim Geithner had many months to develop a solid plan for what to do. He had the opportunity to see what was working and what wasn’t and to consult with dozens of experts, many of whom had no stake in the matter (unlike the Wall Street kingpins who seem to have shaped Geithner’s inaccurate view of the situation). He had the opportunity to see and understand that what America needs most right now is clarity and decisiveness.
Then he took office. In the five weeks since, Tim Geithner has:
* Given a speech billed as the solution to the financial crisis in which he promised something vague, someday, that sounded an awful lot like the bad plan that didn’t work in the past administration (which really isn’t that surprising, given that Geithner was the one who came up with the earlier bad plan).
* Floated multiple versions of the same plan into the press hoping that one would be enthusiastically received by someone other than Wall Street (no dice.)
* Refused to seriously discuss the consensus opinion of most neutral economists and experts: That the banking system is insolvent and that the solution is pre-privatization.
* Given Congressional testimony in which his brusque, defensive manner and weak responses have inspired no confidence and served only to make people wonder again why Obama picked him for the job.
and, most importantly, Tim Geithner has:
* Refused to revisit or defend his almost certainly inaccurate view that this crisis is merely a temporary price decline caused by a lack of liquidity, rather than a collapse of a debt-driven economy. You can’t cure the patient if you’re treating the wrong problem.
Now, I’ll say again that Barack Obama deserves almost as much blame for 1. picking Geithner because he knew the appointment would appease Republicans and 2. endorsing what was basically the Paulson Plan II even though it was clear before the inauguration that it was the wrong thing to do. And at some point I hope people are going to hold Obama to that. But for now, he should probably find someone who a) isn’t Larry Summers or Bob Rubin and b) paid his fucking taxes on time to replace him.
This somewhat lame defense of Geithner appeared in Tina Brown’s Daily Beast from BBC reporter Katty Kay. Kay’s arguments all stem from the political side of the equation, while Blodget’s critiques come from the policy side. In this particular situation, though, political arguments are probably the last line of defense anybody really wants to engage in. The reality is that the bank bailout situation remains an enormous failure that simply started with Bush and has continued with Obama and needs a new direction, which almost certainly requires a new point-man.
Oh, and while we’re at it, this post from CNBC commentator Barry Ritholtz ought to make the steam start pouring out of your ears, if it isn’t already. Ritholtz says that Bloomberg News reports that the bailout money that the government has been pouring into AIG is being funneled back to Goldman Sachs and other investment banks, not being used by AIG for its own situation. They are getting away with this because they don’t have to tell anybody what they are doing with the money. And guess what….Hank Paulson AND Tim Geithner are both former Goldman Sachs bigwigs…hmmm…
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Still Believable
On Tuesday, I posted a link to a blog post from Rex Hammock wherein he listed some things that he had lost belief in due to the economic crisis we’re in, and then I added a few others that I felt were similarly discredited. In the comments, my friend Karan asked what I did still believe in and/or hope for (since Hammock had, at the end of his post, added a few on that score). Since I felt it would take up too much space to explain in a comment, I said I would write a second post along those lines, and so here we are. Given that the crisis itself stems from a lack of confidence in financial institutions (a well-deserved lack, I think), it’s much easier to point to things to be critical about, but I’ve come up with several things that I think would be worthwhile, not just in easing the strain on the economy, but in fashioning the paradigm that will replace the one presently burning itself into ashes.
Restoring the government’s role as the natural enemy of corporatism — In my view, the best role government has is maintaining an adversarial relationship to big business. Our government, by its very definition, is meant to protect the interests of individuals over the potential abuses of other institutions that can amass power: churches, military leaders, even the individual branches of the government as established in the Constitution. The founders also clearly wanted to circumscribe the power of corporations by limiting their charters and enacting other restrictions that held corporations in check for decades. By the latter half of the 19th century, the increasing economic power of some began to erode this adversarial position through the traditional route of corruption, but even the financial shenanigans of the late 1800s eventually overstepped a threshold and a new wave of governmental reform and regulation swept through Washington in the first quarter of the 20th century. The reforms in labor, in the social safety net, in the manifestation of “public interest” as a valid entity in regulation, and ultimately the sweeping financial reforms of the early part of FDR’s administration all served to rein in the monster of capitalism that came to life after the Civil War. In the years since World War II, however, and especially in the forty years since the election of Richard Nixon, government has been completely co-opted by business and now only works for the benefit of corporations. My personal belief is that it remains possible to resurrect the government’s identity as the antagonist of unbridled capitalism, though I also think it will take a few more years of drama and devastation to get there.
The adaptability of the human species — I am, quite honestly, utterly fed up with the popular fascination for Doomsday-ism, and have been for some time. Anyone who reads this blog for any length of time knows that I have zero patience or tolerance for people who are constantly looking for some catastrophe that will destroy life as we know it. While the failures of the global economy surely should not be waved away dismissively, the Doomsdayers were all too quick to latch on to this crisis and whip themselves up into a frenzy speculating over the degree of chaos it would cause, mainly because the economic crisis is a lot more real than waiting around for tsunamis, bird flu, killer volcanoes, asteroids, or glacier melting. Humans are nothing if not resourceful and adaptable, and I believe that it’s far more likely that people all over the world will develop adaptive responses to the situation rather than self-destruct. That’s not to say that there will not be unrest; indeed, there is a strong need for unrest in troubled times, as it is often the only way to shake the powerful out of their complacency and reorganize power structures to meet the needs of the many. However, to imply that all of human civilization stands on the brink of annihilation within the context of a financial collapse is simply deluded.
Money is bullshit — Money is probably the only mass delusion on Earth bigger, more powerful and more destructive than religion. What we’ve seen is that it’s possible for clever and unscrupulous financiers and businesspeople to simply invent wealth out of whole cloth in the form of credit swaps, derivatives, bogus consumer credit, and good old fashioned fraud. And then to have it all evaporate in the space of a few weeks, even though there was never any tangible wealth behind all that paper. And what is “tangible” about wealth? I hear and read a lot of people hollering about gold, but even our insistence on the value of gold is illusory. You can’t eat it or wear it; it has practical uses, but they’re limited and certainly do not justify the overall value we assign to it. The more money that appears to be lost, the more money that appears to be given away in “bailouts” and “stimulus packages”, the more it looks like the great big lie that it is in the first place. There must be other ways to effectively exchange goods and services that can be shielded from the effects of greed and fraudulence to such an extent that allows the basic material needs of all people to be met to a level that our civilized advancements can sustain for the very long term. And it’s not the All-Mighty Dollar, the Euro, or the yuan.
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“Things I No Longer Believe In”
Blogger and magazine guru Rex Hammock had a very good post over the weekend entitled “Things I No Longer Believe In”. It’s mostly aimed at the destruction of the credibility of the institutions and individuals who have played a role in the economic disaster we’re going through. He singles out Congress for its inability to see beyond the short-term political strategies of its membership, the notion of any institution being “too big to fail”, and the absurdity of “real-tine market analysis” on CNBC, among others.
I thought it was a very thoughtful exercise, and I agreed with all of his choices and rationales for them. Still, I think I can add a few of my own:
“The American Dream” — okay, so this one needs a little more definition, because I think there are actually several different “American Dreams” to choose from, so the one I am specifically referring to is the one that posits that every American can and should be a middle-class homeowner living in a suburb. This idea really didn’t manifest itself as “The American Dream” until after WWII; previously, the “American Dream” was more about rising up from lowly serf to captain of industry in the Horatio Alger style, but the Great Depression pretty much proved what a pipe dream that really was to most Americans, and so sights were set on the less-lofty goal of home ownership as the pinnacle of achievement for the majority of Americans. Of all the ideas that went to hell in a handbasket with the boom and bust of the last decade, it is this one that was oversold by greedy and unscrupulous banks and mortgage companies, then twisted into unrecognizable permutations that would have otherwise been dismissed as outright fraud years earlier. On closer historical examination, there’s a lot to suggest this wasn’t a particularly sustainable idea in the first place, but I’m usually willing to give the decision-makers of the past the benefit of the doubt for not being able to imagine THIS as the future.
Economists — Who did these people fellate to convince the world that they deserved doctoral degrees? They’ve proven to be very good at rationalizing things after the fact, but anybody can do that. What they obviously can’t do is explain how to keep the economy from falling into a bottomless pit. Pet theories, cherry-picked examples and evidence, full-blown quackery, and an appalling determination to promote their own ideas over anybody elses make them the least-reputable “scientists” one can possibly imagine. Lately there’s been some complaint that the media are relying on their own bloviating gasbag pundits for insightful commentary than “real economists”, but that’s probably a wise move on the part of the media outlets.
“Saving For Your Future” — Yeah, right. An entire generation of people has just watched whatever retirement savings they had disappear into billions of scattered electrons. The older half of the Baby Boom will be the last generation of Americans to engage in the cultural fantasy of “Retirement”, and the rest of us will work until we drop dead in our cubicles. As my half of the Baby Boom skids headfirst into our “golden Years”, we’re going to have to reinvent collective housing, develop entirely new models of labor that accommodate older employees, and probably stage a “Million Grannies March” on Washington to undo the half-assed systems that our older Boomer siblings didn’t have to worry about because they didn’t need it.
“Planned Obsolescence” — The “everything’s a widget” model of capitalism is going to have to go the way of the dodo tout suite. Making everything from phones to TVs to dishwashers to cars so freakin’ flimsy that they break just to look at them will not be sustainable from the standpoint of consumers without money to spend, from businesses that can’t constantly sell “more more more more”, and from the rapidly encroaching realities of our depleted natural resources and shifting climate. This means that everything the businesspeople think about running their corporations is now and forevermore obsolete, and they might as well all give up and start over again.
I’ll keep adding to this list as I come up with others. You can, too.
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The Slippery Slope
You might have seen the graph on the top already — it was posted on Speaker Nancy Pelosi’s blog yesterday (by a staffer, of course…you don’t think Nancy actually does those sorts of things herself do you? She has a person for that, dear) and subsequently appeared all over the political blogs and even ended up on BoingBoing. I saw it first at David Isenberg’s blog.
Pretty effin’ scary. The red and blue lines represent job losses after peak employment for the 1990 recession (Bush I) and the 2001 recession (Clinton-Bush II). The green line headed straight for the bottom is the current recession. As Pelosi’s blog points out, it represents a loss of 3.6 million jobs.
Like a lot of graphs, though, it’s a little deceptive. It doesn’t take into account the differences in the size of the labor markets in each period. That doesn’t mean the loss of 3.6 million jobs isn’t significant, because that’s a pretty scary number, it just doesn’t give you an idea of how that relates to the overall job market. It has also been pointed out that Pelosi’s graph is comparing the current situation to two relatively mild recessions for the sake of over-emphasizing the plunge of the green line.
So observe the second graph, which comes from economists Susan Woodward and Robert Hall. Their graph compares the current recession to the recession of 1981 (Reagan), which was the most serious economic downturn since the Great Depression of the 1930s…until now. This graph re-indexes the 1981 numbers to the present size of the labor market to present a more realistic comparison.
Still, pretty effin’ scary because, as they point out in the text of the post, if the February job loss numbers continue the downward trend, Reagan’s Recession will get bumped down to Third Worst of All Time. We still have quite a bit of depth to plumb to get to the ~25% unemployment at the worst of the Great Depression, but even this graph makes it pretty evident we haven’t bottomed out yet.
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Let Them Eat Cake!
As I’m sure you know, last week Barack Obama added a salary cap provision to the next round of bank bailouts that would limit the pay of any executive at a bank receiving TARP money to half a million dollars a year. The right-wingers immediately started shrieking “Socialism! Socialism!”, but at this point those people have reached the level of slime mold in terms of credibility (and that’s insulting the slime mold). Since Obama said it was a “take-it-or-leave-it” proposition, Bank of America decided it was more important to continue to plunder their depositors’ money for things like bonuses and Super Bowl parties and so they won’t have anything to do with the next round of bailouts.
Meanwhile, the New York Times had the unmitigated gall to run this article in Sunday’s paper about just how hard it is for the average millionaire to eke by on half a million dollars a year in New York City. Why, a chauffeur alone costs anywhere from $75,000 to $125,000 a year! And Wifey simply MUST spend $35,000-$50,000 on two or three new frocks to wear to all those ghastly social events millionaires must attend. Not to mention the $4 million summer house in the Hamptons, the $20,000 vacations twice a year (sun in the winter, skiing in the spring, dahling!). How ANYONE could expect a person to barely scrape by on half a million dollars is simply a NIGHTMARE.
My friends, I have the perfect solution:
If it was good enough for Marie Antoinette, surely it is good enough for these people.