Posts Tagged ‘Economist’
The Economist has an excellent piece up about the disturbing trends in the economy:
This compulsory return to thrift will be deeply painful; consumer spending and housing are almost three-quarters of GDP. Of the 1.2 million, or 0.9%, decline in jobs since December, about 700,000 are directly related to consumers: retail trade, transportation manufacturing and home-building. The rise in unemployment, from 4.4% in 2006 to 6.5% in October, is nearing that of 2001-03 and is not over. On November 19th Federal Reserve policymakers disclosed they expect the recession to last until mid-2009. Their inflation worries have evaporated; indeed, consumer prices plunged a record 1% in October from September, and by 0.1% excluding fuel and food, the first such decline since 1982. The Fed’s vice-chairman, Donald Kohn, said outright deflation “is a risk out there but it’s still small”.
I think this article, in pointing out the trends in the American economy (such as decreased savings by baby boomers as well as the sharp rise in consumer saving in the wake of the sky falling), also reveals the bigger problem in the American psyche: we risk and spend too much when things are going well, and immediately shock the system by saving as soon as things start to go bad, which makes things get worse. It can be argued that the extra saving is a good thing (and I agree that it’s what we should be doing in the first place!), but, simply put, by not spending as much money in an ailing economy, the economy is obviously going to do worse. Of course, it’s likely that what people are spending now is truly what they can afford, rather than their fake plastic money that created the piles of debt that led to this catastrophe in the first place.
What I fear the most is that this country (and the rest of the world) will weather this recession by being savvy spenders and savers, and immediately return to our old ways of boundless spending and unwise use of credit cards, again buying goods we can’t afford with our plastic friends. That would be sure to land us in another recession in the future, as the debt would, again, crash our system.
But, if we could only maintain our unprecedented level of spending with low savings coupled with unlimited amounts of credit, if we were to remain savvy spenders, taking less risks and saving more, would that mean a permanent shrinkage of the economy (proportional, of course, to the amount of workers in the system; as time goes on, the economy will “grow”, due to job creation, but the net spending per person will go down)?
Maybe this period of economic success was nothing but a hallucination, and we are now getting off the hallucinogens and waking up to reality. And that reality may be a smaller economy.
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Today’s good, bad, and insightful:
The Good
I realize that it was published two weeks ago, but the Economist’s article Capitalism at Bay is way too good not to mention.
Roberto Lovato has a plan for when (if?) the election gets stolen. There will be riots in the streets, people!
Christopher Hitchens has yet another seething attack on the GOP’s anti-intellectualism up at Slate.
The New Yorker’s Hendrik Hertzberg attacks Joe… the Senator (Lieberman, that is).
The Bad
We’ve launched a helicopter raid in Syria, and the BBC reports that the Syrian foreign minister has called the U.S. out on terrorist aggression. He’s absolutely right. (More on this to come, I feel it)
In quite possibly the most hilarious blog post I’ve ever seen (okay, maybe it’s just sad), Elaine Lafferty says that Sarah Palin’s a Brainiac. And no, it’s not a satire.
Oh, and Ted Stevens is guilty!
The Insightful
‘Twas a good day for the Guardian…
Michael Tomasky says this on Rev. Wright’s revival:
I see that Reverend Wright is resurfacing, just a bit, and I see that Obama said something on the radio seven years ago that pisses conservatives off. Boy. I don’t know, I’ve been wrong before, but it seems to me like they’ll need more than this.
The American people have sized up Obama for the better part of two years now. Polls indicate very clearly that swing voters have decided that he’s not nearly as dangerous and risky as four more years of conservative governance. Late reminders can influence some votes, and depending on how sleazy things get, states like Missouri and Indiana can be tipped back to McCain. But he needs a lot more help than that, and I don’t think Reverend Wright takes him where he needs to be.
And this article by George Monbiot is awesome. Money quote:
Besides fundamentalist religion, perhaps the most potent reason intellectuals struggle in elections is that intellectualism has been equated with subversion. The brief flirtation of some thinkers with communism a long time ago has been used to create an impression in the public mind that all intellectuals are communists. Almost every day men such as Rush Limbaugh and Bill O’Reilly rage against the “liberal elites” destroying America.
The spectre of pointy-headed alien subversives was crucial to the election of Reagan and Bush. A genuine intellectual elite – like the neocons (some of them former communists) surrounding Bush – has managed to pitch the political conflict as a battle between ordinary Americans and an over-educated pinko establishment. Any attempt to challenge the ideas of the rightwing elite has been successfully branded as elitism.
Obama has a lot to offer the US, but none of this will stop if he wins. Until the great failures of the US education system are reversed or religious fundamentalism withers, there will be political opportunities for people, like Bush and Palin, who flaunt their ignorance.
Without further ado, here are today’s picks for The Good, the Bad, and the Insightful:
The Good
The Economist blog Free Exchange reminds us all that it’s the housing market, stupid!
The folks at Donklephant reveal that William Timmons, head of John McCain’s presidential transition team, lobbied on the behalf of Saddam Hussein in order to levy the economic sanctions imposed on his government from the UN. Two of the lobbyists he worked with were convicted of federal criminal charges for working as agents of Hussein’s government.
Andrew Sullivan has a nice, short post showing that Palin’s position on the MSM is wrong. Dead wrong.
The Bad
Editor’s Note: Today’s bad has been removed since the writer obviously lacks any and all ability to detect a satire.
The Insightful
From the New Yorker:
There’s no doubt that this system has had huge benefits. It has made it easier for money to connect lenders and borrowers. It has removed the kinds of personal bias that kept capital in the hands of people whom men like J. P. Morgan approved of. And it has vastly expanded the amount of lending as well. But all those benefits have come at an exorbitant price. The problem with an impersonal system is that when the models fail, and when companies’ ratings become suspect, everything is called into question. Lenders can’t fall back on their own judgments of a specific company or individual, because such judgments aren’t part of their typical decision-making process. Instead, they’ve adopted a deep-seated distrust of all borrowers, even financially secure ones. If the Fed is now taking corporate I.O.U.s, it’s because everyone else is acting according to that old motto: In God we trust—all others pay cash.
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