Withering 'Green Shoots'

Mike Whitney, an interesting writer from the left website 'Counterpunch', writes concerning the current economy:

Credit is not flowing. In fact, credit is contracting. When credit
contracts in a consumer-driven economy, bad things happen. Business investment
drops, unemployment soars, earnings plunge, and GDP shrinks. The Fed has spent
more than a trillion dollars trying to get consumers to start borrowing again,
but without success. The country's credit engines are slowing to a crawl.
Fed
chairman Ben Bernanke has increased excess reserves in the banking system by
$800 billion, but lending is still slow. The banks are hoarding capital in order
to deal with the losses from toxic assets, non performing loans, and a $3.5
trillion commercial real estate bubble that's following housing into the toilet.
That's why the rate of bank failures is accelerating. 2010 will be even worse;
the list is growing. It's a bloodbath.

The standards for conventional loans have gotten tougher while the pool
of qualified credit-worthy borrowers has shrunk. That means less credit flowing
into the system. The shadow banking system has been hobbled by the freeze in
securitization and only provides a trifling portion of the credit needed to grow
the economy. Bernanke's initiatives haven't made a bit of difference.
Credit continues to shrivel.

The S&P 500 is up 50 per cent from its March lows. The financials,
retail, materials and industrials are leading the pack. It's a "Green Shoots"
bear market rally fueled by the Fed's Quantitative Easing (QE) which is forcing
liquidity into the financial system and lifting equities. The same thing
happened during the Great Depression. Stocks surged after 1929. Then the
prevailing trend took hold and dragged the Dow down 89 per cent from its earlier
highs. The S&P's March lows will be tested before the recession is over.
Systemwide deleveraging is ongoing. The economy is resetting at a lower rate of
activity.

No one is fooled by the fireworks on Wall Street. Consumer confidence
is still falling. Everyone knows things are bad. Everyone knows the mainstream
press is lying. The restaurants and malls are empty, the homeless shelters are
bulging, and even the big-box stores have stopped hiring. The only "green
shoots" are on Wall Street where everyone gets a handout from Uncle Sugar.

Market Rationing of Health Care

Robert Wright makes a very insightful response to Sarah Palin's Friday remark:

What more is there to say about Sarah Palin’s now-famous claim
that President Obama’s health-care plan features “death panels” that will give
patients the thumbs up or thumbs down? Just that, if this were Obama’s plan, it
would have more in common with our current system than you might think.

In Palin’s fantasy, the death-panel “bureaucrats” were going to pick
winners and losers based on a judgment about their “level of productivity in
society.” Well, if you view income as a gauge of a person’s productivity in
society—and God knows there are Republicans who do—then the quality of health
care is already correlated with “productivity in society.” Obama’s plan, by
making health care more affordable to lower income people, would make that less
true.
This is just another way of making a point already
made by Peter Singer in response to less delusional concerns about the
possibility of rationing under Obama’s plan: we already ration health care; we
just let the market do the rationing.

Any government health care plan will bring some new form of
“rationing,” since no government can afford to guarantee everyone all possible
medical treatment. But let’s be clear: the people who are trying to sabotage
reform by telling mind-boggling lies about its hidden rationing agenda seem, in
fact, pretty content with rationing; they seem happy with a system in which the
least “productive” members of society get bad health care, including,
occasionally, health care so bad that it leads to death.

One Wild and Crazy Woman

Sarah Palin wrote on her Facebook page last Friday the following statement:

The Democrats promise that a government health care system will reduce the
cost of health care, but as the economist Thomas Sowell has pointed out,
government health care will not reduce the cost; it will simply refuse to pay
the cost. And who will suffer the most when they ration care? The sick, the
elderly, and the disabled, of course. The America I know and love is not one in
which my parents or my baby with Down Syndrome will have to stand in front of
Obama’s “death panel” so his bureaucrats can decide, based on a subjective
judgment of their “level of productivity in society,” whether they are worthy of
health care. Such a system is downright evil.

Death panels? This woman is increasingly losing touch with reality.

Social Health and the False Readings of Economics

James Howard Kunstler, called a 'collapsist' by someone recently, writes in his weekly essay today about the mistake of judging the value of our economic activity by numbers:

One of main reasons behind the vast confusion now reigning in the USA, our
failure to construct a coherent consensus about what is happening to us (or what
to do about it), is our foolish obsession with econometrics -- viewing the world
solely through the "lens" of mathematical models. We think that just
because we can measure things in numbers, we can make sense of
them.

For decades we measured the health of our economy (and therefore of our
society) by the number of "housing starts" recorded month-to-month. For
decades, this translated into the number of suburban tract houses being built in
the asteroid belts of our towns and cities. When housing starts were up,
the simple-minded declared that things were good; when down, bad. What this view
failed to consider was that all these suburban houses added up to a living
arrangement with no future. That's what we were so busy actually doing.
Which is why I refer to this monumentally unwise investment as the greatest
misallocation of resources in the history of the world.

Even this interpretation -- severe as it is -- does not encompass the sheer
damage done by the act itself, on-the-ground and to our social and cultural
relations. Suburbia destroyed the magnificent American landscape as
effectively as it destroyed the social development of children, the worth of
public space, the quality of civic life, and each person's ability to really
care about the place they called home.

Whenever I hear an economist making claims that the recession the ending and the recovery is beginning, based on a temporary stock-market ralley or some temporary lowering of the unemployment rate, I am skeptical. These are just numbers that don't speak to the true realities of the economy.

Kunstler is right. The right interpretation of the numbers, taking into account far greater factors than just a few economic numbers being proffered by a governmental agency, is what's needed, and not just some false and sunny optimism.

Real Health Care Reform Is Conservative

Andrew Sullivan, as usual, puts it well:

I find myself again in agreement with David
Frum. It was one thing to oppose greater government involvement in
healthcare in 1993. It is another to do so in 2009. There are several reasons
for this and it is hard to improve on David's summary of them. The status
quo means:
(1) flat-lining wages, (2) exploding Medicaid and Medicare costs
and thus immense pressure for future tax increases, (3) small businesses and
self-employed individuals priced out of the insurance market, and (4) a lot of
uninsured or underinsured people imposing costs on hospitals and local
governments. We’ll have entrenched and perpetuated some of the most irrational
features of a hugely costly and under-performing system, at the expense of
entrepreneurs and risk-takers, exactly the people the Republican party exists to
champion.

I'd add the crippling health costs for the private sector - costs that
are slowly killing their global competitiveness. But the deepest reason for
reform is fiscal. No serious plan to reduce deficits without hugely increasing
taxes excludes healthcare savings. There's no way to get from spiraling debt to
stable public finances without tackling the exponentially rising costs of
healthcare. So this is a fiscally conservative issue.

Instead of pulling a Palin, conservatives should propose real reforms:
ending the tax exemption for businesses; medical malpractice reform; an
independent body to provide some kind of data on the relative effectiveness of
treatments; incentives to reward doctors less for any and all services provided
than for health outcomes within clear budgets. This, actually, is not far from
the Romney model, as the NYT notes today. Real conservatives should point out
that the current proposals are not tough enough on costs - and criticize Obama
for that, not for fantasies like a communist takeover or euthanasia program for
special needs kids.

Mass Murder For Food

Timothy Snyder, in his fascinating article on the mass killing of civilians in Europe during the 30s and 40s, connects 'then' with 'now' in this way:

Both Nazi Germany and the Soviet Union followed a path to economic
self-sufficiency, Germany wishing to balance industry with an agrarian utopia in
the East, the USSR wishing to overcome its agrarian backwardness with rapid
industrialization and urbanization. Both regimes were aiming for economic
autarky in a large empire, in which both sought to control Eastern Europe. Both
of them saw the Polish state as a historical aberration; both saw Ukraine and
its rich soil as indispensable. They defined different groups as the enemies of
their designs, although the German plan to kill every Jew is unmatched by any
Soviet policy in the totality of its aims. What is crucial is that the ideology
that legitimated mass death was also a vision of economic development. In a
world of scarcity, particularly of food supplies, both regimes integrated mass
murder with economic planning.

They did so in ways that seem appalling and obscene to us today, but
which were sufficiently plausible to motivate large numbers of believers at the
time. Food is no longer scarce, at least in the West; but other resources are,
or will be soon. In the twenty-first century, we will face shortages of potable
water, clean air, and affordable energy. Climate change may bring a renewed
threat of hunger.

If there is a general political lesson of the history of mass killing,
it is the need to be wary of what might be called privileged development:
attempts by states to realize a form of economic expansion that designates
victims, that motivates prosperity by mortality. The possibility cannot be
excluded that the murder of one group can benefit another, or at least can be
seen to do so. That is a version of politics that Europe has in fact witnessed
and may witness again. The only sufficient answer is an ethical commitment to
the individual, such that the individual counts in life rather than in death,
and schemes of this sort become unthinkable.

The Heart of Darkness

It is so easy to think our lives difficult, until we remember far more difficult times not so very long ago, indeed, within the lifetimes of many retired people still alive. The 30s and 40s were a truly dreadful time, all around the world. Many millions of people lost their lives in depression and then world war. If this was a time of darkness, then the 'heart of darkness' was, as Timothy Snyder puts it in an article in the New York Review of Books, the lands between Germany and Russia, namely, Poland, Ukraine, and Belarus.

The emphasis on Auschwitz and the Gulag understates the numbers of
Europeans killed, and shifts the geographical focus of the killing to the German
Reich and the Russian East. Like Auschwitz, which draws our attention to the
Western European victims of the Nazi empire, the Gulag, with its notorious
Siberian camps, also distracts us from the geographical center of Soviet killing
policies. If we concentrate on Auschwitz and the Gulag, we fail to notice that
over a period of twelve years, between 1933 and 1944, some 12 million victims of
Nazi and Soviet mass killing policies perished in a particular region of Europe,
one defined more or less by today's Belarus, Ukraine, Poland, Lithuania, and
Latvia. More generally, when we contemplate Auschwitz and the Gulag, we tend to
think of the states that built them as systems, as modern tyrannies, or
totalitarian states. Yet such considerations of thought and politics in Berlin
and Moscow tend to overlook the fact that mass killing happened, predominantly,
in the parts of Europe between Germany and Russia, not in Germany and Russia
themselves.

The geographic, moral, and political center of the Europe of mass
killing is the Europe of the East, above all Belarus, Ukraine, Poland, and the
Baltic States, lands that were subject to sustained policies of atrocity by both
regimes. The peoples of Ukraine and Belarus, Jews above all but not only,
suffered the most, since these lands were both part of the Soviet Union during
the terrible 1930s and subject to the worst of the German repressions in the
1940s. If Europe was, as Mark Mazower put it, a dark continent, Ukraine and
Belarus were the heart of darkness.

By starving Soviet prisoners of war, shooting and gassing Jews, and shooting civilians in anti-partisan actions, German forces made Belarus the deadliest place in the world between 1941 and 1944. Half of the population of Soviet Belarus was either killed or forcibly displaced during World War II: nothing of the kind can be said of any other European country.

In Denial on Climate Change

A new study from the University of Maryland on climate change reveals that:

[Seventy-three] percent of respondents worldwide want their government to
place a high priority on climate change. It's worth noting that China and India,
two countries whose governments have thus far adamantly opposed binding
reduction targets for greenhouse gases, had some of the most enthusiastic
publics [94% and 59%, respectively]. In the United States on the other
hand, only 44 percent thought that climate change should be a major priority.
The only other two countries in the 19-country study that couldn't muster a
majority? Iraq and the Palestinian Territories.

There is something strange going on here. Why are Americans so blind to this looming danger?

The Need for Health Care Reform

A pastor writes to Andrew Sullivan's blog about his dilemma with health insurance:

I am a 37 year old clergyman serving a Protestant Mainline church, who is
of Euro-American descent with a wife and two sons under 4. I have watched my
healthcare costs skyrocket in the last 10 years. When I began work post
seminary, the cost of the standard plan offered by my denomination for two of us
was $4000. It seemed reasonable in 1999 and was a whopping 8% of my salary. Well
since then costs have gone up each year by 20% or more. We have added our two
children to our family since I began working, and the cost of my family's
healthcare plan is now $22000 this year. This currently represents 1/3 of my
salary, and the cost has increased $7000 in the last three years alone.

I look at these numbers and wonder, "Will insurance for my family be
$100,000 in ten more years? $500,000 in 20?" I already know some clergy who work
for health insurance only, and churches are already having difficulties in this
depressed economy.

I wonder how in the world it is that people cannot see the
present danger in this situation. How many churches will be unable to provide
health insurance for clergy if serious health care reform is not undertaken? How
many businesses will be unable to offer insurance because they can't afford
to?

I find myself angry seeing staged demonstrations at town hall meetings,
and boggles my mind that the demonstrators I see on television are older white
men and women, many of whom are on Medicare.

I feel really sorry for younger clergy with families right now. They are facing these huge health insurance costs, increased costs for college, the need to provide for their pensions, and now, more and more church budgets in the red.

Housing to Continue its Decline

According to Deutsche Bank, the housing sector will not be recovering anytime soon.

The percentage of U.S. homeowners who owe more than their house is worth
will nearly double to 48 percent in 2011 from 26 percent at the end of March,
portending another blow to the housing market, Deutsche Bank said on
Wednesday....

Covering 100 U.S. metropolitan areas, Deutsche Bank in June forecast home
prices would fall 14 percent through the first quarter of 2011, for a total drop
of 41.7 percent.

Regions suffering the worst negative equity are areas in California,
Florida, Arizona, Nevada, Ohio, Michigan, Illinois, Wisconsin, Massachusetts and
West Virginia. Las Vegas and parts of Florida and California will see 90 percent
or more of their loans underwater by 2011, it added.

"For many, the home has morphed from piggy bank to albatross," the
analysts said.