Free Markets, Free People

Daily Archives: August 27, 2010


A cold day in Georgia in non-recovery summer

Well, not really, but that pretty much describes metaphorically how often Paul Krugman and I agree on things.  But today, Krugman, wondering what Ben Bernanke of the Fed is going to say today in his big speech believes it will probably be more of the same.  Albeit, we’re in a recovery, more slowly than we’d like and things will soon get better.  Krugman isn’t buying it (and neither am I.  If this is a recovery, I’d hate to see a recession). :

Unfortunately, that’s not true: this isn’t a recovery, in any sense that matters. And policy makers should be doing everything they can to change that fact.

Krugman also zeros in on the main problem that those policy makers should focus on:

The important question is whether growth is fast enough to bring down sky-high unemployment. We need about 2.5 percent growth just to keep unemployment from rising, and much faster growth to bring it significantly down. Yet growth is currently running somewhere between 1 and 2 percent, with a good chance that it will slow even further in the months ahead.

In fact, the GDP number for this past quarter is 1.6%. That’s revised sharply downward from the original 2.4% reported and touted by Democrats recently.  That, as Krugman points out, isn’t a good number when you are looking at unemployment.

Krugman then chastises those who are pumping sunshine up our skirts when the real economic news doesn’t warrant it – like the President and VP.  Bernanke and Geithner:

Why are people who know better sugar-coating economic reality? The answer, I’m sorry to say, is that it’s all about evading responsibility.

Ya think!  Gee wish I’d been saying that for, oh, I don’t know, 18 months.  For 12 of that it was Bush’s fault.  For the past 6, it’s been all sunshine, roses and “recovery summer”.  In effect, although not at all as blatantly, Krugman is validating John Boehner’s call to fire Obama’s economic team.  Because it is clear that the policy makers haven’t a clue of how to fix this mess.

At this point in his op-ed, Krugman reverts to his old self – a hack.  After talking about evading responsibility, he goes for the “obstructive Republicans” canard. 

And when he finally gets around to saying what he’d do, as you might suppose, it is spend more money that we don’t have.

Addressing the Fed he says:

The Fed has a number of options. It can buy more long-term and private debt; it can push down long-term interest rates by announcing its intention to keep short-term rates low; it can raise its medium-term target for inflation, making it less attractive for businesses to simply sit on their cash. Nobody can be sure how well these measures would work, but it’s better to try something that might not work than to make excuses while workers suffer.

In layman’s terms he’s saying let inflation loose and buy more debt (borrow).  He then covers his rear by saying “hey, it may not work, but it is better than doing nothing”. 

I’m not at all sure that’s the case.  In fact, my guess is if you let the inflation dragon out of the cage, you’ll never recapture it until it has ravaged the economy.  All that money that’s been pumped into the economy has to be wrung out at some point.  And there are no painless ways to do that of which I’m aware.

As for the administration his advice is as follows:

The administration has less freedom of action, since it can’t get legislation past the Republican blockade. But it still has options. It can revamp its deeply unsuccessful attempt to aid troubled homeowners. It can use Fannie Mae and Freddie Mac, the government-sponsored lenders, to engineer mortgage refinancing that puts money in the hands of American families — yes, Republicans will howl, but they’re doing that anyway. It can finally get serious about confronting China over its currency manipulation: how many times do the Chinese have to promise to change their policies, then renege, before the administration decides that it’s time to act?

Sure, let’s hand even more money to the two financial black holes – Freddie and Fanny – that have already sucked down half a trillion dollars we don’t have trying to shore up their loses and return them to solvency. Republicans have every reason to howl about Freddie and Fannie.  If Krugman were anything but a hack, he’d have to admit that.

And if he thinks the Chinese – who are actually in a real recovery – are going to stomp on their economic progress to fix ours, he’s dreaming.  Both proposals are absurd on their face.  But then when it comes to actual solutions, I’ve come to expect that from him.

However, at least in the first part of his column, he and I were in pretty much perfect agreement.  I need to go take a bath now.

~McQ


It is safer in Baghdad than Caracas

That socialist paradise created by Hugo Chavez has a new failure to add to its long list of failures – the failure of the government to provide the population with protection and security. Venezuela has become the murder capital of the world:

In Iraq, a country with about the same population as Venezuela, there were 4,644 civilian deaths from violence in 2009, according to Iraq Body Count; in Venezuela that year, the number of murders climbed above 16,000.

Pretty convincing numbers if you ask me. Iraq is war torn and has car bombs going off all over the place and yet there were almost 4 times the deaths in Venezuela the same year.  When you look at the numbers over the whole of Chavez’s rule, they’re mind boggling:

Venezuela is struggling with a decade-long surge in homicides, with about 118,541 since President Hugo Chávez took office in 1999, according to the Venezuelan Violence Observatory, a group that compiles figures based on police files. (The government has stopped publicly releasing its own detailed homicide statistics, but has not disputed the group’s numbers, and news reports citing unreleased government figures suggest human rights groups may actually be undercounting murders).

There have been 43,792 homicides in Venezuela since 2007, according to the violence observatory, compared with about 28,000 deaths from drug-related violence in Mexico since that country’s assault on cartels began in late 2006.

Imagine that – we know a drug war is being waged in Mexico and we know the level of violence it has spawned, especially near the border.   Venezuela has suffered almost twice the number of deaths as have occurred in the Mexican battle with the drug cartels.

In fact, the homicide numbers look more like those you’d find in a war.  It points to a system that is either badly broken, turning a blind eye or incompetent – or perhaps a bit of all three.

More than 90 percent of murders go unsolved, without a single arrest, Mr. Briceño-León said. But cases against Mr. Chavez’s critics — including judges, dissident generals and media executives — are increasingly common.

Henrique Capriles, the governor of Miranda, a state encompassing parts of Caracas, told reporters last week that Mr. Chávez had worsened the homicide problem by cutting money for state and city governments led by political opponents and then removing thousands of guns from their police forces after losing regional elections.

Chavez has spent years wooing the poor as potent electoral allies in his bid to remain in power:

During his 11 years in power, Chávez has cast himself as their champion. He often takes to the airwaves to tell Venezuela’s most humble that “no one loves you like I do” and warn them about being shunted aside by the “squalid bourgeoisie” if he ever loses power.

The government has plowed millions into healthcare, education and subsidies. According to the United Nations, Venezuela is a regional leader in reducing the income-gap between the rich and poor.

But other parts of the economy are stumbling badly, making even some of his most loyal supporters grumble.

In 2010, this oil-rich country will join earthquake shattered Haiti as the only economy in the Americas that will see its gross domestic product shrink; inflation — expected to exceed 30 percent this year — is eating away purchasing power; and crime is rampant.

As you can see Venezuela is also the regional leader in killing not only its citizens but its economy.  And his base is indeed grumbling:

Ana Sanchez, 54, runs a government-subsidized day care center in the Simón Rodríguez sector of Caracas. She said she hasn’t received the funds in more than six months.

In the past five years, she has been mugged three times and her family has quit getting together in the evenings for fear of crime.

“We are living through terrible times,” she said, as she looked for clothes at the market. “It didn’t have to be this way, but the whole tortilla got turned.”

The change is not sudden. For the last two years Chávez has seen his popularity slide, said Saul Cabrera of the Consultores 21 polling firm. The latest polls show just 36 percent of Venezuelans approve of the president’s performance — the lowest figure since 2003, when Chávez survived a strike that decimated the economy.

A poll by Hinterlaces shows similar results — 65 percent of the population thinks the country is headed the wrong direction. But dissatisfaction does not always translate into votes, said Oscar Schemel of Hinterlaces.

The opposition has failed to inspire the poor or provide a coherent or “believable” proposal, he said.

The opposition there sounds like the GOP here.  And the fact that Chavez has actively shut down opposition press.  But there are cracks showing up in the foundation of Chavez’s support:

But even in the 23 de Enero neighborhood, there are signs that Chávez’s support is cracking, said Manuel Mir, the neighborhood campaign coordinator of the Un Nuevo Tiempo opposition party.

In the past, neighbors have torn down campaign tents, threatened opposition candidates and intimidated supporters, he said. During regional elections in 2008, the party had to hold its meetings outside of the area for fear of reprisals.

Now, they are meeting inside the community, he said. People are opening their doors for opposition candidates.

“This time a lot of people are dissatisfied. There are problems with basic public services and crime,” Mir said. “People think now may be the time for a change.”

Sounds like Venezuelans are wanting real change as much as many Americans.  But Chavez runs the electoral process, pretty much owns parliament, and has stuffed the courts with his supporters.  Pushing him out of power is not going to be an easy thing.  But as the situation continues to deteriorate, and even his base of power begins to notice, he may find it very difficult to hang on.  Unfortunately, having watched Chavez over the years, my guess is he’ll end up being carried out of office feet first rather than willingly giving it up. 

~McQ


How do you say “race baiter”? – Fauntroy

Seriously if he’s not bright enough to know the difference or pretends not to, why pay attention to him?

The Rev. Walter Fauntroy, the non-voting delegate who represented the District of Columbia from 1971 to 1991, called on African-Americans to organize a "new coalition of conscience" to rebut the rally scheduled for Saturday at the Lincoln Memorial featuring Fox News pundit Glenn Beck and former Alaska Gov. Sarah Palin.

"We are going to take on the barbarism of war, the decadence of racism, and the scourge of poverty, that the Ku Klux — I meant to say the Tea Party," Fauntroy told a news conference today at the National Press Club. "You all forgive me, but I — you have to use them interchangeably."

Well, Rev. Fauntroy, if you do, you’re intellectually dishonest or just not very bright and, frankly, a run of the mill race baiter.

Here’s the diff, Rev.  You’d be welcome at Saturday’s rally as a concerned American regardless of the color of your skin.  The same can’t be said about any KKK rally, can it?

The fact that he feels compelled to say ignorant and inflammatory things like that says a lot more about the Rev. than those attending the rally.

"I don’t want you to think I’m angry," Fauntroy said. "[But] when this right-wing conservative exclusionary group comes to highjack our movement, we have got to respond. And I’m looking forward to that Coalition of Conscience, in defense of jobs and freedom for women."

Yeah, because none of those in DC on Saturday would defend jobs and freedom for women, would they?  Especially the females and unemployed among them.

Hey, Rev — the race card is dead.  You and those like you who have played it at every turn and make outrageous claims like comparing a rally of concerned Americans to the KKK have killed any cache it had left. 

It doesn’t work anymore.

Instead, things like I’m writing now – ridicule – are the standard response.  You deserve it. It should be heaped on you. Along with a huge helping of scorn.  You’re like a little kid who holds his breath and stomps his feet and says the most hateful thing he can because things aren’t going his way.

And I’ll bet, after tarring all those Americans at the rally with your wide racist brush, that you’ll claim to be a Christian too, won’t you?  You ought to be ashamed of yourself.

Race baiter.

~McQ