After a lot of partisan “happy talk” about how the Obama administration is handling the economic crisis here, Paul Krugman goes on record saying the world is doomed to suffer Japan’s lost economic decade on a global scale.
The thing about Japan, as with all of these cases, is how much people claim to know what happened, without having any evidence. What we do know is that recessions normally end everywhere because the monetary authority cuts interest rates a lot, and that gets things moving. And what we know in Japan was that eventually they cut their interest rates to zero and that wasn’t enough. And, so far, although we made the cuts faster than they did and cut them all the way to zero, it isn’t enough. We’ve hit that lower bound the same as they did. Now, everything after that is more or less speculation.
For example, were the problems with the Japanese banks the core problem? There are some stories about credit rationing, but they are not overwhelming. Certainly, when we look at the Japanese recovery, there was not a great surge of business investment. There was primarily a surge of exports. But was fixing the banks central to export growth?
In their case, the problems had a lot to do with demography. That made them a natural capital exporter, from older savers, and also made it harder for them to have enough demand. They also had one hell of a bubble in the 1980s and the wreckage left behind by that bubble – in their case a highly leveraged corporate sector – was and is a drag on the economy.
The size of the shock to our systems is going to be much bigger than what happened to Japan in the 1990s. They never had a freefall in their economy – a period when GDP declined by 3%, 4%. It is by no means clear that the underlying differences in the structure of the situation are significant. What we do know is that the zero bound is real. We know that there are situations in which ordinary monetary policy loses all traction. And we know that we’re in one now.
Shorter Krugman, “we’re in new territory in terms of the size of the problem, but it is all eerily similar to what happened to Japan”. Unfortunately our reaction has been eerily similar to what Japan did as well.
Krugman’s bottom line:
WH: So, one way to think about it is that self-reinforcing financial crises rooted in overstretched, overborrowed companies and governments in less developed countries – like those in Argentina and Indonesia, which were amazingly destructive in the 1990s and 2000s, but localised – are now playing out in the developed world?
PK: There are really two stories. One is the Japan-type story where you run out of room to cut interest rates. And the other is the Indonesia- and Argentina-type story where everything falls apart because of balance-sheet problems.
WH: So in a nutshell your story is …
PK: The “Nipponisation” of the world economy with a bunch of “Argentinafications” playing a role in the acute crisis. But even after those are over, we have the Nipponisation of the world economy. And that’s really something.
And of course, implicit in the “Nipponisation” of the world economy is the “Nipponisation” of the US economy – something we’ve been talking about for some time. Now, add “cap and trade” and “health care reform” into the mix.
What will we be wishing we were suffering when that all kicks in, should it pass? Nipponisation, of course. As bad as lost decade or two might be, it would be heaven compared to the economic carnage those big tax and spend programs will inflict on a very weak economy here in the US. And that, of course, will ensure the “Nipponisation” of the world economy.
Seriously, if George Bush hadn’t existed, the left would have had to invent him in order to have someone to blame the world’s ills on. CBS has republished a piece by Laura Secor that ran in the New Republic and calls Ahmadenijhad Iran’s “George Bush”. (This on the heels of the Bonnie Erbe piece calling for right-wingers to be rounded up before they can hurt anyone.)
Secor’s comparisons are strained at best, and are a rather simple attempt to fit a very round peg in an extremely square hole (no mention of the mullah’s control, which, of course, completely kills the comparison). Apparently Secor pins her premise on this line:
Ahmadinejad has made a mess of the economy, clamped down on political dissent and social freedoms, militarized the state, and earned the enmity of much of the world.
And in Secor’s world, that essentially makes Ahmadinejhad and Bush twins.
Of course, not to be outdone, “conservative” Andrew Sullivan manages to find even more parallels to the Bush years. If you think Secor’s attempt is strained, you’ll howl when you read Sullivan’s:
Ahmadinejad’s bag of tricks is eerily like that of Karl Rove – the constant use of fear, the exploitation of religion, the demonization of liberals, the deployment of Potemkin symbolism like Sarah Palin.
As an interesting aside, an article mostly ignored by the left has a fairly interesting take on the Bush era in the middle east. And by none other than Thomas Friedman. Even though he can’t bring himself to describe what has happened in complimentary terms, he finds he must give some credit where credit is due:
There are a million things to hate about President Bush’s costly and wrenching wars. But the fact is, in ousting Saddam in Iraq in 2003 and mobilizing the U.N. to push Syria out of Lebanon in 2005, he opened space for real democratic politics that had not existed in Iraq or Lebanon for decades. “Bush had a simple idea, that the Arabs could be democratic, and at that particular moment simple ideas were what was needed, even if he was disingenuous,” said Michael Young, the opinion editor of The Beirut Daily Star. “It was bolstered by the presence of a U.S. Army in the center of the Middle East. It created a sense that change was possible, that things did not always have to be as they were.”
In Benen’s piece today, he ends up calling Ari Fleisher a “shameless hack” (as if Benen has any room to call anyone else a “hack”) for essentially saying the very same thing Friedman said. Apparently, Benen and the left are content to believe in the fantasy that it was more likely the “Cairo speech” that determined the results in Lebanon and spurred the protest vote in Iran – because we all know that movements such as those are easily developed within a week of someone like Obama speaking.
In this podcast, Bruce, Michael, and Dale discuss hate speech, Iran and North Korea.
There is no direct link to the podcast this week, since a number of technical difficulties intervened (thanks for kicking me off the phone twice, Verizon!). So, if you want to hear this one, you’ll need to get it from our Podcast page at BTR. There will be no RSS link this week, either.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.
Steve Benen is “shocked, shocked I tell you”, that some on the right are trying to hang the Iranian election shambles on Obama. He entitles his post:
“WHEN IN DOUBT, BLAME OBAMA…”
Of course, for 8 years, Benen and company made a cottage industry of substituting the name “Bush” for “Obama” while doing the very same thing. Apparently that’s gone the way of an Alzheimer patient’s memory of breakfast and they’ve awakened in a new world which began on January 20th of this year.
It would be funny if it wasn’t so insufferably hypocritical.
It’s kind of hard to protest an election in court when you’re in jail.
Iranian presidential candidate Mir Hossein Mousavi was reportedly arrested Saturday following the reformist’s defeat at the polls by hardliner Mahmoud Ahmadinejad.
Mousavi’s arrest was reported by an unofficial source, who said that the presidential contender had been arrested en route to the home of Iran’s supreme leader, Ayatollah Ali Khamenei.
My guess – and that’s all it is – is this is a move to defuse the protests. It will also remove the last bit of the veneer from the belief that these were “free and open” elections. In some ways this makes Iran easier to deal with. There’s no longer any doubt that it is a totalitarian regime where no “robust debate” is taking place or possible.
Look – the fantasy that these were “free and open” elections was a sham to begin with. 475 people applied to run for the presidency. 4 were approved by the ruling mullahs. That should tell you all you need to know about this election. Even Mousavi had impeccable revolutionary credentials, or he wouldn’t have been one of the 4.
But the election appears to have taken an unexpected turn. It would seem those that voted for Mousavi and perhaps Mousavi himself, took it a little more seriously than the authorities expected. Supporters turned out in record shattering numbers (85% of eligible voters) to vote and simply aren’t buying this supposed “landslide” win the mullahs and IRG had put together to keep their guy in office.
Crude, certainly, but to be expected. Authoritarians don’t believe in the democratic process – never have. But they understand the power of popular approval – even if they have to fake it and fake it poorly.
Electoral, of course.
Given the announced size of the victory (62.6% to 34%), we’re to believe that the majority of the country is quite happy to maintain the confrontational course (and style) set by President Mahmoud Ahmadinejad. Not that it makes a particular difference (since the candidates all were approved by the ruling mullahs and in the case of Ahmadinejad, his opponent’s “reform” label was a relative one to begin with) in the long run. But given the reported unpopularity of Ahmadinejad and the vast turnout, it’s hard to believe that he was the first choice of the majority of those voting.
Mir Hossein Mousavi, the “opposition” candidate, claims there’s bee widespread vote fraud and he’ll take his case to court:
“I’m warning that I won’t surrender to this manipulation,” Mousavi said in a statement posted on his Web site Saturday. He said the announced results were “shaking the pillars of the Islamic Republic of Iran’s sacred system” and represented “treason to the votes of the people.” He warned that the public would not “respect those who take power through fraud.”
“I would like to inform you that in spite of wide-ranging fraud and problem-making, according to the documents and reports we have received, the majority of your votes have been cast in favor of your servant,” the statement said. It concluded with a veiled suggestion of a possible confrontation, calling his supporters into the streets to celebrate his victory Saturday night and warning that if the votes are not fairly counted, “I will use all legal facilities and methods to restore the rights of the Iranian people.”
Meanwhile the mullahs have signaled the voting charade is over:
Iran’s Supreme Leader Ayatollah Ali Khameni praised Ahmadinejad’s election and called on his rivals to cooperate with him.
In Iran, that’s as good as the fat lady singing.
So much for the “robust debate”. So much for the “unclenched fist” as well.
And China is making no bones about it:
China will not make a binding commitment to reduce carbon emissions, putting in jeopardy the prospects for a global pact on climate change.
Officials from Beijing told a UN conference in Bonn yesterday that China would increase its emissions to develop its economy rather than sign up to mandatory cuts.
Not only no cuts, but an increase in its emissions.
And Japan – where the Kyoto accord was signed – isn’t very enthused about cuts either:
Hopes that Copenhagen might deliver tougher carbon reduction targets were dashed further when Japan failed to make a significant commitment to reduce emissions.
Instead of the hoped for 15% cut, Japan said it would try for 2%.
The Bush Administration had insisted that it would not agree to mandatory cuts as long as developing nations increased emissions. The Obama Administration has taken a softer line, accepting that China and India could not be expected to make equal commitments to developed economies. However, Mr Stern recently said: “They do need to take significant national actions that they commit to internationally, that they quantify and that are ambitious.”
Well we now know how that “soft line” works, don’t we? China bows up and not only refuses to play but says it is going to increase its admission. And Japan felt confident enough to lower its target from 15 to 2. Not that I blame them or don’t think we should blow this whole thing off too.
But that’s the probem – the US will probably continue to pursue cap and trade because that’s been the left’s wet dream here for years. You see we use too much energy and we need to be punished – punished I tell you! And we’ll commit ourselves to the equivalent of bailing the ocean with a teaspoon while our economy strangles.
Ironic – in the real world “little green shoots” would thrive in increased CO2.
Nothing makes it clearer than a real world examples. From socialized Canada:
The Lower Mainland’s health authorities will have to dig more than $4 million a year out of their already stretched budgets to pay B.C.’s carbon tax and offset their carbon footprints.
Critics say the payments mean the government’s strategy to fight climate change will further exacerbate a crisis in health funding.
“You have public hospitals cutting services to pay a tax that goes to another 100 per cent government-owned agency,” NDP health critic Adrian Dix said.
“That just doesn’t make sense.”
Heh … it would really be funny if it wasn’t so absurd or headed in our direction like a runaway freight train.
Enjoy those “little green shoots” of growth, because they’re going to be as dead as the Mojave desert if “health care reform” and “cap and tax trade” are passed.
And don’t even try to throw the “these people have your best interest at heart” canard out there either:
Dix warned that some of the potential cuts – such as closing the ER at Mission Memorial Hospital – would actually increase carbon emissions by sending patients further afield.
“Obviously when you shut down regional centres it makes people travel farther to get to their health care facility,” he said.
Vancouver Coastal chief financial officer Duncan Campbell said his health authority believes the payments are appropriate and isn’t asking for any exemption from Victoria.
“For us to go back and ask for an exemption wouldn’t fit in well with our green care plans,” he said.
IOW, your health is secondary to their sacred green mission.
Freakin’ amazing. And yes, it is entirely possible you’d be treated the same way here when government controls health care and is collecting on “cap and trade”. Remember, it was Obama who said he didn’t believe in cap and trade exemptions.
[HT: Wm Teach, RWN]
Two nuts apparently equal vindication of the Department of Homeland Security report on “right-wing extremists”. And Paul Krugman, like many of his ilk, ignores the dearth of statistical support his premise has to make this claim:
But with the murder of Dr. George Tiller by an anti-abortion fanatic, closely followed by a shooting by a white supremacist at the United States Holocaust Memorial Museum, the analysis looks prescient.
There is, however, one important thing that the D.H.S. report didn’t say: Today, as in the early years of the Clinton administration but to an even greater extent, right-wing extremism is being systematically fed by the conservative media and political establishment.
I noticed that one of our more asinine and logic-challenged commenters has picked up these talking points now that they’ve been published. Big surprise.
Noticably missing from the Krugman litany of right-wing extremists is the converted muslim and black man who shot and killed a soldier outside a recruiting station in Little Rock, Arkansas. Using the Krugman statistical model I assume I can interpolate that into a rise in “muslim extremist violence” in the US. In fact, one could certainly credibly argue that it is a 100% increase in such violence.
But of course, people would laugh and point at me and say how utterly stupid it is to use one whacked out nut-job to try and brand a whole religion through implication.
Well, friends, that’s precisely what Mr. Krugman and the rest of the moonbats on the left are attempting with their nonsense. Michael warned you about it and here it is. Nevermind that the right-wing Weekly Standard was apparently on the “right-wing” whack job’s hit list. Facts only get in the way of an unsubstantiated rant.
It may be hard to believe [/snark], but it appears when Democrats speak of “fairness” they define it in their own special interest kind of way.
Take the talk about taxing your private health care benefits (something adamantly opposed by Obama during the campaign).
Originally it was going to be everyone. But other Democrats complained mightily to Senate Democrats who were considering such a tax to pay for the conservatively estimated 1.5 trillion necessary to pay for “health care reform” (PAYGO? HA!). So they modified it a bit – tax the “rich” – those who had the best of coverage. Always a popular populist fallback, Sen. Dems were sure that would work.
Alas it was soon discovered that a huge number of those holding “Cadillac” health care policies were unions. Yes, the special interest group in the pocket of the Dems (and vice versa) would be heavily hit by such a tax. As you might imagine, they were not happy.
Solution – drop this bad idea?
Of course not. Instead exempt the unions, you silly person:
Mr. Baucus officially floated his plans for a tax this week, only with a surprising twist: His levy will not apply to union plans, at least for the duration of existing contracts. In other words, Mr. Baucus intends to tax the health-care benefits only of those who didn’t spend a fortune electing Democrats to office. Sen. Ted Kennedy, who is circulating his own health-care reform, has also included provisions that will exempt unions from certain provisions.
The union carve-out is designed to allay the fears of many Democrats who remain outright hostile to a tax on health-care benefits, whether out of principle, political fear or union solidarity.
This is not your grandfather’s America. Pay czars who arbitrarily set arbitrary pay limits based on what they “think” (according to presidential spokesperson Robert Gibbs) is “fair”, a government appointed CEO for an auto company who admits he knows nothing about cars and the government hijacking of health care.
If you’re not concerned, you’re not paying attention.