It's Still The Economy, Stupid

Wednesday, August 04, 2004  

Better writers than I

Sean Corrigan is the best I've read involving Pure Austrian economics. His archives are over at

Matt Taibbi continues to do amazing work over at the New York Press. This week's Press has both "The Liberal Case against John Kerry" as well as "The Conservative Case against George Bush".

posted by Teddy | 7:36 AM |

Tuesday, August 03, 2004  

Comments on Kerry's economic plan

The full .pdf text can be found here, and the summary is over at Daily Kos.

Oy. The saddest part of this whole exercise was realizing that it still made sense by globally replacing Kerry/Edwards with Bush/Cheney in the document. Every proposal is essentially revising or reworking existing legislation, most of which was implemented by Bush (war on terror, No Child Left Behind, tax cuts, ad nauseum) . I guess the Democrats must not worry that much about Nader or the whole "no difference between the parties" meme because there is no significance between a Kerry/Edwards and a Bush/Cheney plan in this document.

And before Democrats start screeching about Roe vs. Wade, do a search for "abortion" (instances=0), Roe vs Wade (instances=2, one in passing and another listing the faults of the two Federal judges which Bush already appointed for life to U.S. Circuit Courts) or "right to choose" (instances=3, one is the "right to choose a doctor", the other two are non-specific, the first that the Republicans have eroded the right to choose without any mention of instances or even what we're choosing (our long-distance carrier, paper or plastic, what?!?) , the second that this right to choose, whatever it is, is never taken away).

The top priority is Iraq, and Kerry has no solutions except "building alliances". My experience in building alliances is limited to Civilization II, but even my rudimentary knowledge is enough to know that your ally needs to get something in exchange for cooperation. The three things I think our potential allies will need, we are either unable or unwilling to provide: improvement in the security situation, command over their own armed/peacekeeping forces, and economic stakes in the reconstruction. In lieu of foreign support, the only way to get the 40,000 soldiers Kerry wants is to keep all current military forces on "stop loss" forever, or bring back the draft. This would bring our total forces to 180,000 - less than half of the number Eric Shinseki estimated (and Democrats have used to point out Bush's ineffectiveness) we'd need to effectively police the country.

On economic activity, this plan is nothing but tax cuts, tax breaks, subsidies and investments. There's a bit in there about a balanced budget in four years which must be a typo. Not even Bush was crazy enough to try pull that one. All this stimulus works at cross-purposes with another Kerry priority, reducing our reliance on foreign oil (which of course is the influence on our current policy in the Middle East), because the kind of economic growth it generates, if any, will increase our energy needs to run new manufacturing plants and spend our higher incomes.

On health care, apart from paying through the nose to get more health insurance for kids and seniors, and prescription drug care, there is nothing to reform or change the system, except for tangential affairs such as reforming malpractice insurance - which as a big GOP talking point must be another typo. A lot of budget-busting corporate welfare there.

In short, I haven't heard so many empty promises since I told my wife I'd landscape the back yard. Let me make a few predictions about a Kerry Presidency.

1) We'll probably bring back the military draft. As we don't need that many people, it will probably get bundled into a public service commitment, like a 2-year mandatory term. It will take 6-12 months to train the new recruits and assimilate them into the armed forces. By that time, Iraq might be chaos to the point of being not salvageable, and plan B would be to hold hasty elections and fortify 100,000 soldiers in their bases before some type of Beirut-like retreat. I'd put the odds about 50-50.

2) Kerry will have a divided Congress and spend most of his time fighting over minor legislation. Republicans will take all of 15 seconds to remember they used to like balanced budgets, announce a budget crises and block every single non-pork spending bill. Budget fight will take so much time that there suddenly won't be any time or willingness to pass other legislation, such as undoing Bush damage to environmental laws.

3) The economy will fall into a recession and the bailouts will begin. A number of economists are already fearing a recession starting in early 2005. The Pension Guaranty Corporation is near bankruptcy. Unless the airlines can screw over their pensioners, they're going to dump their whole mess on that agency. The housing bubble will pop and we'll probably have to step in for Fannie and Freddie too, if they don't blow themselves up with derivatives first. Banks now have nearly a third of their funds in home mortgages. We now have a -$5 trillion net investment position with the rest of the world. There is simply no room for any kind of recession, and any resulting bailout would amount to a monetization of large amounts of debt, killing the dollar, raising interest rates and inflation and worsening the crisis.

4) The next president will be extremely unpopular. Bush and Greenspan have set all the dominoes to fall, but they haven't actually begun to collapse yet. The likelyhood of doing so before 2008 is extremely high. Unlike the bubble conditions, where lower interest rates stimulated economic growth, low CPI inflation and asset prices, the anti-bubble conditions will work in reverse. Kerry will have the additional handicap of total animosity from the GOP and its supporters (20% of Americans) at an order of magnitude above Democratic opposition to Bush. It's very difficult to see Kerry achieving any of these goals without alienating either Republicans or his own party or more likely both, and unlike Clinton or Reagan, he doesn't have the "party savior" mantle to help him. Like either Bush, he can only ride on his predecessor's coat-tails while facing restiveness on all sides. It's a recipe for total failure, which is too bad because change is badly needed. Unfortunately, there is no change written in Kerry's Plan for America.

posted by Teddy | 9:23 AM |

Summer Sucks
I've lived in the Washington DC area since 1996, and have yet to get used to the summers. Having grown up in San Diego probably spoils me from enjoying any other climate, but living in a former swamp is worse than most places.

This summer is worse than most because not only has it been hotter and more humid than most, but I just got back from a two-week vacation in Oregon where they have no idea what a "heat index" is. Portland had one of the hottest days on record while I was there (104 degrees), and I still found it preferable to a mild day in metro Washington, where you break into a sweat just thinking about walking somewhere.

Then there's the terror alert BS, where an Terror Alert Level alert means ID checks getting into every building even though this same security looks on passively as I nearly get run over by half a dozen cars crossing the pedestrian walkway on the way to work, after an hour on the Metro, which has no entry safeguards whatsoever, and sits like a duck at every Red Line stop packed with customers and with train doors wide open at every stop because they haven't been able to fix their defective switches for a week now.

I can't help but make a quick cost/benefit analysis and think the whole thing is stupid.

I really didn't want to come back from Oregon.

No, I wasn't energized by the Democratic convention.

I have a (possibly) interesting story about that, as I attended a Kerry meetup at Anzu in Adams Morgan about a week or two before the convention. My observation was that there was very little mixing going on. Even the people hawking books and other campaign material were just talking to each other rather than pushing their wares despite a capacity crowd inches away. Everyone there just seemed to show up, talk to the few people they knew, eat the hors d'oeuvres (which were wholly inadequate, though the calimari was very good) and leave. I think Bill Press was supposed to give a talk, but I left before anything happened. It was more an agglomerative experience than an interactive one, not much different than going out dancing in Adams Morgan on any other evening.

I suppose that's what happens when you're running Anyone But Bush. The only thing that matters is finding the right person and there's very little to talk about once you've decided except to hold pep rallies and raise money until the election. The conversations I overheard were almost entirely complaints about Bush policy rather than discussions about how Kerry's policy will improve matters.

There was no inspiration to break me out of my summer funk. In fact, it made things worse. In particular since it was drizzling when I stepped outside, the kind of summer rain here that actually make you feel scummier than before, because it isn't nearly enough to wash anything clean. It just lifts the dirt off the ground into dirty puddles and nothing dries out very fast afterward. Bleh.

Anyhoo, I suppose I've a few things to catch up with: growth is slower (not surprising), jobs report comes out Friday, budget deficit estimated at $478 billion for 2004, trade deficit will probably approach $550 billion, inflationary pressure continues to build, and stock market going nowhere. The outlook is as dreary as the weather. I'll try to pull myself together and get back to work.

posted by Teddy | 6:22 AM |