President Obama recently spoke critically of the gap between the rich and the poor. He has endorsed an increase in the federal minimum wage, from $7.25 up to $10.10. He has argued for stronger enforcement of the labor laws. He seeks universal pre-school.
Predictably, Republicans stood in opposition. More government spending isn't the answer, they contend. Economic growth is the tide that will lift all boats, they say.
Republicans, whether they are right or wrong, have nothing to worry about. Barack Obama, whatever he may say, isn't really serious about changing the distribution of income or wealth. He favors reducing the cost of living adjustment for the Social Security, military and federal retirement benefits that tens of millions of Americans depend on. Cutting back on retirement benefits worsens the distribution of income and wealth.
There were some federal tax increases that took effect this year. But the income tax increase on high level earners was accompanied by an increase in Social Security taxes (which are regressive). So what was the net effect? Most likely, very little or no redistribution.
The Affordable Care Act would have a redistributive effect because of its health insurance subsidies for low income participants. If only people could enroll . . . .
Barack Obama has serious credibility issues. He drew a line in the dust over the use of poison gas, and Assad stepped over it. Obama squirmed, complained, and then let the Russians broker a deal. He didn't have the management skills to implement his signature legislative achievement, the Affordable Care Act. He negotiated some sort of deal on nukes with Iran, although that deal seems to have implementation issues as well. As negotiators talk, Iran continues to enrich. If you're looking for action from the White House on redistribution of income or wealth, don't hold your breath. Keep saving and investing, because you're on your own.
Tuesday, December 10, 2013
Thursday, December 5, 2013
A World of Foreign Policy Gambles
It is almost axiomatic that when a political leader faces domestic problems, he or she will turn to foreign relations as a way to divert disgruntled constituents from their daily travails. Appeals to national pride easily tap into the often reflexive patriotism that many people have. Folks tend to rally 'round the flag whenever there's a dustup with some bunch of dang foreigners. Since foreign relations tend to be largely in the domain of Presidents, Prime Ministers and other national executives, legislative interference is less of a problem and credit for success can be hoarded.
With essentially all of the world's major economies unimpressive, sluggish or even tending toward torpid, it's hardly a surprise that some world leaders are indulging in cross-border shenani . . . , well, activities. China has a slowing economy, with a real estate bubble, a debt bubble, increased competition from lower wage nations around the world, growing unemployment, a lack of high-value innovation, and a demographic demon of too many elderly and way too few young workers that's far, far worse than America's social security issues. So what does China do? Make noise about territorial claims in the East China Sea and South China Sea. America responds by flying B-52s into an area claimed by the Chinese. The Japanese, with a sludgy economy and a recently elected Prime Minister, Shinzo Abe, who appears to be of a nationalistic bent, contest the Chinese claims with their military aircraft, sabre-rattling as good as they've been rattled at. Japan and China are quietly drifting into an arms race, while the U.S. military is expanding its presence in Asia. And of course, there's North Korea, an economic dead zone, which engages in virtually nonstop sabre-rattling to legitimize its autocracy.
Meanwhile, in the Middle East, a newly elected Iranian leadership faced with a sanctions-hammered economy that's circling the drain, are suddenly open-minded about a deal to slow down their nuclear program. An American President, crippled by the virtual non-launch of his showcase domestic health insurance program, decides it's okay to let Iran continue to enrich uranium up to the 5% level, even though this isn't exactly a complete freeze of Iran's nuclear program. (Even though Iran says it wants to have 5% uranium to develop nuclear power, since when does a country with gobs of petroleum reserves need to develop nuclear power?) This deal could be seen as an effort by the U.S. to reduce its presence in the Middle East (so it can increase its presence in Asia). Does that make war in the Middle East less likely? Or will the increasingly nervous Israelis act on their own, as they have in the past? And if they do, will America be militarily dragged into the consequences?
Over the past century and a half, foreign policy adventurism has tended to end badly. Sometimes, very badly, with 20 million dead in World War I and 60 million dead in World War II. This isn't to suggest that America and other nations should become isolationist. The world is interconnected and some degree of international engagement is necessary. But citizens should be skeptical of their leaders, who often have much to gain by stepping up their rhetoric and actions. The recent popular outcries against American and British military action in Syria over its use of poisonous gas is an example of how the levelheadedness of the citizenry can cool the jets of a handful of very powerful people who may spend too much time talking to each other. If a nation's leader seems to have a gambling problem in the foreign policy arena, citizens should stage an intervention.
With essentially all of the world's major economies unimpressive, sluggish or even tending toward torpid, it's hardly a surprise that some world leaders are indulging in cross-border shenani . . . , well, activities. China has a slowing economy, with a real estate bubble, a debt bubble, increased competition from lower wage nations around the world, growing unemployment, a lack of high-value innovation, and a demographic demon of too many elderly and way too few young workers that's far, far worse than America's social security issues. So what does China do? Make noise about territorial claims in the East China Sea and South China Sea. America responds by flying B-52s into an area claimed by the Chinese. The Japanese, with a sludgy economy and a recently elected Prime Minister, Shinzo Abe, who appears to be of a nationalistic bent, contest the Chinese claims with their military aircraft, sabre-rattling as good as they've been rattled at. Japan and China are quietly drifting into an arms race, while the U.S. military is expanding its presence in Asia. And of course, there's North Korea, an economic dead zone, which engages in virtually nonstop sabre-rattling to legitimize its autocracy.
Meanwhile, in the Middle East, a newly elected Iranian leadership faced with a sanctions-hammered economy that's circling the drain, are suddenly open-minded about a deal to slow down their nuclear program. An American President, crippled by the virtual non-launch of his showcase domestic health insurance program, decides it's okay to let Iran continue to enrich uranium up to the 5% level, even though this isn't exactly a complete freeze of Iran's nuclear program. (Even though Iran says it wants to have 5% uranium to develop nuclear power, since when does a country with gobs of petroleum reserves need to develop nuclear power?) This deal could be seen as an effort by the U.S. to reduce its presence in the Middle East (so it can increase its presence in Asia). Does that make war in the Middle East less likely? Or will the increasingly nervous Israelis act on their own, as they have in the past? And if they do, will America be militarily dragged into the consequences?
Over the past century and a half, foreign policy adventurism has tended to end badly. Sometimes, very badly, with 20 million dead in World War I and 60 million dead in World War II. This isn't to suggest that America and other nations should become isolationist. The world is interconnected and some degree of international engagement is necessary. But citizens should be skeptical of their leaders, who often have much to gain by stepping up their rhetoric and actions. The recent popular outcries against American and British military action in Syria over its use of poisonous gas is an example of how the levelheadedness of the citizenry can cool the jets of a handful of very powerful people who may spend too much time talking to each other. If a nation's leader seems to have a gambling problem in the foreign policy arena, citizens should stage an intervention.
Tuesday, November 26, 2013
Are We Stuck With a Powerless Government?
Despite its image as an overbearing ogre, the federal government may be largely powerless these days. The President has managed to undercut himself with an astonishingly bad non-launch of the federal health insurance exchange. Is there anyone in his administration with executive or management ability? Could anyone in his administration succeed as evening shift supervisor at the local McDonald's?
On the foreign policy front, the President managed to set his foot downrange and pull the trigger over Syria's use of poison gas. Only an embarrassing intervention by Russia prevented the President from a real morass of a morass. Now, the administration touts a deal with Iran to freeze its nuclear program, even though it can continue to enrich uranium to the 5% level. Not very frozen, but perhaps global warming is having an impact. One wonders whether this deal with Iran is a sign of strength or weakness on the part of the President.
Meanwhile, over on Capitol Hill, Congress remains essentially non-functional. The Democratically controlled Senate was able to approve the appointment of a few judges by changing its rules, although scowling Republicans made many dire and threatening predictions that the Dems would be sorry for doing this. Nothing like a love fest to make folks feel collegial. As for the federal budget and the debt ceiling, they aren't likely to trigger new crises, but will be resolved by kicking the can down the road.
The only institution that seems to be doing anything is the Federal Reserve. And even it may be losing some of its mojo. The most recently released minutes of the Open Market Committee meeting in October have been interpreted to mean that the Fed may be thinking about pulling back soon on quantitative easing. Antacid sales on Wall Street have jumped. If the efficacy of Fed money printing is diminishing, we may find ourselves in a public policy Sahara with very few water holes.
A powerful government can be scary. A powerless one can be scarier. The problem is this isn't a horror movie and we can't get up and leave the theater if we don't like the show.
On the foreign policy front, the President managed to set his foot downrange and pull the trigger over Syria's use of poison gas. Only an embarrassing intervention by Russia prevented the President from a real morass of a morass. Now, the administration touts a deal with Iran to freeze its nuclear program, even though it can continue to enrich uranium to the 5% level. Not very frozen, but perhaps global warming is having an impact. One wonders whether this deal with Iran is a sign of strength or weakness on the part of the President.
Meanwhile, over on Capitol Hill, Congress remains essentially non-functional. The Democratically controlled Senate was able to approve the appointment of a few judges by changing its rules, although scowling Republicans made many dire and threatening predictions that the Dems would be sorry for doing this. Nothing like a love fest to make folks feel collegial. As for the federal budget and the debt ceiling, they aren't likely to trigger new crises, but will be resolved by kicking the can down the road.
The only institution that seems to be doing anything is the Federal Reserve. And even it may be losing some of its mojo. The most recently released minutes of the Open Market Committee meeting in October have been interpreted to mean that the Fed may be thinking about pulling back soon on quantitative easing. Antacid sales on Wall Street have jumped. If the efficacy of Fed money printing is diminishing, we may find ourselves in a public policy Sahara with very few water holes.
A powerful government can be scary. A powerless one can be scarier. The problem is this isn't a horror movie and we can't get up and leave the theater if we don't like the show.
Thursday, November 14, 2013
How the Federal Reserve Defies the Laws of Economics
For an agency run by economists, the Fed seems non-economic. Its quantitative easing program--now snarfing up bonds at the rate of $85 billion a month--defies one of the basic premises of economics: the concept of scarcity. Scarcity is crucial to establishing price. If something is available in infinite amounts, it has to be priced for free because there's no limit to supply. Scarcity acts as a constraint, forcing prices up as demand increases. Price increases in turn compel actors in the market to think and rethink the utility of the thing that's getting costlier, and adjust their use of it.
The problem with the Fed's QE program is that it's paid for with printed money. In other words, to get the $85 billion it needs each month, the Fed simply makes a few electronic entries into its computer system and, voila, money blossoms. There is no scarcity. The Fed doesn't have to get the money from anywhere. Unlike taxes or borrowings, no one else has less money when the Fed prints some.
In times past, when central banks pulled such financial alchemy, inflation would flare. By reducing the value of the currency, buying power would become scarcer and discipline would be imposed.
But today, there is very little inflation--and, indeed, central banks seem to want more. Thus, there are no constraints on money printing. And, by all indications, the Fed governors whose voices count intend to keep the printing presses rolling.
Numerous skeptical observers haven't been able to complete the journey to Wonderland and believe that there will be no cost to all this. And the truth may be that there has been and will be costs. At the first hints of tapering earlier this year, a number of emerging markets began tanking and some have tanked hard. Real estate sales have slowed dramatically as longer term interest rates have risen and the real estate recovery may have stalled out. Gold and silver have fallen sharply, and other commodities prices have eased back.
The Fed seems to have not really noticed that monetary policy now affects asset values more than consumer prices. The tech stock boom and bust, the real estate and mortgage boom and bust, and the 2008 financial crisis can all be traced in part back to very generous Fed easy credit policies. Central banks may be unable to foster inflation, perhaps for reasons that aren't fully understood yet. But they can foster asset bubbles, and that's a strong reason for easing out of the QE business. The last thing we need is to again have more government sponsored asset bubbles.
The problem with the Fed's QE program is that it's paid for with printed money. In other words, to get the $85 billion it needs each month, the Fed simply makes a few electronic entries into its computer system and, voila, money blossoms. There is no scarcity. The Fed doesn't have to get the money from anywhere. Unlike taxes or borrowings, no one else has less money when the Fed prints some.
In times past, when central banks pulled such financial alchemy, inflation would flare. By reducing the value of the currency, buying power would become scarcer and discipline would be imposed.
But today, there is very little inflation--and, indeed, central banks seem to want more. Thus, there are no constraints on money printing. And, by all indications, the Fed governors whose voices count intend to keep the printing presses rolling.
Numerous skeptical observers haven't been able to complete the journey to Wonderland and believe that there will be no cost to all this. And the truth may be that there has been and will be costs. At the first hints of tapering earlier this year, a number of emerging markets began tanking and some have tanked hard. Real estate sales have slowed dramatically as longer term interest rates have risen and the real estate recovery may have stalled out. Gold and silver have fallen sharply, and other commodities prices have eased back.
The Fed seems to have not really noticed that monetary policy now affects asset values more than consumer prices. The tech stock boom and bust, the real estate and mortgage boom and bust, and the 2008 financial crisis can all be traced in part back to very generous Fed easy credit policies. Central banks may be unable to foster inflation, perhaps for reasons that aren't fully understood yet. But they can foster asset bubbles, and that's a strong reason for easing out of the QE business. The last thing we need is to again have more government sponsored asset bubbles.
Monday, November 11, 2013
How Do You Invest in a Market That's Fearful and Greedy?
To paraphrase Warren Buffett's aphorism about investing, be greedy when others are fearful and fearful when others are greedy. In other words, buy low and sell high.
But what do you do when the market is beset by fear and greed? Market indexes rise to new heights almost every day. But many investors are increasingly stepping back and hoarding cash. Indeed, the greedier some get, the more fearful others get.
There's no established strategy for a pishmi-pullyu market like this. The fearful, greedy market's bipolar movements defy logic and rationality.
Much of the market's wackiness comes down to the fact that asset values today are determined as much by government policy as anything else. We live in the era of the Great Central Bank Accommodation, spiced up with bailouts of one sort or another as ad hoc government policies are slapped together in response to the crisis du jour. Even though the central banks mutter disquietingly about withdrawing accommodation, they don't really get around to it, because they remain the only show in town when it comes to economic stimulus. Investors know that government intervention is likely to continue indefinitely, so some invest. They are also fearful because they know that government support cannot continue forever. So some hoard cash.
You can't rationally invest on the political process or government policy. You can diversify. That's simply another way of admitting you don't know what's happening or what's going to happen. Then again, no one does.
But what do you do when the market is beset by fear and greed? Market indexes rise to new heights almost every day. But many investors are increasingly stepping back and hoarding cash. Indeed, the greedier some get, the more fearful others get.
There's no established strategy for a pishmi-pullyu market like this. The fearful, greedy market's bipolar movements defy logic and rationality.
Much of the market's wackiness comes down to the fact that asset values today are determined as much by government policy as anything else. We live in the era of the Great Central Bank Accommodation, spiced up with bailouts of one sort or another as ad hoc government policies are slapped together in response to the crisis du jour. Even though the central banks mutter disquietingly about withdrawing accommodation, they don't really get around to it, because they remain the only show in town when it comes to economic stimulus. Investors know that government intervention is likely to continue indefinitely, so some invest. They are also fearful because they know that government support cannot continue forever. So some hoard cash.
You can't rationally invest on the political process or government policy. You can diversify. That's simply another way of admitting you don't know what's happening or what's going to happen. Then again, no one does.
Thursday, October 24, 2013
McResource And Your Tax Dollars
McDonald's, it seems, has a hotline called McResource that helps employees get food stamps and other public assistance. See http://money.cnn.com/2013/10/23/news/companies/mcdonalds-help-line-workers/index.html?iid=EL. Apparently, McPay is so low, McDonald's knows that many employees will need help from government programs. So they have institutionalized for employees the process of getting public and charitable aid.
It's nice to know that our tax dollars support McDonald's personnel costs. What could be a better use for our hard earned tax payments than burnishing the shine on the golden arches and boosting the company's earnings? Even the private charity McD's employees get is indirectly subsidized by taxpayers, since contributions are likely to be deductible.
One wonders if Micky D's ought pay its employees better. But, no. Perish the thought. Executive bonuses don't increase if employee costs go up. All the better if the government subsidizes the company.
As for right wing proclamations about cutting back on welfare programs, well, forget it. Poor people have essentially no political power. But when public assistance subsidizes Corporate America, there's no chance that those with political power will allow the programs to be substantially reduced.
It's nice to know that our tax dollars support McDonald's personnel costs. What could be a better use for our hard earned tax payments than burnishing the shine on the golden arches and boosting the company's earnings? Even the private charity McD's employees get is indirectly subsidized by taxpayers, since contributions are likely to be deductible.
One wonders if Micky D's ought pay its employees better. But, no. Perish the thought. Executive bonuses don't increase if employee costs go up. All the better if the government subsidizes the company.
As for right wing proclamations about cutting back on welfare programs, well, forget it. Poor people have essentially no political power. But when public assistance subsidizes Corporate America, there's no chance that those with political power will allow the programs to be substantially reduced.
Monday, October 21, 2013
Are Stock Prices Real Any More?
One wonders if stock prices are real. Consider the evidence. Due to political obtuseness, the U.S. barely avoided defaulting on its debt. The economy continues to expand at a disappointing rate. Employment growth is tepid. Middle class incomes are falling, on average. Consumers are gloomy. The Federal Reserve Board is gloomier. Businesses hold back on investing cash. But, last week, the S&P 500 reached record heights. When you encounter cognitive dissonance in the financial markets, be careful. Every time in the past 20 years when things seemed out of whack, it eventually turned out that, in fact, they were out of whack. In other words, if it looks too good to be true, it probably isn't true.
Could investors be wearing their stupid hats again? Their 401(k)'s got clobbered in the 2000-01 tech stock crash, and after adjustment for inflation, stocks still haven't recovered. Investors' 401(k)'s and homes got clobbered again in the financial crisis of 2008, and many haven't recovered from those losses. What does it take to move up the learning curve?
Maybe, however, the problem isn't investors. Over 50% of the trading volume in the stock markets comes from high-speed computerized trading. This activity isn't based on human judgments. It flows from algorithms and formulae. Some of the computerized trading is dynamic--it changes based on what it observes in the market. Since the activity it is often observing is computerized, we now have computers reacting to the activity of computers, which could be reactions to activity by other computers.
When stocks were valued by humans, we had some idea of what we were dealing with. Even if things seemed irrational or even bubbly, we could understand what was happening, albeit with a frown. Now, with stocks being priced by "thought" processes that are impenetrable to the average investor, the market not longer reflects the collective judgment of humans. Instead, it is an amalgamation of valuation processes that often aren't based on human judgment. The things that people are concerned with--lousy economy, sluggish jobs growth, falling incomes, dim view of the future--may not be finding their way into stock valuations, at least not in the ways that they historically did. If so, we can't be sure stock prices are real because we have no idea what the computers will do next. Caveat emptor.
Could investors be wearing their stupid hats again? Their 401(k)'s got clobbered in the 2000-01 tech stock crash, and after adjustment for inflation, stocks still haven't recovered. Investors' 401(k)'s and homes got clobbered again in the financial crisis of 2008, and many haven't recovered from those losses. What does it take to move up the learning curve?
Maybe, however, the problem isn't investors. Over 50% of the trading volume in the stock markets comes from high-speed computerized trading. This activity isn't based on human judgments. It flows from algorithms and formulae. Some of the computerized trading is dynamic--it changes based on what it observes in the market. Since the activity it is often observing is computerized, we now have computers reacting to the activity of computers, which could be reactions to activity by other computers.
When stocks were valued by humans, we had some idea of what we were dealing with. Even if things seemed irrational or even bubbly, we could understand what was happening, albeit with a frown. Now, with stocks being priced by "thought" processes that are impenetrable to the average investor, the market not longer reflects the collective judgment of humans. Instead, it is an amalgamation of valuation processes that often aren't based on human judgment. The things that people are concerned with--lousy economy, sluggish jobs growth, falling incomes, dim view of the future--may not be finding their way into stock valuations, at least not in the ways that they historically did. If so, we can't be sure stock prices are real because we have no idea what the computers will do next. Caveat emptor.
Thursday, October 17, 2013
The Fiscal Crisis: Can Kicks Are All We Can Expect
Tonight (Wednesday, Oct. 16, 2013), Congress has temporarily "fixed" the fiscal and debt crises by re-opening the government until Jan. 15, 2014, and raising the debt ceiling until Feb. 7, 2014. In other words, the government will resume operations and not default on its debt until early next year, when we return to crisis mode again.
Can kicking is all we can expect. The government that the voters elected in 2012 isn't capable of decisive action on divisive issues like government spending. With the House held hostage by a small but very loud group of Tea Partiers, and the rest of government controlled by the Democrats, dysfunction is baked into the cake the voters made last year. Maintaining the status quo--a/k/a can kicking--is the only thing a sharply divided government can do.
Early next year, when Congress and the White House revisit the fiscal and debt crises, they will again kick the can through the end of the 2014 fiscal year (which ends Sept. 30, 2014)--because they won't be able to do anything else. Maybe they'll make minor tweaks, but nothing big will happen. Come late September or early October 2014, with the 2014 Congressional elections imminent, they will kick the can again past the election date, perhaps into early 2015 for the next Congress to deal with.
To end can kicking, voters need to elect a functional government next fall. Yes, the idiots in Washington are to blame for behaving like children. But the electorate put them in office. Democracies function by compromising. If narrow-minded, uncompromising fanatics are elected, expect the can to be well-kicked for years to come.
Can kicking is all we can expect. The government that the voters elected in 2012 isn't capable of decisive action on divisive issues like government spending. With the House held hostage by a small but very loud group of Tea Partiers, and the rest of government controlled by the Democrats, dysfunction is baked into the cake the voters made last year. Maintaining the status quo--a/k/a can kicking--is the only thing a sharply divided government can do.
Early next year, when Congress and the White House revisit the fiscal and debt crises, they will again kick the can through the end of the 2014 fiscal year (which ends Sept. 30, 2014)--because they won't be able to do anything else. Maybe they'll make minor tweaks, but nothing big will happen. Come late September or early October 2014, with the 2014 Congressional elections imminent, they will kick the can again past the election date, perhaps into early 2015 for the next Congress to deal with.
To end can kicking, voters need to elect a functional government next fall. Yes, the idiots in Washington are to blame for behaving like children. But the electorate put them in office. Democracies function by compromising. If narrow-minded, uncompromising fanatics are elected, expect the can to be well-kicked for years to come.
Friday, October 11, 2013
Why the Republicans Blinked
The Republicans, especially those in the House of Representatives, are rapidly giving ground in their fiscal battle with the Democrats. A resolution is pretty likely within a week or less. It will probably provide a short term delay of the debt ceiling and re-open the government, while the parties negotiate over long term fiscal issues.
Why did the Republicans blink? Because they tried to manufacture a crisis out of a non-problem and a long term problem. The non-problem is Obamacare. The truth is that Obamacare offers valuable benefits to millions of people. The huge traffic jams on health exchange websites demonstrate that lots of people understand Obamacare's value and want to participate in the program. The Republican attempt to de-fund Obamacare would take away something millions of people want, and that's usually a very poor political strategy. The Republicans seem to have belatedly figured this out, but not before forming a circle and firing volleys inward.
The long term problem is the federal deficit. It is a serious problem. But it's not an immediate problem. The Republican effort to create a crisis at this moment over something that will play out years and decades from now is too obvious a political ploy. The minority party wants to call the shots by gratuitously inflicting damage on the economy with a government shutdown and coercing an unnecessary default on the most important financial instruments in the world, U.S. Treasury securities. Political parties thrive by winning over a majority of voters, not by wrecking economies and financial systems. The fiscal deficit is not an immediate crisis. It needs to be addressed, and will be, over the next years and decades as it becomes more pressing. But the Republican tactic--give us everything we demand or we will destroy your government and wreck your finances--is bound to, and in fact did, alienate a majority of the electorate.
After Barack Obama's re-election last year, the Republicans launched a process of reflection and reconsideration. It's unclear that they made much progress, and the fiscal brawl of the past few weeks has surely left the party more damaged than before. The Tea Partiers have prevented the Republicans from doing the thing that's necessary to political domination--shifting toward the middle. Since political power abhors a vacuum, the Democrats have easily moved into the breach.
Why did the Republicans blink? Because they tried to manufacture a crisis out of a non-problem and a long term problem. The non-problem is Obamacare. The truth is that Obamacare offers valuable benefits to millions of people. The huge traffic jams on health exchange websites demonstrate that lots of people understand Obamacare's value and want to participate in the program. The Republican attempt to de-fund Obamacare would take away something millions of people want, and that's usually a very poor political strategy. The Republicans seem to have belatedly figured this out, but not before forming a circle and firing volleys inward.
The long term problem is the federal deficit. It is a serious problem. But it's not an immediate problem. The Republican effort to create a crisis at this moment over something that will play out years and decades from now is too obvious a political ploy. The minority party wants to call the shots by gratuitously inflicting damage on the economy with a government shutdown and coercing an unnecessary default on the most important financial instruments in the world, U.S. Treasury securities. Political parties thrive by winning over a majority of voters, not by wrecking economies and financial systems. The fiscal deficit is not an immediate crisis. It needs to be addressed, and will be, over the next years and decades as it becomes more pressing. But the Republican tactic--give us everything we demand or we will destroy your government and wreck your finances--is bound to, and in fact did, alienate a majority of the electorate.
After Barack Obama's re-election last year, the Republicans launched a process of reflection and reconsideration. It's unclear that they made much progress, and the fiscal brawl of the past few weeks has surely left the party more damaged than before. The Tea Partiers have prevented the Republicans from doing the thing that's necessary to political domination--shifting toward the middle. Since political power abhors a vacuum, the Democrats have easily moved into the breach.
Wednesday, October 2, 2013
Upsides of the Shutdown
The federal government shutdown isn't all bad. Some of the good things that resulted include:
White supremacists had to cancel their rally at Gettysburg National Park, because National Parks have been closed. Poor knuckleheads.
Federal spy agencies have been cut back 70%. We now have a lot more privacy than we had just a day ago.
Spying on pandas halted, as the National Zoo's panda cam has been cut off. A lot of people are disappointed, but consider the pandas' point of view. Wouldn't it be creepy to have a camera focused on you for hour after hour after endless hour? Aren't pandas entitled to some privacy and dignity?
School lunches and breakfast still being served. Or maybe, from the kids' point of view, this isn't so good. Many of them might have been hoping for an excuse to binge on junk food.
Free and discounted food and drinks are being offered to feds and sometimes non-feds by many Washington, DC area bars and restaurants. Theaters, museums, gyms and other businesses are also advertising free or discounted admissions, goods or services. Close the government and what do you get? Party central.
Stock market up. The S&P 500 rose about 0.8%. If this is what a shutdown does, there are probably a lot of market players rooting for more government dysfunction.
White supremacists had to cancel their rally at Gettysburg National Park, because National Parks have been closed. Poor knuckleheads.
Federal spy agencies have been cut back 70%. We now have a lot more privacy than we had just a day ago.
Spying on pandas halted, as the National Zoo's panda cam has been cut off. A lot of people are disappointed, but consider the pandas' point of view. Wouldn't it be creepy to have a camera focused on you for hour after hour after endless hour? Aren't pandas entitled to some privacy and dignity?
School lunches and breakfast still being served. Or maybe, from the kids' point of view, this isn't so good. Many of them might have been hoping for an excuse to binge on junk food.
Free and discounted food and drinks are being offered to feds and sometimes non-feds by many Washington, DC area bars and restaurants. Theaters, museums, gyms and other businesses are also advertising free or discounted admissions, goods or services. Close the government and what do you get? Party central.
Stock market up. The S&P 500 rose about 0.8%. If this is what a shutdown does, there are probably a lot of market players rooting for more government dysfunction.
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