Subject: John Dean: PK's new hero From: Sid Bachrach To: All Date Posted: Tues, Mar 30, 2004 at 11:39:46 (EST) Email Address: sidb23@juno.com Message: Today Mr. Krugman presents one John Dean as an expert on American democracy and foreign policy. Mr. Dean is one of the worst liars left over from the Watergate era. Mr. Dean participated in all sorts of dirty tricks, was disbarred and has spent the last 30 years trying to profit from his crimes. In addition, Mr. Dean is a wimp! Yet PK quoting Dean authoritatively. Dean has no credibility and was a two bit lawyer before he married into money. What's next from PK? A quote from Pat Buchanan? BTW, Richard Clark, who is quoted in PK's article, was a minor bureaucrat now profiteering from the lives and blood of 3000 innocent people.

Subject: I am a Lying Troll From: Sid Bachrach To: Sid Bachrach Date Posted: Tues, Mar 30, 2004 at 14:14:59 (EST) Email Address: Not Provided Message: I am Sid Bachrach the Lying Degenerate Troll.

Subject: Vicious Ugly Troll Here From: Trolly Troll To: Sid Bachrach Date Posted: Tues, Mar 30, 2004 at 13:19:05 (EST) Email Address: Not Provided Message:

Subject: Re: Vicious Ugly Troll Here From: Bla... To: Trolly Troll Date Posted: Tues, Mar 30, 2004 at 13:34:18 (EST) Email Address: Bla@bla.bla Message: Bla bla bla bla bla?Bla bla!Bla bla supply-siders bla bla.World?Blaaaa!

Subject: state of the union From: A Alexander Stella To: All Date Posted: Tues, Mar 30, 2004 at 11:09:22 (EST) Email Address: aastella@yahoo.com Message: Well, I do hope you can recall previous courriels of mine. In the event you'd like a couple hints, let me first present this one, like so: 'some sixty years hence, the curators of the Reagan Library will have to devote a wing to a bed-and-breakfast nook ... maybe, a massage parlour, even'. Okay, here's the other one, like so: 'there's no way Joe Scarborough can forever evade questions about the attractive female intern, whose corpse was found in his Florida office'. Anyway, I do hope those two suffice. This time, I'd like you to consider reading the text for a 'state of the union' address that I believe is imperative for this country of ours. To get to it, all you need do is click on the below enclosed U.R.L http://www.bcvoice.com/modules.php?name=News&file=article&sid=205 By the way, the proprietors of the www.BCVoice.com website have provided a couple ways for you to leave your comments. toodles \ A Alexander Stella p.s - also in the event, you'd like some more credentials. Those can be obtained easily enough from the Google search engine. All you need do is use as a search phrase, with quotes and all, the following: 'A. Alexander Stella'. Upon your doing so, the monitor screen shall fill with hyperlinks. state of the union www.bcvoice.com/modules.php?name=News&file=article&sid=205

Subject: New US Economy From: Mik To: All Date Posted: Mon, Mar 29, 2004 at 18:06:39 (EST) Email Address: Not Provided Message: Thanks for your inputs guys. Econochick - again you make me smile with your insight. I see that the posts are being removed as this thread becomes stale. I just want to point something out - I said I don't like the current administration but I tried to point that although it wasn't their express intention - they may actually be doing something good if we think laterally. I'm sure the current administration means well... but... well... hey read Krugman's opinions on Bush and his merry men. Also note that I am sure there are many better places to commit gov spending and push the economy forward. Hey - no argument here. But considering the paradigm that Bush lives in - his angle is 'oil and military strength'. I'm just trying to analyse his angle not argue for or against it. Now I do want to highlight a point about 'rocket science'. I do believe that even in our modern age of a recent Mars landing, we are still in the baby stages or rocket science. This top aero-designer (who's name I think is Bert Rutan) made an amazing statement when he explained how our current technology has slowing dramatically in comparison with the jet-age of the 60's. Just recently we saw the launch of the 'X-prize' - a competition for a private organizations to put people in space for commercial purposes. And! last night I watched a test on a new aircraft that went to mach-7 in a study on getting man into space at a cheaper cost. China has now entered into the exclusive club of man missions to space. It is obvious, that we are on the frontier of a new dawn in civilisation and economics to suit. Ironically enough, the lessons that are going to be learnt out of the Star Wars program (in my opinion) are not going to be 'how to shoot down an incoming missile' but rather to spear head whole new rocket sciences and the economic ripple effect for the leading nations is going to be - whole new economic ventures. I just realised that I shouldn't have read Arthur C Clarke.... am I talking crap?

Subject: Re: New US Economy From: Nat To: Mik Date Posted: Tues, Mar 30, 2004 at 11:01:16 (EST) Email Address: Not Provided Message: Star Wars will not propel our domestic technology forward even a smidgen. As a kid I saw sputnik and echo overhead and stayed home from school to watch all the Mercury launches, so I have a fondness for this sort of stuff. But military projects are too secretive to produce domestic spin offs even if the products have potential. This group in DC wants pie in the sky but is willing to let the Hubble die, a true sin. A truly worthy national project, on the order of the 60's moon race or the 50's highway system or the 30's public works would be to solve our (and therebye the world's) energy problems. How about 10 years to stop our dependence on foreign oil? That would be a new US economy, but not gonna happen...

Subject: Re: New US Economy From: Pete Weis To: Mik Date Posted: Tues, Mar 30, 2004 at 10:27:33 (EST) Email Address: Not Provided Message: Mik. If your general point, here, is a major national effort to develop new technologies similar to our effort to 'land a man on the moon and return him to earth' during the 60's, then I'm in 100% agreement. This is, I believe, a very important issue to America's future. I'm thankful for your reintroduction of this topic. Posters on this board may have different ideas about which direction that effort should go and it would be interesting to hear their ideas. I would like to see this nation recapture that great effort of the 60's, by going 'full speed ahead' into developing and perfecting new energy sources which would replace our dependency on oil. The sooner we reach this goal the better. It's time to end our love affair with the internal combustion engine. We have a meager start - wind and solar power and new battery technology such as vanadium, early highbred auto's, etc. Wind, solar, and proposed tidal power have a weakness in that they produce with uneven volume. The solution revolves around effective means of storage during peak production to provide adequate supply during low production periods. Hydrogen could be that storage medium. Vanadium technology is promising. A Canadian company, VRB Corp out of Vancouver, British Columbia, has developed some interesting large scale vanadium battery systems which deal with fluctuating large scale power demand. Will they become a 'Microsoft' of this type of power storage technology? Maybe. But much of this research, design, development and implementation will cost many billions of dollars. How long would it have taken to reach the desktop computer age if our government hadn't funded the development of the integrated circuit? Would it have been developed elsewhere? New, simpler technologies, could be instituted quickly to greatly increase energy conservation and efficiency - there is so much waste. During the early days of the Bush administration, when energy policy was being formulated, Dick Cheney stated 'the government has no role to play in promoting energy conservation.' Was this statement just short sighted or were there other motivations - you can draw your own conclusion. But the present steep increases in oil are begining to drag on our economy. Anyway I'm running out of time here.

Subject: too weird From: Nat To: Pete Weis Date Posted: Tues, Mar 30, 2004 at 11:03:23 (EST) Email Address: Not Provided Message: Talk about great minds moving on the same path! Pete, you said it much better than I.

Subject: Re: too weird From: Mik To: Nat Date Posted: Tues, Mar 30, 2004 at 15:26:21 (EST) Email Address: Not Provided Message: Thanks for the input. Yes I am aware of Ballard of Vancouver and their hydrogen cell battery. Hey I lived in that Beautiful city for two years. Unfortunately when you hear Ballard speak of what it takes to get cars to convert - it will be generations of active effort - and we haven't even started yet. Ballard may well go under in the next couple of years. BUT !! hey we already have hybrid cars that use both gasoline and electric power - there should be a serious push to have all cars convert to this format (as a start). So yes I agree that the main focus should be on different (and preferrably renewable) energy sources. I can imagine so many good government investments such as Nano-technology, and nuclear energy should be re-visited. From what I know, the 'space race' of the 60s resulted in many spin-offs we don't fully appreciate. As an example, the Intel 8086 processor chip was developed for NASA. This chip was later upgraded to the 80286 and later called the '286' chip and placed in desk top computers - the rest is an amazing history. But alas, perhaps I have been influenced by too many Arthur C Clarke books which make me 'hope' that we will see a return to the rocket age. Nat - you watched the Mercury Missions? wow - uhmmm you must have many year under your belt;-) But consider this: - how old is the Shuttle?

Subject: Anything into Oil From: mike To: All Date Posted: Sun, Mar 28, 2004 at 22:39:53 (EST) Email Address: Not Provided Message: Has anyone read the article'Anything into Oil'. It was written in 'Discover' magazine 4/03. The company has 2 operating plants that convert turkey guts into #2 crude oil. The process is very efficient, and seems to be clean and affordable. The creators claim that they could make 4 billion barrels of oil a year which would make up for all the oil that is imported. The company has posted a notice that says the PIRG states it has given the company(changing world technologies) 95 million dollars of tax credits, but realistically it was only elligible for $190,000 over 4 years. Does anyone know about this? If anyone knows the story please reply. This technology does seem for real, but last fall I saw David Brooks on the 'News Hour'discussing the Republican budget proposal and he dimissed the whole technology in one sentence. I knew something was fishy.

Subject: Krugman's book, The Great Unraveling From: JRVotano To: All Date Posted: Sun, Mar 28, 2004 at 16:01:19 (EST) Email Address: jvotano@chemsilico.com Message: Most revealing book on GW Bush and company I have read in ages. Truly, we, as Americans, have one big problem on our hands with Bush and company. Lies, lies, permanate this current administration and their ''revolutionary goals' of this are to dismantle our institutions, our way of life,our liberties, all in the name of corporate interests. War by decree and shift the burden of all taxation to people who actual are the productive members of society and no taxes for investors who live off the middle class.. What an agenda! and who would believe it. Thanks, Paul K.

Subject: Re: Krugman's book, The Great Unraveling From: Walk To: JRVotano Date Posted: Sun, Mar 28, 2004 at 21:05:01 (EST) Email Address: Not Provided Message: I have to admit that I haven't read Krugman's latest. In fact, I have stopped reading anything by him since he switched from a very interesting commentator on economic policy to a bitter apologist for the left wing. Very boring and predictable. But, I guess that's what maximizes his revenue with the least amount of effort.

Subject: Walk Walk From: Duh To: Walk Date Posted: Mon, Mar 29, 2004 at 16:33:44 (EST) Email Address: Not Provided Message: Such insight.

Subject: Re: Walk Walk From: Walk To: Duh Date Posted: Mon, Mar 29, 2004 at 16:47:27 (EST) Email Address: Not Provided Message: Go fuck yourself.

Subject: Re: Walk Walk From: Run To: Walk Date Posted: Mon, Mar 29, 2004 at 16:55:54 (EST) Email Address: Not Provided Message: Well argued.

Subject: Re: Walk Walk From: Walk To: Run Date Posted: Mon, Mar 29, 2004 at 17:29:07 (EST) Email Address: Not Provided Message: Thanks. An approriate response to an anonymous snipe. You wouldn't by any chance be French would you?

Subject: Do Not Feed From: Troll To: Walk Date Posted: Mon, Mar 29, 2004 at 17:53:38 (EST) Email Address: Not Provided Message: Walk is a Troll

Subject: Re: Krugman's book, The Great Unraveling From: AriLev To: JRVotano Date Posted: Sun, Mar 28, 2004 at 17:34:33 (EST) Email Address: Not Provided Message: PK's book and column are terrific.

Subject: Employment From: Emma To: All Date Posted: Sun, Mar 28, 2004 at 15:02:36 (EST) Email Address: Not Provided Message: http://jobwatch.org/ Unemployment measures understate job slack Despite a steady unemployment rate of 5.6%, jobs increased by only 21,000 in February 2004, underscoring the fact that the typical unemployment measures are failing to convey the labor market's current distress. Evidence of this distress is obvious when taking into account both underemployment rates and the number of those who have dropped out of the job market altogether.

Subject: The perfect storm that's about to hit From: B.B. To: All Date Posted: Sat, Mar 27, 2004 at 22:54:37 (EST) Email Address: Not Provided Message: The perfect storm that's about to hit Rising oil prices and a weak dollar could shatter the global economy Jeremy Rifkin Wednesday March 24, 2004 The Guardian The average nationwide price of a gallon of gasoline in America reached a record high of $1.77 this month. The steady spike in prices has left analysts wondering if this is a harbinger of even more dramatic increases as motorists head into the spring and summer months. Get ready for what might become the economy's version of the perfect storm later this summer. The devastation could quickly spread to the UK and the rest of the world, with dire consequences for the global economy. The first hint of what might be in store came last month when Opec announced its decision to withdraw 1m barrels of crude oil a day from the market. Opec is worried about the weakening value of the dollar: it has lost one-third of its value in just under two years. Since Opec sells oil for dollars, the oil-producing countries are losing precious revenue as the value of the dollar continues to erode. And because oil-producing countries then turn around and purchase much of their goods and services from the EU and must pay in euros, their purchasing power continues to deteriorate. (The euro is currently valued at $1.23.) How will the weaker dollar affect oil prices? Philip K Verleger, the dean of US oil market analysts and a visiting fellow at the Institute for International Economics, suggests that 'oil-exporting countries may decide to adjust their price band to reflect the falling value of the dollar'. If the dollar continues to slide, he warns, we could see oil prices rising from the current $38.18 a barrel to a record high of $40 by midsummer. There are other dark clouds on the horizon. US crude oil inventories are at the lowest point since the mid 70s, and the retail gasoline market is operating with little reserve margin as we move into the summer months, where more travel will increase demand. The dwindling oil reserves are made worse by the White House decision to replenish the strategic petroleum reserve, further reducing the amount of gasoline available. Verleger says gasoline could climb as high as $3.50 a gallon before levelling off at $2 by the autumn. How high prices eventually soar could depend on still other factors, including potential oil disruptions in Venezuela and the Middle East. There is also the prospect that one or two major refineries might fail during peak demand this summer - not that unusual when increased consumer pressure forces refineries to produce at peak capacity without taking the time for proper maintenance. Here is where events potentially begin to feed off each other, creating the conditions for the perfect storm for the economy. If the price of oil increases to $40 a barrel with an accompanying rise in gasoline prices, the already weak economic recovery could stall. How then do we lower the price of a barrel of oil? We'd have to strengthen the value of the dollar so that Opec would not be forced to raise prices to compensate for the deteriorating value of the currency. But the dollar's value is declining because of America's growing debt. The IMF is so concerned about US debt - the result of rising budget deficits and trade imbalance - that it issued a report warning that if steps weren't taken to reverse the trend, it could threaten the financial stability of the world economy. An ever-weaker dollar makes foreign investors less interested in financing the mushrooming US debt. The US could raise interest rates, making it more attractive for foreign investors, but that would mean higher interest rates for US companies and consumers, which could dampen the already weak recovery and send us back into a recession in the US and around the world. So we have all the conditions coming together to create the perfect economic storm: record oil prices triggering a restriction in US economic growth and an increase in the federal budget deficit, accompanied by further erosion in the value of the dollar - with increased budget deficits and the diminished value of the dollar leading in turn to higher interest rates to convince foreign investors to lend the US additional money, followed by a further retraction of the US economy as rising interest rates lead to a drop in domestic investment and consumption. The cascade of events touches off a tsunami that engulfs the rest of the global economy, submerging the world in deep recession. As long as the US and global economy are increasingly dependent on an ever-dwindling supply of oil from the Middle East, the conditions for a perfect economic storm will continue to haunt us. The solution, in the long run, is to wean the world off its dependency on oil. That would require much tougher fuel efficiency standards, greater energy conservation measures, support of hybrid vehicles and a switch to renewable sources of energy. Short of that, expect the storm clouds to gather in intensity. http://www.guardian.co.uk/comment/story/0,3604,1176401,00.html

Subject: Wake Me When It's Over From: jennifer To: B.B. Date Posted: Sun, Mar 28, 2004 at 14:48:14 (EST) Email Address: Not Provided Message: There is no economic analysis here at all. So, who cares for the storm sloshing?

Subject: Re: Wake Me When It's Over From: Pete Weis To: jennifer Date Posted: Mon, Mar 29, 2004 at 00:25:42 (EST) Email Address: Not Provided Message: When, in history, have a majority of economists, academic or otherwise, ever been able to predict or often even detect as it was happening any of the many economic downturns that have occurred over the last two hundred years? Has economic analysis advanced very much at all since its earliest beginings? Once again, we get to find out. Presently a majority of economists are using there analytical training and experience to say they believe the US economy is not headed back into recession, that eventually employment will come along and the consumer will hold up since his debt levels will stay manageable. Apparently, the majority of economists think the current account deficit is not presently a serious problem. The beauty of this time, in which we live, is that we will get the answers to these questions, probably in the coming year or two. Lets face it, if employment doesn't come back in the next year or two, or the Japanese or Chinese decide our economy and/or the dollar are too much risk and stop or slow their financing of our heavy spending habits, or a faltering stock market drives down consumption we'll definitely be headed for another recession, perhaps a deep prolonged one. That's my economic analysis - what's yours? I figure I probably have a better shot at economic 'analysis' than the majority of economists out there, since as far as I can determine, economists, as a group, are batting a big fat 'zero'. Economists seem to get it wrong 100% of the time when we're on the brink of a recession or depression. Now, admittedly, this doesn't say much about my own miserable abilities - it's just that I needn't aim too high to get a better batting average. There have been some notable exceptions amongst economists recently -Robert Shiller at Yale and Stephen Roach at Morgan-Stanley who have shown independent thinking. But independent or original thinking is extremely rare when it comes to economists IMO. Certainly the 'world is not coming to an end' as someone in this thread stated. But that's not what is at issue here. We're talking about which way each of us views the direction of the economy. It's not about being 'positive' or 'negative' it's about how each of us view this economy. People seem to feel threatened by what they perceive as 'negative' views on the economy. But if we all had the same views there would be no point to this web site.

Subject: Re: Wake Me When It's Over From: B.B. To: Pete Weis Date Posted: Mon, Mar 29, 2004 at 16:48:40 (EST) Email Address: Not Provided Message: Wow, I had no idea that post would be so popular. I agree with you, Pete. The last access I had to the internet, I was only able to briefly glance at the replies, and the first thing that popped into my head was what you posted below, and say again here, that a majority of economists have been unable to predict most market downturns. I didn't post this because I thought it would definitely come to pass (nor does the author, I don't think), but because it contained a lot of things we should be thinking about. It seems alot of people spend a great deal of time and energy rationalizing whatever current situation there is as good, rather than spending that energy trying to figure out solutions to problems we have or might have in the future. I would add one more economist to your list of independent thinkers who saw the last recession coming: Doug Henwood.

Subject: Doug Henwood From: Terri To: B.B. Date Posted: Mon, Mar 29, 2004 at 17:36:13 (EST) Email Address: Not Provided Message: Doug Henwood is clever. Please tell us what led him to see the last recession in the offing.

Subject: Re: Doug Henwood From: B.B. To: Terri Date Posted: Tues, Mar 30, 2004 at 12:06:53 (EST) Email Address: Not Provided Message: Well, I am not clever, so I will let him tell you in his own words: http://www.leftbusinessobserver.com/Dow7000.html http://www.leftbusinessobserver.com/Dow36000.html Brad DeLong (whom some people on this site seem to be a fan of, and you may or may not be) says Doug Henwood's book After the New Economy is 'the best single new economy book to read'.

Subject: Thanks From: Terri To: B.B. Date Posted: Tues, Mar 30, 2004 at 13:20:52 (EST) Email Address: Not Provided Message: Nice stuff....

Subject: Peter Weis - You Argue Well From: Jennifer To: Pete Weis Date Posted: Mon, Mar 29, 2004 at 14:15:13 (EST) Email Address: Not Provided Message: Never fear, I always take you comments seriously since they are always carefully developed. Allow me to be comical at times, but know that I will consider the problems you present thoroughly.

Subject: Re: Peter Weis - You Argue Well From: Pete Weis To: Jennifer Date Posted: Mon, Mar 29, 2004 at 21:42:41 (EST) Email Address: Not Provided Message: I need to remember not to take myself too seriously. At times I get a little wound up.

Subject: Predicting From: Jennifer To: Jennifer Date Posted: Mon, Mar 29, 2004 at 17:39:05 (EST) Email Address: Not Provided Message: As Emma noted: Trying to predict and time macro economic changes is important for policy makers, but deadly for investors.

Subject: Re: Predicting From: Pete Weis To: Jennifer Date Posted: Mon, Mar 29, 2004 at 22:01:09 (EST) Email Address: Not Provided Message: My question - if you are in the stock market aren't you, in fact, making a 'bet' (if not a prediction) on where the economy and therefore the markets are headed? Isn't it, at times, beneficial to be prudent like Buffet is now or when Buffet was in the late 90's? What's wrong with an investor looking at a struggling US economy and a falling dollar and placing his or her investments in funds which invest in overseas fixed income securities where they haven't the government debt levels we have (such as Australia and Switzerland), where they pay higher yields and their currency is appreciating against the dollar? Wouldn't this be less risky than the US stock markets?

Subject: Re: The perfect storm that's about to hit From: Pete Weis To: B.B. Date Posted: Sun, Mar 28, 2004 at 11:30:04 (EST) Email Address: Not Provided Message: B.B. This article reveals problems which most of us are unwilling to consider. We tend to either diminish them or ignore them. As the article points out, our economy (in its present state) is very vulnerable to any significant further rise in oil, a rise in interest rates, or significant reduction in Japan's or China's willingness to continue funding our current account deficit. I might add to this: our economy, in its present state, is vulnerable to any prolonged drop in the stock markets and the drop in consumption which inevitably follows. Thus far, the Fed as been able to offset the normal drop in consumption which goes hand in hand with a bear market by introducing unprecedented rate drops. But we've pretty much come to the end of the line with these rate drops. Some of this looks alot like the 70's - the increasing oil prices, falling dollar, and the threat of increasing interest rates. But a big difference is our present sizeable twin deficits. Our twin deficits were just begining in the 70's. Back then we didn't depend on heavy borrowing from foreign central banks to keep our economy afloat - now we do. Again, it's something we often don't want to know about, but we should consider the possibilities and how they might effect us personally.

Subject: Hedging From: Emma To: Pete Weis Date Posted: Sun, Mar 28, 2004 at 17:46:50 (EST) Email Address: Not Provided Message: Easy to hedge against the dollar by buying an index of foreign stocks. But, do you really want to hold the Nikkei Index? Japan has actually been the poorest performing stock market since 1989. That may have changed finally, but the risks are substantial. Also, energy stocks can be bought. The point is investors can protect against changes in economic conditions.

Subject: Not Now From: Emma To: Pete Weis Date Posted: Sun, Mar 28, 2004 at 13:53:35 (EST) Email Address: Not Provided Message: There has been a bull market in bonds since 1981, through all the debt. There is a bull market in stocks and real estate. The dollar, which may rise or fall for years with no harm, is stable. The problem is in the labor market, and that can be addressed with decent fiscal policy as we had during the 1990s.

Subject: Re: Not Now From: Pete Weis To: Emma Date Posted: Mon, Mar 29, 2004 at 01:43:34 (EST) Email Address: Not Provided Message: Ask yourself why there has been bull markets in both bonds and real estate. Then ask yourself if the conditions that promoted these bull markets are still in place. Also, is this a true bull market in stocks or was it merely a bear market rally? We had record inflows into mutual funds in January and February by small investors - hope you're right about this being a bull market. Has any bear market in history ever ended with PE's above 20? Has any bear market in history ever ended with PE's above 10?

Subject: Bull Market From: Emma To: Pete Weis Date Posted: Mon, Mar 29, 2004 at 16:28:56 (EST) Email Address: Not Provided Message: The point of investing is finding companies that are well valued given future earnings prospects. Playing price/earnings numbers games with the entire market is a timer's foolish game that is sure to be a losing strategy. We are in bull market in stocks that extends to almost every country and every investment sector, what other name you want to call it makes no difference. Eventually the market will turn down. So?

Subject: Economagic From: Jennifer To: Pete Weis Date Posted: Mon, Mar 29, 2004 at 14:17:58 (EST) Email Address: Not Provided Message: Statistical questions on economic history can often be answered by referring to 'economagic.' A great tool.

Subject: Re: The perfect storm that's about to hit From: raj To: B.B. Date Posted: Sat, Mar 27, 2004 at 23:54:09 (EST) Email Address: raj@interchange.ubc.ca Message: This does sound kind of sensationalistic. I mean, for all of that to happen during the three months which summer/'driving season' is around seems pretty unlikely.

Subject: When the World comes to an End From: Terri To: raj Date Posted: Sun, Mar 28, 2004 at 13:36:27 (EST) Email Address: Not Provided Message: When I read such predictions, I know there will be no such outcomes. The world is not ending for America. We will drive and air condition through the summer, the Chinese and Japanese will sell to and buy from us, even buy our debt, the dollar will rise or fall but be fine. Of course, we need better energy policy but this scare mongering is absurd.

Subject: Not Now From: Emma To: Terri Date Posted: Sun, Mar 28, 2004 at 13:43:33 (EST) Email Address: Not Provided Message: There is all sorts of essential work to be done through the world. The need is fiscal programs that foster employment in infra-structure from America to India: http://www.nytimes.com/2004/03/25/international/asia/25INDI.html India has a vast primary health care system to serve its billion people, with clinics for every 3,000 to 5,000. But the system is often just a skeleton. New studies have documented the startling, damaging dimensions of chronic absenteeism — and not just in India. Researchers for the World Bank discovered through large national surveys that medical personnel were absent from their public posts 35 to 40 percent of the time in India, Bangladesh, Indonesia and Uganda, and about a quarter of the time in Peru. Researchers from the Massachusetts Institute of Technology and Princeton, in a detailed survey of 100 villages here in Rajasthan, in north India, found a no-show rate of 44 percent. When combined with absences for meetings and other work-related reasons, these vital clinics were closed more than half the time. As the United Nations leads a global effort to prevent millions of deaths from AIDS, tuberculosis, malaria and a range of childhood illnesses, the fissures in public health systems are emerging as a main obstacle....

Subject: It would be better if grownups were in charge. n/m From: David E... To: raj Date Posted: Sun, Mar 28, 2004 at 01:09:45 (EST) Email Address: daveellis_39@hotmail.com Message: n/m

Subject: Iraq's Next Shock Will be Shock Therapy - Stiglitz From: B.B. To: All Date Posted: Fri, Mar 26, 2004 at 22:13:04 (EST) Email Address: Not Provided Message: Iraq's Next Shock Will be Shock Therapy by Joseph E. Stiglitz With one exception - the actual military 'victory,' which looks increasingly Pyrrhic - President Bush's Iraqi adventure has been marked by repeated failures. Scant signs of weapons of mass destruction have been found, and, according to David Kay, America's chief arms inspector, the stockpiles either never existed or were destroyed years ago. So Bush simply ignored the data, gathered by Hans Blix's UN inspectors, and the evidence on which he based his case for war seems to have been largely fabricated. Worse still, it is now clear that Bush never had a plan for when the war ended. Instead of moving towards peace and democracy, the situation in Iraq remains so dangerous that Paul Bremer, the American occupation leader, is using instability as his rationale for avoiding democratic elections this year. Of course, America tried to keep real order in some places, revealing a lot about what it truly valued in Iraq. When Baghdad fell, the oil ministry was quickly protected, while museums and hospitals were allowed to be looted. If there was not outright corruption in the $7 billion in contracts awarded to Halliburton, whose former chairman was Vice President Dick Cheney, there was undoubtedly a strong whiff of crony capitalism. Halliburton and its subsidiaries have been ensnared in charges of war profiteering ever since, and have had to pay back millions of dollars to the US government. Now, everyone agrees, the most important task - beyond creating a democratic state and restoring security - is reconstructing the economy. Blinded by ideology, however, the Bush administration seems determined to continue its record of dismal failures by ignoring past experience. When the Berlin Wall fell, the countries of Eastern Europe and the former Soviet Union began transitions to a market economy, with heated debates over how this should be accomplished. One choice was shock therapy - quick privatization of state-owned assets and abrupt liberalization of trade, prices, and capital flows - while the other was gradual market liberalization to allow for the rule of law to be established at the same time. Today, there is a broad consensus that shock therapy, at least at the level of microeconomic reforms, failed, and that countries (Hungary, Poland, and Slovenia) that took the gradualist approach to privatization and the reconstruction of institutional infrastructure managed their transitions far better than those that tried to leapfrog into a laissez-faire economy. Shock-therapy countries saw incomes plunge and poverty soar. Social indicators, such as life expectancy, mirrored the dismal GDP numbers. More than a decade after the beginning of the transition, many postcommunist countries have not even returned to pre-transition income levels. Worse, the prognosis for establishing a stable democracy and the rule of law in most shock-therapy countries looks bleak. This record suggests that one should think twice before trying shock therapy again. But the Bush administration, backed by a few handpicked Iraqis, is pushing Iraq towards an even more radical form of shock therapy than was pursued in the former Soviet world. Indeed, shock therapy's advocates argue that its failures were due not to excessive speed - too much shock and not enough therapy - but to insufficient shock. So Iraqis better prepare for an even more brutal dose. There are, of course, similarities and differences between the former communist countries and Iraq. In both cases, economies were pervasively weakened before they collapsed. But the Gulf War and sanctions weakened Iraq's economy much more than communism weakened the USSR's. Moreover, while both Russia and Iraq are heavily dependent on natural resources, Russia at least possessed demonstrated abilities in some other areas. Russia had a highly educated labor force, with advanced technological capabilities; Iraq is a developing country. To be sure, Russians went decades without opportunities to exercise entrepreneurship, while Ba'athist rule did not suppress Iraq's merchant class and entrepreneurial spirit in any comparable way. But Iraq's location puts it at a distinct disadvantage compared to Russia and many postcommunist states: none of Iraq's neighbors is doing particularly well economically, while many postcommunist countries sat next door to the European Union during the 1990's boom. Most importantly, ongoing instability in the Middle East will deter foreign investment (other than in the oil sector). These factors, together with the ongoing occupation, make quick privatization particularly problematic. The low prices that the privatized assets are likely to fetch will create the sense of an illegitimate sell-off foisted on the country by the occupiers and their collaborators. Without legitimacy, any purchaser will worry about the security of his property rights, which will contribute to even lower prices. Furthermore, those buying privatized assets may then be reluctant to invest in them; instead, as happened elsewhere, their efforts may be directed more at asset stripping than at wealth creation. If Iraq's prospects are as dismal as my analysis suggests, any international contribution to the US-driven reconstruction effort is likely to be little more than money flushed down the drain. This does not mean that the world should abandon Iraq. But the international community should direct its money to humanitarian causes, such as hospitals and schools, rather than backing American designs. The World Bank and other institutions considering assistance through loans face even greater difficulties. Piling more debt onto Iraq's already huge obligations will only make matters worse. If Iraq's economy falters as a result of a misguided economic reconstruction program based on shock therapy, the country will be further indebted with little to show for it. The dream of Iraq's American invaders was to create a stable, prosperous, and democratic Middle East. But America's economic program for reconstructing Iraq is laying the foundations for poverty and chaos. http://www.project-syndicate.org/commentaries/commentary_text.php4?id=1476&lang=1&m=contributor (I find it hard to believe he takes that last paragraph seriously, but the rest of the article seems top notch)

Subject: The road out of hell From: Economist To: All Date Posted: Fri, Mar 26, 2004 at 21:19:17 (EST) Email Address: nma@hotmail.com Message: 'Ten years after the genocide, Rwanda is at peace, on the mend and outwardly serene.This is an 'astounding?!' achievement, given what the (a) country has suffered.In the 13 weeks after April 6th 1994, between 500,000 and 800,000 were murdered.'... 650,000:3,000 = ? Who cares?

Subject: Interest Rates From: Emma To: All Date Posted: Fri, Mar 26, 2004 at 14:57:57 (EST) Email Address: Not Provided Message: Defending the dollar may be useful at times against speculators. Robert Rubin certainly did just that by buying dollars after 1993. But, adjusting interest rates to change the value of the dollar is harming the economy for the sake of currency speculators. Fruitless and harmful. There are still decent yields from corporate bonds funds at Vanguard. The Federal Reserve can not act to satisfy older investors, and older investors should carry stocks as well as bonds.

Subject: Fixed Income From: Emma To: Emma Date Posted: Fri, Mar 26, 2004 at 15:46:35 (EST) Email Address: Not Provided Message: Simply because an investor wishes to be quite conservatvie does not mean there are not useful stock and bond portfolios. We have been through an extended bull market in bonds. Bond investors should have ample capital gains running as long as 22 years to go along with yields that have been declining. There is every reason for long term bond investors to be pleased with the past, and prepared to give back some capital gains for higher yield in time.

Subject: Guessing From: Jennifer To: Emma Date Posted: Fri, Mar 26, 2004 at 17:53:23 (EST) Email Address: Not Provided Message: Though analysts have been guessing that interest rates will soon be moving up for the past 2 years, they have been quite wrong and cost overly cautious bond holders dearly. There simply is no telling when rates will begin a long term rise. The 10 year treasury could rise to 5% quickly or stay below 4% for a long while yet.

Subject: Dividends From: Emma To: Emma Date Posted: Fri, Mar 26, 2004 at 17:01:57 (EST) Email Address: Not Provided Message: By the way, stocks dividends are a form of fixed income that can be relied on with a basket of stocks despite the swings in stock prices. The need is to have enough saved to have a portfolio of income generating stock and bond funds. Of course, saving can be a difficult problem unless there is a decent and steady income through a work life.

Subject: Interest Rates From: Jennifer To: All Date Posted: Thurs, Mar 25, 2004 at 17:18:26 (EST) Email Address: Not Provided Message: http://www.j-bradford-delong.net/movable_type/2004_archives/000534.html Gerard Baker: Shackle these sado-monetarists: Sado-monetarism, a deviancy popular among certain central bankers and commentators in the 1980s, is out of the closet and back in respectable living rooms. Even as the US economy is failing to generate sufficient growth to employ its expanding workforce, as the core inflation rate has fallen by a third in the past year, as the stock market slides below where it started the year and as the global economy is held hostage once again to war, Middle East terror and surging oil prices, there is a chorus of calls for the Federal Reserve to raise interest rates to squeeze the world's largest economy harder. The Economist, a sado-monetarist of long standing whose complex psychology has been further tangled in recent years by an unhealthy bubble fixation (stock bubbles, housing bubbles, bond bubbles, dollar bubbles, hubble-bubble, trouble-bubble), is leading the charge. An editorial two weeks ago said: 'A rise in rates could help to avoid another dangerous bubble by warning investors and homebuyers that asset prices cannot rise for ever.' Hurt me! The New York Times, a relatively new convert to self-flagellation, says the same thing. The paper condemned the federal open market committee's decadent decision last week to leave policy unchanged and called for an immediate increase in interest rates. 'Rates are so low that the Fed has plenty of room to move before being accused of adopting a restrictive monetary policy. It needs to get started.' Punish me!

Subject: Re: Interest Rates From: Walk To: Jennifer Date Posted: Fri, Mar 26, 2004 at 09:52:48 (EST) Email Address: Not Provided Message: 'A rise in rates could help to avoid another dangerous bubble by warning investors and homebuyers that asset prices cannot rise for ever.' Why are bubbles dangerous? And why is it the Fed's responsibility to mitigate the 'exuberance'? They certainly did their best in the face of the dot.com feeding frenzy by raising interest rates. Did it make any difference? No. The bubble popped and the Fed had to immediately reverse course.

Subject: Re: Interest Rates From: Pete Weis To: Jennifer Date Posted: Thurs, Mar 25, 2004 at 23:55:50 (EST) Email Address: Not Provided Message: Well, if there is, in fact, no bubbles to worry about (as Gerard seems to think) and the economy is actually coming along as 99% of the prognosticators on Wall Street seem to think, then why not raise rates a little to support the dollar and help out those retirees on fixed income investments? Come on Gerard - you really believe in those inflation numbers? Do you live in America? Who, in the world, pays the bills in your house?Definitely not you.

Subject: Re: Interest Rates From: Walk To: Pete Weis Date Posted: Sat, Mar 27, 2004 at 15:10:31 (EST) Email Address: Not Provided Message: I don't think that monetary policy should be used to help out specific sectors of our economy - especially the current crop of entitled retirees. But, my point is not that there isn't bubbles, but why care? Isn't the effect of a monetary policy to move the Aggregate Demand curve. If we are overheated and in an inflationary mode, decrease AD by the various methods the Fed has at hand. If we are below full employment, then attempt to shift AD out. But a bubble is just that. Maybe a bowing out along the curve somewhere. Let it pop or allow the rest of the AD schedule to catch up.

Subject: Re: Interest Rates From: Pete Weis To: Walk Date Posted: Sat, Mar 27, 2004 at 17:14:19 (EST) Email Address: Not Provided Message: So there are no consequences for asset bubbles, like the stock and real estate markets, popping? Would it effect consumption? What effect would stagflation such as we had in the '70's (with a faltering dollar and rising oil prices) have on a housing market which has gone up by 50-60% in many urban areas on the west coast, northeast and other selected cities in the southeast and southwest? Put that next to an employment picture which is not so rosey and tell me again this won't be a problem. What percentage of homes today have 20% or more equity in them, even at today's high valuations? What does it cost to sell a home? If 20-30% of homes across America go 'upside down' relative to their mortgage/valuation levels, what effect would this have on our financial system? Furthermore, if housing valuations start to falter what will replace this most important segment of our economic stimulus? Somehow, if our housing market begins to go in reverse, I don't see it as a 'bowing out along the curve somewhere'. I think we get to see this whole thing begin to play out in the next 2 to 5 years.

Subject: Re: Interest Rates From: Walk To: Pete Weis Date Posted: Sun, Mar 28, 2004 at 12:40:37 (EST) Email Address: Not Provided Message: I guess I have to disagree with your premises. First of all, I don't beleive there is a real estate bubble. Supply and demand are doing their normal thing here. Second, our economy is doing quite well right now and the employent picture is, in fact, rosey - 5.6 unemployment rate is pretty darn good. Third, although gas prices are rising, they are still very cheap when corrected for inflation. Interest rates very low, inflation very low, expanding economy, low unemployment. Things look pretty good. It would probably take someone like Carter to screw this up.

Subject: Awful Labor Market From: Emma To: Walk Date Posted: Sun, Mar 28, 2004 at 13:46:31 (EST) Email Address: Not Provided Message: This is the worst labor market period since 1945, in terms of job creation and wage and benefit increases.

Subject: Not sure I agree... From: Walk To: Emma Date Posted: Sun, Mar 28, 2004 at 14:12:44 (EST) Email Address: Not Provided Message: Well, 5.6 UR is not bad. Only 0.6% of the labor force is out of work by the text book definition. Perhaps there is job creation but they are being filled overseas becuase of competitive pressures. Wages and benefits are surley not going to rise in the short term. What do you suggest be done? Wage and benefit floors only cause more unemployment. If you were president, what would you do?

Subject: epinet From: Emma To: Walk Date Posted: Sun, Mar 28, 2004 at 14:55:35 (EST) Email Address: Not Provided Message: Take a look at 'epinet.' This is sadly not a question of agreement, but labor department statistics. The unemployment rate is not the relevant statistic in this period. A mark of how weak the labor market is lies in the Federal Reserve holding to a 1% Federal Funds rate, and the 40 year lows for bond yields. When the labor market finally improves interest rates will finally climb. This is easily the poorest labor market recovery from a recession since 1945.

Subject: Re: Interest Rates From: Econochick To: Pete Weis Date Posted: Fri, Mar 26, 2004 at 19:07:11 (EST) Email Address: Not Provided Message: If interest rates were raised, it would certainly burst the real estate bubble. But wouldn't that hurt most Americans - especially in light of unemployment levels? The weaker dollar does make our goods more competitive abroad. Given this, with a stronger dollar at this point we would probably lose even more jobs to offshoring (scary to think!!). Also, the idea of lower interest rates is to stimulate investment in the private sector which will hopefully create more jobs. But there's a lag between investment in a new business or branch and hiring new people because you obviously don't hire people the day you borrow money for your new venture. We've recently had the internet bubble burst and, since there was nothing to replace it, there will be some lag in re-employing those folks and absorbing new labour coming into the market. An increase in interest rate now would stall budding businesses. I understand your point about retirees but I'm not sure that we wouldn't be giving up too much in our economy to boost the incomes of retirees by a small amount. One idea for retirees is to take some of the investment out of bonds and put it into large, mature companies that pay a high dividend. Dividends are taxed at only 15% now and some companies pay very substantial ones.

Subject: Housing From: Emma To: Econochick Date Posted: Sat, Mar 27, 2004 at 16:38:07 (EST) Email Address: Not Provided Message: Simply because real estate prices have increased in desirable areas, does not mean there is a housing bubble. There is no reason to believe there will be much of a decline in housing prices when interest rates rise unless there is a deep recession, and the Federal Reserve will try to prevent a recession by working gradually when the time comes to raise rates.

Subject: Re: Interest Rates From: Pete Weis To: Econochick Date Posted: Sat, Mar 27, 2004 at 11:30:12 (EST) Email Address: Not Provided Message: Actually, I believe raising interest rates would cause some serious problems at this point. But isn't it interesting to hear calls from some pretty savvy people (at the 'Economist', Bill Gross, the chief economist at Morgan-Stanley, and now the New York Fed) to raise rates even when they themselves know this would cause alot of pain. Are they thinking if the Fed doesn't do it now then at some time, perhaps in the near future, the 'market' will do it anyway? You wonder if they believe the 'battle' for our economy is lost on the ground we now occupy and they are thinking it's best to cut our loses and seek higher ground to make a more viable stand? Unfortunately, the weaker dollar hasn't done much to reduce our current account deficit, since so far the Japanese and Chinese have concurrently weakened there currencies. I believe the Europeans will be forced to follow America's and Asia's example. We talk about avoiding the damaging tariff wars of the thirties but today we have currency wars which attempt to accomplish the same goal as broad based tariffs. I think its a risky strategy especially for a nation with such large debts. Can we continue to promote a long, controlled drop in the dollar without any serious accidents (a sudden, steep collapse)? The irony, is that any stoppage in Japan's and China's willingness to play this game could bring on this collapse. Maybe it all comes down to the world's faith in the US consumer and the US dollar. As long as US consumers keep buying and our dollar doesn't appear ready for a freefall then our creditors will continue lending. Any significant slowdown by the US consumer or overly steep drop in the dollar (or even rumors of real trouble with the dollar) then our creditors may 'pull the plug'. Right now, with little to no room to lower interest rates, there is no real 'downside protection' for the bond, stock or real estate markets. Your suggestion for elderly investors to get into the stock market by buying into 'large, mature companies that pay high dividends' is exactly what our parents and grandparents who depend on investments to pay monthly living expenses are being forced to do. But in a broad, prolonged market turndown they could be putting their life savings at risk. This is what we used to tell retirees not to do. If even Buffet sits there with 36 billion in cash, are we going to tell our parents and grandparents to get into the stockmarket at this time? Anyway, these are interesting times. Ten years from now economists and others may me talking about this time as a moment where we came close to disaster but managed to pull through. Or they may be debating about why things went so wrong - should Greenspan have raised rates in 1996-1997, are asset bubbles more dangerous to an economy than inflation, is a Fed Chairman really independent from the pressures of political influence and the power of public opinion? We don't know the answers to these questions yet, but it will be amazing to see these events play out.

Subject: Re: Interest Rates From: Terri To: Econochick Date Posted: Fri, Mar 26, 2004 at 21:03:57 (EST) Email Address: nma@hotmail.com Message: 'The weaker dollar does make our goods more competitive abroad.'Unilateral acting = raising global interdependant demand?.'Given this, with a stronger dollar at this point we would probably lose even more jobs to offshoring (scary to think!!).'Not necessarily.'Also, the idea of lower interest rates is to stimulate investment in the private sector which will hopefully create more jobs.'The raise of productivity and competivity can only be achieved through the purchasing of machines and the firing human resources?'But there's a lag between investment in a new business or branch and hiring new people because you obviously don't hire people the day you borrow money for your new venture.'Yes and No.(No lag, short term effect.Yes, long term effect.) 'We've recently had the internet bubble burst and, since there was nothing to replace it...'Petrol?'An increase in interest rate now would stall budding businesses.'Yes! 'One idea for retirees is to take some of the investment out of bonds and put it into large, mature companies that pay a high dividend. Dividends are taxed at only 15% now and some companies pay very substantial ones.'Sorry, too late.

Subject: Re: Interest Rates From: Jennifer To: Pete Weis Date Posted: Fri, Mar 26, 2004 at 16:57:13 (EST) Email Address: Not Provided Message: Remember that inflation small or large effects each family differently. Gasoline is a problem if you drive large distances, but not if you walk to work or ride a bus or train as in New York City. There are selective price increases, but there is little general inflation in Amercia or Europe and deflation in Japan.

Subject: Re: Interest Rates From: Pete Weis To: Jennifer Date Posted: Sat, Mar 27, 2004 at 11:51:21 (EST) Email Address: Not Provided Message: 'There are selective price increases, but there is little general inflation in America or Europe and deflation in Japan.' Well, the 'selective price increases' seem to be the regular monthly bills we pay - mortgage payments, grocery bills, insurance bills, heating and electric bills, medicines (amount not covered by insurance), college expense for your child, etc. There also have been considerable increases in the dollar costs of raw materials and energy used by US manufacturers. You may argue that low interest rates have reduced mortgage payments, but in fact, home sellers have jacked up the price of their homes to take away any advantage for the buyer. Furthermore, most of those refinancing have not taken advantage of their refinancing to lower their monthly mortgage - they've taken Greenspan's advice and increased their mortgages (often with higher monthly payments - despite lower rates) to help the economy survive just a bit longer.

Subject: A New U.S Economy From: Mik To: All Date Posted: Thurs, Mar 25, 2004 at 16:39:15 (EST) Email Address: Not Provided Message: I'm not a fan of the current administration but a thought hit me, in which they may actually be doing some good (perhaps not intentionally) - and I would welcome some discussion (especially from the ever cool Econochick) I was watching a TV program that spoke of how Keynes first gained credibility by the US administration. It appeared at first that the US administration did not fully believe that Government had a big role to play in stimulating the economy (as Keynes suggested). Leading up to the second World War, the US started spending heavily in developing arms and found itself stimulating the economy well beyond what they imagined. So many industries sprung out of this huge arms spending, that Keynes theory gained serious recognition by the US. The horrible thought struck me when I learned about the vast amounts of money being spent by the current administration in the Military. Then the second thought hit me - what are the current spin-offs of the military spending and will it not have major positive impacts in the US economy? What will the US economy of the future look like? Look at the huge amounts being spent in missile technology and the huge leap forward the US will make in rocket science (as an example). What about the huge leaps in avionics, computer systems, etc, etc. Could this be a repeat of the WWII effort? As we move into the 21st century, could the US economy of the future be based on hightech rockets, super jet liners, ultra-advanced computer technology, etc, etc? Comments?

Subject: Re: A New U.S Economy From: Pete Weis To: Mik Date Posted: Sat, Mar 27, 2004 at 16:14:13 (EST) Email Address: Not Provided Message: Perhaps the biggest economic benefit of WW II (for the US) was the fact that America was the only industrial power in the world to emerge unscathed. All the other industrial powers had their factories bombed to rubble. It took them until the late '60's and '70's to catch up. Based on that, our best chance for a good economic future would be to bomb European, Japanese, Chinese manufacturing plants and Indian Universities into the stoneage. In addition, we might consider napalming competing agricultural regions of the world. Sorry, I couldn't resist. But once the anger subsided and desperation took over we would be in the same position we were in immediately after WW II - minus the great supply of natural resources we had at the time.

Subject: Re: A New U.S Economy From: Econochick To: Pete Weis Date Posted: Sat, Mar 27, 2004 at 18:54:24 (EST) Email Address: Not Provided Message: Pete!!!! Don't be mean!!! Who's going to buy our goods to reduce that current account deficit if we reduce Europe to rubble??!! And then we'll have to have another Marshal Plan....too much work. Sigh. Besides, just wait, if Germany's an indicator Europe will do itself in. We won't be better off.

Subject: Re: A New U.S Economy From: B.B. To: Pete Weis Date Posted: Sat, Mar 27, 2004 at 16:20:46 (EST) Email Address: Not Provided Message: I thought that was the plan. Quite right, by the way.

Subject: Re: A New U.S Economy From: Econochick To: Mik Date Posted: Fri, Mar 26, 2004 at 17:57:58 (EST) Email Address: Not Provided Message: This is a very interesting question indeed. Although I would have to wonder why you thought the current administration means to do 'no good'. Logically, it is beneficial for ANY administration to try to make things better because it wants to be re-elected. For instance, I doubt that Clinton intended to weaken our National Defence by significantly reducing the intelligence department. He was trying to cut government spending post-cold war - a good thing. The dissaray it left the department in (according to Clarke) was certainly an unintended consequence. By the same token, it doesn't benefit the Bush administration to destroy the country it is trying to run. Some decisions may be better than others but I don't think any of our past or present presidents INTEND to destroy the country. But I digress... Keynes developed his demand-side model (or when it became popular - I've now forgotten which) around the time of the depression - which was pretty much world wide. There are (simplictically) two sources of economic stimulus - government and private sector. During the early 30's the private sector was completely dead and no-one had money to invest in private industry. Thus, the government began to embrace a demand-side economic strategy and began to spend spend spend. In fact, the first such spending was to build things like public parks - anything to employ people. The idea is that if the government goes into debt to employ people, those people will have money to spend and invest and that would stimulate the private sector. There has to be a balance between demand and supply-side. The supply-side (private investment) provides private sector jobs and incomes to tax that the government can then redistribute in the form of social welfare and pay down the deficit. Russia tried to go without private industry and it's economy collapsed. And (I'm Russian) it was a MISERABLE existance. Our (American) government was not stupid enough to make that mistake. WWII came at a very advantageous time because it provided a demand and supply-side stimulus. The demand-side came from our government spending on defence and the 'supply-side' came from European governments buying our goods in the lead up and during WWII. And you're absolutely right to point out how much innovation occured during that time. Plastic surgery, antibiotics and a lot of new technology were developed during that war. In my opinion, you are on the mark when you suggest that defense spending boosts GDP. However, I don't think we'll get the same boost to our economy that we got during that war for several reasons - unless we develop a 'killer app' in the process. First, the economy was in much much worse shape in the 1930's than it is now. I know people will say that our unemployment problem is lasting a long time now as it did then, but then our unemployment problem was long AND deep (much higher unemployment than now). Thus, the need for demand-side economics was high. Also, at the time the American manufacturing sector was much larger. I'm tempted to say it was over 50% of GDP but I don't remember off the top of my head. It is a much smaller part of our GDP now. So, you can do the math: huge growth in a huge sector of the economy means huge payoff, huge growth in a tiny sector of the economy, not much growth in GDP. In other words, if I were choosing an economic stimulus, I would not choose defense spending. I would spend on defense only because we needed defense specifically. Now, all bets are off if we develped a killer app type of thing that led to more innovation and to whole new industries. That happened during WWII. That's what you're talking about in the latter part of your post. In other words, a huge leap in a technology that creates a whole new industry - like PC's and internet. New technologies EXPAND the economy. We no longer travel along and within the curve of the 'economic frontier' (if I remember the name correctly) but we actually SHIFT the curve to the right - i.e. expand the economy. This is precisely how the US has grown its economy to the largest in the world BY FAR - twice the size of the second largest. From a previous post, I understand that Nat works in the field of technology and, in particular, software. So, it would be really interesting to hear what he thinks expecially about this last bit. Now, I am fairly certain that Krugman rejects the keynesian model for today's economy. Partially becauce of the much smaller manufacturing sector and partially because there is (compared to the 1930's) a very functional private sector. While he is not a supply-side economist, in his academic work (that's mostly my experience with him), he takes a balanced approach. So, perhaps more demand-side but not eliminating the private sector. I'm afraid that military spending is probably here to stay whether Mr. Kerry or Mr. Bush leads us in the next four years. Unfortunately, we need to beef up our intelligence departments, better the communications within departments and beef up defence of our interests abroad because of the now so-clear terrorist threat. As I sit in my NYC apartment, I often hear the air force planes patrolling our air space. It's unsettling. If that is the case, then let's hope for your scenario of whole new industries coming from that defence spending. We could certainly use a little stimulus in our economy, wouldn't you say? Thanks for bringing it up - it's an interesting point.

Subject: Re: A New U.S Economy From: Terror stoppa To: Econochick Date Posted: Sat, Mar 27, 2004 at 00:03:47 (EST) Email Address: Not Provided Message: Yes, lets put more troops in more countries. I think there are still 2 or 3 without US military bases. Big mistake. Also, we need to install more leaders friendly to US business interests. People in third world countries still want too much for their labor and natural resources. You'd think half a millenium of killing them would have woken them up. Apparently not. If we do all these things we should stop terrorism.

Subject: Re: A New U.S Economy From: Paul G. Brown To: Mik Date Posted: Fri, Mar 26, 2004 at 15:51:41 (EST) Email Address: Not Provided Message: Some data to chew on. Government spending, as a percentage of GDP, reached a peak of just over 40% during WWII. Fiscal stimulus on this scale is mind-boggling. But that was a time of national emergency, and very few would consider it a mistake. (BTW: Look at the jump in G as % of GDP post Roosevelt's election in 1932. That's a jump of 6%, but such was the output gap, and the hysteresis effect of 5 years of depression, that it had a relatively modest effect on GDP growth. But OK, let's allow that fiscal stimulus is a good thing. The question is, why would military spending be a better way of achieving these goals than, say, a national campaign to end US reliance on imported petro-chemicals? The scientific and technical challenges are at least as great, and the effort would have both short and long term benefits: national security implications, make the US a leader in the development and use of non-oil energy, etc, etc. The same argument goes for tax cuts. Reducing tax burden puts more money in the consumer's pockets which increases savings and consumption. But in the details not all tax cuts are created equal. Tax cuts to those with higher relative incomes creates, arguably, more saving than spending. Not a bad thing, when what is needed is additional capital investment, but it represents a missed opportunity (not to mention prolonged misery) in these times. BTW: I retract my earlier enthusiasm over Greenspan's willingness to point out 'turds on plates'. It's true that there is one there, and it's true that no one wants to mention it, but what Greenspan pointed to was not it.

Subject: Re: A New U.S Economy From: B.B. To: Paul G. Brown Date Posted: Fri, Mar 26, 2004 at 16:13:36 (EST) Email Address: Not Provided Message: Excellent point. Why shouldn't government fiscal stimulus programs be for helping people, instead of killing them? People will then reap the direct benefits of the spending program itself, in addition to any spin-offs that result from it. Of course we all know why this is unlikely to happen, but its an excellent point nonetheless.

Subject: Re: A New U.S Economy From: Mik To: B.B. Date Posted: Mon, Mar 29, 2004 at 18:04:47 (EST) Email Address: Not Provided Message: Thanks for your inputs guys. Econochick - again you make me smile with your insight. I just want to point something out - I said I don't like the current administration but I tried to point that although it wasn't their express intention - they may actually be doing something good if we think laterally. I'm sure the current administration means well... but... well... hey read Krugman's opinions on Bush and his merry men. Also note that I am sure there are many better places to commit gov spending and push the economy forward. Hey - no argument here. But considering the paradigm that Bush lives in - his angle is 'oil and military strength'. I'm just trying to analyse his angle not argue for or against it. Now I do want to highlight a point about 'rocket science'. I do believe that even in our modern age of a recent Mars landing, we are still in the baby stages or rocket science. This top aero-designer (who's name I think is Bert Rutan) made an amazing statement when he explained how our current technology has slowing dramatically in comparison with the jet-age of the 60's. Just recently we saw the launch of the 'X-prize' - a competition for a private organizations to put people in space for commercial purposes. And! last night I watched a test on a new aircraft that went to mach-7 in a study on getting man into space at a cheaper cost. China has now entered into the exclusive club of man missions to space. It is obvious, that we are on the frontier of a new dawn in civilisation and economics to suit. Ironically enough, the lessons that are going to be learnt out of the Star Wars program (in my opinion) are not going to be 'how to shoot down an incoming missile' but rather to spear head whole new rocket sciences and the economic ripple effect for the leading nations is going to be - whole new economic ventures. I just realised that I shouldn't have read Arthur C Clarke.... am I talking crap?

Subject: Re: A New U.S Economy From: Mik To: B.B. Date Posted: Mon, Mar 29, 2004 at 18:04:29 (EST) Email Address: Not Provided Message: Thanks for your inputs guys. Econochick - again you make me smile with your insight. I just want to point something out - I said I don't like the current administration but I tried to point that although it wasn't their express intention - they may actually be doing something good if we think laterally. I'm sure the current administration means well... but... well... hey read Krugman's opinions on Bush and his merry men. Also note that I am sure there are many better places to commit gov spending and push the economy forward. Hey - no argument here. But considering the paradigm that Bush lives in - his angle is 'oil and military strength'. I'm just trying to analyse his angle not argue for or against it. Now I do want to highlight a point about 'rocket science'. I do believe that even in our modern age of a recent Mars landing, we are still in the baby stages or rocket science. This top aero-designer (who's name I think is Bert Rutan) made an amazing statement when he explained how our current technology has slowing dramatically in comparison with the jet-age of the 60's. Just recently we saw the launch of the 'X-prize' - a competition for a private organizations to put people in space for commercial purposes. And! last night I watched a test on a new aircraft that went to mach-7 in a study on getting man into space at a cheaper cost. China has now entered into the exclusive club of man missions to space. It is obvious, that we are on the frontier of a new dawn in civilisation and economics to suit. Ironically enough, the lessons that are going to be learnt out of the Star Wars program (in my opinion) are not going to be 'how to shoot down an incoming missile' but rather to spear head whole new rocket sciences and the economic ripple effect for the leading nations is going to be - whole new economic ventures. I just realised that I shouldn't have read Arthur C Clarke.... am I talking crap?

Subject: Re: A New U.S Economy From: B.B. To: Mik Date Posted: Fri, Mar 26, 2004 at 11:16:38 (EST) Email Address: Not Provided Message: It worked for the Soviets. For a while. Tends to piss people off when almost none of the resources of a nation go toward their well-being, though.

Subject: Re: A New U.S Economy From: malcolm To: Mik Date Posted: Fri, Mar 26, 2004 at 02:37:37 (EST) Email Address: Not Provided Message: I think it may have some stimulatin effect but not as much as it did in WW2. Because now only a fraction of workforce work in defence industry. If that was the case to stimulate the economy, I think Russia would the richest country of the Earth. Because Russia spent bigger proportion of its GDP in Military for such a long time. bye

Subject: Re: A New U.S Economy From: Adrian B. To: malcolm Date Posted: Fri, Mar 26, 2004 at 09:35:36 (EST) Email Address: Not Provided Message: On the message board of a site dedicated to a liberal economist, a right-wing troll that thinks dropping the a-bombs on Japan was a good thing, Ronald Reagan was awesome, multinational corporations driving down wages and destroying the environment is a windfall for all, and people are poor cause they aren't innovative enough is 'cool'. Interesting site you have here.

Subject: Re: A New U.S Economy From: Nat To: Adrian B. Date Posted: Fri, Mar 26, 2004 at 10:52:03 (EST) Email Address: Not Provided Message: Hey, I am at the point where I am considering the use of fuel-air munitions to motivate my 14 year old to do his homework. Who says our military expenditures don't have a domestic application?

Subject: Re: A New U.S Economy From: Econochick To: Nat Date Posted: Fri, Mar 26, 2004 at 16:49:03 (EST) Email Address: Not Provided Message: Let me know how that works for ya, Nat!! I need all the advice I can get. Economics is child's play compared to raising kids, eh? LOL.

Subject: Ha Ha From: Emma To: Nat Date Posted: Fri, Mar 26, 2004 at 14:59:01 (EST) Email Address: Not Provided Message: Must do our homework!

Subject: Outsourcing From: Emma To: All Date Posted: Thurs, Mar 25, 2004 at 16:04:42 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/webfeatures_snapshots February 2004: India's industry association of software and related companies (NASSCOM) published an analysis of recent trends indicating that the professional jobs in India's software export sector rose by 150,000 from 1999 to 2003. Given that 67.7% of its software exports go to the United States, this growth implies that Indian software jobs servicing the U.S. market have increased by roughly 100,000 over the last four years. The NASSCOM report also indicates that its two largest customers abroad are in the banking, financial services, and insurance industry (39% of exports) and in the manufacturing industry (12%). Both industries have traditionally employed many people to produce software in-house. Increased movement of work overseas that had been formerly done in-house at these companies may explain why U.S. jobs fell by 154,000 in software occupations but only 81,000 in software-producing industries between 2000 and 2002. The loss of software jobs lands an especially hard blow to the U.S. labor market because of their high quality. Software-producing industries and software occupations pay exceptionally high salaries. Annual salaries in all private industries averaged $36,520 in 2002, while salaries averaged $99,425 for workers in the software publishing industry, $76,051 in the custom software industry, and $75,568 in the computer systems design industry. Salaries for software occupations averaged $65,200 in 2002. Perhaps most disturbing, faster-than-average job declines occurred in the two highest paid software occupations: computer and information systems managers and computer information scientists.

Subject: Taiwan From: Emma To: Emma Date Posted: Thurs, Mar 25, 2004 at 16:07:02 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/19/business/worldbusiness/19jobs.html After an Exodus of Jobs, a Recovery in Taiwan By KEITH BRADSHER TAIPEI, Taiwan - Many Americans are becoming alarmed as factories and jobs disappear to China. But by Taiwan's standards, American losses so far have been modest. Manufacturing here has shrunk to only a quarter of the economy from half in the late 1980's, as tens of thousands of companies shifted operations across the Taiwan Strait to the mainland. Unemployment more than tripled, from 1.5 percent through the early 1990's to 5.2 percent in 2002. Entire industries, like the manufacture of many plastic products, largely vanished, lured by Chinese wages that are a fifth of those in Taiwan. But while the economy here still has troubles, there are signs that Taiwan has turned the corner. The economy has grown rapidly since a SARS virus outbreak was quelled last June, and unemployment has dropped abruptly, to 4.5 percent, in the last few months. The recovery may provide lessons, economists say, for the United States and the European Union as they struggle to compete with China and other low-wage countries....

Subject: Re: Taiwan From: Jacques To: Emma Date Posted: Thurs, Mar 25, 2004 at 16:29:16 (EST) Email Address: nma@hotmail.com Message: 'The recovery may provide lessons, economists say, for the United States and the European Union as they struggle to compete with China and other low-wage countries....' 'economists say...'.I don't believe in 'economists', I believe in Paul and in his magnificient and Nobel-worth 'New Trade Theory'!

Subject: Florida From: Emma To: Emma Date Posted: Thurs, Mar 25, 2004 at 16:09:07 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/22/business/worldbusiness/22ORAN.html In Florida Groves, Cheap Labor Means Machines By EDUARDO PORTER IMMOKALEE, Fla. — Chugging down a row of trees, the pair of canopy shakers in Paul Meador's orange grove here seem like a cross between a bulldozer and a hairbrush, their hungry steel bristles working through the tree crowns as if untangling colossal heads of hair. In under 15 minutes, the machines shake loose 36,000 pounds of oranges from 100 trees, catch the fruit and drop it into a large storage car. 'This would have taken four pickers all day long,' Mr. Meador said. Canopy shakers are still an unusual sight in Florida's orange groves. Most of the crop is harvested by hand, mainly by illegal Mexican immigrants. Nylon sacks slung across their backs, perched atop 16-foot ladders, they pluck oranges at a rate of 70 to 90 cents per 90-pound box, or less than $75 a day. But as globalization creeps into the groves, it is threatening to displace the workers. Facing increased competition from Brazil and a glut of oranges on world markets, alarmed growers here have been turning to labor-saving technology as their best hope for survival. 'The Florida industry has to reduce costs to stay in business,' said Everett Loukonen, agribusiness manager for the Barron Collier Company, which uses shakers to harvest about half of the 40.5 million pounds of oranges reaped annually from its 10,000 acres in southwestern Florida. 'Mechanical harvesting is the only available way to do that today.' Global competition is pressing American farmers on many fronts. American raisins are facing competition from Chile and Turkey. For fresh tomatoes, the challenge comes from Mexico. China, whose Fuji apples have displaced Washington's Golden Delicious from most Asian markets — and whose apple juice has swamped the United States — is cutting into American farmers' markets for garlic, broccoli and a host of other crops....

Subject: Re: Florida From: Jacques D. To: Emma Date Posted: Thurs, Mar 25, 2004 at 17:04:58 (EST) Email Address: nma@htomail.com Message: Ah dear Emma...:'Finally, we come to human capital.This means, above all, the EDUCATION -in the broad sense- of the nation's children.Education is primarily a state and local responsability in the US, and in some ways these local governments actually tried harder;in spite of the emergence of a number of 'distressed' school districts unable to buy textbooks or furniture, overall measures such as classroom size improved.Such financial efforts, however, were surely swamped by the growing problem of child poverty and its associated social consequences.Even at the end of the Reagan expansion, poverty in the US was higher ...'(Peddling Prosperity, p.127-128, written by Genius Paul)

Subject: Nicely Stated From: Emma To: Jacques D. Date Posted: Thurs, Mar 25, 2004 at 17:20:35 (EST) Email Address: Not Provided Message: Important point.

Subject: Right-wing version of Krugman? From: ecoforum To: All Date Posted: Thurs, Mar 25, 2004 at 15:50:40 (EST) Email Address: amcbee@austincollege.edu Message: Who would the right-wing version of Krugman be? If there even is one? Doing some research for future speakers at some economics events... thanks

Subject: Re: Right-wing version of Krugman? From: Dan To: ecoforum Date Posted: Thurs, Mar 25, 2004 at 17:20:07 (EST) Email Address: nma@hotmail.com Message: A good book could be Bhagwati's 'Free Trade Today', translated in fact: 'Supply-side economics vs. demand-side economics.When to use what'

Subject: Re: Right-wing version of Krugman? From: Mik To: ecoforum Date Posted: Thurs, Mar 25, 2004 at 16:04:39 (EST) Email Address: Not Provided Message: I guess the best would be to do a google search on 'Supply Side Economists.'

Subject: Against All Enemies From: Terri To: All Date Posted: Thurs, Mar 25, 2004 at 15:49:53 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/28/books/chapters/0328-1st-clarke.html March 28, 2004 'Against All Enemies' By RICHARD A. CLARKE I expected to go back to a round of meetings examining what the next attacks could be, what our vulnerabilities were, what we could do about them in the short term. Instead, I walked into a series of discussions about Iraq. At first I was incredulous that we were talking about something other than getting al Qaeda. Then I realized with almost a sharp physical pain that Rumsfeld and Wolfowitz were going to try to take advantage of this national tragedy to promote their agenda about Iraq. Since the beginning of the administration, indeed well before, they had been pressing for a war with Iraq. My friends in the Pentagon had been telling me that the word was we would be invading Iraq sometime in 2002. On the morning of the 12th DOD's focus was already beginning to shift from al Qaeda. CIA was explicit now that al Qaeda was guilty of the attacks, but Paul Wolfowitz, Rumsfeld's deputy, was not persuaded. It was too sophisticated and complicated an operation, he said, for a terrorist group to have pulled off by itself, without a state sponsor-Iraq must have been helping them. I had a flashback to Wolfowitz saying the very same thing in April when the administration had finally held its first deputy secretary-level meeting on terrorism. When I had urged action on al Qaeda then, Wolfowitz had harked back to the 1993 attack on the World Trade Center, saying al Qaeda could not have done that alone and must have had help from Iraq. The focus on al Qaeda was wrong, he had said in April, we must go after Iraqi-sponsored terrorism. He had rejected my assertion and CIA's that there had been no Iraqi-sponsored terrorism against the United States since 1993. Now this line of thinking was coming back. By the afternoon on Wednesday, Secretary Rumsfeld was talking about broadening the objectives of our response and 'getting Iraq.' Secretary Powell pushed back, urging a focus on al Qaeda. Relieved to have some support, I thanked Colin Powell and his deputy, Rich Armitage. 'I thought I was missing something here,' I vented. 'Having been attacked by al Qaeda, for us now to go bombing Iraq in response would be like our invading Mexico after the Japanese attacked us at Pearl Harbor.' Powell shook his head. 'It's not over yet.' ...

Subject: Medicare Distortion From: Emma To: All Date Posted: Thurs, Mar 25, 2004 at 14:13:15 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/25/politics/25MEDI.html Medicare Official Testifies on Cost Figures By ROBERT PEAR WASHINGTON — The chief Medicare actuary, Richard S. Foster, told Congress on Wednesday that last June he provided the White House with data indicating that prescription drug legislation would cost 25 percent to 50 percent more than the Bush administration's public estimates. That information did not make its way to Congress for six more months. Mr. Foster said he had shared his cost estimates with Doug Badger, the president's special assistant for health policy, and with James C. Capretta, associate director of the White House Office of Management and Budget. But he said that Thomas A. Scully, who was then administrator of the Medicare program, directed him to withhold the information from Congress, citing orders from the White House in one instance. In testimony before the House Ways and Means Committee, Mr. Foster said he had struggled to preserve the independence and integrity of his office....

Subject: India's Health Care for the Poor From: Emma To: All Date Posted: Thurs, Mar 25, 2004 at 13:53:10 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/25/international/asia/25INDI.html Deserted by Doctors, India's Poor Turn to Quacks By CELIA W. DUGGER BHOMATAWARA, India — The sturdy little public clinic in this poor, sickly village was locked up one recent afternoon, but that is nothing remarkable. Rampant absenteeism among government doctors and nurses is an open secret across India and much of the developing world, and they virtually never get in trouble for not showing up. 'Sometimes the nurse is here, sometime she's not,' said Nagji Lal Pandore, a skinny old man in a saffron turban. 'Sometimes she has medicines, sometimes she doesn't. Why take a chance?' So, like many people here, his family has turned to amateur private 'doctors' who have regular hours and plentiful medications to sell. His daughter-in-law Shanti Bai, 30, went to such a doctor for a fever six months ago. He gave her an injection. The next day, she was dead and her children motherless. Villagers blamed the doctor and he fled, but the heartache remains. Mr. Pandore and his wife have broken the news to their 5-year-old grandson, but they are still telling their 3-year-old granddaughter that her mother is away on a trip. 'She cries and cries and asks, `Where is my mother?' ' he said. India has a vast primary health care system to serve its billion people, with clinics for every 3,000 to 5,000. But the system is often just a skeleton. New studies have documented the startling, damaging dimensions of chronic absenteeism — and not just in India. Researchers for the World Bank discovered through large national surveys that medical personnel were absent from their public posts 35 to 40 percent of the time in India, Bangladesh, Indonesia and Uganda, and about a quarter of the time in Peru. Researchers from the Massachusetts Institute of Technology and Princeton, in a detailed survey of 100 villages here in Rajasthan, in north India, found a no-show rate of 44 percent. When combined with absences for meetings and other work-related reasons, these vital clinics were closed more than half the time. As the United Nations leads a global effort to prevent millions of deaths from AIDS, tuberculosis, malaria and a range of childhood illnesses, the fissures in public health systems are emerging as a main obstacle. There is an increasingly heated debate among experts about whether multibillion-dollar infusions of foreign aid or politically sensitive domestic reforms are more central to repairing public health systems. What is starkly clear in India, home to more poor people than any other country, is that the health system is both starved for resources and desperately in need of reform....

Subject: Development Models From: Jennifer To: Emma Date Posted: Thurs, Mar 25, 2004 at 17:58:59 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/21/opinion/21FRIE.html?8bl Software of Democracy By THOMAS L. FRIEDMAN My favorite building in Bangalore, India's Silicon Valley, is a corporate complex called the 'Golden Enclave.' In some ways, the whole tech sector in Bangalore could be called India's 'Golden Enclave' — disconnected from the country's bad governance, as companies create their own walled enclaves, with their own electricity, bus service, telecommunications and security, and disconnected from the countryside, where many Indians still live in abject poverty. .... http://www.nytimes.com/2004/03/25/opinion/L25FRIE.html Progressive in India To the Editor: If Thomas L. Friedman wants to see firsthand a model of good governance in India, he should head out of Bangalore and visit the Indian state of Kerala. Its history has been one of radical governments and popular movements, a combination that has ensured its population a standard of health care and education that far surpasses the rest of India. But, contrary to Mr. Friedman's precepts, this hasn't been done in conjunction with globalization. Instead, the state has brought this about by a combination of radical land reform and effective provision of basic services like education, medical facilities and public food distribution. The result is a level of social well-being among the people that is hard to find anywhere else in India. AMITABH PAL Managing Editor, The Progressive Madison, Wis., March 21, 2004

Subject: defense outlays From: raj To: All Date Posted: Thurs, Mar 25, 2004 at 11:43:13 (EST) Email Address: raj@interchange.ubc.ca Message: I may be mistaken, but I am fairly sure I had once read a report (perhaps in 'The Economist') which stated that america could support military spending at roughly five or six times its current level (as of 2002). I was wondering what positive and negative effects would occur if america pursued such a strategy. It would mean greater amounts of money put into high-tech research but would this overall be beneficial to the economy?

Subject: Impossible From: Terri To: raj Date Posted: Fri, Mar 26, 2004 at 13:39:11 (EST) Email Address: Not Provided Message: An increase of such magnitude would be impossible unless there were massive tax increases or an end to social benefit spending. Also, it would focus far more spending on defense than could be productive and we should be the weaker for it in economic terms. Impossible.

Subject: Re: defense outlays From: Walk To: raj Date Posted: Fri, Mar 26, 2004 at 11:16:19 (EST) Email Address: Not Provided Message: Government spending is government spending (I made that up). It adds to GDP. But Could the federal government afford it without raising taxes? Without borrowing? Raising taxes would reduce Consumption. Borrowing would reduce Investment. Both of these scenarios would have an offsetting effect. What if the US raised its defense spending by five times in order to manufacture implenemts of destruction because it had every intention of and did use them?

Subject: Re: defense outlays From: Econochick To: Walk Date Posted: Fri, Mar 26, 2004 at 18:52:45 (EST) Email Address: Not Provided Message: Then we would be, as they say, up the creek without a paddle? An unpleasant thought indeed.

Subject: Re: defense outlays From: Econochick To: raj Date Posted: Thurs, Mar 25, 2004 at 14:08:22 (EST) Email Address: Not Provided Message: I guess you could argue that it is overall beneficial if the boosted defense prevents more horrific terrorist attacks that interrupt economic activity. But it's really hard to measure things that DON'T happen. It's a good question - but dang hard to answer.

Subject: Developing countries!!! From: malcolm To: All Date Posted: Thurs, Mar 25, 2004 at 09:47:25 (EST) Email Address: malcolmriver@yahoo.com Message: Hi! I have read many of Krugman's works. They are mostly astonishing. Based on scientific analaysis rather than slogans. But, I did not see any of his work about the problems of Developing World. US may have a huge deficit, but majority of the world live in developing countries and they have a much bigger deficit than US when compared to their GDPs. Also, most od these countries have populated young citizens who are seeking for work. But, the standard cure IMF and World Bankk gives to these countries are 'cuts in public spending in order to decrease inflation and pay the debt' which is a wonderful recipe for unemployment and liitle more than zero economic growth. When yo add up these: budget deficits foreign debts inflation high unemployment the IMF medicine which I have talked about, these countries are all candidates of long-lasting upheavel. And, that is a very crucial probelm for the humanity. What does Mr. Krugman think about that? Does he have any work on this topic?

Subject: Luskin following Paul Krugman From: jim To: All Date Posted: Wed, Mar 24, 2004 at 15:36:59 (EST) Email Address: jzmarg@aol.com Message: While perusing Atrios/Eschaton blog today, I found a piece that referred me to a website for The New American Empire. I thought it was a put on with subsites on Wealth, Values, etc. It had one guest column by of all people, Donald Luskin, who spoke about his attempt to personally, or through his agents, stalk Paul Krugman. This is old news, I know, but the column is relatively recent. Is this a put on? It seems it might be actionable. Guest Column I’m Not Going to Fall for the Banana in the Tailpipe Donald Luskin March 04, 2004 Stalking the elusive Paul Krugman can be daunting, but even the liberal Donald Luskin feels the effort is worthwile Paul Krugman spent last week trying to shake my rolling tail. As he sped around town promoting the lie that the Social Security system is 'in pretty good financial shape,' I was on him like white on rice. Despite his best efforts to give me the slip, I kept my eye on his aerial, my foot on the pedal and my obsession on overdrive as I stalked the hirsute economist across town from Monday to Friday. Here’s a typical day for Krugman: out of the house at 0730 hours after a bagel and coffee with two spoons of sugar, no cream; pop by the video store to drop off movies (Mon: Memento, Toy Story 2; Wed: I Am Sam); visit art gallery for witty reparte with 'Serge'; 2-6 mph over speed limit to office; brown bag lunch at 1230, park bench; back to office; out at 1500 (French working hours?); stop at dry cleaners, pick up white shirt (cocktail sauce stains on left sleeve, mid-forearm) and tie (dark red, green and cream diagonal stripes ... yuk!); drive to bonded warehouse, impersonate customs officer; pull into driveway around 1615 hours; putter about, research column; in bed by 2230. There’s no doubt Krugman possesses a certain amount of street smarts, enough to pull a fast one on even the most professional tail. We all know about the unfortunate 1984 surveillance operation manned by my colleagues in Beverly Hills, Billy Rosewood and John Taggart. Krugman first tried to shake the pair by having room service delivered by a portly Hispanic waiter to their unmarked vehicle while they were staking out the Beverly Wilshire Hotel, where he had played the race card to get a free penthouse suite. Despite excellent crab sandwiches, Rosewood and Taggart put duty first and were ready to roll when they spotted Krugman trying to make a getaway behind the waiter, who was blocking their view. What they couldn't have known was that Krugman had also enlisted the aid of a swishy buffet server, who supplied him with several bananas to block the surveillance car’s tailpipe. With their man on the run, Rosewood and Taggart swung around to give chase ... and their vehicle sputtered and died. It got worse for Rosewood and Taggart. Back on the stakeout the next night, Krugman had the audacity to leap into their car unannounced as a gesture of “friendship.” The devious New York Times columnist then proceeded to suborn the in-over-their-heads duo into visiting a strip club. That certainly wasn’t going by the book, but let’s give Taggart credit for refusing a drink while on duty. The long and the short of it is Rosewood and Taggart were pulled off the stakeout the next day. Replacing them were Foster and McCabe - two highly capable, if slightly arrogant surveillance men. Considering themselves the “first string” in Beverly Hills, Foster and McCabe vowed not to be fall for any bananas in the tailpipe. The new team got off to a good start, parrying a classic Krugman gambit their very first morning on duty. When the same room service waiter darted through traffic to deliver breakfast to their car, they instinctively knew their man was on the move. Sure enough, Krugman was off and away, leading them on a merry chase through Beverly Hills. Confronting him outside the home of a respectable member of the community, the art dealer Victor Maitland, Foster and McCabe deduced that Krugman was on a stakeout of his own. Alas, we’ll never know what he wanted with Maitland - their quarry gave Foster and McCabe the slip at a traffic light, courtesy of the old “stalled car that springs to life as the light turns” routine. (Krugman went on to ruin the buffet at the Harrow Club that same morning.) What we do know is that the elusive liberal economist returned to the Beverly Wilshire at some point later that night and is suspected of stealing various room amenities, including a pair of bathrobes that retailed for $79 each in 1984 (upwards of $120 in today’s dollars). I have enormous respect for Rosewood, Taggart, Foster and McCabe. But this correspondent won’t be falling for any tricks Krugman has up his sleeves. I won’t rest until I’ve tracked down the man who counsels that we ignore 'alarming reports generated by people who work at ideologically driven institutions' who are 'itching for an excuse to dismantle the [social security] system ...' and I've made him pay for what he says. So Paul, if any fat Mexicans come up to my car with room service, just so you know, I’ve got Immigration on speed-dial. As for strip clubs, I say bring ’em on - this hard on’s for you, sweetcheeks. And baby, we can talk “bananas” and “tailpipes” ... once you stop playing hard to get! Donald Luskin is chief investment officer of Trend Macrolytics LLC, an independent economics and investment-research firm. He welcomes your comments at don@trendmacro.com.

Subject: Re: Luskin following Paul Krugman From: David E... To: jim Date Posted: Thurs, Mar 25, 2004 at 20:25:17 (EST) Email Address: daveellis_39@hotmail.com Message: Don't get excited! It sounds like the real Donald Luskin, but it isn't. It is satire, but very similar in tone to Donald's original column. The original one- the one where Donald Luskin said he, Donald, was stalking Paul Krugman. a big clue is the title is from the Beverly Hills Cop movie. 'I’m Not Going to Fall for the Banana in the Tailpipe'

Subject: Re: Luskin following Paul Krugman From: David E... To: David E... Date Posted: Fri, Mar 26, 2004 at 11:45:39 (EST) Email Address: daveellis_39@hotmail.com Message: Econochick, are you a troll? Trolls dont have a sense of humor.

Subject: Re: Luskin following Paul Krugman From: Econochick To: jim Date Posted: Wed, Mar 24, 2004 at 18:59:49 (EST) Email Address: Not Provided Message: Okay, whatever it is, it seems like a huge waste of time. Why would anyone spend that much time to write something that long and that vile?

Subject: Re: Luskin following Paul Krugman From: Piranha To: Econochick Date Posted: Wed, Mar 24, 2004 at 21:14:26 (EST) Email Address: Not Provided Message: This man, Luskin, is beyond mad!

Subject: Outsourcing From: Jennifer To: All Date Posted: Wed, Mar 24, 2004 at 14:10:36 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/webfeatures_snapshots High-paying software jobs being moved abroad Software jobs, which pay some of the highest wages in America, have fallen sharply since 2000. These jobs have disappeared despite the fact that software sales to U.S. businesses in 2003 were up 4% over 2000. Comprehensive data on the number of U.S. software jobs that have moved overseas is hard to come by, but persuasive indirect evidence points towards the significant movement of software jobs to India (the most prominent of many countries to which U.S. software work is being moved)....

Subject: Re: Outsourcing From: Nat To: Jennifer Date Posted: Wed, Mar 24, 2004 at 14:30:12 (EST) Email Address: Not Provided Message: Want venture capital? Put overseas manufacturing in your business plans Venture capitalists expect entrepreneurs to use cheapest markets By John Shinal SAN FRANCISCO CHRONICLE Monday, March 22, 2004 Silicon Valley's top venture capitalists are pushing hard for tech startups to move jobs overseas to lower costs. 'There isn't a board meeting that goes by that we don't ask, 'Why aren't you being more aggressive (with software development) in India and China?' ' said Jim Breyer, managing general partner of the venture firm Accel Partners, which has backed more than 200 companies. And Accel is not alone. Other venture capitalists are sending the same message, and entrepreneurs have heard it loud and clear. Many are rushing to embrace the trend. Clarus Systems, a San Francisco startup whose software makes it easier to send phone calls over the Internet, expects to save 50 percent by sending development work overseas, according to chief executive R. Keith Giarman. Indeed, cost savings from using foreign labor are so significant that many startup CEOs now include that component in the business plans they pitch to venture capitalists. That's a big change from just three years ago, according to Peter Barris, managing general partner of New Enterprise Associates, a venture firm with offices in Menlo Park, Calif., Baltimore and Northern Virginia. Few of the startups that received funding from the firm's 2000-era fund had a built-in overseas workforce, yet many of those companies eventually sent software development overseas. Now, nearly all the business plans that Barris and his colleagues evaluate for the firm's new venture fund include an workers based in other countries. 'It's not an unusual event anymore,' said Barris. The accelerated use of overseas workers by startup companies means the trend may just be gathering steam in Silicon Valley. That's because the most successful startups will survive and one day compete with large publicly traded companies such as Oracle Corp. and Cisco Systems Inc. If the new rivals can make products more cheaply and thus sell them at lower prices than established companies, the big players will be forced to lower their costs to compete on price, or watch their profit margins erode. Within three years, Breyer predicted, software firms will need to have between 40 percent and 50 percent of their product development done overseas to compete with rivals on cost. Already, the companies in Accel's venture investment portfolio employ 25 percent of their workers overseas. That's up from less than 5 percent five years ago, Breyer said. It's also not unusual.

Subject: Jobs Programs From: Emma To: Nat Date Posted: Wed, Mar 24, 2004 at 17:30:33 (EST) Email Address: Not Provided Message: Then, what we need is fiscal policy that is designed after New Deal models. Programs to directly stimulate job creation. We are not running out of important work to be done, but we need programs such as infra-structure development that add to job creation. That is what fiscal policy should be about and not endless tax cuts for those who do not need tax cuts.

Subject: Infrastructure Dilema From: Mik To: Emma Date Posted: Thurs, Mar 25, 2004 at 14:35:06 (EST) Email Address: Not Provided Message: Emma, Your statement, 'programs such as infra-structure development that add to job creation.' Do they really add to job creation? Infrastructure projects such as dams, bridges, roads, etc comprise of three main job groups. 1. Financial/Economic consultants - to do higher level viability studies 2. Engineering Consultants - to do the design work 3. Construction contractors - to do the physical work The first two job groups can easily be (and are being) exported overseas. The last job group is being done inside the States but has already traditionally become the main employer of new immigrants. So the dilema - infrastructure may well not be a form of government spending to stimulate local job growth. Don't get me wrong - I'm not trying to insult you - I'm looking for solid suggestions that may well stem the tide of all jobs being moved overseas. Consider this - what makes your job so important that it cannot be sent overseas?

Subject: Re: Infrastructure Dilema From: Nat To: Mik Date Posted: Fri, Mar 26, 2004 at 14:56:57 (EST) Email Address: Not Provided Message: This is precisely the point that has me in a lather: I think the current trends in outsourcing will accelerate. If your work is informational: phone-base or internet-based support, bureaucratic paper pushing, the complete software development cycle, analysis of any sort, research, sales, art, engineering, web design and hosting, insurance, and publishing to name a few occupations... your job will ultimately be at risk if you are not cost competitve. The US has always leaked jobs like a sieve, however our jobs creation engine has stalled and I wonder what the next wave of opportunity will be. And when that wave arrives, what will make it so special that it won't be outsourced in a heart beat as well? My concern is that we have just entered an era where most new jobs can be filled anywhere on earth, but that our government hasn't a clue as to the implications of this reality. I suspect we have entered an era where income will stagnate or fall over the long haul for a significant portion of the population. This will affect how we fund our schools, public sector health care, roads, and military. This will also affect our attitudes towards the undocumented family that lives down the street. I agree that most protectionist policies would be counter productive. However, I find it absolutely crazy that state and federal human service organizations would consider offshoring to save costs, but it is beginning. For example, I have heard that several states have their Medicaid help desks overseas. There are very few jobs at a state or federal human service agency (our state welfare systems, employment service agencies, SSA, HCFA et al.) that could not be offshored. The loss of these jobs will only add to the problems these agencies strive to remedy. I think it is reasonable that these jobs stay in the US, and even in state, by statute. Despite my alarmist concerns, on reflection I feel there are some positives/silver linings out there. Much of the offshoring is dependent on good English and the 3rd world does not have an infinite supply of workers with this skill. However, there will be an incentive to develop more... Also, not all the world is technically gifted. Competition will flush out the weaker part of the US job market, but India does not have an infinite supply of these guys either. At some point out in the future all this will stabilize. And this competitiion might ultimately improve our educational system. But in both the short and long run it will cost us some jobs and some wages.

Subject: One more point From: Econochick To: Nat Date Posted: Fri, Mar 26, 2004 at 20:01:51 (EST) Email Address: Not Provided Message: Sorry for those couple of messed up sentences in the first paragraph. That should read 'demand for American labour', not wages. Bad editing. One important point that I forgot to bring up is that the development of a wealthier middle class in India and China will boost demand for American products. And if the Chinese and Indians (for example) are busy answering the phones and working in factories, they will have less time to innovate. The American investor will benefit because they own shares in the companies that produce the products that are now in higher demand. But more importantly, if the Indian middle class will demand more goods in general, Americans will likely fill that demand. Imagine a world in the future where, for example, Indian wages are at parity with American wages. Everybody wins because there is more demand from the newly wealthy Indian middle class and there is no longer pressure to offshore here. Americans will probably still have the upper hand, though, because innovation is very much a part of our culture and with fewer people working in menial labour jobs, we will likely have more entrepeneurs who identify and fill the needs of the growing demand of the world's newly richer middle classes. But, it will be a painful transition in the short term.

Subject: Re: Infrastructure Dilema From: Econochick To: Nat Date Posted: Fri, Mar 26, 2004 at 18:47:44 (EST) Email Address: Not Provided Message: I do enjoy reading your posts, Nat, as you bring up such good points. I wanted to touch on the point you made in the second paragraph where you said that the effect of outsourcing is to, at best, stall our wages here. That exactly what economists say and that is the effect of lower demand for US wages. However, in the long run, the 'job-bleeding' should end at the point at which the labour markets in other countries are bid up to our own wage level - on a relative basis, of course. There is a cost of offshoring and the wages of foreign workers will be discounted by that cost. That means, of course, that eventually the Indian (for example) middle-class will resemble our own. Of course, there are benefits to that as they will have better education, healthcare and lower poverty rates that should, theoretically put a smaller burden on the US. Protectionism could, of course, mean the failure of major American industries because they lack competitive edge and the loss of even more jobs. You also make an excellent point about the limits of offshoring - education, language, a finite amount of bodies, etc. And, of course, I agree with your reiteration of the long and short term effect on wages. My personal belief is that what will 'save' American jobs is continuous innovation. A start-up is unlikely to hire mainly over-seas. And let's face it, Americans are the masters of innovation. That is the thing at which we are best because that is the thing that the free market encourages most. Americans are amazing. I have a lot of faith in the American entrepeneur.

Subject: Interesting From: Terri To: Nat Date Posted: Fri, Mar 26, 2004 at 16:22:03 (EST) Email Address: Not Provided Message: Interesting comments.

Subject: Japan and Taiwan From: Emma To: Mik Date Posted: Thurs, Mar 25, 2004 at 15:52:07 (EST) Email Address: Not Provided Message: Both Japan and Taiwan have used infrastructure development as a successful means of sustaining employment through an outsourcing transition.

Subject: The Problem From: Jennifer To: Jennifer Date Posted: Wed, Mar 24, 2004 at 14:14:55 (EST) Email Address: Not Provided Message: The problem with outsourcing is not with trade or movement of tasks from country to country, but with providing comparable job opportunites for workers suffering trade related loss of occupation.

Subject: Re: Question From: Abbé de Condillac To: Jennifer Date Posted: Thurs, Mar 25, 2004 at 16:07:43 (EST) Email Address: nma@hotmail.com Message: Question:What happens within the domestic market, concerning the price of an 'out-sourced', remember, 'a source??!!! that's been delocalised', created product?

Subject: Question in return?? From: Econochick To: Abbé de Condillac Date Posted: Fri, Mar 26, 2004 at 18:50:52 (EST) Email Address: Not Provided Message: Terri, I'm not sure I understand your question. If you're asking what happens to a product that is produced by a lower-cost labour source, then that product costs Americans less money to buy because it costs less to produce. Simply put. Is that what you were getting at?

Subject: Re: Question in return?? From: Terri To: Econochick Date Posted: Fri, Mar 26, 2004 at 19:13:28 (EST) Email Address: nma@hotmail.com Message: Yes!Thus, demand increasing or decreasing?

Subject: Re: Question in return?? From: Econochick To: Terri Date Posted: Fri, Mar 26, 2004 at 20:06:35 (EST) Email Address: Not Provided Message: Thus, demand increasing - all else constant.

Subject: Re: Question in return?? From: Terri To: Econochick Date Posted: Fri, Mar 26, 2004 at 21:40:16 (EST) Email Address: nma@hotmail.com Message: You can't see without eyes, you can't walk without legs, you can't think without brain, you can't hear without ears... Your legs can't work without muscles, your brain can't work without neurons... Your muscles can't...etc. etc. Thus, demand increasing -everything increasing = nothing constant.

Subject: Waxing Philosophical From: Econochick To: Terri Date Posted: Fri, Mar 26, 2004 at 22:51:54 (EST) Email Address: Not Provided Message: You're very philosophical tonight, Terri. If US income declines enough, demand for even cheaper goods will either remain the same or will decline - depending on the amount of income decline. But, then demand for their substitutes increases. And so on and so on...

Subject: Price Should Fall From: Jennifer To: Abbé de Condillac Date Posted: Thurs, Mar 25, 2004 at 17:49:29 (EST) Email Address: Not Provided Message: Depending on competition in market, the price should fall.

Subject: I want to buy the book! From: onur To: All Date Posted: Wed, Mar 24, 2004 at 08:05:59 (EST) Email Address: malcolmriver@yahoo.com Message: Hi! Although I am not an American, I am a fan of Paul Krugman and especially his writings are quite good. and, I want to buy his latest book. but, I am not a resident of US. Do I have the chance to buy the book or wait until it is translated to my language.

Subject: Making a Living From: Emma To: All Date Posted: Tues, Mar 23, 2004 at 14:29:43 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/23/nyregion/23hunger.html Agencies Say Hunger on Rise Outside Cities Across Region By ADRIENNE LU Come payday, the tough choices begin for Roxie Jackson. Her salary as a physical therapist's assistant has sustained her family of five in the middle-class suburb of Bloomfield, N.J., since her husband lost his job two years ago and income from her second job, with Mary Kay, declined before she eventually left it. So each week, Ms. Jackson weighs which bills she must pay and which must wait. And one factor is ever-present in her budget deliberations: hunger. 'My refrigerator and cupboard have been bare more than once,' said Ms. Jackson, 35, who said that her home telephone has been disconnected since last year because she could not afford to pay for both utilities and groceries. 'It's still a struggle.' According to hunger experts and federal statistics, a growing number of suburban families are struggling to put food on their tables. Nationally, the rate of households facing limited or uncertain availability of food, what the federal government calls food insecurity, has been rising, reaching its highest point in four years. From 1999 to 2002, the latest year for which figures are available, the number of such households rose by about 15 percent, or about 1.5 million, according to the United States Department of Agriculture, bringing the number to just over 12 million. On the surface, hunger may seem more severe and more intractable in the hearts of the largest cities. But experts say that more and more people who live in suburban and outlying areas are also having to make hard choices that sometimes leave them scrambling for their next meal. Nationwide, the number of suburban households facing food shortages rose by roughly a quarter-million from 2001 to 2002....

Subject: Re: Making a Living From: Yann To: Emma Date Posted: Wed, Mar 24, 2004 at 06:31:47 (EST) Email Address: Not Provided Message: Poor Keynes and his (so appealing) 'Economic Possibilities for our Grandchildren' (1930)! Even in the so rich USA, the 'economic problem' is not solved. Will it be solved in 2030, at least in the USA? No? Why? Is there a solution?

Subject: Re: Making a Living From: Econochick To: Yann Date Posted: Wed, Mar 24, 2004 at 19:14:42 (EST) Email Address: Not Provided Message: Yann, economics is not a problem, so it can't be solved. Economics is the study of decisions people make in an environment of unlimited wants and needs and limited resources. To solve that dilemma, we would reach a state of Utopia. I think that's pretty unattainable. So, grab your favourite profession, come onboard and enjoy the ride with the rest of us :-)

Subject: Re: Making a Living From: Yann To: Econochick Date Posted: Thurs, Mar 25, 2004 at 03:58:05 (EST) Email Address: Not Provided Message: Dear Econochick, I think there's been a little misunderstanding. Of course, economics is not a problem. But the 'economic problem' of Keynes in his 1930 paper might be solved, one day. Ideally, economists pursue a basic goal: managing to free mankind from its material needs. Why? Because the 'economic problem' is not (and cannot) be the permanent problem of mankind. If, one day, mankind is free from its material needs, it will be able to devote itself to what is really important: human relationships, friendship, the arts, and so on. This day, economists will be like dentists! Am I really wrong? Am I so innocent and naive?

Subject: Re: Making a Living From: Econochick To: Yann Date Posted: Thurs, Mar 25, 2004 at 07:33:37 (EST) Email Address: Not Provided Message: We all have at least basic material needs such as clothing and housing, then we have other needs like healthcare, vacations from our jobs, education for our children, rule of law. Economics does not seek to free us from our material needs because it is impossible. Economics studies the trade-offs we make between them. For example: how much does each additional hour of work (so, time away from our families and other important relationship) yield relative to how much time I'm giving up with my family? Economists study these trade-offs and (simplistically) try to determine equilibriums. In fact, Nobel Laureate in Economics, Daniel Kahneman's studies show that, in general, our hunger for material wealth declines after about the average American middle-class level of wealth. Thus, according to Kahneman, the equilibrium is somewhere around a middle-class income. Actually, based on just the little bit of information I have from your two posts, I think you might be interested in his work because Kahneman studies behavioural finance - a fairly new field of study. A lot of his work is measuring things like satisfaction levels and challanges the long-held belief in economics that man is a 'rational' actor. Check it out.

Subject: Re: Making a Living From: Mik To: Econochick Date Posted: Thurs, Mar 25, 2004 at 15:07:38 (EST) Email Address: Not Provided Message: Hhmmm I think that this discussion has an overlap between Economics and Maslow's Hierarchy of needs. As Econochick correctly pointed out - economics is the study of how people best use their limited resources. Human 'needs' such as health, material needs, security, esteem needs, etc on an individual level is studied through Maslow. I guess there is an overlap but the two studies are quite different.

Subject: Yeah, Mik!! From: Econochick To: Mik Date Posted: Thurs, Mar 25, 2004 at 17:04:38 (EST) Email Address: Not Provided Message: You are so right, Mik!! Good old Maslow. From basic shelter and food to self-actualization! I think I studied Maslow in Management and Marketing classes and Econ in...well...Econ classes. But we're talking a looooong time ago. So I don't remember. But I was actually thinking of good old Maslow when I was writing my post! Well, at least we're all involved in that all-important critical thinking process and staving off dementia :-)

Subject: Yes Mik From: Yann To: Econochick Date Posted: Fri, Mar 26, 2004 at 03:19:40 (EST) Email Address: Not Provided Message: Mik, I agree with you.

Subject: Thank you, Paul! From: Bernadette Say To: All Date Posted: Mon, Mar 22, 2004 at 16:48:40 (EST) Email Address: nma@hotmail.com Message: Thank you, Paul!You are definitely Keynes' heir: An optimist!

Subject: Agreed From: Emma To: Bernadette Say Date Posted: Tues, Mar 23, 2004 at 14:28:30 (EST) Email Address: Not Provided Message: Thank you, Paul!

Subject: Re: Thank you, Paul! From: Econochick To: Bernadette Say Date Posted: Mon, Mar 22, 2004 at 17:30:04 (EST) Email Address: Not Provided Message: You think he'll get rich like Keynes? But Paul is definitely apposed to a Keynesian approach in the modern day - the economy is too structuraly different. Optimism would be nice. Not enough of it on this board. Too bad.

Subject: Don't even think about it From: Troll To: Econochick Date Posted: Mon, Mar 22, 2004 at 19:37:37 (EST) Email Address: Not Provided Message: http://www.cabinfever.org/images/fgm-troll.jpg

Subject: NY Housing Market From: Emma To: All Date Posted: Mon, Mar 22, 2004 at 16:41:57 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/21/realestate/21COV.html Supply Varies, Demand Doesn't By DENNIS HEVESI AS though her convoluted deal of nine years ago did not already constitute a broker's symphony — juggling all interested parties so that three apartments on the same floor of a Park Avenue co-op building could be sold and converted into one — Suzanne Sealy has written a coda. In a market of constricted inventory, Ms. Sealy of the William B. May brokerage company recently persuaded the owners of that grand 3,400-square-foot apartment to relinquish their dream home, to sell it to a new buyer and then to buy another, somewhat smaller, apartment a few blocks north on Park Avenue. 'I really had to scurry around to find something for them,' she said. Such are the lengths to which brokers in the upscale environs of Manhattan and Brooklyn Heights go these days as listings have dwindled, bringing prices and buyer frustrations to a boil. In the other boroughs and through much of the suburban ring around New York City, however, a more balanced market equation has prevailed over the last year, with inventory warming or cooling from community to community and prices percolating upward.... As Jason Bram, a regional economist with the Federal Reserve Bank of New York, put it: 'If you had told somebody at the beginning of 2001 that the regional economy would be hit by a national recession, a steep downturn in its key financial sector and the destruction of the World Trade Center, they would have found it unimaginable that the housing market would hold up this well, let alone spiral upward as it seems to be doing now. Yet that's what's happened.' One broad-brush indicator comes from the massive national database of sales compiled by the Office of Federal Housing Enterprise Oversight. According to the federal data, average home prices in New York State rose by 11.6 percent between the fourth quarter of 2002 and the fourth quarter of 2003 (the housing enterprise office does not provide dollar figures). New Jersey saw an even higher increase during the year, 12.1 percent. In Connecticut, the increase was 9.5 percent. All three states surpassed the national increase of 8 percent. 'There has been no easing at all in price patterns,' said James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. 'And sustained low interest rates certainly have had the effect of increasing housing purchasing power, even if incomes are stable.' ...

Subject: Re: NY Housing Market From: spaniel To: Emma Date Posted: Tues, Mar 23, 2004 at 08:55:53 (EST) Email Address: Not Provided Message: In Spain we've been having annual increases around 15% for 4 years in a row now. A small house now costs around 500.000 euro, my annual salary being around 20000. And no appartments to rent out there. :-(

Subject: Spanish Housing From: Emma To: spaniel Date Posted: Tues, Mar 23, 2004 at 16:41:13 (EST) Email Address: Not Provided Message: Though I have argued there is no housing bubble in America, I have been wondering about Spain and in turn wondering about America. The bouyancy in the Spanish economy is coming from the housing sector almost exclusively, and unlike other European countries and unlike the majority of American cities renting is a problem. We must think about what is happening in Spain.

Subject: Wow!! From: Econochick To: spaniel Date Posted: Tues, Mar 23, 2004 at 12:14:41 (EST) Email Address: Not Provided Message: That's pretty intense, Spaniel. That's about double the rate in New York. What part of Spain is that? Is that the case for most cities there?

Subject: I Love NY From: Econochick To: Emma Date Posted: Mon, Mar 22, 2004 at 17:25:23 (EST) Email Address: Not Provided Message: Thanks for the post, Emma, for yet another data point in my apartment buying analysis which usually ends with '...and that is why we will be renting for the foreseeable future'. By the way, for interested parties, occupancy rates in NYC rental buildings are down and so are rents. I think it may be because more people are buying and the higher than average unemployment rate in NYC is reducing the number of people who would rent (presume rent before rent).

Subject: The smear machine cranks up again! From: Bernadette Say To: All Date Posted: Mon, Mar 22, 2004 at 16:35:06 (EST) Email Address: nma@hotmail.com Message: http://www.guardian.co.uk/worldlatest/story/0,1280,-3875905,00.html

Subject: Technology and Labor From: Jennifer To: All Date Posted: Mon, Mar 22, 2004 at 15:10:35 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/22/business/worldbusiness/22ORAN.html In Florida Groves, Cheap Labor Means Machines By EDUARDO PORTER IMMOKALEE, Fla. — Chugging down a row of trees, the pair of canopy shakers in Paul Meador's orange grove here seem like a cross between a bulldozer and a hairbrush, their hungry steel bristles working through the tree crowns as if untangling colossal heads of hair. In under 15 minutes, the machines shake loose 36,000 pounds of oranges from 100 trees, catch the fruit and drop it into a large storage car. 'This would have taken four pickers all day long,' Mr. Meador said. Canopy shakers are still an unusual sight in Florida's orange groves. Most of the crop is harvested by hand, mainly by illegal Mexican immigrants. Nylon sacks slung across their backs, perched atop 16-foot ladders, they pluck oranges at a rate of 70 to 90 cents per 90-pound box, or less than $75 a day. But as globalization creeps into the groves, it is threatening to displace the workers. Facing increased competition from Brazil and a glut of oranges on world markets, alarmed growers here have been turning to labor-saving technology as their best hope for survival. 'The Florida industry has to reduce costs to stay in business,' said Everett Loukonen, agribusiness manager for the Barron Collier Company, which uses shakers to harvest about half of the 40.5 million pounds of oranges reaped annually from its 10,000 acres in southwestern Florida. 'Mechanical harvesting is the only available way to do that today.' ...

Subject: Interesting From: Econochick To: Jennifer Date Posted: Mon, Mar 22, 2004 at 17:37:49 (EST) Email Address: Not Provided Message: Thanks for the post, Jennifer. Very interesting.

Subject: Debunking the Economist -- again From: BB To: All Date Posted: Mon, Mar 22, 2004 at 14:08:32 (EST) Email Address: Not Provided Message: Debunking the Economist -- again Is this the 'new golden age of global capitalism'? The Economist thinks so -- and ignores the facts. - - - - - - - - - - - - By James K. Galbraith March 22, 2004 | Does inequality rise under globalization? You might think this is like asking 'Does McDonald's have golden arches?' And you would not be wrong. But there is a part of the scribbling world -- and some economists of whom they scribble -- for which the obvious is never quite good enough. Especially not when powerful doctrines are at stake. And so we find, in wide circulation, the curious (even weird) claim that worldwide economic inequality has been falling thanks to a 'new golden age of global capitalism.' Last August, the Economist put about this claim. I debunked it before the audience of the British Web site OpenDemocracy.net http://www.opendemocracy.net/home/index.jsp. Clive Crook of the Economist then responded to me, and I rebutted him. All of this is on record, here http://www.opendemocracy.net/debates/article-7-30-1483.jsp here http://www.opendemocracy.net/debates/article-7-30-1485.jsp and here http://www.opendemocracy.net/debates/article-7-30-1495.jsp. But some people don't learn, and here we are again. This month, they've gone and made the claim again http://www.economist.com/opinion/displayStory.cfm?Story_id=2498851. And they've included, as evidence, the same pair of charts they already published last August. The charts come from a lecture given back in January 2003 by Stanley Fischer, a formidable economist and former deputy managing director of the International Monetary Fund. Fischer is a globalization advocate. But he is smart and careful and his lecture is studded with footnotes and qualifications. These the Economist cheerfully ignores. Let's have a little fun: How many ways can a picture lie? --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- The top chart shows economic growth for a large group of countries from 1980 to 2000 plotted against original income level. There is a point for each country. The scatter slopes upward, indicating more growth in the rich countries, and hence increasing inequality between countries, over the past 20 years. Poorer countries have been slipping, in general, during the age of globalization. Nobody disputes this. The bottom chart weights each point by population. It reveals that two of the largest countries, China and India, grew among the fastest. Hence the claim: That if one considers people rather than countries, worldwide inequality has been falling under globalization. The chart qualifies this conclusion by noting that in sub-Saharan Africa the situation is terribly grim, with low and declining incomes in the past 20 years. No one disputes that either. But sub-Saharan Africa, the Economist tells us, is an under-globalized region, so it would not be fair to count it in the grand scorecard of the neo-liberal world. What is wrong with the picture? First, it ignores changes within countries. Yes, China's average income grew. But not every Chinese got the average increase. We know that China became dramatically more unequal in the 1990s. (Fischer concedes this, incidentally; see my evidence here http://utip.gov.utexas.edu/web/workingpaper/risinginequalityinchinaandrussia3.pdf And it is possible to make a much broader statement. Looking over the broad range of developing countries, my University of Texas Inequality Project http://utip.gov.utexas.edu/ finds rising inequality in most of them, including India, and falling inequality in only a few. Second, it is not reasonable to treat sub-Saharan Africa as apart from globalization. These countries have always been suppliers of minerals, rubber, oil, coffee and cocoa to the West, often under horrific conditions. (During the slave era they were, of course, great victims of that earlier wave of globalization.) They are not isolated now: Trade ratios in sub-Saharan Africa are not abnormally low. They are victims now of debt crises and so-called structural adjustment programs. To treat them as special cases is simply a way of evading globalization's greatest failures. Third, the two charts cover only the period 1980-2000. But the right comparison is between this period and what came before. For most developing countries, growth was higher in the 1950s and 1960s, under the regulated international monetary system known as Bretton Woods. It was also much higher in the 1970s, when the oil boom, high commodity prices and cheap credit briefly spelled good times for much of the developing world. Fourth, countries created after 1980 are excluded from those charts, including the successor states to the Soviet Union and Yugoslavia. And what happened to income in these areas as they globalized? Inequality shot up, poverty exploded and life expectancies fell to Third World standards. No one disputes these facts, but the Economist ignores them. In the new version of its article, the Economist does say of China and India that 'Neither country is an exemplar of free market capitalism -- far from it.' Funny, I used almost exactly the same words in my first critique of their earlier article, saying: 'Anyway, neither China nor India is an exemplar of free-market globalisation.' This little bit of crypto-plagiarism tells you all you need to know about the standards the Economist applies, where this issue is concerned. Both China and India steered free of Western banks in the 1970s, and spared themselves the debt crisis. Both continue to maintain capital controls to this day, so that hot money cannot flow freely in and out. Both continue to have large state sectors in heavy industry to this day. And China, for that matter, continues to be run by the Communist Party, which is not the institution most noted in history for devotion to the free market. (More analysis on China can be found here http://utip.gov.utexas.edu/web/workingpaper/utip16.pdf (Confession: In the mid-1990s I served as chief technical advisor to a Chinese State Planning Commission project on macroeconomic reform, a job that centered on advising them as to which Western economists to talk to, and which ones to avoid. I loved the second part of that job.) Of course, whether true or false, the claim that worldwide inequality across people has been falling is just an academic abstraction. Why should anyone care? What matters is whether particular policies lead to good or bad results, and policies tend to differ across countries. Yes, China and India have done well, on the whole. But is this due to their reforms or to the regulations they continue to impose? No doubt, the right answer is: Partly to both. The Economist and its allies simply refuse to face this complex and uncomfortable reality. The Economist makes much of claims that global poverty has been falling in the past 20 years. This claim is probably true. If you measure global poverty as the World Bank does, by a living standard of less than a dollar a day, the numbers probably are falling. But where are all those people -- hundreds of millions of them -- who may have risen out of the very bottom? Once again, they are overwhelmingly in China and India. This point is made explicitly by Surjit Bhalla, one of the pro-globalization economists the Economist cites -- but it doesn't cite him on this point. They are not in Africa, where the world's worst poverty persists. And they are also not in Latin America or the former USSR, where the poor live at a higher standard but where poverty rates are getting worse. So once again, we have to ask: Is this the golden age of global capitalism, really? Or is it something closer to a golden age of reformed socialism in two places (China and India) -- alongside an age of disasters for those who followed the prescriptions favored by the Economist? In truth, countries that followed the IMF-World Bank prescriptions to the letter -- Argentina, say, or Russia in the early 1990s -- have seen catastrophe worse in every way than the Great Depression of the 1930s was for us. Is it any wonder that the electorates in both places firmly reject the neo-liberal model? Finally, it is not true that the remedy to the problems of globalization is 'more globalization.' We often hear, for instance, that cutting trade barriers to farm goods from the Third World is the big solution to many development problems. Don't believe it. Yes, some tropical products (sugar, orange juice) face severe protection. But most do not. And even if all the agricultural barriers came down, few developing countries could get ahead much just by expanding their farms. There are ecological limits. There are limits to the quality of the soil. Most of all, there are severe problems of oversupply. There is too much coffee in the world as it is: New supplies only drive the price down. Sugar would work the same way, and so probably would wheat and beef. Confronting the problems of the stricken Third World will require a balanced approach. What the poorest countries need perhaps most of all is sustainable finance, permitting them to build their infrastructure, their human resources, their public health systems and their industries -- both for domestic consumption and foreign trade. This is an old formula. But it is one with a track record: It worked in Europe after World War II, and then in Japan, Korea and in China, each of which saw decade after decade of sustained growth and industrial transformation. Here's the rub: Pursuing these goals will require placing the world's private financiers under a degree of regulation and control -- such as we used to have in the real golden age of development, from 1945 to 1970. That, of course, is not on the Economist's agenda. But it should be on ours. http://www.salon.com/opinion/feature/2004/03/22/economist/

Subject: Re: Debunking the Economist -- again From: Econochick To: BB Date Posted: Mon, Mar 22, 2004 at 16:23:33 (EST) Email Address: Not Provided Message: But Galbraith has failed to account for the impact of protectionism in Africa. Nor has he scrubbed out the rebuilding after World War II from the 'growth' in the 1950's and 60's. Nor is Russia's growing poverty the fault of globalization - the country imploded and poverty was the result. Hopefully it will rebound but it will take more than one generation. How much agricultural over-supply can be attributed to farm subsidy? How much more could the price drop by taking away controls if you already have over-supply? Even if the price dropped a bit (unlikely), wouldn't that drag impoverished people out of severe poverty and wouldn't that be good? I don't have time to list all of my other concerns that are all along the same lines. I'm all for Galbraith (or anyone) debunking whomever but I'm afraid that Galbraith will have to answer these questions first and give the cost and benefit of an alternative solution for it to be a truly great 'debunking'. I mean, I don't think anyone is silly enough to think that everyone is going to benefit equally at the same time from any change, globalization or otherwise. The question is whether or not it will benefit more people over time than the alternative. Right? Economics - the study of trade-offs?!

Subject: Re: Debunking the Economist -- again From: Mr. Gruff To: Econochick Date Posted: Mon, Mar 22, 2004 at 19:32:15 (EST) Email Address: Not Provided Message: http://www.slightlywarped.com/forumpictures/trolls/trollxing.gif

Subject: Well Argued From: Emma To: BB Date Posted: Mon, Mar 22, 2004 at 15:07:33 (EST) Email Address: Not Provided Message: Fine post!

Subject: Interest Rates From: Jennifer To: All Date Posted: Sun, Mar 21, 2004 at 18:01:14 (EST) Email Address: Not Provided Message: Since we are growing well, with no retail inflation but with plenty of slack in the economy, especially in the labor market, I can find no reason for higher interest rates. Evidently neither can the Federal Reserve. Simply because there are bond investors or gold speculators who want the Fed to raise rates is not enough. Again, to argue that the Japanese or any other foreign central bank is going to suddenly stop buying American bonds and force an interest rate increase makes no sense. Central banks do not try to make profits, they try to keep home economies growing strongly with little inflation. The last thing the Bank of Japan wishes is a decline in American buying. Bond yields are quite low, so we can chose to make other investments, but why worry? The Federal Reserve is doing all it can to spur demand and the labor market. Terrific, though I wish the Administration were doing as much.

Subject: Re: Interest Rates From: Pete Weis To: Jennifer Date Posted: Sun, Mar 21, 2004 at 23:49:58 (EST) Email Address: Not Provided Message: Paul Krugman, Bill Gross and the Japanese Finance Minister don't agree with you. At this point it's not so much about hard goods inflation in the US, but a steep prolonged drop in the US dollar along with very poor yields. It's not about central banks making a profit but it is about central banks not wanting to absorb big losses. As mentioned in the article I sited from the Sydney Morning Herald it's 'about talk in Asian circles of a looming dollar crisis'. Japan's dollar denominated reserve assets now exceed three-quarters of a trillion dollars and the Japanese are becoming concerned about the risk the US dollar represents. Buffet wrote a really good piece on the current account deficit and the very serious threat it represents to the US economy in Fortune magazine recently. He was echoing much of what Krugman and Gross were saying about our creditors (mostly Japan and China) becoming shy about loaning us more money while we deflate the currency in which we pay back our debt. As I've stated in other posts on this site, we've been running a current account deficit for about three decades and as Buffet points out this has been a constant transfer of our net wealth overseas. Since we consume more than we produce, we must borrow just to maintain a constant living standard. Yet we have a considerably higher standard of living today than we had 30 years ago when we produced as much or more than we consumed. Today we own big, expensive 4-wheel drive vehicles, three car garages, bigger houses, more TV's per house, expensive RV's, etc. But most of this better living has come from borrowing and not from substantial growth in wages and jobs. And a big part of the financing for our heavy borrowing habits has come from our trading partners with the current account surpluses. As Krugman, Gross and Buffet, as well as many others who are paying attention, have said this can't go on for ever. Now, the Japanese Finance Minister is begining to say enough is enough. You are right - the Fed has done all it can do. Now it's up to our creditors. They are looking at our economy and they see a worsening US job market and an American consumer who they believe is close to being tapped out anyway. So now they are more focused on the risk their US assets represent and are looking to offload. As to your lack of worry about bond investors - where do you suppose alot of the mortgage money for the real estate market comes from? If the supply of mortgage money drops, we'll need a commensurate drop in demand for mortgage money if interest rates are not to go up, correct? Whether mortgage rates go up or mortgage demand drops, we get to test Emma's theory that there is 'no problem' with a real estate bubble. By the way, gold speculators are not asking the Federal Reserve to raise rates. That would not be good for precious metals investment.

Subject: High or Low Rates From: Jennifer To: Pete Weis Date Posted: Mon, Mar 22, 2004 at 12:39:50 (EST) Email Address: Not Provided Message: Well, I do not find any concern with low interest rates by Paul Krugman. PK wants interest rates as low as can be to generate as much growth as possible. What PK worries about is the 'long term' effect of the deficit on interest rates. Bill Gross wants higher interest rates now. Bill Gross is wrong, and thinking about PIMCO more than the economy. As for the Japanese, they are and will contiue to buy American debt. Who is right? Since the bond market just registered a 3.74% yield on the 10 year treasury, and the lowest mortgage rates since the 1960s, Bill Gross and Stephen Roach of Morgan Stanley are likely wrong. The Federal Reserve is right to keep interest rates low, and the Japanese have never interfered with our bond market and are not about to now. Is there a real estate bubble? Possibly, possibly. But, the housing market is a driver of this economy. What is the Federal Reserve to do, slow housing and risk a recession. If we had a fiscal stimulus that helped employment, we could afford higher interest rates. Gold bugs always try to talk up inflation, that is how they can win at speculation.

Subject: Re: High or Low Rates From: Pete Weis To: Jennifer Date Posted: Mon, Mar 22, 2004 at 15:23:06 (EST) Email Address: Not Provided Message: Guess, to some extent, we're talking about two different issues. You keep saying the Fed should not raise interest rates and I'm talking about the effect of the Japanese ending their purchasing of US dollar denominated assets (which was part of a public statement by the Japanese Finance Minister). I'm not sure that the Japanese Finance Minister is prone to bluffing or make bogus statements. You seem to think he is just blowing smoke - perhaps he is, we'll find out soon. I'm not sure what Paul Krugman's stance on the Fed and interests rates are. I believe the Fed is pretty much out of the picture now when it comes to interest rates. As I said in a previous post, they're now boxed into a corner. In a post below, I refered to two editorials (archived on this site) entitled 'The China Syndrome' and 'This Can't Go On' by Paul Krugman which talked about our 'Asian creditors' 'waking up' to their overextended, risky stake in the US dollar. When I said that Paul Krugman does not agree with you, I was refering to his belief that at some point Japan and China will stop the credit and this will have a powerful upward influence on our interest rates. If you read these two Krugman pieces, I don't know how you can miss what I'm trying to convey with regard to the seriousness of the Japanese public statements.

Subject: Re: High or Low Rates From: Emma To: Pete Weis Date Posted: Mon, Mar 22, 2004 at 16:13:23 (EST) Email Address: Not Provided Message: Paul Krugman 11/04/03 As Bill Gross of Pimco, the giant bond manager, says, 'Sooner, perhaps later, our Asian creditors will wake up and smell the coffee.' (Yes, the federal budget and the value of the dollar now depend on huge purchases of Treasury bills by the governments of Japan and China.) When they do, he predicts 'higher import costs, a cutback in spending on cheap foreign goods, rising inflation, perhaps chaotic financial markets, a lower standard of living.' With Jennifer, I do not argue about the long term danger only that there is little danger in the coming months. There is really no chance that the Japanese or Chinese will balk at holding American debt when development in these countires would be at stake. I would not be buying bonds, but I am not worried about inflation or the bond market 'yet.'

Subject: Re: High or Low Rates From: Nathan Corson To: Emma Date Posted: Mon, Mar 22, 2004 at 19:16:57 (EST) Email Address: Not Provided Message: I believe the critical issue will not be if Asian central banks 'stop' buying US debt, but rather if they (particularly BOJ) buy substantially LESS in the short term. So far in 2004, BOJ has intervened to the tune of $100 billion -- an unprecedented amount of intervention, I believe to keep Yen weak for Japanese exporters going into Japan's fiscal year end March 31. During the last several US treasury auctions, foreign central banks have purchased 40-45% of the issues!! (Asian CB's thought to be large majority) and the US bond market has rallied back toward the all time highs seen last spring. I believe reduced foreign cb buying of US treasuries is an issue if we talk about debt levels, deficits etc. not causing 'dislocations' in the bond market. Will a drop in US bond prices, whatever the cause, from today's lofty levels, snowball into higher and higher yields and exploding bond volatilities like June-August 2003? Will GSE's and other holders of mortgage securities contribute to this snowball, and survive a sustained move up in yields? Speaking of dislocations, as Peter mentions above, the Fed is in a box--one that they have built for themselves. Fed Funds at 1% is extreme, but the Fed's been extremely successful in managing expectations and convincing the market to bid the rest of the curve down to all-time low yields. The futures markets assign a very low probability of a hike before the end of '04. Raising Fed Funds just back to a 'normally' accomodative level in the near future would shock the bond market. (Take a look at the Philly Fed prices paid/prices received chart from their release last week, recent CPI/PPI releases and the CRB numbers): http://www.phil.frb.org/files/bos/bos0304.pdf http://www.bls.gov/news.release/archives/cpi_03172004.pdf http://www.bls.gov/news.release/pdf/ppi.pdf http://www.crbtrader.com/crbindex/ndata.asp Are these numbers indicative of rising prices? Reading Moskow's comments today, the Fed doesn't think so. Even if they WERE getting a bit concerned, how are they going to make a move without causing severe 'dislocations'?

Subject: Re: High or Low Rates From: Pete Weis To: Nathan Corson Date Posted: Mon, Mar 22, 2004 at 21:20:14 (EST) Email Address: Not Provided Message: Nathan. Agree that raising the Fed rate now would cause major problems, despite Stephen Roach and Bill Gross asking for this. I view the US Federal Reserve as a 'deer caught in the headlights'. They may eventually lower rates, as did Japan, to zero if a serious drop in the stock markets begins to erode consumption (reverse wealth effect). I don't believe the Fed will raise rates before the financial markets do it for them. Apparently, Bill Gross and Stephen Roach see very serious problems ahead. I'm sure they believe the Fed raising rates would have some fairly severe consequences. Perhaps for them, a good analogy would be forest-fire fighters purposely setting 'back fires' to limit even greater damage - such as a sudden collapse in the dollar at some future date. I really don't know. Anyway, the coming couple of months should probably reveal how much, if any, reduction in US securities purchases the BOJ has in store. We'll also get to see (if they reduce) how much it effects interest rates and the bond markets. These are truely unusual times.

Subject: India From: Jennifer To: All Date Posted: Sun, Mar 21, 2004 at 13:18:38 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/21/opinion/21FRIE.html Software of Democracy By THOMAS L. FRIEDMAN My favorite building in Bangalore, India's Silicon Valley, is a corporate complex called the 'Golden Enclave.' In some ways, the whole tech sector in Bangalore could be called India's 'Golden Enclave' — disconnected from the country's bad governance, as companies create their own walled enclaves, with their own electricity, bus service, telecommunications and security, and disconnected from the countryside, where many Indians still live in abject poverty. As long as these two liabilities of inept governance and endemic poverty are not addressed, India can't really take off and become a big-time technology competitor of the United States. The information revolution, though, has given India, for the first time, some real resources and tools to address its chronic ailments. Will it seize this opportunity? This is India's 'to be or not to be' question. Says Vivek Paul, president of the cutting-edge Indian software giant Wipro: 'In some sense, all that this globalization of information technology and [outsourcing] has done is to give India pin money to reform itself.' If India 'blows it,' well, the opportunities may still be out there, 'but India won't be a beneficiary in the long run,' he said. 'The beneficiaries will be those who are most flexible and able to organize themselves around the opportunities.' Mr. Paul said he believed India would seize this moment. But it will require some radical changes in politics: While India has the hardware of democracy — free elections — it still lacks a lot of the software — decent, responsive, transparent local government. While China has none of the hardware of democracy, in the form of free elections, its institutions have been better at building infrastructure and services for China's people and foreign investors....

Subject: Outsourcing From: Jennifer To: All Date Posted: Sun, Mar 21, 2004 at 12:38:07 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/21/business/yourmoney/21wipro.html An Outsourcing Giant Fights Back By SARITHA RAI Bangalore, India TO his compatriots, Azim Premji is the Bill Gates of India. By transforming his family-owned vegetable oil business into a global technology powerhouse, Mr. Premji has become the country's richest citizen, with a net worth hovering around $8 billion. Outside India, however, Mr. Premji is not exactly Mr. Popularity these days. A British newspaper recently went so far as to describe him as 'the man who wants to take away your jobs.' That has to do with the nature of Mr. Premji's business: his company, Wipro, is one of the biggest outsourcing concerns in the world. At Wipro's sprawling suburban campus near Bangalore, enthusiastic young engineers in blue-and-cream cubicles write code, build software and maintain computer systems for a host of American companies, including Lehman Brothers, General Motors, Home Depot and Boeing. And they do it for a small fraction of what it would cost these companies to do the work. But in the United States and elsewhere, Wipro and the rest of India's growing technology services industry are increasingly denounced as a major cause of job losses. Senator John Kerry of Massachusetts, the likely Democratic presidential nominee, has called chief executives who shift work overseas 'Benedict Arnolds.' Mr. Premji, 58, contends that Americans are blowing the issue out of proportion. Still, as he sits in his elegant office, gazing through its huge glass windows at the eucalyptus trees in the distance, he allowed that he is feeling the pressure. 'How can you ignore such rooftop shouting against outsourcing unless you are an ostrich with your head stuck in the sand?' he said....

Subject: Re: Outsourcing is good From: SId Bachrach To: Jennifer Date Posted: Sun, Mar 21, 2004 at 18:35:55 (EST) Email Address: sidb23@juno.com Message: John Kerry, who dabbles at populism when he is not marrying heiresses, denounces outsourcing. It is easy for Kerry to denounce outsourcing. After all, Mr. Kerry never has shopped at Walmarts or Home Depot. The fact is that working class Americans want cheap foreeign goods and the lower price of these goods gives families more discretionary spending. Mr. Kerry (and New York Times limousine liberals) don't think working class folks should have the choice of purchasing cheaper goods made by foreigners. The elitists don't see why anyone would ever want to shop at Walmarts.

Subject: Please Do Not Feed From: Troll Alert To: SId Bachrach Date Posted: Mon, Mar 22, 2004 at 13:11:26 (EST) Email Address: Not Provided Message: SB is the ugliest, smelliest, most lying of trolls.

Subject: Re: Outsourcing is good From: BB To: SId Bachrach Date Posted: Mon, Mar 22, 2004 at 12:11:30 (EST) Email Address: Not Provided Message: Kerry decries outsourcing, but he won't do a damn thing to stop it, and you know it. He'll do exactly what business tells him to do, sadly, just as Clinton did. Working class folks have no choice but to shop at Walmart, which has slightly cheaper merchandise, because their wages have drastically declined in the past 30 years. Goods made in abysmal sweatshop conditions cost a very small fraction of what products made in the US (or anywhere) under good conditions do, and yet they are priced only slightly more cheaply, if at all. The labor costs for an enormous number of products (if not almost all) have been significantly reduced by outsourcing over the last few decades, but there has not been a huge deflation of prices in the US (or the rest of the west) in this time. Rather, the wealth of the top few percent has been growing enormously, while the real wages of most western workers has stagnated or dramatically declined. Let's see: huge savings on the costs of producing items; items stay at same price or become only slightly cheaper; rich become much, much richer. Hmmm, can't figure out what's going on here...

Subject: Re: Outsourcing is good From: Econochick To: SId Bachrach Date Posted: Mon, Mar 22, 2004 at 11:25:32 (EST) Email Address: Not Provided Message: I agree with you, SB. However, George Bush is introducing the same protectionist crap that John Kerry is. I believe the reason is that the vote is coming in the short term and the structural changes in our economy are long term. What people who vote (I'm generalizing here, no offense to anyone) don't realize is that if you don't allow American companies to compete with other companies who do use cheaper labour, not only will those 'protected' jobs disappear but more will go. The companies will simply be out-competed, go out of business and the jobs we tried to protect will be lost anyway - along with the white collar jobs in the same companies that would have been kept had the company been allowed to outsource in the first place. Then, we will be forcing a 'no more than 35 hours per week' law to 'fix' unemployment just like France. It is my opinion that we are better off spending public money in the re-education of the folks who have lost cheap, back-breaking manufacturing jobs to be elligible for growing sectors in our economy - like High Tech manufacturing. We either take the pain in the short term or we take much greater pain for the long run.

Subject: Outsourcing From: Nat To: Econochick Date Posted: Mon, Mar 22, 2004 at 12:52:44 (EST) Email Address: Not Provided Message: Outsourcing is an old problem with several new twists. Twist number 1 is that a vast array of our white collar jobs are subject to outsourcing, not just the traditional blue collar manufacturing jobs. If your job pushes paper, or is involved in high tech or engineering, your job is at risk. I have seen opinions that the 'good' IT jobs will stay here and just the coding jobs will vanish. I am sorry, but pretty much every IT job is at risk: offshore folks are good at the high end stuff, also. And with modern networks even the need for the main machine to be on site is diminishing. And the bureaucratic/paper pushing jobs in government, insurance and corporate offices don't need to be here either. Twist number 2 is the weakened state of unions and the assaults on the government social safety net to cushion the blow of job loss. Twist number 3 is that some of our most educated citizenry will be losing their jobs. It just cracks me up when I hear Greenspan say we need better education. A college degree and 30 years of experience in high tech is not enough: the real issue is cost of labor. What do we tell our kids to study in college? Massage therapy would be safe, I guess, but computer science is a real risk. The 4th twist is our labor market is under pressure from illegal immigration. In Houston it is nearly impossible to find a U.S. citizen on a construction crew. It is the primary reason housing costs there are so cheap. This blessing is also a curse: since these people are outside the normal labor channels (i.e. no FICA, no insurance, no minimum wage, no workman's comp) out-of-work citizens cannot compete for these jobs. This situation will worsen since our neighbors to the south are being battered by job loss also: over 100,000 Guatemalan garment workers lost their jobs last year (sorry, no links to where I saw that figure) to cheaper Chinese labor. The references to cheap goods at Walmart also cracks me up. Last November Walmart released information that their sales peaked on pay day and the best sellers in most categories were the cheapest items. Both of these are symptoms of a buying population under financial stress (their analysis, not mine.) There is no Walmart without people having decent jobs somewhere other than Walmart. Despite all this I am of the opinion that protectionism won't work in either the short or long run. It is scary that we have squandered both our fiscal and monetary ammo and gotten less than squat in jobs creation. The ultimate issue is political stability. Our government treasuries are the most secure investment in the world because we are the most politically stable nation on earth. If we continue to have a growing under and unemployed population with inadequate access to the benefits we all have grown accustomed to having in this country, we may get to insource something from the third world: social unrest.

Subject: Worst Case From: Econochick To: Nat Date Posted: Mon, Mar 22, 2004 at 14:06:58 (EST) Email Address: Not Provided Message: Nat, I think that your analysis is sort of a worst case scenario - unlikely but not unthinkable. Years ago we thought there would be a lot more telecommuting but it's actually pretty rare. For certain jobs it is paramount that people are able to work face to face - Doctors, lawyers, accountants, MIS staff, investment bankers, construction workers, maids, chefs, etc. That's one reason teleconferencing is not so popular. So, based on that, I do think that your post is a worst case scenario. Also, the labour market in India and China will get to full employment and, in theory, the labour cost difference will shrink over time. Also, I'm curious if you know for sure that the construction workers of whom you speak are illegal or you're just guessing because of the lack of English. They could be here legally and not speak English. If you're on a work visa or have a green card, you pay American taxes, you know. I do get the larger point that there is more pressure on our borders but I'm curious about that one statement. But I have a question: what happened to American innovation? What happened to starting your own business instead of relying on someone else to provide the job for you? This is a practical question because working for yourself is the ultimate control - also the ultimate risk. Historically, Americans have been so entrepeneurial and have been admired for that spirit. What happened to us? Do you not think that we will innovate and produce more to offset offshoring? I'm generally an optimistic person, I realize, but there seems to be a lot of pessimism on this board and I don't know why.

Subject: Re: Worst Case From: Jerry To: Econochick Date Posted: Thurs, Mar 25, 2004 at 16:00:54 (EST) Email Address: Not Provided Message: One response...your optimistic outlook presumes a closed system with a limited number of variables. The greatest hazard facing the global economy is long term inflation due to a massive shortage of natural resources. For instance, by the year 2015 oil demand will dramtically exceed supply and that will drive up the cost of all things on a global scale. Like you, I don't see innovation coming to our rescue. We've created an economic Versailles, a closed system that lives for itself and shapes the world around it to fit its own needs. While economics can function objectively, so many ecnomists choose their data in a subjective manner and they can tend to paint a pretty picture. I believe that for the long term the global economy is in great danger with global oil shortages and environmental calamity as two shakey legs on a three legged stool. If you are not considering those two variables in your data set then you will have a far more optimistic outlook on things.

Subject: Re: Worst Case From: Econochick To: Jerry Date Posted: Thurs, Mar 25, 2004 at 17:16:56 (EST) Email Address: Not Provided Message: I see your point, Jerry. However, I think you make a couple of overly pessimistic points. The first is your assumption that we will hit an oil supply crisis in the next 11 years. The most conservative estimates for even hitting Hubert's Peak (let alone an actual shortage) are 20-30 years from now - barring new technology or a discovery of a(n) large reservoir(s). Second, you are assuming that we will not be able to develop a reasonably priced substitute for oil. I think that nuclear energy may be one large componant and maybe fuel cells. Although, I know VERY little about fuel cells. Also, Economic forecasts are by definition not objective because every assumption in a model is a subjective variable. You cannot 'assume' without being subjective. Some economists have much more pessimistic forecasts than others, that's true. But none of us know what will happen and when. So, I guess I'm more optimistic and you're more pessimistic and we'll all just have to wait and hope for the best, right?

Subject: Re: Worst Case From: Nat To: Econochick Date Posted: Wed, Mar 24, 2004 at 14:14:34 (EST) Email Address: Not Provided Message: Econochick, I agree that my previous semi-rant is at least a semi-worst case. The Houston/housing comment is based on a Houston Chronicle article of a few months ago. It was in response to the Bush immigration proposal and the resistance to it at all levels of the real working world. Builders are insulated by a network of middlemen and the INS turning a blind eye to local business activities. They get rock bottom cost, young, motivated undocumenteds who live frugally and ship money back home. Adding these workers to the 'system' will drive up their costs and put their jobs at risk to the lower cost next wave of undocumenteds (who will always be the cheapest labor.) Interesting your comment about physicians: George Will cited offshoring of medical services (i.e. reading xrays) as a way to quell rising costs a few weeks ago on This Week. Stephanopoulos or Schumer retorted that that was a good way to discourage Americans from going into radiology. In general, I think licensed occupations with strong political hooks (lawyers and doctors) are the safest high end jobs. The good blue collar jobs (plumbers, electricians) are under pressure from the other direction: those willing to work without protections and benefits. One of the triggers for my last rant was a conversation with a friend who is a loyal union member (welder and pipefitter, with high tech clean room expertise) here in Austin: his last local union job was in 2000. IMO, unions are toast here in Texas. As for innovation, I am founder and owner of a small software firm that does speculative development in the hospital financial world. Our customers are very large public seector hospitals. I have been a software developer since '76 and started my current work in '89. I took 2 years to write and sell my first spec system on my own nickel. IMO, it has never been harder to be small and innovative than it is today. Basically, that is one of the major reasons I have been hanging around this board and following the Delong etc. blogs. I used to think my working world was a good fall back for my kids. I no longer think that is true.

Subject: Re: Worst Case From: Econochick To: Nat Date Posted: Wed, Mar 24, 2004 at 18:51:39 (EST) Email Address: Not Provided Message: Nat, I see your point about the undocumented workers. I have to say that I really can't disagree with that. And illegal immigration really is a problem - especially in border states. I had actually heard about the offshoring of x-ray reading. However, that seems like pretty narrow thing to offshore. I'm completely out of my depth when it comes to specifics of medicine but I believe radiologists do more than just x-ray reading. Don't they? And it would drive down some of our medical costs, which I think everyone agrees we sorely need. But of course, for anything that requires patient contact (and most of the profession does) you can't offshore. Congratulations on your business!! It is a huge thing when one goes out and does that. You are a fantastic example to all of us. The reason I'm hanging out here a lot is because I'm starting my own business and I'm waiting for equipment arrival and installation. Once that happens I'll be too busy. As for it being harder than ever before, it's hard not to agree. But that's largely a function of a highly developed economy and very little pent-up demand. We will always go through cycles in our economy. Don't you remember the 70's and stag-flation? It was awful. I'm confident that our economy will be just fine as long as we don't turn into Europe and it sounds like your kids have a great example to follow!

Subject: Do Not Feed theTrolls, Please From: B. Goat To: Econochick Date Posted: Mon, Mar 22, 2004 at 19:29:06 (EST) Email Address: Not Provided Message:

Subject: Medicare From: Emma To: All Date Posted: Sat, Mar 20, 2004 at 14:40:45 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/20/politics/20MEDI.html Medicare Actuary Gives Wanted Data to Congress By ROBERT PEAR WASHINGTON — Richard S. Foster, the chief actuary of Medicare, provided Congress with documents on Friday showing that federal payments to private health insurance plans under a new Medicare law could far exceed what Congress assumed when it passed the measure last fall. For months, lawmakers had been seeking the data, but Mr. Foster said in an interview that he had withheld it under instructions from Bush administration officials. He turned over documents outlining the information at a meeting on Friday with Congressional aides of both parties who work on health legislation. The documents estimate that the new law will increase Medicare payments to private health plans by a total of $46 billion over the next 10 years, not the $14 billion assumed by lawmakers when they voted on the legislation. Mr. Foster had cited the discrepancy in an interview earlier this week, but the documents he turned over on Friday, Mr. Foster said, show that the Bush administration was aware of the gap well before Congress approved the new law. Moreover, the documents show that the administration expects a huge increase in the number of Medicare beneficiaries enrolled in various types of managed care. About 12 percent of the 41 million current Medicare beneficiaries are in such private health plans today. By 2009, Mr. Foster says, the proportion will reach 32 percent, equally divided between health maintenance organizations and preferred provider organizations. By contrast, the actuary estimates that enrollment in the traditional government-run Medicare program will decline from 2006 to 2009, along with payments to many health care providers....

Subject: Medicare From: Emma To: Emma Date Posted: Sat, Mar 20, 2004 at 16:54:40 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/18/politics/18MEDI.html Mysterious Fax Adds to Intrigue Over the Medicare Bill's Cost By SHERYL GAY STOLBERG and ROBERT PEAR WASHINGTON — Late one Friday afternoon in January, after the House of Representatives had adjourned for the week, Cybele Bjorklund, a House Democratic health policy aide, heard the buzz of the fax machine at her desk. Coming over the transom, with no hint of the sender, was a document she had been seeking for months: an estimate by Medicare's chief actuary showing the cost of prescription drug benefits for the elderly. Dated June 11, 2003, the document put the cost at $551.5 billion over 10 years. It appeared to confirm what Ms. Bjorklund and her bosses on the House Ways and Means Committee had long suspected: the actuary, Richard S. Foster, had concluded the legislation would be far more expensive than Congress's $400 billion estimate — and had kept quiet while lawmakers voted on the bill and President Bush signed it into law. Ms. Bjorklund had been pressing Mr. Foster for his numbers since June. When he refused, telling her he could be fired, she said, she confronted his boss, Thomas A. Scully, then the Medicare administrator. 'If Rick Foster gives that to you,' Ms. Bjorklund remembered Mr. Scully telling her, 'I'll fire him so fast his head will spin.' Mr. Scully denies making such threats. These conversations among three government employees — an obscure Congressional aide, a little-known actuary and a high-level official — remained secret until now, and Ms. Bjorklund still does not know who sent the fax. But Mr. Foster went public last week, and details of his struggle for independence within the Bush administration are now emerging, raising questions about whether the White House intentionally withheld crucial data from lawmakers....

Subject: Pretending From: Emma To: Emma Date Posted: Sat, Mar 20, 2004 at 18:44:50 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/15/politics/15VIDE.html U.S. Videos, for TV News, Come Under Scrutiny By ROBERT PEAR WASHINGTON — Federal investigators are scrutinizing television segments in which the Bush administration paid people to pose as journalists praising the benefits of the new Medicare law, which would be offered to help elderly Americans with the costs of their prescription medicines. The videos are intended for use in local television news programs. Several include pictures of President Bush receiving a standing ovation from a crowd cheering as he signed the Medicare law on Dec. 8. The materials were produced by the Department of Health and Human Services, which called them video news releases, but the source is not identified. Two videos end with the voice of a woman who says, 'In Washington, I'm Karen Ryan reporting.' But the production company, Home Front Communications, said it had hired her to read a script prepared by the government. Another video, intended for Hispanic audiences, shows a Bush administration official being interviewed in Spanish by a man who identifies himself as a reporter named Alberto Garcia. Another segment shows a pharmacist talking to an elderly customer. The pharmacist says the new law 'helps you better afford your medications,' and the customer says, 'It sounds like a good idea.' Indeed, the pharmacist says, 'A very good idea.' ...

Subject: Pretending From: Emma To: Emma Date Posted: Sat, Mar 20, 2004 at 14:42:04 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/20/opinion/20SAT4.html Reporting Live, Outside Credibility In a foolhardy obsession, the Bush administration continues to insist that a woman it used to portray a television reporter is actually a freelance journalist, not an actor. The woman appears in free videos distributed to local TV stations by the Health and Human Services Department. The videos, which many stations used, are plugs for the controversial new drug program the White House is selling to elderly voters. But the videos pretend to be balanced news accounts, and even end with a facsimile of the tag line delivered by real reporters. 'In Washington, I'm Karen Ryan reporting.' The government insists that Ms. Ryan is the real deal. The Columbia Journalism Review, which put some actual reporters on the case, showed otherwise. Ms. Ryan turns out to be a public relations specialist who in this case was hired to portray a stand-up reporter presenting the Medicare plan as objective news....

Subject: More Pretending From: Kosh To: Emma Date Posted: Mon, Mar 22, 2004 at 12:22:10 (EST) Email Address: jrgallag@earthlink.net Message:

Subject: Re: More Pretending From: Kosh To: Kosh Date Posted: Mon, Mar 22, 2004 at 12:23:40 (EST) Email Address: jrgallag@earthlink.net Message: http://www.newsday.com/news/local/longisland/columnists/ny-livit0312,0,1155991,print.column?coll=ny-li-columnists

Subject: PK: Bad Saudis, good Malysians! From: Sid Bachrach To: All Date Posted: Sat, Mar 20, 2004 at 08:16:20 (EST) Email Address: sidb23@juno.com Message: Mr. Krugman is correct to point out the coddling othe Saudis during the War on Terrorism. Mr. Krugman is correct to point out the Bush administration's insanity in allowing a planeful of Saudis to be spirited out of the US only days after 9/11. But how does Mr. Krugman's correct view of the repressive and terrorist permitting Saudi royal family square with PK's unabashed admiration for Malaysian Muslim fanatic former PM Matahar Mohammed? Answer: It doesn't! Mohammed was at again blaiming Jews for being too powerful and saying again that Israel is the source of all evil in the world. Yet there is not a peep of protest from Mr. Krugman. Last time Matahair Mohammed made antiSemitic statements, Mr. Krugman could only call them 'unfortunate' but blamed Bush for turning an otherwise reasonable man like Matahair Mohammed into a foaming antisemite. If the Saudis deserve approbation, and they do, surely Mr. Krugman won't allow his personal friendship with Matahair Mohamed to render PK silent about Mohammed latest garbage.

Subject: Do Not Feed the Trolls From: Please To: Sid Bachrach Date Posted: Sun, Mar 21, 2004 at 12:34:33 (EST) Email Address: Not Provided Message:

Subject: Trolling From: Troll To: Sid Bachrach Date Posted: Sat, Mar 20, 2004 at 14:29:55 (EST) Email Address: Not Provided Message: SB is a lying radical right troll, as all trolls are. Lying in Ponds is the home of trolls, if trolls can be thought to have homes.

Subject: Re: Trolling From: Sid Bachrach To: Troll Date Posted: Sat, Mar 20, 2004 at 20:03:07 (EST) Email Address: sidb23@juno.com Message: The fact is that Mr. Krugman pooh poohed Matahair Mohammed's anitSemitic ravings. Read Mr. Mohammad's remarks side by side with David Duke's ravings. There is no discernible difference. So why on earth did Mr. Krugman blame George Bush for Mr. Mohammad's disgraceful remarks. The logic of Mr. Krugman's argument was nonsensical. PK essentially claimed that people like Mohatair Mohammed are essentially reasonable but get inflamed by bad people like George Bush and then turn to antiSemitism. Then Mr. Krugman condemns the Bush administration for coddling the Saudis (by itself a good point by Mr. Krugman). So at the same time, Mr. Krugman has George Bush coddling the most fanaatical Muslim regime and simultaneously causing Muslims to become antiSemites. How on earth can Mr. Bush do both at the same time? It just does not make sense.

Subject: I can not Help Lying From: SB - Lying Troll To: Sid Bachrach Date Posted: Sun, Mar 21, 2004 at 12:30:47 (EST) Email Address: Not Provided Message: I am a lunatic troll, and I can not help lying.

Subject: Countering Trolls From: Terri To: SB - Lying Troll Date Posted: Sun, Mar 21, 2004 at 15:18:32 (EST) Email Address: Not Provided Message: The whole purpose of critics like this troll is to try to intimidate. They lie and assume if they toss around lies they will be effective at intimidation. They must be countered. I am feeding the trolls once to explain why they are so hateful, never again.

Subject: Re: Trolling From: Suleiman To: Sid Bachrach Date Posted: Sat, Mar 20, 2004 at 20:11:02 (EST) Email Address: nma@hotmail.com Message: What's the difference between a politician and a statesman?A politician is short sighted, a statesman(Paul Krugman!) is long sighted

Subject: Re: PK: Bad Saudis, good Malysians! From: Econochick To: Sid Bachrach Date Posted: Sat, Mar 20, 2004 at 12:59:15 (EST) Email Address: Not Provided Message: I have a lot of Respect for Paul Krugman the Economist but less as a political pundit. Thought you guys might like this article. Nov 13th 2003 From The Economist print edition Paul Krugman and the controversial art of popularising economics “GIVE me a one-handed economist,” demanded a frustrated American president. “All my economists say, ‘on the one hand...on the other'”. From a mono-manual perspective, at least, Harry Truman would have loved Paul Krugman, an economist who rarely hesitates to take a bold position—even when the subject is himself. In recounting the transformation of his twice-weekly New York Times column from a genial discussion of the “New Economy” into a widely read broadside against the Bush administration, the Princeton professor recently described himself as “a lonely voice of truth in a sea of corruption.” What is beyond dispute is that Mr Krugman is the finest economist to become a media superstar—at least since Milton Friedman or, earlier, John Maynard Keynes turned to journalism. Mr Krugman's work on currency crises and international trade is widely admired by other economists. He holds the John Bates Clark medal in economics, which is slightly harder to get than a Nobel prize. As for popularity, his new book, “The Great Unravelling”—his eighth aimed at a broad, non-academic readership—has spent eight weeks on the New York Times bestseller list. The Economist, which itself has been known on occasion to clamber off the economic fence, can hardly criticise anybody for writing hard-hitting (yet engaging and accessible!) economic analyses. But, increasingly, people are asking whether Mr Krugman's success as a journalist is now coming at the expense of, rather than as the result of, his economics. For while he has had some journalistic coups during his time as a columnist—most notably in recognising, long before most other commentators, that market manipulation played a role in the California energy crisis—perhaps the most striking thing about his writing these days is not its economic rigour but its political partisanship. Paul Krugman's columns and other writings are available at the Unofficial Paul Krugman Archive, while a collection of rebuttals to his critics (such as the National Review's Krugman Truth Squad) and other pieces are available on Mr Krugman's own web page. Click to buy “The Great Unraveling” from Amazon.com (Amazon.co.uk) Lyinginponds.com, a website that tracks partisanship among American political columnists, rates Mr Krugman second in the overall partisan slant of his columns, behind only Ann Coulter, a fiercely (and often incoherently) conservative polemicist. As the site documents exhaustively, the vast majority of Mr Krugman's columns feature attacks on Republicans; almost none criticise Democrats. Unsurprisingly, this has made him a sort of ivory-tower folk-hero of the American left—a thinking person's Michael Moore. But he may have even more readers among his ideological adversaries, particularly on the internet, where deconstructing his latest column is a kind of twice-weekly parlour game—albeit one so contentious it has spawned talk-show chatter and even legal threats. He refers to these critics as his “stalkers”. Many of them spend an inordinate amount of time quibbling about minor semantic points, or trivial differences in statistics. But they cannot all be easily dismissed. The more reasonable ones allow that he is a gifted writer and economist, but also argue that these days his relentless partisanship is getting in the way of his argument. Is the American political and economic picture, they ask, really as one-sided as he paints it? And if not, should an economist of Mr Krugman's prominence be telling the public that it is? A glance through his past columns reveals a growing tendency to attribute all the world's ills to George Bush. Regarding California's energy crisis, for example, he berated the Bush administration and the Federal Energy Regulatory Commission for not imposing price caps sooner—but found no room to mention Bill Clinton, who presided over a similarly inactive FERC for the first part of the crisis, nor to attack California's then Democratic governor Gray Davis for his disastrous refusal to allow consumer prices to rise. After Mahathir Mohamad, the prime minister of Malaysia, recently gave an anti-Semitic speech, Mr Krugman argued that the Bush administration's ham-fisted foreign policy had forced Dr Mahathir to make the remarks in order to shore up domestic political support—most unlikely, given that he was about to step down. Even his economics is sometimes stretched. A recent piece accused conservatives of embracing the “lump of labour fallacy”, the mistaken claim that there is a fixed quantity of work which governments must strive to allocate equitably. In fact, the paper he cited did not commit the lump of labour fallacy. He used game theory to argue that, by criticising North Korea but not attacking it, and then going after Iraq instead, Mr Bush is “probably” encouraging North Korea to become a more dangerous nuclear power. This probably did not convince most game theorists. Overall, the effect is to give lay readers the illusion that Mr Krugman's perfectly respectable personal political beliefs can somehow be derived empirically from economic theory. No such thing as a free lunch Now that he is a journalist, it is perhaps not surprising that Mr Krugman seems to have embraced the concept of the free lunch—even though as an economist he should know better. Every opportunity (including lunch, and even including Mr Krugman's favoured policies) has a cost. Decision-making, not least in politics, tends to be hard because it involves trading off those costs and benefits, with the resulting net gains often marginal and uncertain. Surely one of an economist's main tasks is to remind one-handed politicians, and their constituents, that economic choices generally come in shades of grey, not black and white—even when they are made by one's political rivals. Many of Mr Krugman's fellow economists, jealous of his celebrity, comfort themselves with the thought that his angry rants have hurt his reputation enough to ensure he will not now win a Nobel prize. They may be kidding themselves. The Nobel committee has not been averse in the past to giving the prize to economists who have achieved popular notoriety, as its awards to Mr Friedman and, more recently, Joseph Stiglitz show. Mr Krugman is probably still in the running

Subject: Re: PK: Bad Saudis, good Malysians! From: Gnao To: Econochick Date Posted: Sat, Mar 20, 2004 at 19:16:26 (EST) Email Address: nma@hotmail.com Message: 'The object of government in peace and in war is not the glory of rulers or of races, but the happiness of the common man.' Lord William Beveridge or Sir Paul Krugman?

Subject: Ah! If only we can go back to tending our gardens. From: Ayn Rant To: Econochick Date Posted: Sat, Mar 20, 2004 at 18:42:51 (EST) Email Address: Not Provided Message: As I have noted here before; there is nothing I would like better than for PK to go back to the ivory tower and produce research on (among other things) economic geography, which he has helped to change from a descriptive science to an analytic one. (From geography--my field of study--it is only fair to mention Brian J.K. Berry, who has delved into economic analysis. He's only the second geographer inducted into the National Academy of Sciences.) George Orwell wrote that 'We have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men.' I think PK sees his duty clear.

Subject: I Love a Good Quote n/m From: David E... To: Ayn Rant Date Posted: Sat, Mar 20, 2004 at 20:49:17 (EST) Email Address: daveellis_39@hotmail.com Message: n/m

Subject: Right Wing Tripe From: Terri To: Econochick Date Posted: Sat, Mar 20, 2004 at 17:56:26 (EST) Email Address: Not Provided Message: Duh....

Subject: Trolling From: Troll To: Econochick Date Posted: Sat, Mar 20, 2004 at 14:23:53 (EST) Email Address: Not Provided Message: Lying in Ponds is complete right wing rubbish. The Economist is simply more subtle bujt on such matters is all hypocrisy. SD is a beyond mention.

Subject: God Forbid... From: Econochick To: Troll Date Posted: Sun, Mar 21, 2004 at 13:03:03 (EST) Email Address: Not Provided Message: ...anyone question your god. Quick, put the blinders back on or you may see the world as it really is, warts and all.

Subject: Re: God Forbid... From: David E... To: Econochick Date Posted: Sun, Mar 21, 2004 at 14:33:33 (EST) Email Address: daveellis_39@hotmail.com Message: To avoid the troll label, maybe you might want to analyze the 'Mahathir Mohamad' columns. I just re-read them, and I failed to find what the Economist was talking about. Maybe you could point the problems out to me.

Subject: Re: God Forbid... From: Econochick To: David E... Date Posted: Mon, Mar 22, 2004 at 11:16:34 (EST) Email Address: Not Provided Message: I've no interest your labels. I'm careful who I argue with. My post was on SB's behalf.

Subject: Troll, Troll, Troll From: David E... To: Econochick Date Posted: Mon, Mar 22, 2004 at 12:34:38 (EST) Email Address: daveellis_39@hotmail.com Message: Yes, you said you had doubts about Paul talents as a pundit. Because you supported Sid, those doubts supposedly include the Mohammed Matathir columns. Sid has posted here many times in the past. It has been impossible to have an intelligent discourse with him. You picked his side - and you refuse to defend your position. I dont think you are careful who you argue with, I think you got caught saying something you can't defend. Looks like you are a definite troll.

Subject: *sigh* From: Econochick To: David E... Date Posted: Mon, Mar 22, 2004 at 22:36:20 (EST) Email Address: Not Provided Message: Okay, David. Enough. You've become uncharacteristically childish. My entire opinion of the venerable Mr. Krugman is summarized in the article I posted. Krugman is not divine and, in any case, he is not MY God. This is my OPINION of Krugman and, as such, I am under no obligation to defend it. It is not a good use of my time to have a huge fight about Krugman on this or any other board with you or anyone else. If that discredits my position in your eyes, that is absolutely fine with me. We are (at least I am) in a free country. Furthermore, I posted on behalf of Sid because he brought up a point and someone attacked him with that troll thing (whatever that means). It didn't seem nice. If you do not agree or you can't have what you consider to be an 'intelligent discussion' with him, simply don't answer his post. Good night.

Subject: Trolly Annoyed From: Troll Alert To: Econochick Date Posted: Sun, Mar 21, 2004 at 14:19:43 (EST) Email Address: Not Provided Message:

Subject: A Lesson From Taiwan From: Jennifer To: All Date Posted: Fri, Mar 19, 2004 at 13:53:10 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/19/business/worldbusiness/19jobs.html After an Exodus of Jobs, a Recovery in Taiwan By KEITH BRADSHER TAIPEI, Taiwan - Many Americans are becoming alarmed as factories and jobs disappear to China. But by Taiwan's standards, American losses so far have been modest. Manufacturing here has shrunk to only a quarter of the economy from half in the late 1980's, as tens of thousands of companies shifted operations across the Taiwan Strait to the mainland. Unemployment more than tripled, from 1.5 percent through the early 1990's to 5.2 percent in 2002. Entire industries, like the manufacture of many plastic products, largely vanished, lured by Chinese wages that are a fifth of those in Taiwan. But while the economy here still has troubles, there are signs that Taiwan has turned the corner. The economy has grown rapidly since a SARS virus outbreak was quelled last June, and unemployment has dropped abruptly, to 4.5 percent, in the last few months. The recovery may provide lessons, economists say, for the United States and the European Union as they struggle to compete with China and other low-wage countries. Many jobs have come from surging exports, especially of high-technology products. There have also been more jobs in marketing, logistics and other tasks related to managing operations on the Chinese mainland, using expertise not yet available there. Heavy government spending to build roads, dams, rail and subway lines and other infrastructure projects in Taiwan has played a lesser but important role in increasing employment....

Subject: American Business Abroad From: Jennifer To: Jennifer Date Posted: Fri, Mar 19, 2004 at 15:22:49 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/19/business/worldbusiness/19manufacture.html Increasingly, American-Made Doesn't Mean in the U.S.A. By LOUIS UCHITELLE Anthony F. Raimondo, a Nebraska business executive, was all set to become President Bush's manufacturing czar until he was caught in a political firestorm last week after John Kerry's campaign suggested that Mr. Raimondo was a 'Benedict Arnold C.E.O.' for moving jobs from the United States to China. But it's not that simple. What Mr. Raimondo's company did, experts of all stripes say, has become standard business practice in response to domestic and international pressures. Hundreds of American companies, among them Mr. Raimondo's Behlen Manufacturing of Columbus, Neb., own facilities abroad that produce goods and services for overseas customers rather than for shipment back home. Indeed, these overseas sales, which have risen to more than $2.2 trillion annually in recent years, dwarf the nation's exports of roughly $1 trillion. Should American companies turn so quickly to production abroad, rather than export from the United States - particularly in China, where sales are growing at two or three times the rate in any other country? Mr. Raimondo says yes and he is far from alone. He and the chief executives of most manufacturing companies contend that such moves are essential to keep American industry competitive in the global marketplace. Behlen's story is telling....

Subject: Re: American Business Abroad From: Jennifer To: Jennifer Date Posted: Fri, Mar 19, 2004 at 17:53:40 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/18/business/18scene.html?pagewanted=1 Questioning Free Trade Mathematics By JEFF MADRICK FREE trade theory has a growing number of detractors, and one of their traditional concerns has understandably moved to center stage in this presidential election year. How much has the exporting of jobs to foreign nations contributed to the lack of jobs and the absence of wage growth in the current expansion at home? The standard tenets of free trade theory strongly support the case for outsourcing. Generally, as business finds cheaper ways to make products, it reduces prices to consumers. And some businesses may not survive unless they can reduce labor costs. In general, most economists believe that the 'consumer surplus' that results from lower prices far outweighs the cost of lost jobs or lower wages. In other words, there are many more winners than losers. But recent research suggests that the magnitude of this advantage has been exaggerated. Also, the plight of the losers has clearly been sorely neglected in the economic literature. And if sending jobs abroad turns from its current relative trickle to a fast-flowing stream, as it well might, the costs of job dislocation will be still higher. It is more than a little interesting how frequently past research understated the costs of jobs lost to free trade. A literature search published in a 2003 monograph by the economists Michael W. Klein, Scott Schuh and Robert K. Triest, called 'Job Creation, Job Destruction and International Competition' (Upjohn Institute), provides a useful summary of this work....

Subject: Japan firing a warning shot? From: Pete Weis To: All Date Posted: Thurs, Mar 18, 2004 at 22:06:16 (EST) Email Address: Not Provided Message: Reuters reported the following on March 15: 'The Bank of Japan is mulling ending its massive yen-selling interventions in the currency market by the end of March, the Nihon Keizai Shimbun reported from Tokyo in its early Tuesday edition.' Reuters also reported Japanese Finance Minister Sadakazu Tanigaki saying he felt it was necessary to 'diversify' Japan's foreign reserve assets which are presently made up mostly of US dollar denominated assets. Looks like they are losing their appetite for US debt especially with the very poor return on investment they're getting. Their public statements seem to be directed at Greenspan (to raise rates) and the US government (to get its spending under control). They are setting a deadline by specificly mentioning the end of March as an end or severe curtailment in their purchases of US dollar denominated assets. They may not be demanding a Fed rate increase before the end of March but may be demanding some assurances that the Fed will raise rates soon. What they seem to be saying is either the Fed raises our interest rates or Japan will do it for us. You might say this is ironic since Japan has the lowest interest rates in the world. But Japan runs a current account surplus and doesn't need to borrow to offset an outflow of its wealth. It's kind of startling to realize that a country like Japan can obliquely threaten to pull the plug on our low interest rates but they definitely have the power to do so. Afterall, they owe so much of our debt. It appears they have decided to take a different tact in this currency war we've started and have been running for several years now. They are saying 'no mas'.

Subject: No Problem From: Emma To: Pete Weis Date Posted: Fri, Mar 19, 2004 at 13:27:40 (EST) Email Address: Not Provided Message: There is no problem here. If the Japanese central bank buys less American currency, the Yen will appreciate against the dollar. So? Why should we be the least concerned? A more expensive Yen will give a competitive edge to American exporters and be a hurdle for Japanese exporters. The is simply no problem, no warning, no concern.

Subject: Re: No Problem From: Jhemp To: Emma Date Posted: Fri, Mar 19, 2004 at 16:46:24 (EST) Email Address: Not Provided Message: Dear Emma, what about the 'Euro'?

Subject: Speculation From: Emma To: Jhemp Date Posted: Fri, Mar 19, 2004 at 17:17:44 (EST) Email Address: Not Provided Message: A thought. When the Bank of Japan appears to change course from constant support of the dollar to now and then support, we may take this as a lesson for currency traders. Robert Rubin always wanted currency traders to know a bet could go either way. The Bank of Japan could be teaching traders a lesson: you can lose if you assume we have to support the dollar. Remember, central banks can not let currency traders think they can trade with no risk. As for the Euro, the dollar has been steady since November. Europe is growing more slowly than America, and the steadying of the Euro-dollar rate may just continue.

Subject: Re: Speculation From: Jennifer To: Emma Date Posted: Fri, Mar 19, 2004 at 17:31:15 (EST) Email Address: Not Provided Message: This seems right. A central bank never wants speculation to be rickless. BOJ is only concerned with keeping Japan's economy healthy, but it has to create risk for speculators.

Subject: Re: No Problem From: Pete Weis To: Emma Date Posted: Fri, Mar 19, 2004 at 15:20:32 (EST) Email Address: Not Provided Message: What do you suppose will happen with US interest rates? If you believe there is no housing bubble or stock market bubble than there is no problem if our rates were to jump a percent or two? Unless you believe the US is about to buy its own securities - that will be interesting.

Subject: No Bubbles From: Emma To: Pete Weis Date Posted: Fri, Mar 19, 2004 at 15:33:23 (EST) Email Address: Not Provided Message: The trailing price/earning ratio of the S&P was 20.8 on February 27. There is no stock market bubble. Stocks are not cheap, but why should they be. I have no worries about bubbles. Asset prices rise and fall, and might do either in the short run. In the long run, I am not worried about asset prices. There are no doubt selected real estate prices that are quite high, but that will happen from time to time. Nothing will happen to American interest rates because of action by the Bank of Japan. The Bank of Japan is not about to destroy an export market.

Subject: Interest Rates From: Emma To: Emma Date Posted: Fri, Mar 19, 2004 at 16:01:02 (EST) Email Address: Not Provided Message: There is no chance at all that American interest rates will rise significantly because of action by the Bank of Japan. Notice that American bond investors and the Federal Reserve are paying no attention to such a possibility. When the labor market finally begins to improve, then rates will climb.

Subject: Re: Interest Rates From: Pete Weis To: Emma Date Posted: Fri, Mar 19, 2004 at 22:50:58 (EST) Email Address: Not Provided Message: I'm very sure the Federal Reserve is paying alot of attention to it. But the Federal Reserve is boxed into a corner. They have been reduced to merely reacting to events around them rather than being in a position to take any effective action. There is a prevalent misconception that the Fed is the primary factor, at all times, when it comes to interest rates. In fact, many elements contribute to rising or falling interest rates. One of the most powerful influences on US interest rates are the twin deficits and the foreign central bank purchases of US securities necessary to fund these deficits. Many economies around the world can survive without any foreign central bank purchases of their securities. These are, generally, countries which have current account surpluses. The US is not one of these countries. In fact, since we consume so much more than we presently produce (now at about a net loss of 500 billion a year and rising rapidly) our economy is literally being propped up, mostly, by the Japanese and Chinese central banks. We owe as much, if not more, for our present low interest rates to foreign central banks returning their surplus dollars than we do our Federal Reserve. Japan has been by far the largest purchaser of US securities. Paul Krugman has refered to this problem a number of times. In his New York Times editorial 'The China Syndrome' which talks about why we have no bargaining chips when it comes to our trade deficit with China. He states 'Furthermore, purchases of Treasurey bills by China's central bank are one of the ways the US finances its trade deficit. Nobody is quite sure what would happen if the Chinese suddenly switched to, say, Euros - a two-point jump in mortgage rates?' Now, Japan is a much bigger purchaser of US treasuries than is China. I believing I was being quite conservative when I said a one to two percent rise in mortgage rates if Japan follows through with its warnings. Another Paul Krugman editorial 'This Can't Go On' says ' there will eventually be a day of reckoning. As Bill Gross of Pimco, the giant bond manager, says, 'sooner, perhaps later, our Asian creditors will wake up and smell the coffee.'' Paul Krugman goes on to say, 'Yes, the federal budget and the value of the dollar now depend on huge purchases of treasury bills by the governments of Japan and China.' Krugman further quotes Bill Gross as saying when our Asian creditors 'wake up' it will bring 'rising inflation, perhaps chaotic financial markets, and a lower standard of living.' A Sidney Morning Herald article, dated March 13, 2004, entitled 'Asia's mass debt weapon points to US', says: 'A warning signal is flashing, however, in a trend by Asian countries to diversify new additions to their foreign reserves away from US dollar investments into other currencies and assets. This is a sign of concern about the growing twin deficits in the US.' The article goes on to say 'A default by the US government is still unthinkable, but not so a unilateral change in the rules of international finance.. Among the possibilities being discussed are a closing of the exit door to prevent a sudden sell-off of US treasuries by Asian governments , which would require sudden leaps in US domestic interest rates.' The article also mentions growing fear in Asian circles that there is a 'looming dollar crisis'. Does this sound like the Federal Reserve would not be paying attention to foreign purchases of US securities, especially the largest purchaser - Japan. If I'm a bond trader, I better be paying attention! There is alot written out there about this subject. Your assertion that this is 'no problem' disagrees with not only Gross and Krugman, but just about every major financial and economic publication on the planet. This is a very serious issue.

Subject: Demand for American Debt From: Emma To: Emma Date Posted: Fri, Mar 19, 2004 at 13:51:25 (EST) Email Address: Not Provided Message: Worries about whether the Japanese will stop buying American debt have been around for 20 years. As long as the Japanese want to export to us, they will buy American debt. When they do not wish to export they can stop, but they will not stop. The Yen will grow stronger and weaker, but all will be well.

Subject: Re: Japan firing a warning shot? From: Danny Boy To: Pete Weis Date Posted: Fri, Mar 19, 2004 at 00:55:01 (EST) Email Address: Not Provided Message: NO. I think the US bonds are attractive to foreign investers.What bonds are attractive than Americans?

Subject: Bonds From: Jennifer To: Danny Boy Date Posted: Sat, Mar 20, 2004 at 14:38:06 (EST) Email Address: Not Provided Message: Bonds seem completely un-attractive to ordinary investors at these yields.

Subject: Bonds - No Reason From: Emma To: Jennifer Date Posted: Sat, Mar 20, 2004 at 14:45:26 (EST) Email Address: Not Provided Message: Agreed. There is no reason for bonds at such interest rates.

Subject: Re: Bonds - No Reason From: Pete Weis To: Emma Date Posted: Sun, Mar 21, 2004 at 11:10:23 (EST) Email Address: Not Provided Message: Well, if Japan stops buying and private investment slows its buying at these low yields, what replaces this loss to the pool of money available for borrowing? Does this not force interest rates higher?

Subject: Bonds - No Problem From: Jennifer To: Pete Weis Date Posted: Sun, Mar 21, 2004 at 12:41:31 (EST) Email Address: Not Provided Message: Japan will continue to be American debt as will any and every other central bank. Central banks are not out for profit, but to facilitate economic growth and stability. There is no possible problem. Interest rates will rise when the economy speeds and the labor market improves, not when Japan sneezes.

Subject: Re: Bonds - No Problem From: David E... To: Jennifer Date Posted: Sun, Mar 21, 2004 at 14:37:43 (EST) Email Address: daveellis_39@hotmail.com Message: Bill Gross, the well-recognized bond guru, is very concerned. I wonder why you are not concerned and he is. http://www.pimco.com/LeftNav/Late Breaking Commentary/IO/2004/IO_03_04.htm

Subject: Fine Question From: Jennifer To: David E... Date Posted: Sun, Mar 21, 2004 at 15:25:49 (EST) Email Address: Not Provided Message: I am not concerned because they 10 year treasury is telling me not to be concerned. The yield is about 3.8%. There is no general inflation, the economy is growing reasonably, and we are all hoping for a labor market improvement before the Federal Reserve begins a tightening sequence. The Federal Reserve is telling us there is no problem with low interest rates, and I agree. So, I read Bill Gross but do not agree. Bond yields were this low for years in the 1950s and 1960s. Then, find better personal investments but do not worry. The long term worry is the deficit, but that is long term and not now.

Subject: Institutions Buy From: Jennifer To: Jennifer Date Posted: Sun, Mar 21, 2004 at 12:47:45 (EST) Email Address: Not Provided Message: Also, private institutions such as pension funds will continue to buy bonds. Just because you or I do not wish to buy, makes no perceptible difference. Remember, I surely do expect rates to rise in time because of domestic factors from labor market improvement to deficit growth.

Subject: Debt From: Emma To: All Date Posted: Wed, Mar 17, 2004 at 14:22:10 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/16/business/16FED.html Alan Greenspan suggests that household and foreign debt are not too troublesome. Low long term interest rates may be bearing this idea out.... Adjusted for inflation, the average family's debt, including a mortgage, has climbed from $54,000 in 1990 to $79,000 last year. Mortgage foreclosures, credit card delinquencies and personal bankruptcies are all at near record levels. Mr. Greenspan's view is that household balance sheets are 'in good shape,' and perhaps stronger than ever, because the value of people's homes and stock portfolios have risen faster than their debts. The Fed chairman is equally sanguine about the nation's overall borrowing from foreigners, which has soared to more than $500 billion a year and has contributed to a sharp drop in the value of the dollar. And he has also made it clear he will not try to torpedo the president's tax-cutting agenda, which could add another $2 trillion to federal borrowing over the next decade. 'History suggests that the odds are favorable that current imbalances will be defused with little disruption,' he declared in a speech two weeks ago....

Subject: Re: Debt in Dell-land From: nat To: Emma Date Posted: Thurs, Mar 18, 2004 at 14:55:29 (EST) Email Address: Not Provided Message: Foreclosure gloom lingers Postings for April auctions up sharply By Shonda Novak AMERICAN-STATESMAN STAFF Thursday, March 18, 2004 The foreclosure cloud that has hung over Central Texas for more than a year isn't going away. In Travis County, foreclosure postings for the April 6 auction are at a 13-year high. In Williamson County, the 284 postings are believed to be a record, according to companies that track such activity. The reasons for the spike include a weak job market, excessive credit card debt and the purchase of more house than the buyer could afford, in many cases because of the lure of record low mortgage interest rates. People who track the market say foreclosures will remain high until the area sees appreciable job growth. 'There is no other solution to the foreclosure problem,' said George Roddy Sr., president of Foreclosure Listing Service Inc., an Addison company that tracks foreclosures in several Texas cities. 'And the job growth has to be people being re-employed, and re-employed at liveable wages.' Based on preliminary figures, Roddy's firm tallied 408 April postings for Travis County, 46 percent higher than a year ago. The Williamson County figure is 73 percent higher than the 164 postings in April 2003. Both figures could change slightly when the count is finalized today. But the picture won't change: The region has a growing number of people who have run out of financial rope and can't make their mortgage payments. Even in good times, there are about 150 foreclosures a month in Travis County, said Peter Sajovich, president of eCounty Foreclosures Inc., which tracks foreclosures for real estate investors. But the numbers began to rise as the Central Texas economy cratered. The 2002 total for Travis and Williamson counties was 49.3 percent higher than the previous year's, and foreclosures in 2003 were 64.4 percent higher than those in 2002. Foreclosures tend to lag an economic recovery, so monthly ups and downs are to be expected this year, even as the economy continues its tentative rebound. Even if the region started generating jobs, 'we would still see high foreclosures for six months because . . . people have gotten themselves into a problem and they're not going to get out of it,' Roddy said. He and other analysts described several reasons why homeowners would find themselves on the foreclosure list: * Low- or no-down-payment programs lured many people, especially first-time buyers, to buy homes that they no longer could afford after they lost their jobs. With no equity, 'they don't have anything to lose,' Roddy said. 'So psychologically they're saying, 'I don't have that much in it, so I'll let it foreclose.' ' * Record low mortgage interest rates led others to buy more house than they could afford. When a layoff hit, they also lacked the resources to pay the mortgage. 'Once you start to get behind on your note, it's very hard to make it up,' Roddy said. * Still others bought homes at high prices during the boom, believing that the market would continue to rise. For the past two years, however, prices have been flat. When a job loss or other troubles forced those buyers to sell, 'they couldn't get enough to pay off the loan because the market didn't go up anymore,' said Gregg Stanley, president of San Antonio-based Real Estate Foreclosures Inc. Despite the gloomy statistics, analysts say there's no reason for the foreclosure picture to get much worse. The worst of the layoffs appear to be over, though the region is still not generating jobs. 'Unless some big problem happens with lending institutions, we're probably getting close to the bottom,' Stanley said. 'I don't think things will get much worse, but I'm not going to bet money on it.' Even at high levels, Roddy doesn't think the foreclosure postings in Travis County will affect home prices. 'They're spread out all over the county,' he said. 'There's no reason for them to impact values unless you have a lot of foreclosures in close proximity, and that's not happening. If you had 10 in your neighborhood, that would be a serious problem.' snovak@statesman.com; 445-3856

Subject: Re: Debt From: Mik To: Emma Date Posted: Wed, Mar 17, 2004 at 18:17:43 (EST) Email Address: Not Provided Message: pardon me for being cynical. But! 'Alan Greenspan suggests that household and foreign debt are not too troublesome'.... 'Mortgage foreclosures, credit card delinquencies and personal bankruptcies are all at near record levels.' Am I the only one joining the dots here? Just because interest rates are down, doesn't mean we can manage debt better or that we are taking on less debt. I personally believe lower interest rates are to a large degree cancelled out by increase house values and increased mortgage rates.... but I don't have figure to prove it.

Subject: Rising Debt From: Emma To: Mik Date Posted: Thurs, Mar 18, 2004 at 15:21:13 (EST) Email Address: Not Provided Message: Alan Greenspan is making the case that increasing asset values and low interest rates are making it easier for householders to afford rising debt levels. The argument is interesting, for it goes against the warnings on debt that we are used to. So, could it be rising debt and easier payments?

Subject: Re: Rising Debt From: Mik To: Emma Date Posted: Fri, Mar 19, 2004 at 15:44:53 (EST) Email Address: Not Provided Message: Emma, Interesting concept - 'increasing asset values and low interest rates are making it easier for householders to afford rising debt levels.' Maybe I'm wrong here but let me analyse this - house values increase, thus the 'asset' value has increased. An increase in asset value means that using yur asset as surety you now have an increase in surety. I'm sorry - call me old fashion - I don't buy this (pardon the pun).

Subject: Re: Rising Debt From: Emma To: Mik Date Posted: Fri, Mar 19, 2004 at 17:52:17 (EST) Email Address: Not Provided Message: We need to argue more about this, as I am arguing with myself. Alan Greenspan is arguing that households are learning to act just like a small business. Use rising asset values to extend debt, but for business there is supposed to be a revenue or further asset appreciation return for debt. Are households to expect the same? I do not know!

Subject: Alan Greenspan From: Emma To: All Date Posted: Tues, Mar 16, 2004 at 15:19:58 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/16/business/16FED.html Greenspan Shifts View on Deficits By EDMUND L. ANDREWS WASHINGTON — Consumer debt is hitting record levels. The federal budget deficit is yawning ever larger. The trade gap? Don't even ask. Many mainstream economists are worried about these trends, but Alan Greenspan, arguably the most powerful and influential economist in the land, is not as concerned. In speeches and testimony, Mr. Greenspan, chairman of the Federal Reserve Board, is piecing together a theory about debt that departs from traditional views and even from fears he has himself expressed in the past. In the 1990's, Mr. Greenspan implored President Bill Clinton to lower the budget deficit and tacitly condoned tax increases in doing so. Today, with the deficit heading toward a record of $500 billion, he warns more emphatically about the risks of raising taxes than about shortfalls over the next few years. On Monday, the nonpartisan Congressional Budget Office published new calculations showing that the budget deficit now stems almost entirely from tax cuts and spending increases rather than from lingering effects of the economic slowdown. Mr. Greenspan's thesis, which is not accepted by all traditional economists, is that increases in personal wealth and the growing sophistication of financial markets have allowed Americans — individually and as a nation — to borrow much more today than might have seemed manageable 20 years ago....

Subject: Re: Alan Greenspan From: Jennifer To: Emma Date Posted: Tues, Mar 16, 2004 at 16:34:50 (EST) Email Address: Not Provided Message: Essentially Greenspan is arguing that institutions and households can handle more debt since interest rates are low so payments are less of a problem and institutions are better at handling risk. Interesting.

Subject: Re: Alan Greenspan From: Econochick To: Jennifer Date Posted: Tues, Mar 16, 2004 at 17:21:27 (EST) Email Address: Not Provided Message: If I'm not mistaken, though, he also warns in other statements that household debt is getting alarmingly high. I believe that is a distinction between being able to 'handle' household debt and household debt being good for people. Household debt means lower household investment, thus missing out on the return on investment. So, while we may not go bankrupt at the rate we would expect with this kind of debt (on a Macro level), we're not getting richer either.

Subject: Debt From: Jennifer To: Econochick Date Posted: Tues, Mar 16, 2004 at 17:32:02 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/16/business/16FED.html Mr. Greenspan's view is that household balance sheets are 'in good shape,' and perhaps stronger than ever, because the value of people's homes and stock portfolios have risen faster than their debts. This really is an interesting argument. Economists fret about household debt, but they have been fretting for decades. Do I agree with Greenspan? No, but but but....

Subject: Hmmmm... From: Econochick To: Jennifer Date Posted: Tues, Mar 16, 2004 at 17:34:36 (EST) Email Address: Not Provided Message: I'm with you in that 'but but but....' camp.

Subject: Re: Hmmmm... From: Pete Weis To: Econochick Date Posted: Tues, Mar 16, 2004 at 21:33:34 (EST) Email Address: Not Provided Message: We may get an answer to those 'buts' sooner rather than later since economic stimulus (made up mostly of mortgage originations) appears to be running between $1 trillion to $1.5 trillion less in 2004 than it was in 2003 when interest rates bottomed. If the stock markets begin dropping or go flat in 2004, then we could get the 'wealth effect' going in reverse. Consumers may begin to look at their high levels of debt with a little more unease. It doesn't look like employment is going to save the day anytime soon. So far its been load up those credit cards, pay them off with home equity and load them up all over again. There's nothing like cheap, easy money when you can pay the bills for the last cheap, easy money with new cheap, easy money. But just as automakers must offer better and better discounts to keep the customers coming, our financial system must offer both steadily cheaper and easier money to keep the consumers consuming. Greenspan apparently thinks this can go on indefinitely, or atleast until employment rides to the rescue. We're still waiting on employment.

Subject: Gentlemen, start your savings From: Econochick To: Pete Weis Date Posted: Tues, Mar 16, 2004 at 21:51:18 (EST) Email Address: Not Provided Message: Well, Pete, you know that I'm a big supporter of self-discipline and savings. I say, cut back on spending, pay off the credit cards and increase investment. You don't need a change in government policy to do that.

Subject: Re: Gentlemen, start your savings From: Pete Weis To: Econochick Date Posted: Tues, Mar 16, 2004 at 22:38:50 (EST) Email Address: Not Provided Message: Wow. That was a fast reply! Guess we're a couple of message board junkies on this site. I agree with you completely on the self-discipline. Doesn't appear to be much of it out there. Apparently, primitive aspects of human behavior ('keeping up with the Flintstones' and 'live for today') seem to 'carry the day'. Guess this whole scenario of holding things together up to this point (until employment kicks in)wouldn't have worked if most of us had self-discipline. So, here's to the overwhelming lack of self discipline - may it carry on forever so our economy will do the same. Afterall, in a fiat money system this can go on forever. If bailouts are needed along the way, our government can simply print money as needed. If we're a little short on social security, health care for the masses, FDIC, GSE's, foreign investment in the US, and foreign wars, we can just cover it with paper. As Greenspan has stated - our markets have become 'sophisticated' and that now trumps the primitive human behavior which has so long ruled our markets and economy. Anyway, we need to have a sense of humor about this brave new world of economics.

Subject: Pete - Ayi Caramba From: Mik To: Pete Weis Date Posted: Wed, Mar 17, 2004 at 18:09:13 (EST) Email Address: Not Provided Message: Peter, your statement, 'our markets have become 'sophisticated' and that now trumps the primitive human behavior which has so long ruled our markets and economy.'.... uhmm you know some how I can draw an analogy to Enron on that. In one way it kinda spooks me. In another way - what the hell can I do about it?.. life must go on and a sense of humour is a good thing.

Subject: Amen, Pete! From: Econochick To: Pete Weis Date Posted: Wed, Mar 17, 2004 at 14:10:18 (EST) Email Address: Not Provided Message: Yeah, I gotta say I find myself here often! And I agree with you - you have to have a sense of humour, full stop. About everything - otherwise it's all just too intimidating.

Subject: Why no jobs recovery From: Jim To: All Date Posted: Mon, Mar 15, 2004 at 20:00:48 (EST) Email Address: jzmarg@aol.com Message: Behind the jobs debacle Bush's jobs forecast failed because there's been no jobs recovery at all. - - - - - - - - - - - - By James K. Galbraith March 15, 2004 | Let's look again at the chart deftly deployed by Paul Krugman in the New York Times on March 9 to blast the Bush economic team for missing its employment forecasts. (Source: The New York Times) No doubt, it's a screw-up. But just how did they manage it? Was Economic Team Bush getting its job targets, as many suspect, from Karl Rove? Did the professionals turn prostitute, as Krugman charges in no uncertain words? So far as we can tell from the numbers, it's the Scotch Verdict: Not Proven. We can make this clear immediately. We need only extend the historical tail of the Krugman chart back in time, say to 1991 -- as in the chart below. Our new chart shows that the Bush forecast did not imply unusually rapid job growth for an economic expansion. To the contrary. The growth track in the first set of Bush forecasts, published in 2002, is a bit lower than the actual rate of job growth under Clinton. And it is considerably lower (though probably for good reason) than the average growth rate of payroll jobs in non-recession years since 1952. And so, the failure of the jobs forecast did not occur because economic recovery forecasts were abnormal. They were not. So far as we can tell, it did not occur because someone cooked the books, under instruction or otherwise. No. The true reason is worse than that. Bush's jobs forecast failed because a jobs recovery never began at all. Look at monthly payrolls compared to a year before. The period through January 2004 is by far the longest episode of steadily falling payroll employment since World War II: 32 months, with the end still uncertain. The next worst was 26 months, roughly from the end of World War II to the 1947 start of the Cold War. Apart from these two periods, the average period of job losses on this basis (over 11 episodes) is just one year. And as Lee Price of the Economic Policy Institute points out, since 1939 full recovery of all jobs lost in recession has never taken more than 35 months. Something's happening here. Four years after the tech implosion, two and a half years after 9/11, one year after the start of the Iraq war -- we are still not creating new jobs in serious or sufficient number. And let's therefore ask, why not? Is it because, as many have said, Bush's tax cuts are primarily for the rich, who do not spend their tax-cut gains? This argument has practical virtue. It makes a case for repeal of the worst Bush tax cuts, which is useful: The worst Bush cuts should be repealed. But the facts don't support this particular argument as to why. Bush did cut taxes on the rich -- relentlessly, recklessly, wrongly. But most of those tax cuts have yet to be phased in. They are part of the revenue losses still to come in the decades ahead. They aren't the big thing behind deficits we're seeing now. Therefore, reconfiguring the tax cuts already in place to benefit only the middle class and poor would have helped some -- but not that much. Moreover, in 2001 and 2003, taxes were cut for the middle class. Those cuts were the sweetener for the enormous future giveaways to the rich. They happened first through cash rebates and then through an expanded child credit. Taken entirely alone, these cuts weren't bad policy. Without them -- and without the short-term deficits they caused -- the recession and job losses would have been much worse. And in 2003 the middle-class tax cuts did deliver a burst of spending, leading to an 8 percent economic growth rate in the third quarter. But it didn't lead to new jobs. And then too: In 2001 and 2003 Bush took us to war. That entailed large increases in public spending, boosting demand and economic growth. The macro effects of the Iraq war were roughly sufficient to double the growth rate in the second quarter of 2003, getting (as many thought) recovery underway. But that didn't lead to new jobs either. Some people appear to believe that the root cause lies in the person of the president himself: Clinton good, Bush bad. Replace Bush, economy better. But this is economics for children. Truth: The conditions for this disaster were set by the tech debacle, by the enormous and unsustainable accumulation of household debt, by the decline in our trade competitiveness and trade balance (under the 'high dollar policy'), and by the unsustainability of regressive and opportunistic state and local tax structures. Not since the 1920s had growth been so dependent on speculative investment and mortgage finance. Not in history has our trade position been so weak. Most economists missed the significance of this. Back in 1991, most of them just assumed that we were facing an ordinary recession and that an ordinary recovery would follow. Those who felt that way repeatedly made forecasts no less wrong than those adopted by Bush's Council of Economic Advisers. And that is why the official forecasts -- apart from their natural obscurity -- attracted little attention at the time. But a few did not go along. It was possible to figure things out. The British economist Wynne Godley has been writing strategic analyses for years on the Web site of the Levy Institute. What's the difference? In general terms, it is that Godley is not engaged in the facile maneuver of the forecasting trade, which is mechanically to predict an 'average recovery' starting some time in the near future. Rather, he presents the implications of a very specific theory of financial relations and behavior. And this approach, because it could pick up the unique financial signature of the late 1990s, got the essentials of our problem right. (Godley was not alone, either -- though very few cared to listen. I lectured on Godley's thesis in the summer of 2001 -- though in China, where no one could hear.) The failure of Bush and his economists does not lie in faking a prediction. It lies in failing to understand what the underlying problems are. It lies in failing to propose policies suitable to their cure. It lies in the wanton pursuit of a strategy of tax cuts for the long term aimed at the political, not economic, objective of exempting plutocrats and their fortunes from federal tax. In lies in the rush into military adventures -- from missile defense to Iraq -- that achieve little, waste vast resources and make a proper jobs-and-security policy even more difficult down the road. Most of all, it lies in failing to care, one way or another, what might happen. That we-don't-care attitude showed up pretty clearly when Bush nominated his 'manufacturing czar' -- a steel-building man who promptly and sensibly withdrew. The nominee, a Nebraskan named Tony Raimondo, got a bad rap, momentarily, for being an outsourcer. It turns out he isn't: His new factory in China is for the Chinese market, which is, of course, booming. And one can only admire the man's frankness about the effect of Bush's Iraq adventure on his domestic business: 'They sure as hell don't want to buy a building if there's a war.' It turns out that the job of 'manufacturing czar' isn't new: An existing post in the Commerce Department just got relabeled. It showed up again on March 11 when Commerce Secretary Don Evans said the administration had '57 ... objectives in its plan to reinvigorate U.S. manufacturing.' Fifty-seven objectives? Now there's a number for you! Is there a list? Or does Evans have ketchup, or Theresa Heinz Kerry, on his mind for some reason? And will the Democrats under the leadership of John Kerry do better? Let's hope so. But let's recognize that the challenge will be enormous. To begin with, there is a good chance that things will get worse, not better, after the election. But even if a normal jobs recovery, at the normal growth rate, somehow got underway, would that be good enough? I don't think so. We would be starting then from a deep hole and 'normal' growth would leave millions unemployed and underemployed for many years. We should aim for something better: A strong recovery brought on by good policy. Whether we can get it will depend on what President Kerry eventually does. Right now, the test should not be whether enlightened policy emerges in the heat of the campaign. It probably won't. But Franklin D. Roosevelt campaigned against deficits in 1932 and embraced them in 1933 -- and thank God for that flip-flop. If John Kerry wants to campaign on halving the deficit in four years, I won't complain. But when the policy is tried, and nothing happens, I ask only that he be ready to change, and quickly, to something much more substantial. Kerry's right move now is to make a broad and forceful commitment to the return of good jobs at decent wages -- to the return of full employment. It lies in stating a willingness to do, in good time, whatever may prove necessary to achieve that goal. It lies in helping to prepare the public for big policy changes when it becomes necessary to have them. The most important thing is to keep an open mind. salon.com - - - - - - - - - - - - About the writer James K. Galbraith is Salon's economics correspondent. He teaches at the Lyndon B. Johnson School of Public Affairs, the University of Texas at Austin. Sound Off Send us a Letter to the Editor Salon.com >> News

Subject: Jim, thanks for your post From: David E... To: Jim Date Posted: Fri, Mar 19, 2004 at 16:58:54 (EST) Email Address: Not Provided Message: What a good way to understand and forecast economic growth. I read some of Wynne Godley's essays. http://www.levy.org/1/research/bios/godley.html I read his analyses written in 1999, 2000, and 2001. Very few economists can remain right over 3 years. His analysis in 2001 told him that George Bush's tax cuts were a 1/3rd of the strength needed. So he predicted this jobless recovery three years ago.

Subject: Investing From: Jennifer To: All Date Posted: Mon, Mar 15, 2004 at 15:09:05 (EST) Email Address: Not Provided Message: 'The fact is, if 'beating the market' were that easy, it wouldn't be this hard....know what I mean?' Well, yes and no. Buy a broad index fund and you are the market minus a small fee. Since the great majority of investors have higher costs in fees and taxes than indexers, you will beat the broad market majority to bits over time. Buy the American total stock market index and add Europe and you have a hedge against the dollar as well. A Vanguard bond bond and you have as much diversity as you could wish. Heck, buy the REIT index from Vanguard and you have more diversity [though REITs appear quite expensive right now]. Also, the idea of paying loads and high fees for funds is absurd.

Subject: Re: Investing From: Don Camillo To: Jennifer Date Posted: Tues, Mar 16, 2004 at 17:16:01 (EST) Email Address: nma@hotmail.com Message: 'Buy the American total stock market index and add Europe and you have a hedge against the dollar as well.' Compare the evolution of both stock-markets (Dow & Euro Stockxx) after the worldwide fall of the 'New-Economy' in april 2000 till now to the evolution of the dollar.Comparative or competitive(trade balance, PK) advantage?Don't think so.Now N>>M (in The Quarterly Journal of Economics,Nov.1989, Issue 4 'Persistent Trade Effects Of Large Exchange Rate Shocks, by R.Bladwin and P. Krugman) why then FDIs(US 1995-1999)>>FDIs(US 2003).Your guesses?

Subject: Don Camillo = Rubbish From: Nonsense To: Don Camillo Date Posted: Wed, Mar 17, 2004 at 12:49:55 (EST) Email Address: Not Provided Message: Don Camillo posts rubbish.

Subject: Re: Investing From: Econochick To: Don Camillo Date Posted: Tues, Mar 16, 2004 at 17:23:53 (EST) Email Address: Not Provided Message: Not sure what you're getting at. Would you mind reposting?

Subject: Re: Investing From: Jennifer To: Econochick Date Posted: Tues, Mar 16, 2004 at 17:40:40 (EST) Email Address: Not Provided Message: The point may be that in the bear market both the S&P and Europe Indexes declined about 50% over the same periods. The markets sold off together and have risen together. Europe fell a bit more and for a few months longer actually. My sense is to buy the better of the values at different times, though the markets may move together for quite a while. Bonds were the haven during the bear market, and a few sectors like REITs and to a lesser extent large drug and oil companies.

Subject: Re: Investing From: Don Camillo To: Jennifer Date Posted: Tues, Mar 16, 2004 at 18:13:46 (EST) Email Address: nma@hotmail.com Message: Dow-Index * Exchange-rate (E=Eus/Eeuro) = Euro Stockxxx-Index * Exchange rate (E=Eeuro/Eus)?Or not?

Subject: Re: Investing From: Don Camillo To: Jennifer Date Posted: Tues, Mar 16, 2004 at 18:13:34 (EST) Email Address: nma@hotmail.com Message: Dow-Index * Exchange-rate (E=Eus/Eeuro) = Euro Stockxxx-Index * Exchange rate (E=Eeuro/Eus)?Or not?

Subject: Re: Investing From: Don Camillo To: Don Camillo Date Posted: Tues, Mar 16, 2004 at 18:22:32 (EST) Email Address: nma@hotmail.com Message: delta stocks as a function of time and exchange-rate from t0=april 2000 to t1=now

Subject: Don Camillo = Rubbish From: Nonsense To: Don Camillo Date Posted: Wed, Mar 17, 2004 at 13:35:27 (EST) Email Address: Not Provided Message:

Subject: Re: Don Camillo = Rubbish From: Don Camillo To: Nonsense Date Posted: Wed, Mar 17, 2004 at 17:16:54 (EST) Email Address: nma@hotmail.com Message: Bof, do your homework!

Subject: Re: Investing From: Econochick To: Jennifer Date Posted: Tues, Mar 16, 2004 at 17:49:48 (EST) Email Address: Not Provided Message: Thanks, Jennifer. So if that's what that post means then this is proves the point we've been making on these investment-related threads - diversify among asset classes and you'll be fine. Correct? If you want further diversification, traditionally emerging markets have been less correlated with (but more volatile) than developed markets - which are more highly correlated with each other. but the point is diversify.

Subject: Bonds From: Emma To: Jennifer Date Posted: Tues, Mar 16, 2004 at 13:54:20 (EST) Email Address: Not Provided Message: Again, I agree, but my choices in bond funds have long been convertible securities and high yield tax free and more recently high yield corporate. High yield tax free is secure and stable enough to be used as a money market account. There is really no reason for an actual money market account.

Subject: Jen hits Bull's Eye!! From: Econochick To: Jennifer Date Posted: Mon, Mar 15, 2004 at 16:52:41 (EST) Email Address: Not Provided Message: Oh my God!!! You're trying to build the CAPM!!! It's true - if you buy an index of all the assets you are as perfectly diversified as you can get. Also, I forgot to mention (but you implied in your post) that index funds typically have no loads and a MUCH smaller management fee than 'actively managed' funds. The European index is a great idea for a dollar hedge. I think Pete also said that in a post a few days ago. There are a few tricks too, like investing in muni bonds if you're in a high tax bracket. The higher the tax bracket the closer you get to a stock-like return but for bond risk. You can reduce your risk even further if you buy an index of muni bonds. Since all returns have to be measured relative to risk, that's a pretty good deal! Yhat's a form of 'outperforming' without having to guess about where the market is going next. I could not agree with you more about those fund fees. It is my impression - although I could be completely wrong about this - that investors don't pay enough attention to management fees and end up paying too much. And funds do a great job of distracting you with glossy photos of capable looking fund managers and the razzle dazzle of their (pre-fee) performance so that you don't. I cannot think of one good reason for paying up for that either! Jennifer, you are the third person (besides Emma and myself) to mention Vanguard specifically. I have a large portion of our portfolio invested with them because they are large, professional, and have some of the lowest fees around. So, I recommend them. But other than myself I have no testimonials. Are we correct in assuming from your post that you would recommend Vanguard from personal experience? Finally, I read your kind comment below and I thank you. I know for sure that there are those who disagree. However, I think (and I'm sure others will agree) that there is such a large number of people who make great arguments on this board that it is the only one I find worth checking on a regular basis.

Subject: Re: Jen hits Bull's Eye!! From: Emma To: Econochick Date Posted: Mon, Mar 15, 2004 at 17:25:22 (EST) Email Address: Not Provided Message: Interesting! Given high quality and low costs, I am less concerned about buying a bond index than a stock index. I would rather buy and hold a specific category and duration of bond fund. When I can buy high quality corporates or municipals at low cost all, I need to do is decide the duration. By that I mean a long term fund, which would have a duration of about 9 or 10 years. Or, an intermediate fund with a duration of about 4.5 to 5 years. Then, let a manager shop for a bit of extra yield which an index fund will not do. A smidge more cost and less diversity but enough extra yield to be attractive. Since I do not time markets, I like to buy long term and hold. the extra yield always more than makes up in time for price swings as long as the duration is fairly constant.

Subject: Re: Jen hits Bull's Eye!! From: Econochick To: Emma Date Posted: Mon, Mar 15, 2004 at 19:23:29 (EST) Email Address: Not Provided Message: If I understand you correctly, you are determining the risk exposure you want by choosing the duration (longer duration = more risk, shorter duration = less risk). Then, by investing in a bond fund, you're letting the fund manager pick the most attractively priced bonds in that duration and that's where you pick up the extra yield. It's more efficient to pay him to do it (through fees) than to spend the time wading through the lists of bonds yourself. Plus you get the managers expertise and economies of scale (lower transaction costs). As long as the management fee doesn't eat too much of the gain you're winning. Sounds great. But are you saying there's never a need for a stock piece? I didn't understand that part of your post.

Subject: Investing - Econochick From: Jennifer To: Jennifer Date Posted: Mon, Mar 15, 2004 at 15:41:10 (EST) Email Address: Not Provided Message: Econochick argues wonderfully!

Subject: Madrid, March 11, 2004 From: Yann To: All Date Posted: Mon, Mar 15, 2004 at 03:57:23 (EST) Email Address: Not Provided Message: Is 'March 11' in Madrid our 'September 11'? Are there some economic reasons for terrorism? What can we do? Is removing all poverty the solution? Yann (French citizen)

Subject: Re: Madrid, March 11, 2004 From: Econochick To: Yann Date Posted: Mon, Mar 15, 2004 at 11:12:01 (EST) Email Address: Not Provided Message: Philosophical ruminating on what internal dialogue some people have with themselves that gives them the permission to destroy others is almost too scary to consider. I remember reading a book more than a decade ago called 'The True Believer' that may answer that question. I don't think it is possible to eliminate all poverty. Partially because 'poverty' is relative and there is more than one sort of poverty. The worst part about what happened in Spain, I think, is the implications for the future. Because the Spaniards folded like a house of cards, voting out the ruling party in retaliation for making them 'targets of Islamic terror', the terrorists will be encouraged to try this in future. In other words, the Spaniards sent the message that 'if you threaten us, we will bend to your will'. That's a very bad message to send.

Subject: Re: Madrid, March 11, 2004 From: Jerry To: Econochick Date Posted: Mon, Mar 15, 2004 at 11:53:40 (EST) Email Address: Not Provided Message: Well, actually, no. The Spanish people voted out the Center-Right party as a response to that party's support of the United States in Iraq. I would offer that the Iraq war has been a distraction from the legitimate war on terror, well on the radar of Bush's policy team when he was still running for office back here in Texas. Ninety percent of the Spanish people were against supporting the U.S. in Iraq and the Center-Right party was on its way out the door well before the March 11 attacks. At some point, even in this so-called war on terror, democracy has to count for something. You cannot fight a war on something as nebulous as 'terror.' Wars must be fought afainst specific enemies. In this case I enemy is Al Qaeda, not 'terror.' We need to seriously re-think how we are approaching the whole concept. A repudiation of an imperialistic war in Iraq, a power it has now been proven that was fully contained, is in no way a repudiation of the war against Al Qaeda or a victory for terrorists. It is a wake up call that people are disgusted with the direction so-called Western 'democracy' has taken.

Subject: Re: Madrid, March 11, 2004 From: Econochick To: Jerry Date Posted: Mon, Mar 15, 2004 at 17:14:59 (EST) Email Address: Not Provided Message: Well, you may be right about the reason that the PP was voted out. The fact that the party had popular support just before the train bombings (despite the war) would run counter to your argument, though. However, my statement was really more specific than that. I think that if people interviewed has said 'I don't support the war in Iraq and this party does, therefore I want to vote them out' that would be fine. Or if they just liked the socialist platform better. My concern was people interviewed by the media were saying things along the line of 'we are voting them out because we blame their policies for bringing Islamic terrorism to our shores'. That sends the message to terrorists that terrifying and killing works. Do it enough and an entire country will bend to your will. I'm pretty certain that these guys have other things they want Spain to do, other than getting out of Iraq, that the Spanish probably don't want to do. So how much will they concede to terrorists in return for not being bombed? This kind of commentary by the public encourages terrorists to stage these sorts of attacks in future. I'm a little worried about between now and November here in the States, for example. Whether what people said differed from the real reason they voted out the PP, I guess we don't really know. The unfortunate thing is what they said to the media.

Subject: Re: Madrid, March 11, 2004 From: Paul G. Brown To: Jerry Date Posted: Mon, Mar 15, 2004 at 12:54:15 (EST) Email Address: Not Provided Message: I think both Jerry & Econochick have good points here. Inspite of its involvement in the US led coallition in Iraq, Aznar's party had widespread popular support, and up until the bombing polls indicated that they would be returned to power. But on polling day, it was beaten like a cheap drum. Now, let's put on our neo-con, real-politik goggles. How badly has the Bush administration screwed up the battle against theocratic fascism? (Yes Mr Falwell, Robertson, that was a glance in your direction.) Very badly. The only way to win is to win the struggle for hearts & minds. The Popular Party's defeat tells us that the Spanish people do not trust their leadership, or (indirectly) the Bushies'. The Spanish election is not, I think, a defeat in the broader struggle. If we in the west repudiate the cynicism, deceit and opportunism that has characterized our efforts in this war so far it might well stand as an example of the inherent strength of democracy. From an economic perspective, attacks like Madrid 3/11 corrode expectations and make it hard to judge risk in a rational way (for psychological reasons). Endemic terrorism stunts social and economic development. But the best evidence is that occasional terrorism is not as important as other factors.

Subject: Re: Madrid, March 11, 2004 From: Jerry To: Yann Date Posted: Mon, Mar 15, 2004 at 10:30:19 (EST) Email Address: Not Provided Message: Removing all poverty is not the answer, although it is a nice goal. Most of the people behind this kind of stuff are not poor themselves and, for a time, even had ties to the United States. This kind of terrorism is, really, a response to American imperialism. Every time we have flexed our imperialistic muscle we've been met with this type response. Every empire eventually faces it. Look at Rome. As a French person, you must know that it was your ancestors and the ancestors of you neighbors that brought that empire down. External response to empirial misdeeds coupled with internal mismanagement spelled doom for the greatest empire in history. Does that sound familiar? It is not unfamiliar to those in the know. Anthropologist James C. Scott referred to this as 'A Saturnalia of Power.' His book on hegemony, DOMINATION AND THE ARTS OF RESISTENCE should be mandatory reading for all U.S. politicians right now.

Subject: Re: Madrid, March 11, 2004 From: Econochick To: Jerry Date Posted: Mon, Mar 15, 2004 at 17:01:14 (EST) Email Address: Not Provided Message: Well, I believe Empire is a factor but to blame it solely on Empire is an oversimplification. After all, terrorism exists without Empire too. Poverty (in all its forms) is a factor, clashing ideologies is a factor, education is a factor, religion is a factor. Just plain craziness is a factor too, I guess. I'm sure lots of folks can add lots more factors to that list.

Subject: Re: Madrid, March 11, 2004 From: Piranha To: Jerry Date Posted: Mon, Mar 15, 2004 at 11:50:32 (EST) Email Address: Not Provided Message: Robert Barro wrote a good piece about the relationship between poverty and terrorism in Business Week. Here is a link to the article:(you may need subscription) http://www.businessweek.com/magazine/content/02_23/b3786027.htm I personally think that removing poverty will help reduce terrorism to some extent. A lot of the terrorists, rely on public sympathy for their work. The public are far more likley to be sympathetic to violent means if they are poor and have many greivances. Reduce the poverty, and you reduce one such greivance.

Subject: Re: Madrid, March 11, 2004 From: Starsky To: Piranha Date Posted: Mon, Mar 15, 2004 at 16:28:22 (EST) Email Address: nma@hotmail.com Message: So far, though so terribly near...

Subject: too close to home From: Econochick To: Starsky Date Posted: Mon, Mar 15, 2004 at 16:53:59 (EST) Email Address: Not Provided Message: You said it, brother. I live in NYC and I still can't sleep at night...

Subject: Greenspan to retire? From: Pete Weis To: All Date Posted: Sun, Mar 14, 2004 at 12:56:28 (EST) Email Address: Not Provided Message: Do any posters on this board believe Greenspan might retire before the upcoming elections? He's getting up there in years. Would the Republican leadership want this? Or do you think they need him to remain until after the elections? He made comments about social security which George W. had to disavow. Ben Bernanke was appointed by the Bush administration to the Philadelphia Fed position and he has been very outspoken while other Fed governors keep a low profile. Bernanke is a big Friedman fan and is outspoken about taking a very agressive approach to increasing liquidity if necessary. Is Bernanke being 'groomed' (not sure this is the best word) for Greenspan's job? If winning the upcoming elections looks unlikely or atleast questionable for the Republicans, would Republican supporters of 'influence' pressure Greenspan to retire now to prevent the possibility of the Democrats appointing the new Fed Chairman? I don't think Greenspan wants to remain Fed Chairman much longer - he looks increasingly tired to me.

Subject: Let me dream for a short while From: Mik To: Pete Weis Date Posted: Wed, Mar 17, 2004 at 18:12:51 (EST) Email Address: Not Provided Message: Imagine the Democrats win.... imagine.... imagine Greenspan decides to retire after the Democrats win.... imagine... imagine Paul Krugman is asked to take Greenspan's position.... ahhh I can dream can't I?

Subject: Not so hot in person? From: SSFSX17 To: All Date Posted: Sun, Mar 14, 2004 at 03:59:15 (EST) Email Address: ssfsx17@yahoo.com Message: I noticed that, although Krugman is a masterful writer and his books are incredibly enlightening, he seems to stumble a lot or miss the point in live interviews. It seems that he is on the 'losing' side in any live debate against any of his opponents simply because he gets under a lot of stress. It feels like if they were debating through letters and e-mails instead of in-person, Paul Krugman should be absolutely destroying his opposition. I don't understand why Paul Krugman should falter like that, since he doesn't seem like a bad-looking fellow or a shy person. Any ideas?

Subject: Paul is Excellent From: Terri To: SSFSX17 Date Posted: Tues, Mar 16, 2004 at 17:03:28 (EST) Email Address: Not Provided Message: You may be not so hot in person, Paul is excellent!

Subject: Re: Not so hot in person? From: Paul G. Brown To: SSFSX17 Date Posted: Mon, Mar 15, 2004 at 14:22:03 (EST) Email Address: Not Provided Message: Television, like movies, is a 'hot' media. It is superb at conveying emotional truths because its signal saturates the two dominant senses, sight and sound, rubbing up directly against our most strongly recalled experiences. Print media is relatively 'cool'. Readers can stop, go back, and integrate what they have just read over a broader range of memories. Some ideas are easier to convey through certain media than others. Print is ideal for Krugman's analytic reasoning, but he comes across poorly on TV because he's not got the training or experience in that media. I mean, imagine Krugman as Tom Hanks in 'Sleepless in Seattle'. Now, imagine Russell Crowe testifying before the House Finance committee.

Subject: Re: Not so hot in person? From: Jerry To: SSFSX17 Date Posted: Mon, Mar 15, 2004 at 10:35:25 (EST) Email Address: Not Provided Message: Yeah, I know. He often goes into interviews and debates completely unprepared, as well. He's best when his discusses economics, but now that he's become a 'personality' he's often asked to talk about things on which he does not have fully developed opinions. I'm sure he has an agent that just says 'show - TONIGHT' and he has to go running. Some Prof types respond very well in this environment, Krugman seems a little over his head in it.

Subject: Re: Not so hot in person? From: Econochick To: Jerry Date Posted: Mon, Mar 15, 2004 at 17:45:22 (EST) Email Address: Not Provided Message: I couldn't agree with you more. I don't think he should go out at all if he's not prepared - that's just unprofessional. Like you, I think does best on the topic of Economics and he should stick to it.

Subject: Always Prepared From: Terri To: Econochick Date Posted: Tues, Mar 16, 2004 at 17:04:51 (EST) Email Address: Not Provided Message: Paul is always prepared and always interesting on any topic I have heard discussed.

Subject: Re: Not so hot in person? From: Al Corrente To: Jerry Date Posted: Mon, Mar 15, 2004 at 16:23:04 (EST) Email Address: nma@hotmail.com Message: 'Now, imagine Russell Crowe...', or Terminator...?

Subject: Re: Not so hot in person? From: Al Corrente To: SSFSX17 Date Posted: Sun, Mar 14, 2004 at 15:14:45 (EST) Email Address: nma@hotmail.com Message: The China Syndrome: 'SYNOPSIS: Bad incentives, media consolidation, and implicit favors are turning the media into a toady to the government'

Subject: Japan intervention From: Nathan Corson To: All Date Posted: Sat, Mar 13, 2004 at 01:23:17 (EST) Email Address: Not Provided Message: Can anyone pitch in on the following: Is the massive amount of fx intervention by the Bank of Japan in the last year or so, and especially in the last two months, 'sterilized' or 'unsterilized' intervention? Also, I have heard it kicked around that the sterilization issue 'doesn't matter' because the BOJ has a zero interest rate policy right now. Is this true? and if so, why? Finally, is it possible that the current BOJ intervention efforts, unprecedented in size, may be a move toward 'credible irresponsibility', as suggested by Krugman in his Japan Trap article? Thanks.

Subject: Keeping the Yen From Rising From: Emma To: Nathan Corson Date Posted: Mon, Mar 15, 2004 at 15:12:20 (EST) Email Address: Not Provided Message: the Bank of Japan simply wishes to keep the Yez from increasing in value too sharply against the dollar. The idea is to protect Japanese traders.

Subject: Re: Keeping the Yen From Rising From: Pete Weis To: Emma Date Posted: Tues, Mar 16, 2004 at 14:33:50 (EST) Email Address: Not Provided Message: 'The idea is to protect Japanese traders'. Interesting viewpoint. Most would say it was to protect Japanese jobs.

Subject: Re: Keeping the Yen From Rising From: Emma To: Pete Weis Date Posted: Tues, Mar 16, 2004 at 15:23:51 (EST) Email Address: Not Provided Message: Fiscal policy in Japan has been the key in insuring Japanese jobs. A reasonably priced Yen is the key to earnings for Japanese companies that are heavily trade dependent.

Subject: Re: Keeping the Yen From Rising From: OPEC To: Emma Date Posted: Mon, Mar 15, 2004 at 17:16:59 (EST) Email Address: nma@hotmail Message: Why?

Subject: Re: Keeping the Yen From Rising From: Wiiliam To: Emma Date Posted: Mon, Mar 15, 2004 at 16:54:20 (EST) Email Address: nma@hotmail.com Message: {[(BOC)]} as X% function of (BOJ), both are loving GreenSpan.That's why still 'M' (M=P*L(Y;i)) is 'under control!?'.(personal opinion)

Subject: Rising Oil Prices Hurting Job Growth From: David Doty To: All Date Posted: Fri, Mar 12, 2004 at 18:14:52 (EST) Email Address: david@dotynmr.com Message: It's often been pointed out that rising oil prices portend a drop in job creation, primarily because of their indirect effects on natural gas (NG) prices and the chemical industry. It's time for astute economists to begin factoring 'Oil Peak' into their economic analyses. A fresh look at practical energy solutions, based on sound science, couldn't be a more timely subject, as debate on the pending Energy Bill begins, and gasoline prices are now at record highs. You may want to start with the abridged version of my 'Fuels for Tomorrow's Vehicles', http://www.dotynmr.com/PDF/Doty_Practical_Energy_Brief.pdf . I discuss 'hydrogen hype' and next-generation biofuels in more detail in my paper, 'Fuels for Tomorrow's Vehicles', http://www.dotynmr.com/PDF/Doty_FutureFuels.pdf . You'll be surprised at how much bad energy science is being pushed by the Bush administration, but also by how much progress has been made toward some viable options that could avert a looming energy crisis if we change directions very soon. - David Doty, PhD, Physicist

Subject: Phooey From: Ad Alert To: David Doty Date Posted: Mon, Mar 15, 2004 at 15:15:42 (EST) Email Address: Not Provided Message: Reason not to pay attention!

Subject: Re: Rising Oil Prices Hurting Job Growth From: Econchick To: David Doty Date Posted: Sat, Mar 13, 2004 at 20:52:20 (EST) Email Address: Not Provided Message: Primarily because of the effect of higher energy and raw materials cost on INFLATION. As inflation goes up, employment declines and vice versa. The Philips Curve. Do you know Prof. Goodstein at Cal Tech? He just came out with a book and a paper on the same subject.

Subject: Re: Rising Oil Prices Hurting Job Growth From: Econchick To: David Doty Date Posted: Sat, Mar 13, 2004 at 20:51:38 (EST) Email Address: Not Provided Message: Primarily because of the effect of higher energy and raw materials cost on INFLATION. As inflation goes up, employment declines and vice versa. The Philips Curve. Do you know Prof. Goodstein at Cal Tech? He just came out with a book and a paper on the subject.

Subject: Re: Rising Oil Prices Hurting Job Growth From: Milton To: Econchick Date Posted: Mon, Mar 15, 2004 at 17:20:52 (EST) Email Address: nma@hotmail.com Message: I don't believe in the 'Phillips Curve'!He was an engineer, not an economist!

Subject: A.W. Phillips' Curve From: Econochick To: Milton Date Posted: Mon, Mar 15, 2004 at 17:39:28 (EST) Email Address: Not Provided Message: Milton, you don't have to believe in the Phillips curve if you don't want to but A. W. Pillips was an Economist. He studied Economics at the London School of Economics and became a professor there in 1958. He developed the 'phillips curve' and built a machine called the Moniac as a physical representation of his mathematical model of the economy. The machine represented his both of his interests - Macroeconomics and Hydro-dynamics. So, he may have been an engineer of sorts too.

Subject: Re: A.W. Phillips' Curve From: Cold-Play To: Econochick Date Posted: Mon, Mar 15, 2004 at 17:59:17 (EST) Email Address: nma@hotmail.com Message: What about Paul Krugman then?

Subject: Re: A.W. Phillips' Curve From: Econochick To: Cold-Play Date Posted: Mon, Mar 15, 2004 at 17:56:09 (EST) Email Address: Not Provided Message: Um...not sure what you're asking.

Subject: Econochick From: Mik To: All Date Posted: Fri, Mar 12, 2004 at 17:00:25 (EST) Email Address: Not Provided Message: Just a quick note to say thanks for your posts. Really informative and to the point.

Subject: Re: Econochick From: econochick To: Mik Date Posted: Sat, Mar 13, 2004 at 11:26:05 (EST) Email Address: Not Provided Message: Than YOU, Mik. Also Emma and Pete for a great exchange. I just now realized that Emma added to the investment discussion in the 'always pays to save' thread. She mentioned Vanguard funds as a favourite of hers because of low fees and I have to second her high opinion of Vanguard. I don't know if Vaguard has advisory but they have a very wide selection of asset classes and a lot of 'do it yourself' information. Vanguard also charges some of the lowest - if not THE lowest - fees on the Street. I am in no way affiliated with Vangaurd (just so you know) but I part of my personal portfolio is in their Municipal Bond fund for the reasons I stated above.

Subject: Bond Funds From: Emma To: econochick Date Posted: Mon, Mar 15, 2004 at 15:26:02 (EST) Email Address: Not Provided Message: Thanks EC High Yield Tax Free at Vanguard has long been a particular favorite, though yields are awfully low these days. The portfolio is high investment grade even though it is termed 'high yield.' The yield is gained even with the quality because of the low fees. Another favorite has been convertible securities, though there is more price risk to the fund than other bond funds. Astonishing how little price competition there has been among fund families all these years. Same for insurance families.

Subject: High fees From: Econochick To: Emma Date Posted: Mon, Mar 15, 2004 at 17:24:34 (EST) Email Address: Not Provided Message: Ditto, Emma! Thanks for the info! That's good stuff. I'll have to look into that fund. I can't understand the still high fees of funds either. My best guess is that most fund investors are individuals and they don't bother figuring the fees into returns. Thus, they are sort of 'unconsiously' price insensitive. Does anyone on the board know or have a guess?

Subject: Re: Econochick From: E To: Mik Date Posted: Sat, Mar 13, 2004 at 01:24:30 (EST) Email Address: Not Provided Message: http://www.hotboards.com/plus/plus.mirage?who=pkarchive&id=16717.035236142126

Subject: terrorist teachers From: byron To: All Date Posted: Thurs, Mar 11, 2004 at 23:09:41 (EST) Email Address: bluefin76020@yahoo.com Message: Here we have Bushe's education secretary calling the teachers union and teachers terrorists and he is still on the job. Why is this not being reported by the news media. Is it because they are controlled by the Bush Admin?

Subject: Saving and Investing From: Jennifer To: All Date Posted: Thurs, Mar 11, 2004 at 16:22:27 (EST) Email Address: Not Provided Message: I would welcome more discussion of saving and investing. The discussion below were most useful.

Subject: Re: Saving and Investing From: Pete Weis To: Jennifer Date Posted: Fri, Mar 12, 2004 at 00:49:10 (EST) Email Address: Not Provided Message: Jennifer, this will be a continuation of the thread below. Might as well continue it here. One of the ideas expressed in the previous thread was that the reason Warren Buffet succeeds (or at least part of why he succeeds) is that he has a large position in the companies in which he invests and therefore influences the management of those companies. And this is an advantage that the average investor does not have. I believe Buffet would be the first to tell you that he invests in companies because they already have quality management and need no help from him. Furthermore, Buffet would tell you that PE ratios do matter and he invests in companies which have good earnings relative to the price and market cap of the stock, along with many other factors. This whole idea that price-to-earnings ratios no longer matter or matter less than in the past only seems to crop up when PE's begin to get really high, as they are now. If you read his March 3rd 2003 letter to Berkshire-Hathaway shareholders ( a search in google will find it) you'll find that he states 'presently we can find few if any stocks at a value worth buying'. Remember this is before this last very big rally in the stock market. In his most recent March 2004 letter he mentions how strange it is to be holding so much cash (about 36 billion right now) 'but its better than doing something stupid' he says. I can guarantee you he would not advise anyone to buy into a US stock index at this time. Bill Gross (often refered to as 'The Bond King') at PIMCO has talked extensively in recent writings about probable problems in the bond markets in the future and as one poster on this board pointed out has sold his personal holdings in bonds. I'll mention again, as I did in a previous post, that Buffet, believing interest rates where likely headed upward, sold Berkshire-Hathaway bond holdings (about 9 billion worth) in the Spring of 2003. Shortly after (in June) the Fed dropped a quarter point, the bond market tanked and 30 year fixed mortgage rates jumped about 1%. As you are probably aware, bond traders (most bond funds are trading funds) buy bonds when they believe interest rates are headed lower and sell bonds when they believe interest rates are headed higher. In recent weeks bonds have rebounded since poor employment data has cast doubt on our 'recovery' which makes it less likely the fed will raise rates. However, there is little room to lower rates and a growing federal budget deficit, current account deficit, as well as rising oil/energy prices are likely to pressure interest rates upward in the future. I agree that investing in the S&P index or other well balanced stock funds along with bonds is usually a very good strategy. But I believe this is one of those rare times when it's not a good idea. Why jump into a market which has, on average, such high valuations and in which, someone like Buffet can find nothing of value which he would buy? If employment is not doing well, personal debt is at record levels, interest rates have little room to go down, US companies are being squeezed between the rising costs of raw materials & energy and a lack of pricing power, why would you want to get into this stock market now? There will be a time to get back into the S&P but it's not now. One other thing. You may be in a balanced portfolio where you 'out perform' the S&P if it goes down a bunch. But ask yourself if the S&P were to drop 40% over the coming years and you 'out performed' the S&P by dropping only 30% in the same period, would you be happy with that?

Subject: Re: Saving and Investing From: Econochick To: Pete Weis Date Posted: Fri, Mar 12, 2004 at 14:52:05 (EST) Email Address: Not Provided Message: P/E: this is a fine metric. However, it is useless for small-cap, high-growth companies (like tech startups) because their earnings near-term are negative. Negative cash flows (and earnings) are a hallmark of all start-ups, by the way. What does a negative P/E mean? Well, nothing. Also, you have to know what they mean by 'earnings'. Companies often dump all manner of rubbish into their Income Statement to augement earnings. Thus, when we worked with earnings statements we always 'scrubbed' the data. I assure you Buffet scrubs numbers. Most small investors do not a.) know how and 2.) have the time. I wouldn't trust the Street's scrubbed numbers either, though. The scrubbing is often as only as good as the investment banking deal from the company in question. I could go on about the benefits and pitfalls P/E ratios. I could also go on about other metrics like Price-to-book, Cash flow-to-EBITDA, ROE, ROI, Discounted Cash flow analyses, etc., etc. In fact, we could go through several whole textbooks. See my point? The fact is, if 'beating the market' were that easy, it wouldn't be this hard....know what I mean? I've said it before and I'll say it again. If you enjoy being a momentum player (as Pete seems to) - picking the ups and downs and predicting in which the market lurches next - or stock picking, by all means go for it. As long as you're diversified among non-correlated assets, you won't lose your life savings. Just watch out for those transaction costs. As for my implication that Buffet's success is based in part on how much sway he has over management, I would only say not to forget that I also implied that he could just be a statistical inevitablility. In other words, in the group of managers who consistently outperform as a statistical inevitablity. I'm not trying to beat up on poor ole' Buffet or Gross (both really smart people), just trying to point out that not all is as simple as it would seem. I still don't think that where the S&P is now is of any relevance to people with long time horizons. This is basic Finance 101 stuff. I elaborate on this in my previous posts under the subject heading 'It ALWAYS pays to save'. You have to ask yourself if you even want to try to 'outperform' the market. To outperform you have to take on higher risk than the market on average, which means you can also hugely UNDERPERFORM the market. Do you want to gamble with your retirement like that? If you're 20 years away from retirement then you may want to. Just remember that if you lose a lot of money you may be working a few more years than you expected. But that might be okay with you. And what if you're wrong? What if there is a paradigm shift and inflation stays low and the stock market goes way up? How do you know for sure that isn't going to happen? I sure don't know what's going to happen next. If I did, I would be richer than anyone else in the world. If you love the risk and want to invest this way, go for it. Just realize that that's what you're doing. Okay, I think I've made my point. I'm finding myself more time constrained than I was a week ago and don't have time for long posts. If anyone has found my posts helpful or interesting and would like some more information about anything specific, I will be happy to answer it. I do find it a shame that folks don't have a lot of access good portfolio management - where they aren't being pushed into some product or another that some firm is selling. If I can be of help to anyone, that's great.

Subject: Re: Saving and Investing From: Pete Weis To: Econochick Date Posted: Sat, Mar 13, 2004 at 13:45:08 (EST) Email Address: Not Provided Message: Well, this has been a good discussion. When Jennifer reintroduced this subject at the top of the board, I thought this could end up being quite a long thread with posters adding their various thoughts about investing and saving. It's obviously a very important issue, not only for each of us who post here, but for the health of our economy down the road. If retirements dwindle either because markets don't do well over the next decade or simply because we have become a nation of spenders, with little saving and investing - leaving many with poor retirements - then social security will have to be the 'life ring' for too many of us. I've taken a somewhat defensive approach to investing in the last couple of years. I invest in funds which buy fixed income securities, mostly in Europe, Australia, and Canada, which pay higher yields than here in the US. I also have been getting the added benefit of the rising Euro and Australian and Canadian dollars vs. the US dollar. Also, a smaller portion of my investments have been in companies that produce commodities and to some extent in these commodities themselves. Clearly, I'm a believer that the US markets, in the short term, are a poor place to invest and the US dollar has some real problems for the long term. When Buffet starts getting back into the markets, I probably will buy some Berkshire-Hathaway. I believe he is biding his time for stocks to get back down to reasonable levels. Recently, he has expressed some disatisfaction with some of the stocks he presently owns, but talks about his responsibilities (since he sits on their boards) which precludes him from dumping them wholesale. Anyway, I agree with econochic that there is a lot of bad advice out their. A final thought - we should think about the currency implications of our investments as well as the actual dollar returns. If you make 15% on you stock fund and the US dollar has fallen a given amount against a basket of currencies and commodities then you need to subract that from your dollar denominated stock fund. Remember that the next time you fill up your gas tank.

Subject: Re: Saving and Investing From: Econochick To: Pete Weis Date Posted: Sat, Mar 13, 2004 at 20:45:07 (EST) Email Address: Not Provided Message: 'A final thought - we should think about the currency implications of our investments as well as the actual dollar returns. If you make 15% on you stock fund and the US dollar has fallen a given amount against a basket of currencies and commodities then you need to subract that from your dollar denominated stock fund. Remember that the next time you fill up your gas tank. ' Good point. Depending on how the CPI is calculated the weak dollar would theoretically be captured in the form of inflation in your scenario. I think you made a case in earlier posts for increasing inflation - maybe this was your reaoning for that? If the CPI does not include a lot of foreign produced goods, then inflation could be substantially under-estimated. I've had a browse on www.bls.gov to discover what's in the CPI number and I'm no better for it. They seem to calculate inflation for everything (Olives!?!) but the released number appears to be only select raw material? I'm no less confused than before. But to your point, Pete, year over year inflation for energy was 4.4%! By the way, you seem pretty diversified. I hope you've shopped around for the lowest management fees for the funds you invested in. They can be so outrageous!

Subject: China's Development From: Emma To: All Date Posted: Thurs, Mar 11, 2004 at 13:21:15 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/05/international/asia/05CHIN.html China's Leader Urges Shift in Development to Rural Areas By JOSEPH KAHN BEIJING — Prime Minister Wen Jiabao, delivering China's equivalent of the State of the Union address, vowed Friday to cool China's surging economy and focus more resources on the hundreds of millions of people left behind in the boom of the last decade. Mr. Wen, who was appointed prime minister a year ago and is presiding over an annual session of China's Communist Party-controlled Parliament for the first time, implicitly criticized his predecessors for stimulating high growth through heavy state investment. He said this had led to rampant waste and did too little to raise the incomes of peasants, who make up most of China's 1.3 billion population. 'Rural incomes have grown too slowly, and development in different regions of the country is not balanced,' Mr. Wen said in his 90-minute address. China has a 'serious problem of haphazard investment,' he said, adding that peasants have suffered 'widespread illegal appropriation of farmland.' Plans to increase urban and rural welfare payments, overhaul grain production, reduce rural taxes, improve education and cut down on 'serious accidents that inflict heavy loss of life' took up most of Mr. Wen's address, fulfilling expectations that he would outline a new approach to what he has called 'balanced development.'

Subject: China's Development - Continued From: Emma To: Emma Date Posted: Thurs, Mar 11, 2004 at 15:01:44 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/10/international/asia/10RIVE.html Dam Building Threatens China's 'Grand Canyon' By JIM YARDLEY DIMALUO, China — The highest villages in the mountains above the Nu River seem to hang in the air. Farmers grow cabbage and corn nearly a quarter-mile up, as if cultivating ski slopes. Necessity has pushed them into the sky; land is precious along the river. They may have to move higher still, perhaps into the clouds. The Nu, which flows through a region that is home to old-growth forests, some 7,000 species of plants and 80 rare or endangered animal species, is the latest waterway coveted by a Chinese government that is planning to build a new generation of dams to help power its relentless, booming economy. Unlike the Three Gorges Dam, the world's largest hydroelectric project and the subject of a bitter international debate, the Nu River plan has barely stirred a ripple outside China. But in China the project, which calls for 13 dams in all, has unexpectedly touched a nascent chord of environmental awareness and provoked rare public rifts within the government. The reason is that the Nu is one of the last pristine rivers in one of the world's most polluted countries, running through a canyon region unlike any other, which a United Nations agency has designated a World Heritage Site. Last year, China's State Environmental Protection Agency and the Chinese Academy of Sciences publicly criticized the Nu project. 'If this river system is destroyed, it would be a terrible blow,' said Li Bosheng, a prominent Chinese botanist. 'This area has been called the Grand Canyon of the Orient. It forms one of the world's most special canyon environments.' ...

Subject: Re: China's Development - Continued From: Mik To: Emma Date Posted: Thurs, Mar 11, 2004 at 15:13:25 (EST) Email Address: Not Provided Message: Interesting to see a critic on China's dam construction. Yet no one seems to criticize the pollution from the coal powered power stations that has caused wide spread lung disease. The dams will replace these coal power stations and offer far cleaner energy sources. I'm even more amazed that in this world we live in where energy requirements and burning of fossil fuel is so controverial, one would think that dams are far more welcome. I guess you can't please everyone?

Subject: Emma From: Mik To: Mik Date Posted: Fri, Mar 12, 2004 at 17:18:47 (EST) Email Address: Not Provided Message: How ironic - I have just read the interview with Paul Krugman - where he was asked the simple question - 'Why aren't we seeing more jobs in the face of strong economic growth.' Paul had no answer. Am I allowed to put my theory forward again?

Subject: Does economic growth = to job creation? From: Mik To: All Date Posted: Tues, Mar 09, 2004 at 12:02:49 (EST) Email Address: Not Provided Message: Simple question really. In the past it seemed simple that good economic growth was the main target of monetary and fiscal policies. With the economic growth, we would get job creation and all the rest would fall in place. I once remember some sort of stat that said something like 1% GDP was equal to 0.8% employment growth (the exact figures stand to be corrected). The point is that there we are seeing a serious 'disconnection' between economic growth and employment growth. Now I know that according to Keynes, employment stimulus also requires government spending. But even the current government is spending a great deal. Heck they are spending more than they are making. Now I raise this question again - are we not seeing a new phenomena that is actually very dangerous, not only in the US but all over the world as the majority of developing countries are gaining good GDP growth but very weak employment growth. These are the same countries that have been convinced to give up their dictatorships and socialist systems in exchange for 'our western' system that is a panacea for economic problems. As an example: The IMF and the US gov, convinced Uganda to restructure their economy liberating it and allowing for Western Capitalism (promising a flood of foreign investment). Uganda has met all the requirements set by the IMF and US advisors, after more than 10 years (within the stipulated requirements) Uganda has seen excellent GDP growth but dismal employment growth (and none of the promised foreign investment). There are now calls by the opposition for the government to give up this 'experiment' as it is not working.

Subject: Re: Does economic growth = to job creation? From: Enzo To: Mik Date Posted: Tues, Mar 09, 2004 at 15:46:37 (EST) Email Address: www.ferrari.it Message: '...that good economic growth was the main target of monetary and fiscal policies.' Want a Ferrari? But, do me a favour...

Subject: Critical Question From: Emma To: Mik Date Posted: Tues, Mar 09, 2004 at 13:34:36 (EST) Email Address: Not Provided Message: The Uganda example is excellent. Growth per se will not assure a high employment level. Rather, economic stimulus programs must be designed to add to employment as was the case during the New Deal. More added in time....

Subject: Hey Emma From: Mik To: Emma Date Posted: Thurs, Mar 11, 2004 at 15:15:00 (EST) Email Address: Not Provided Message: I thought you were going to give some comment on the Uganda discussion?

Subject: Uganda From: Emma To: Mik Date Posted: Thurs, Mar 11, 2004 at 17:35:31 (EST) Email Address: Not Provided Message: 'The IMF and the US gov, convinced Uganda to restructure their economy liberating it and allowing for Western Capitalism (promising a flood of foreign investment). Uganda has met all the requirements set by the IMF and US advisors, after more than 10 years (within the stipulated requirements) Uganda has seen excellent GDP growth but dismal employment growth (and none of the promised foreign investment).' Though I have spent considerable time reading and thinking about the question, I have no argument. The problem is most important, but how do I approach it? Why the continued employment problem, especially in light of the sweep of AIDS which harshly limits the prime working age population? Why the lack of foreign investment? Is it capital infrastructure that is lacking or education? So, I do not have a response only more questions. We can return to this!

Subject: Re: Uganda From: Al corrente To: Emma Date Posted: Fri, Mar 12, 2004 at 17:40:06 (EST) Email Address: Not Provided Message: Emma, u're really gold, man!

Subject: Re: Uganda From: Mik To: Emma Date Posted: Fri, Mar 12, 2004 at 12:02:09 (EST) Email Address: Not Provided Message: Emma, I would hope we'd return to this. You seem to have raised some good points in other threads. Aids is not an issue in this case. Uganda is the first African country to have stemmed the tide of Aids - besides, there are many unemployed able workers. Capital infrastructure has seen much rehabilitation after all Uganda had a staggering 10% GDP growth in 2002 and a negligable employment growth. The country Lesotho is another prime example also 10% GDP growth for a couple years running but negligable employment growth. The main problem is that FDI is a complicated beast. The mere fact that we have good monetary, fiscal and even infrastructure layout - does not guarantee FDI. And when FDI does arrive - it appears to be more 'capital' lead and not 'labour' lead. In other words, companies are taking advantage of tax holidays, cheap local costs, etc to set up their primarily automated factories. The hope now would be that most of these countries can grow from developing their own economies. All said and done - we are, in my opinion, witnessing a whole new phenomena. Jobless growth. I don't fully understand it. I believe it is just a new case of the 'trickle down' effect. And it is not exclusive to any country. Comments?

Subject: China's Transport From: Emma To: All Date Posted: Mon, Mar 08, 2004 at 18:15:52 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/05/business/worldbusiness/05ship.html A Logjam for Transportation in China By KEITH BRADSHER HONG KONG - Strained by rapid economic growth, China's transportation system has bogged down, especially in the last six weeks, causing delays in deliveries of raw materials and raising a serious risk of higher inflation. Railroads are so overburdened that power plants in southern China are having trouble getting coal from the north. That and shortages of generating capacity have contributed to brownouts that have forced factories to operate on limited schedules or in the middle of the night.... anne

Subject: China's Transport - Continued From: Emma To: Emma Date Posted: Tues, Mar 09, 2004 at 15:50:38 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/03/05/business/worldbusiness/05ship.html Heavy-duty trucks have also become an impediment, as Beijing, alarmed at road damage caused by overloaded trucks, has suddenly clamped down on enforcing cargo weight limits. This forces each truck to make more trips to carry the same amount of cargo. The logjam appears to be most acute in China's ports, where shortages of trucks and railcars are preventing the distribution of shipments arriving from overseas. Mountains of imported iron ore and steel now clog the docks in many of China's biggest ports, forcing ships to wait at anchor as long as a month to make deliveries, at a cost of up to $100,000 a day per vessel just in ship charter fees. Notably, even as China seems to be choking on imported commodities like iron ore, steel, coal, aluminum and soybeans, its exports of everything from shoes to furniture to the United States and other foreign markets have been remarkably little affected. That is because such goods move mostly in steel containers on different kinds of trucks, and they pass through special ports that have received considerable investment in recent years.

Subject: Re: China's Transport - Continued From: Mik To: Emma Date Posted: Tues, Mar 09, 2004 at 16:52:19 (EST) Email Address: Not Provided Message: Emma, you are now entering my field - is this not a sign of an overheating economy? China already uses international standards in road design, especially in Beijing. So to 'implement cargo weight limits' and force trucks to make more trips is a very one sided argument. It holds about as much weight as saying that 'because US trucks cannot overload, they have to make more trips and thus slow down the US economy.' I'm sure you can see how weak this argument is. All that has happened in Beijing, is that the traffic load control enforcement has been weak in the past - they are now clamping down. It is probably a co-incidence that it falls at a time when there are blockages at the ports and someone has used some creative thinking to join some dots that should not be joined. As for the blockages, yes, China is growing fast. And like many places they are having to deal with under capacity issues. Their imports have recently boomed, which probably explains your post. But they are already, for many years, implementing large projects to expand capacity in all their infrastructure. Consider this - I recently worked on a study on the construction of a new road in rural Western China. A simple 78km road which comprises of 228 Bridges and 19 tunnels. 20 of these bridges are in the 'super large suspension' category. The US and Canada has never seen road projects of this scale. AND! this is one of their smaller projects. In essence these are the hey-days of China.

Subject: China's Boom From: Emma To: Mik Date Posted: Thurs, Mar 11, 2004 at 13:18:58 (EST) Email Address: Not Provided Message: Agreed completely. My firm sense is that careful economic policy can keep China growing at about 8% indefinitely. China strikes me as having the growth potential of America in 1870. The biggest problem will be managing the labor transition from rural to urban occupations.

Subject: Re: China's Transport From: Mik To: Emma Date Posted: Tues, Mar 09, 2004 at 11:38:07 (EST) Email Address: Not Provided Message: Interesting Emma, They are building roads at an amazing scale. So the current transport strain should only be a temporary issue.

Subject: New trade Theory? From: The Interpolator To: All Date Posted: Mon, Mar 08, 2004 at 14:02:42 (EST) Email Address: nma@hotmail.com Message: 'Supply-Side Economics' = f(ONE country;t0 < 1991-1992); 'Demand-Side Economics' = f(MANY countries;t0 > 1992); 'Supply-Side Economics' = f(ONE country;t0 < 1991) 'Demand-Side Economics' = f(MANY countries;t0 > 1992); = P.K.'s Noble worth 'NEW TRADE THEORY'

Subject: Re: New trade Theory? From: The Interpolator To: The Interpolator Date Posted: Mon, Mar 08, 2004 at 14:07:56 (EST) Email Address: nma@hotmail.com Message: SORRY:'Supply-Side Economics' = f(ONE country;t0 < 1991) added to 'Demand-Side Economics' = f(MANY countries;t0 > 1992); = P.K.'s Noble worth 'NEW TRADE THEORY'

Subject: The Hong Kong currency board From: Matthew Bristow To: All Date Posted: Sun, Mar 07, 2004 at 22:56:35 (EST) Email Address: matthew.bristow@britishcouncil.org.hk Message: Do any of you know anything about the Hong Kong currency board? Since Argentina went a couple of years ago, I think it is the only big one left. When their currency was overvalued they had five years of deflation and rising unemployment. Then, on September 23rd last year, the $HK went to a premium against its pegged rate, and since then it has been undervalued, like the Yuan, and we have had falling unemployment, an asset price boom and deflation has almost ended. What I would like to know is this: if the HK dollar stays below its equilibrium rate will Hong Kong continue to recover regardless of what happens to US interest rates? Or will we get thrown into recession again when nice Mr Greenspan starts putting up interest rates? Is a high interest rate deflationary in itself, or only through its effect on the money supply? I haven’t studied economics for over a decade, so forgive me if I have overlooked something obvious or fallen into some well-known Heffalump trap.

Subject: Hong Kong Currency From: Emma To: Matthew Bristow Date Posted: Mon, Mar 08, 2004 at 13:39:21 (EST) Email Address: Not Provided Message: My records show no meaningful change in the value of Hong Kong's currency against the American dollar in the last year. Hong Kong's currency has lost value against other currencies because it is tied to the dollar which has lost value.

Subject: Re: Hong Kong Currency From: M Bristow To: Emma Date Posted: Mon, Mar 08, 2004 at 20:45:01 (EST) Email Address: Not Provided Message: Yes, it has been pegged at 7.8 to the US dollar since 1983. Until September, the forward rate for $HK was anticipating a possibility of a devaluation. Now if Hong Kong unpegged the HK$ would apparently go up, hence it is undervalued, like the Yuan. And you are right, this has been caused by the fall in the US dollar. When the equilibrium rate is lower than its pegged rate, Hong Kong has deflation; when it is higher it has a boom. Having a currency board is like having a gold standard. They have no control over their money supply. Because the exchange rate cannot move, the price level has to make the adjustments. This is why they have had the world’s worst deflation over the last few years. And this is why they have such wild swings in asset prices. From 1997 to last autumn property prices were down 70%. Since then there has been a huge increase, as much as 40% in some areas. According to the South China Morning Post, flat prices rose 5% last week, which struck me as rather a lot. But the thing I don’t understand –one of the things I don’t understand- is this: if the $HK is below its equilibrium rate, will Hong Kong continue to have growth in the money supply even if there is a large increase in interest rates? Is a high interest rate deflationary in itself? Or only through its effect on the money supply?

Subject: Hong Kong Currency Board From: Emma To: Emma Date Posted: Mon, Mar 08, 2004 at 16:15:22 (EST) Email Address: Not Provided Message: Checked again. Hong Kong's currency is simply moving with the American dollar. So, if the American dollar declines in value against the Euro so does Hong Kong's currency. There has been no change. Hong Kong is tied to the dollar so this is the only 'equilibrium' level, though there really is no equilibrium level because of the tie. Should the dollar change in value in any way up or down against other currencies, Hong Kong's currency will change to the same extent against all other currencies.

Subject: Re: Hong Kong Currency Board From: Pikono-Klast To: Emma Date Posted: Mon, Mar 08, 2004 at 17:02:17 (EST) Email Address: nma@hotmail.com Message: Dear Emma, too far away,too many variables ergo too difficult to discern!

Subject: Yes, but.... From: Emma To: Pikono-Klast Date Posted: Mon, Mar 08, 2004 at 18:14:31 (EST) Email Address: Not Provided Message: The reason for Hong Kong's new growth would seem to be the growth of China proper, and the weaker American dollar which in turn has weakened Hong Kong's currency. Why should we be surprised?

Subject: Energy From: F. David Doty, PhD To: All Date Posted: Sat, Mar 06, 2004 at 20:47:24 (EST) Email Address: david@dotynmr.com Message: It's time for astute economists to begin factoring 'Oil Peak' into their economic analyses. A fresh look at practical energy solutions, based on sound science, couldn't be a more timely subject, as debate on the pending Energy Bill is expected to begin within a week to 10 days, and gasoline prices are now (or within the week) at record highs. You may want to start with the abridged version of my 'Fuels for Tomorrow's Vehicles', which is available here http://www.dotynmr.com/PDF/Doty_Practical_Energy_Brief.pdf . I discuss 'hydrogen hype' and next-generation biofuels in more detail in my paper, 'Fuels for Tomorrow's Vehicles', available here http://www.dotynmr.com/PDF/Doty_FutureFuels.pdf . You'll be surprised at how much bad energy science is being pushed by the Bush administration, but also by how much progress has been made toward some viable options that could avert a looming energy crisis if we change directions very soon. - David Doty, PhD, Physicist, Science Moderator, Dean Issues Forum, http://deanissuesforum.com/ Dean Issues Forum deanissuesforum.com/

Subject: Re: Energy From: Paul G. Brown To: F. David Doty, PhD Date Posted: Sun, Mar 07, 2004 at 14:06:29 (EST) Email Address: Not Provided Message: > You'll be surprised at how much bad energy science is being pushed > by the Bush administration, Oh no I would not. Shocked, perhaps. But not surprised.

Subject: Re: Energy From: Jennifer To: Paul G. Brown Date Posted: Mon, Mar 08, 2004 at 18:18:16 (EST) Email Address: Not Provided Message: Energy efficiency or conservation? With these folks there is neither.

Subject: Greenspan, Galt's Gulch, and more... From: Jerky LeBoeuf To: All Date Posted: Sat, Mar 06, 2004 at 20:25:19 (EST) Email Address: feedback@dailydirt.com Message: GREENSPAN, GALT'S GULCH, AND THE GREATEST GENERATION Remember all the talk a few years back about America's so-called Greatest Generation? Those stalwart survivors who met the challenges of the Great Depression, defeated fascism in Europe, kept communism in check until it imploded, and established the historically unprecedented 'middle class' from which Americans derive all their most cherished traditions, beliefs and values? I remembers my own sneaking suspicions upon first encountering this idea of the Greatest Generation. It was back in 1998, when those words entered the lexicon via NBC anchorman Tom Brokaw's doorstop-sized best-seller. Since that time, the title of his pandering paean has come to serve as a brand name of sorts. It also serves a handy rhetorical whip with which to flagellate butter-soft Boomers, not to mention the pierced and tattooed sloth-weasels of Generations X, Y and Z. How could the sturdy, worthy stock of mid-century America have spawned a generation of hippie/yuppies who then, in turn, produced a generation of nihilistic sensualists? How did those industrious paragons of self-reliance come to produce the soft, entitled likes of us? Whence this perplexing xenogenesis? These are the questions Brokaw's book - and its copycats - seems to ask of the reader. Actually, 'copycat' might be an unfair characterization. Considering the publishing industry's torturous turnaround, the speed at which these books followed each other would indicate cultural synchronicity at least, if not collusion. And while it might appear paranoid and naïve to believe that Dan Rather, Peter Jennings and others conspire to shape consensus reality, fact is these five-star generals of the Fifth Estate often do consult with each other, to significant effect. Case in point, the recent Homeland Security 'summit meeting,' where celebrity anchors and newsmedia brass attended an off-the-record dinner with Big Tom Ridge. The purpose of this meeting was to coordinate media efforts in anticipation of the next major terrorist attack on American soil. And isn't it comforting to know that when a suitcase nuke finally goes off in the Lower 48, Aaron Brown will be there to point us all towards the camps. But I digress. It was last week, while watching Alan Greenspan address Congress, that I undestood something fishy was afoot. According to the unelected Federal Reserve chairman-for-life, the opportunity had finally arrived for this generation - the Lamest Generation - to be noble, to sacrifice for the common good, to prove worthy of that which came before. Here, in part, is what Big Money Yoda (a.k.a. The Pope of Greenback Village) said: 'In view of this upward ratchet in government programs and the enormous uncertainty about the upper bounds of future demands for medical care, I believe that a thorough review of our spending commitments - and at least some adjustment in these commitments - is necessary for prudent policy. This dramatic demographic change is certain to place enormous demands on our nation's resources - demands we almost surely will be unable to meet unless action is taken.' Greenspan here implies that Social Security and Medicare are on the verge of bankrupting the nation. Thus, those entitlements must be reduced, if not eliminated. But a brief perusal of recent history reveals that Social Security's collapse isn't exactly imminent. The program takes in far more than what it pays out, and is projected to do so for decades. And yet, when anyone dares suggest dealing with the exploding Bush deficit by reversing his irresponsible tax cuts, they get this kind of gobbledygook in reply: 'The exact magnitude of such risks is very difficult to estimate, but they are of enough concern, in my judgment, to warrant aiming to close the fiscal gap primarily, if not wholly, from the outlay side. For a variety of reasons, that action is better taken as soon as possible.' Translated from the Greenspanese, that means: 'Reversing Bush's consciously irresponsible tax cuts wouldn't be feasible, because if that happened, America's wealthiest citizens - the capital investors whose purity of vision and forceful leadership keep Western civilization afloat - would likely become angry, and refuse to use their wealth to generate more wealth. According to the principles of supply-side, trickle-down, Voodoo economics, the wealthy would go on a devastating wealth strike.' The above scenario might seem vaguely familiar to some of you. It echoes the plotline of Ayn Rand's novel, Atlas Shrugged. Rand was an eccentric, egocentric Russian émigré who became the leader of a pseudo-philosophical cult of personality called 'Objectivism.' Her beliefs were a weird mélange of atheism, libertarianism, and what she called enlightened selfishness. In Atlas Shrugged, the 'creative people' of the world decide to withhold their genius from the unworthy masses and retreat from society. They relocate to a faraway hidden valley where they create their own private utopia. Without them, the civilization they left behind spirals into anarchy and collapses. Despite its obvious comic potential - think Bill Gates and Warren Buffet bunking together and having to empty a mountain cabin chamber-pot every morning - Atlas Shrugged was not meant as satire. Rand took her fiction, her philosophy, and herself very seriously, even when few others did. One of the first people to take Ayn Rand seriously other than Rand, herself, was Alan Greenspan. He thought her philosophy so appealing that he became a member of her cult's inner circle, known as 'the Collective.' Legend has it that Greenspan first read Atlas Shrugged literally while Rand was writing it. He would read the freshly finished pages as she peeled them from her typewriter. In 1957, Greenspan defended Atlas Shrugged's merits in a letter to the New York Times, after that paper had published a negative review. The letter strikes a disturbing chord: 'To the Editor: Atlas Shrugged is a celebration of life and happiness. Justice is unrelenting. Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose or reason perish as they should. Mr. Hicks suspiciously wonders 'about a person who sustains such a mood through the writing of 1,168 pages and some fourteen years of work.' This reader wonders about a person who finds unrelenting justice personally disturbing. Alan Greenspan, NY' Half a century ago, Greenspan used the language of genocide to express his 'joy' at the idea of 'creative individuals' with 'undeviating purpose' one day meting out 'unrelenting justice' to social 'parasites,' causing them to 'perish.' Today, two decades after he reformed Social Security in a way that increased its burden on the working class and left the program ripe for Republican plunder, he's using romanticized, revisionist myths about the 'rugged individualism' of the Greatest Generation as a pretext for dismantling one of that generation's greatest legacies. 'The money can't be spared. You don't deserve it anyway. Come on… noblesse oblige!' If the Greatest Generation was, indeed, the greatest generation, it's only because they had to be. Rugged individualism didn't pull America out of the Great Depression. It took a New Deal - proactive government responding to legitimate needs - to do that. European fascism wasn't defeated by rugged individualism, but by cooperation between Allies, including a great many communists. The trillions spent playing 'bankruptcy chicken' with the USSR during the course of the Cold War didn't come from rugged individuals. It came from taxes. The government. The state. A collective. And where were Greenspan's rugged individuals during all this? They were doing everything in their power to avoid paying the taxes that paid for it all. They were closing down factories at home, and opening unregulated sweatshops abroad. They were hiding their assets offshore. They were treating government contracts like a license to steal from the American people. Then they decided to use their ill-gotten loot to buy more influence, so they could score more contracts, so they could make more money, so they could eventually afford to get a puppet Preznit installed in the White House. This gave them the oportunity to dismantle and/or de-fang all those pesky government regulatory agencies, then raid the treasury. Now they've going after Social Security. I guess after that comes the part when the parasites - who, as we all know, persistently avoid either purpose or reason - will perish as they should.

Subject: Re: Greenspan, Galt's Gulch, and more... From: David H. To: Jerky LeBoeuf Date Posted: Sat, Mar 06, 2004 at 23:58:52 (EST) Email Address: Not Provided Message: Wonderful article. I would appreciate it if anyone had a link. Here's another: Greenspan's Con Job It is not exactly that he lies, but Alan Greenspan certainly ranks among the most duplicitous figures to serve in modern American government. Using his exalted status as economic wizard, the Federal Reserve chairman regularly corrupts the political dialogue by sowing outrageously false impressions among gullible members of Congress and adoring financial reporters. These distortions are not harmless; they become solemn writ for lawmakers and opinionmongers. Greenspan is especially destructive when he opines on public matters outside his supposed expertise as a central banker. His thinking is still anchored by Ayn Rand's brittle social philosophy: Let the strong prevail, let the weak pay for their weakness. The Fed chairman's recent remarks on Social Security and the federal budget deficits offer a particularly chilling example. In a House budget hearing, he elided the two subjects in a way that produced predictable scare headlines and chin-wagging editorials. The deficits must be dealt with promptly, he warned, because the baby boomers are about to retire. Then Social Security will be in trouble. And so government must cut benefits now, before it's too late. 'I am just basically saying that we are overcommitted at this stage,' he explained. 'You don't have the resources to do it all.' That sounds like manly wisdom. Greenspan was widely praised for courage. He should more properly be pilloried for gross mendacity. He is proposing a con job on ordinary working Americans--a bait-and-switch game on a grand scale--in which the payroll taxes they paid into Social Security over many years will now be diverted to other purposes, including the generous tax reductions G.W. Bush has enacted for the very wealthy and the corporations. It doesn't sound so noble when you put it that way. Greenspan knows these facts but also knows his big lie will probably endure as conventional wisdom. Typically, the media shorthanded his comments to create a larger fallacy--that Social Security is part of the deficit problem, therefore future retirees deserve to take the hit. Here is the truth: Social Security is not in deficit, not now and not for at least the next forty years. The trust fund will have a surplus next year of $1.8 trillion. In 2011 when, Greenspan warns, the baby boomers will start retiring in large numbers, the surplus will be $3.2 trillion. These stored savings, plus future payroll-tax revenue, are sufficient to pay all retirees the current level of benefits through 2042, according to the fund's very conservative actuaries. The problem is, the government borrowed this money and has spent it on other projects. But the trust fund, despite what right-wingers like to claim, is not an accounting gimmick. The government is legally obligated to pay back the money (as surely as it is obliged to repay Treasury bonds). The borrowed trillions, in fiduciary terms, belong to the 'beneficial owners'--every worker who has paid higher payroll taxes for the past twenty years. Greenspan is familiar with the accounting because he was chairman of the bipartisan commission that supposedly 'fixed' the Social Security problem back in 1983 by imposing a huge increase in FICA payroll taxes--extra revenue that produced the still-growing surpluses. This historic tax shift (I think of it as the 'crime of '83') was most convenient to the Reagan Administration because Reaganomics had just created huge budget deficits by cutting income taxes for the monied interests and pumping up the military budget. The burgeoning surpluses from the Social Security payroll tax would help offset the economic impact of the deficits. Hardly anyone noticed at the time, since Democrats cooperated in the 'solution.' Now Bush Jr. has done the same thing. And Greenspan is proposing another 'fix': Double-cross the workers who paid the extra trillions; don't disturb the new monster tax cuts delivered to the rich. Any con artist would appreciate the bait-and-switch as a nifty piece of work. But the epic swindle may yet fail. Politicians, even the right-wing variety, hesitate to close the deal for fear the 'marks'--workers, young and old--might figure it out. Meanwhile, there's one simple and just solution for any long-term fiscal problems Social Security might face: Eliminate the income cap of $87,000 on FICA taxes so that every highly paid worker, even Bill Gates, would pay the full freight. Since wealthy earners have benefited disproportionately from tax reduction, this would be their personal contribution to restoring fiscal order. Why doesn't someone ask the Fed chairman about that? If Democrats were more attentive to their constituencies, they would be aggressively promoting this reasonable alternative to Greenspan's sordid double talk, attacking him for duplicity and filing resolutions of impeachment. Did the Federal Reserve chairman knowingly deceive Congress and the public? What did the chairman know and when did he know it? Let the hearings begin. http://www.thenation.com/doc.mhtml?i=20040322&s=greider

Subject: Well said From: David E... To: Jerky LeBoeuf Date Posted: Sat, Mar 06, 2004 at 23:29:12 (EST) Email Address: daveellis_39@hotmail.com Message: I admire the greatest generation, they emerged from the great depression, fought and won a world war, built a nationwide highway system and put man on the moon. I dont think the boomers or the alphabet generations can put a man on the moon. Not that there are not ones left who are honest and true, but the corrosive effect of measuring everything to the penny and always choosing the cheapest has left us with a shell of the social system the greatest generation created. I hope it does not take the a repeat of the hard times that birthed the greatest generation to birth another greatest generation. We need more heroes now.

Subject: Wages From: Emma To: All Date Posted: Sat, Mar 06, 2004 at 14:27:15 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/webfeatures_econindicators_jobspict The impact of the weak job market on wage growth was also evident in today's BLS report. The 1.6% annual growth rate of the hourly wages of blue-collar workers in manufacturing and non-managers in services is tied with the lowest rate on record (posted in December 1986), going back to 1964.

Subject: Interest Rates From: D Dixon To: All Date Posted: Fri, Mar 05, 2004 at 16:25:46 (EST) Email Address: ddixon4541@sbcglobal.net Message: I think that raising interest rates to a fair level would be a stimulus to the economy. Who benefeits from low interest rates? Home buyers? Yes,but how many times a year does one buy a home? And low interest rates drive home prices through the roof. Banks? Yes,they pay less than one percent on deposits and then loan it out any rates 5 to 10 times the savings rate. The Automobile companies? No, they pretty much do their own financing on the products that they sell. But they do benefit when it comes to borrowing money. The government? Yes, borrows money at, what almost amounts, to free money. Same with corporations, insurance companies etc. Consumers? No, interest rates on credit cards are still a major ripoff. Bank savings and CDs actually result in a loss. So why should consumers get excited about interest rates that are, in my opinion, too low? Makes for good conversation and that's about it. What consumer group the most money in thier pockets these days? The over 50 crowd. But, when they have reached the later years in life they invest more conservatively in CD's, Money Market accts, bonds, preferred stocks etc. They spend tons of money UNTIL the investment income dries up and they they zip their wallets and sit on the money until interst rates come back up___if they ever do... They spend money on their kids and their grandkids on things that really drive an economy. They buy their kids everything from soup to nuts. I feel that there should be a floor on interest rates of no less than 5%. If I am am remembering right, when I was a kid the banks had to pay a rate on savings tied to their lending rates. They could not have the huge spread that they currently enjoy. I put money from my paper route in the bank and actually watched it grow not shrink as is does now. And there wasn't this stupid inflation as we had asset based dollars as opposed to todays debt notes. Restaurants changed menus when they wore out as opposed to frequently changing them because of price increases like these days.

Subject: Re: Interest Rates From: Econochick To: D Dixon Date Posted: Fri, Mar 05, 2004 at 17:57:23 (EST) Email Address: Not Provided Message: Here here, Emma! I will add to Emma's very concise comments Lower interest rates spur investment because companies can now afford to borrow more. People who want to start small businesses can borrow more to invest. This investment means that there will be more economic activity and more jobs. More jobs means even more economic activity which means more demand and a greater need to invest more to expand and so on and so on until the economy heats up so much that inflation starts to rise - then the economy will correct. Also, REAL interest rates are very high right now. The nominal interest rate (the one that is offered to you by your mortgage company, for example) is the sum of the inflation rate and a risk premium. The risk premium is the real interest rate and it is very high as a result of rising consumer debt (the more debt you have the higher the risk that you won't repay and the more the bank will charge you to borrow). The inflation rate is almost nothing, driving down the nominal interest rate. If inflation rises, our interest rates are going through the roof! So, keep that in mind when buying a house. By the way, the Fed doesn't actually set the interest rate that the bank charges you. It only sets it's lending rate to member banks. The rise and fall in the interest rate offered to you is a trickle down effect from that - and it is not even that highly correlated with the Fed rate. The interest rate is actually set by the market as bond traders buy and sell debt securities along the interest rate curve. I'm going to have to stop here because beyond this point we'll have to get into term structure of interest rates and all sorts of fancy-pants stuff. But I think you get the point that interest rates are largely set by the market.

Subject: Interest Rates Stay Low From: Emma To: D Dixon Date Posted: Fri, Mar 05, 2004 at 17:38:30 (EST) Email Address: Not Provided Message: Raising interest rates does and would slow the economy. This would be precisely the wrong policy at a time when we are not growing fast enough to create enough jobs. A serious mistake, and it will not happen.

Subject: Inflation From: Emma To: Emma Date Posted: Fri, Mar 05, 2004 at 17:41:31 (EST) Email Address: Not Provided Message: There is no general inflation in America, indeed year over year inflation is the lowest in 40 years. There are always prices rising and falling, but there is no general meaningful inflation.

Subject: Re: Inflation From: Pete Weis To: Emma Date Posted: Fri, Mar 05, 2004 at 22:47:23 (EST) Email Address: Not Provided Message: Emma. I'm going to disagree with you on 'there is no general inflation in America.' If you are someone who does not buy food, does not rent an apartment, has not bought a house in recent years, does not put gas in your car, does not heat your house, does not turn on the lights in your house, does not buy insurance of any kind, does not need to buy drugs of any kind, needs no dental or medical care, does not need to send your child to college, then for you there is no inflation in America. I think this points to the distorted way in which our government calculates inflation. They conveniently leave certain important personal expenses out of the calculation which are often the less discretionary ones. Sure, there is a lack of pricing power in many hard goods. But if it's something you must have then it's very much been inflated by the glut of easy money at artificially low rates. We're all participants in a great economic experiment. Economics today is mostly about control of the money supply. Milton Friedman says the Great Depression need not have happened. According to him it was not the run-up of debt (it was a record at the time), it was not the overproduction, it was not the loss of wealth in the market crash, it was not the great transference of wealth from the masses of consumers to the upper 1%, it was not the high risk taken on by financial institutions, and it was not the wide spread corruption which sapped the faith of the investor. He and his followers say it was all about money supply - pump the economy with enough money and you'll get rid of deadly deflation. Well the dollar continues to fall, energy and raw materials continue to rise, squeezing US manufacturers trying to sell hard goods, where there is no pricing power, to consumers who have gotten into more and more debt (far and away a new record). We have no savers in this country because it doesn't pay to save. So we've become addicted to low interest rates and continue to borrow heavily to cover the ever increasing gap between our slowing production and increasing consumption. We're running a 1.5 billion a day current account deficit thanks to this cheap money. This heavy borrowing by American consumers has been a great benefit to countries like China since so much it ends up buying their products. Yet all this money pumping is gaining no traction thus far with employment. This same experiment has been running in Japan for some 14 years after the collapse of the Nikei and has yet to prove itself there, despite the fact that Japan runs a considerable current account surplus. Because employment is not catching on and cheap, easy money has created asset bubbles in the housing and stock markets (which the fed is desperate to maintain), the fed will not raise rates. As econochick stated - the market will set rates. When you look back at the seventies you can see how inflationary rising energy costs combined with a falling dollar can be. Rates went well up into double digit realms by the early eighties - 'what goes around comes around'. So, if this poster is looking for higher banking and CD rates just have patience. If you've recently bought a house in San Diego get a real estate agent pronto.

Subject: ALWAYS pays to save From: Econochick To: Pete Weis Date Posted: Sun, Mar 07, 2004 at 22:20:04 (EST) Email Address: Not Provided Message: The best point Pete made is that low nominal interest rates have indeed created a housing bubble. However, I must take issue with a few statements: First of all, it ALWAYS pays to save. In fact, the lack of savings is one of the reasons for the growing income gap. The richest got so rich by investing - either by becoming entrepeneurs or by investing in entrepeneurs or by investing in the financial markets (stocks or bonds). In the 1950's and 1960's, when the income gap was not as big, the middle class spent less and invested much more of their total household income. Ironically, the inflation rate was around 1-2% (give or take) - just as it is now. Think of it this way: you have income from your job plus you have income from the return on your investment. The return on your investment can be thought of as a second income and it grows as you invest more over the years. In other words, part of the income inequality today results from the lack of savings (investment) by the middle class. In other words, in the past, when the middle class savings rate was higher, the middle class as well as the wealthy were capitalists - now the middle class are mere consumers. Today, the middle class BORROWS to finance rampant consumerism - putting more strain on their income and creating no additional income. Good news, though. If you are reading this post, you can change. Put a few bucks away every week until you get enough to invest and then diversify your investments - don't dump it all in one stock. And pay down your debt and you too can become much wealthier and financially stable than you are now. That's good news because you don't have to wait for the government to take action - you have control. There's hope for us all. It always pays to save. While our demand for Chinese-made goods is doing wonders for them, the fact that they are made in China is doing wonders for us. We can now buy MORE goods for the SAME amount of money because of lower labour costs. And anyone who has invested in a company that has increased its profits because it offshored to China is doing better in the stock market. Take note, fellow middle classers! Those of us invested have done better than those who have not! The Chinese economy is overheated and the Chinese government is trying to cool it down a bit. We can do our part by saving a little more and spending a little less. Pete mentions the rising cost of energy. Mostly, the increase in energy prices is driven by oil prices. Fortunately or unfortunately oil price is one of the very few commodity prices that is not set by the market. The collection of owners of the largest reserves in the world have very significant pricing power over this commodity. The collection of owners (OPEC) is 'lead' by Saudi Arabia and oil prices are set based on the economic agenda of member states - not really on political agenda. If we could have found more cheap oil in other parts of the world we would have. But I'm afraid that even if we snuff out every environmentalist in this country, we will not end our reliance on Arab oil - unless we all give up our SUVs. So, I'm afraid it's not in the hands of the fed or anyone else. The Japanese economy too is not a model for us. The problems in the Japanese economy are so painful and incesstious (spelling?) that the unwinding of them has been a sore topic of panicked discourse within the Japanese government for a long time. Deflation is not an experiment there - it is the natural result of the effective collapse of the Japanese economic structure. Krugman, by the way, has some good articles on this topic. But take note, the US economy is structurally very dissimilar. The money supply too deserves comment. Inflation is when more money chases the same number of goods. It's like ebay - the more people that want an item, the more the price gets bid up. Now, imagine that example for every good sold in the country. Restrict the money supply, Friedman argues, and you will have less money chasing the same number of goods. It works fine but we have to consider the current dynamic - we don't have inflation in this country (housing market excluded). We don't largely because of those 'productivity gains'. In other words we have more money chasing more goods. And when the number of goods increases at the same rate as the number of dollars chasing them, inflation is low. That is what we have now. Pete, I understand the argument that you make that perhaps - in your (and maybe others') opinion - the CPI should include some goods that it doesn't. However, to say it is 'convenient' for the government to exclude them makes it sound like the government has some kind of agenda that it surely doesn't. It does not benefit the government in any way to collect inaccurate economic statistics - at least in this case. Benefits one political party or another at one time or another - but not the government in general. Perhaps I read too much into your statement and you didn't mean that. It would be intereting to know what goods you would include in the CPI. I know it's hard to tell in posts when someone is being sarcastic - please take note that I am asking out of genuine interest. One more thing on investment: if you dumped all of your money into one internet stock hoping you'll make a 'mint' like your neigbour, the day trader - I hope you've learned your lesson. If you try to get rich quick you will likely get poor quick. When I say 'invest' I mean a balanced and DIVRSIFIED portfolio including stocks, bonds, and money market accounts. Also, as much as you can stuff into a 401K. If anyone needs proof that 5 bucks a week makes a difference, I'll do the math for ya' right here on this message board.

Subject: Re: ALWAYS pays to save From: Pete Weis To: Econochick Date Posted: Tues, Mar 09, 2004 at 03:28:11 (EST) Email Address: Not Provided Message: The two most significant reasons for oil/energy prices rising so much recently are the fall in the dollar (due to low interest rates and the glut of dollars worldwide caused by the heavy borrowing to cover the twin deficits) and increased oil demand by countries like China. Decreases in supply (the Hubbert Curve) will begin to have effect in the near future. OPEC, in their most recent meeting, had as their main topic the fall in the dollar - which was having a large downward effect on their profits. They decided to decrease production to get more dollars for their oil. Of course, as most posters on this board are aware, the US dollar is the world's 'reserve currency' (Brentonwood Agreements) and commodities are traded worldwide using US dollars. Because US consumers are borrowing heavily (spurred on by low interest rates) which is supporting a massive trade deficit, the central banks of countries with resulting trade surpluses are flooded with large dollar reserves. As with everything else, currencies are all about supply and demand. With huge supplies of US dollars worldwide and waining demand due to a struggling US economy - the dollar has been dropping rather steeply relative to commodities. When I said there is little to no saving going on in this country, I was talking about the effect of low interest rates attracting Americans into more and more debt (among other things, extracting equity out of their home). Additionally, there is the problem with retired folks depending on less risky fixed income investments such as government securities, CD's, etc. which are steadily giving them lower and lower returns (I think this will eventually turn in the other direction). When it comes to investing, this is where I have spent alot of time, probably an obsessive amount of time. I am not a day trader. The vast majority of day traders lose money and I'm sure it is more of a gambling habit for them. I try to absorb a broad range of investing views. I give extra weight to the old 'geezers' with good track records. If they are bearish now, I need to know that they were bullish at the right time in the past. Anyone who does this will discover that the most succesfull investors over the long term are contrarians. Warren Buffet is a contrarian. Contrarians were investing in stocks in the late 1970's when they averaged well below 10 times earnings and were paying very high dividends. Everyone else at the time were into CD's, treasuries, oil, and precious metals. In the late nineties contrarians were getting out of the stock market when everyone else was jumping in. In 1998, Buffet bought approximately one third of the world's available silver bullion at a rock bottom price per ounce and the CNBC talking heads scratched their heads. Now at over $6/0z we know why. The brokerage firm through which I invest is one of the largest and it operates pretty much like all the others. If you've ever been to an investment seminar at one of these brokerages then you are familiar with their 'dog and pony show'. They are fine, intelligent people and they've been trained by management on how to do their presentation. They'll bring out their pie charts and explain 'balanced portfolio's'. They have 'conservative portfolio's' and 'aggressive portfolio's'. They are, of course, salesmen and saleswomen. They want to sell you on a managed portfolio where the brokerage gets an annual percentage of the amount invested (often 1%). You may get assigned a personal broker who will work with a team of investment experts to tailor a portfolio which will work the best for your specific needs. The young broker my wife and I met with was probably in his late twenties or early thirties and probably had a business degree, maybe an MBA. In passing conversation, I started talking about Larry Kudlow and Jim Kramer of CNBC (Kudlow gives almost outrageously positive predictions at the begining of each year). The broker said he never heard of them. I mentioned Kramer's 'TheStreet.com' - he never hear of that. I mentioned a well known local investment guru who appears on CNBC occasionally and whose writings appear in business sections all over the country - he never heard of him. Then I remembered something I had read about brokers which is: 'they rarely invest themselves, they sell others on investing and collect their fees and commissions'. It also occurred to me that brokerages feed investors with the same stuff about balanced portfolio's - so much in bonds, so much in equities, so much in fixed income, etc. no matter what the situation with the economy. The advice they give now is the same advice they handed out in the '50's, 60's, 70's, 80's and 90's. Now if you took this advice in the late '60's thru the late '70's you would have probably lost alot of money and if you took this advice in early 2000 you again would have lost alot of money. If you followed this advice in the late 20's you wouldn't have gotten a return on your investment perhaps in your lifetime! If you invest like they're telling you right now (balanced portfolio in bonds, equities and US fixed income securities), I believe you'll likely lose alot of money in the next 5 to 10 years. You have two choices when it comes to investing: (1) spend the time and teach yourself about investing, (2) Pay someone with a proven track record like Michael Belkin (who presently charges about $36,000 a year for his services) from the Seattle area or some other guru the very wealthy use. The best way to start, in my opinion, is to study the history of the markets, find how PE ratios have tracked for the major indices over the years. Realize that successfull investing is all about recognizing changing trends - don't fight the change in current, swim with it. Definitely don't put all your eggs in one basket - spread the risk. But if the stock markets are at very high PE ratios when the economy is struggling and bond funds are not good investments because interest rates are more likely to go up in the coming years, and US securities lose money because their interest rates don't equal the fall in the dollar then all you'll end up with is 'balanced' loses.

Subject: Re: ALWAYS pays to save From: Econochick To: Pete Weis Date Posted: Tues, Mar 09, 2004 at 12:54:09 (EST) Email Address: Not Provided Message: Pete, that was a very nice paragraph on oil. Very nice. There's a lot of debate about when we will be hitting Hubbert's peak, so I don't know if I would be so bold as to call it 'very soon'. Oil reserves are a function of price and technology (which drives down price). But if you are making the point that if demand from developing economies like China far outpaces new discovery and technology, then Hubbert's peak will be reached sooner, then I have to agree. In any case, it's time to check out new fuel sources for more than one reason. Not the least of which oil, as you illustrated in your example, is not entirely a free-floating commodity because of the producers' pricing power. I was tickled reading your diatribe on investing. I lay some cards on the table here: I have for years and years and years been an 'investment professional' on Wall Street. Now, I've never worked with small retail investors - I'm not a stock broker. My work has been in research and investment advisory for Hedge funds, pension funds, and large mutual funds and in asset management. I've hung up on every broker who has ever been unfortunate enough to cold call me. At one large Investment Bank I regularly got calls from brokers in our retail arm and they were, with rare exception, completely unschooled in finance and economics. They were purely sales people who didn't really understand their product. Scary. How the heck they were advising anyone about money I have no idea. But I felt very sorry for their victims. There are, however, very few brokers out there who are very good. But I would not recommend that a person who is not a professional try anything too fancy. I will use 'me' to mean professional asset managers and 'you' to mean a person in another profession who needs to invest money for their future. I would not recommmend you to trade against me because I will always have better access to information and more experience and eduction. If you and I go head to head, I will win the game because I have more resources. I don't know if you play poker, but if I played against Jackie Chan I would surely lose. If the fifth best poker player played the second best, the second best will win. No matter how many investment seminars you go to and no matter how much you learn about market history it will never be enough to counter the education and experience of professional traders. Now, in the past a lot of traders were mooks who could 'count good' but now most of us in the industry are very quantitative, have multiple degrees in finance, economics, statistics, etc. and we can get company CEOs to take our calls. That's a huge advantage over the average doctor who invests in his spare time. I never recommend that people waste their time trying to 'beat the market' - unless they enjoy it and they do it with risk capital (money they can afford to lose). And our goals are different too. For example, I have to execute a certain strategy to maximize returns for my hedge fund. I am also aware of other strategies and how they work (some of them are very complex) and I know how that effects execution on the floor of the exchanges. I know the tricks specialists play. You may have a great trade but get messed up in the execution - I'm less likely to get snared because I know that a trap exists and how to get around that. If you try to invest based on fundamental analysis you are similarly handicapped. My husband and I often have a good laugh about these investment seminars that trot out old favourites like P/E ratios and ROE as the 'keys' to finding that hidden gem of a stock. In reality, it's much more complicated than that and do you really want to spend the time it took (4 months) to build a 4 meg model on a large telecom company? It's not worth missing dinner with your wife. That said, though I can only imagine the stream of mind-numbing drivel coming from stock brokers - just from what I've been able to gather. We could have a HUGE discussion about all of this - it's a broad topic. But suffice to say that I personally recommend staying away from stock brokers - they are peddling whatever the company has too much inventory of. To build your portfolio you should take into account these factors: time horizon, liquidity needs (balloon mortgage payment, new car, down payment, etc.), risk tolerance and financial goals. Then, you need to build a portfolio around that. I do not see any evidence that standard portfolios - as you mention the brokers push on you - are a help to anyone. Bonds (especially government bonds) are very low risk RELATIVE to stocks - especially small-cap start-ups. Thus, you can use bonds to lower the risk of your stock portfolio. There is an infinite number of 'correct' portfolios. The question that annoys me most when people find out my professin is 'so, I've got $5,000. Where should I put it?' and variations on that question. I always answer that I don't know - is your house fully paid for? When will your kids go to college? When are you planning to retire? etc. The abnoxious smile usually fades from their face and they change the subject. Thank God. By the way, in case you're wondering, I invest my personal portfolio exactly the way that I suggest to other people and it has met my financial goals. I churn it very infrequently. Also, most contrarians blow up. It's a very high risk strategy and by virtue of being high risk it is also high reward - when it works. Thus, it makes sense that some of the highest returns went to contrarians - what you don't read about is how many of them blew up. But I will say one thing about that too....you can be a contrarian, you can engage in options arbitrage, you can invest only in companies that start with the letter 'E'. It doesn't really matter. As long as you don't commit too much of your portfolio to any one trade or to too many correlated trades, you shouldn't loose the whole portfolio. There is no one magic model that will make you rich (we'll save the natural discussion of Buffet for another post as this one is turning into a book). So that brings me back to the point in my original post. My advice (for anyone who wants it): it always pays to save because the return on the investment of that savings (whether stock bond or savings account) generates a passive income. Diversify your investments among asset classes that give you the kind of risk profile that fits your personal risk tolerance. Save and invest. Do it actively (as Paul appears to do) or do it more passively but spend a little less, pay down your debt a little more and put some away for the future and you will be better off in a few years than you are now. I am not affiliated in any way with Suze Orman but I've caught her a few times on whatever network she appears on and she seems to give out a lot of good advice.

Subject: Re: ALWAYS pays to save From: Pete Weis To: Econochick Date Posted: Wed, Mar 10, 2004 at 01:46:09 (EST) Email Address: Not Provided Message: I'm impressed with your credentials. You make a good point about the disadvantages to those of us who are small investors. If we're unable or unwilling to pay the high prices of a quality investment advisor, who is available to wealthier investors, where do we turn? Paul Krugman and John Kenneth Galbraith (two economists I respect) both state that anyone who says they know which way the economy is headed are simply showing their 'ignorance'. But a small investor, concerned about his or her retirement, really is making a bet of sorts on what direction the economy is headed. Does he adopt a conservative defensive strategy, change his general investment focus to match changing trends, or follow the advice of the major financial networks and publications telling him to get into equity markets, albeit in a balanced way? You compare investing to poker. This implies winners and losers. In the 90's almost any idiot (myself included) could make a buck in the markets. Most were winners. But the 90's were an aberation. Presently, I see your poker game in action. Every day when I check insider transactions, I see heavy selling. In this last stock rally we've had record numbers of insiders exiting the markets even as small investors were piling in (in recent months at record levels into equity funds). Ultimately, stock and bond markets will yield to world economic realities. Here, in the US, the employment situation points to the fact that this is an unusual time. I've chosen (admittedly, with the modest tools at my disposal) to make a decision on which direction the economy is headed. I also consider the probable reactions by the government and federal reserve to the direction of our economy. This is difficult - I agree. But I believe we're at a crossroads - recovery or some level of economic hardship; dollar stabilization or continued dollar slide. Whether we are willing to admit it or not, as small investors, we are placing bets at this crossroad. Insiders seem to be placing their bets in one direction while most small investors are placing their bets in the other direction. As we speak there is a great shift in poker chips taking place. I listen to people like Buffet because they have been right far more often than wrong. I've placed my bets. So far they've done well over the last couple of years. When it's time to change those bets based on changing economic conditions I'll make the change. By the way, if you made net gains in your investments in the two and a half years following March 2000 than I am very impressed!

Subject: Re: ALWAYS pays to save From: Econochick To: Pete Weis Date Posted: Wed, Mar 10, 2004 at 11:43:45 (EST) Email Address: Not Provided Message: The poker analogy is a good one because I believe life is very similar to poker and the markets even more similar. The similarities include asymetric information and the ability to read the information the market is giving you by reading transactions. Your example of interpreting insider transactions is a perfect illustration. But you have to remember that not all insider transactions are driven by a lack of confidence in the company - some are driven by personal liquidity needs. You never know if you've won the hand until it is played out. Some Wall Street firms use poker to teach traders. I never listen to 'Gurus' because I have no confidence that they are. Statistically, even holding everything constant, a few people will outperform for a long time. I'll illustrate with a statistical example: this year half the people will out-perform the market. Next year, the unsuccessul half drop out of the sample and, of the 'successful' half, half will outperform the market. The next year the 'unsuccessful' half drop out and half of the successful half outperform the market. We go on until we have several money managers who have outperformed for many many years. This is a statistical inevitability even with even odds. So, while you can prove that these people have been more successful you cannot prove why. People like Buffet are very rare. Buffet takes such huge stakes in companies that he is often either on the board of Directors or has significant sway over management decisions of the company. So, it's difficult to say whether he's just a great investor or if he's fabulous at running companies. Personally, I think he's a management genius. But either way, it's difficult for one small investors to have sway over management, making Buffet's strategy impossible to replicate. By the way, I spent a long time on Wall Street in a research capacity. Industry research, Macroeconomic research, company research - all to build forecasts. I'll tell ya' what I learned: Anyone who says they know what the future is whether it conerns a single company or the economy is full of it. If you hear someone say 'the Dow is going to [pick a number]' turn off the TV!! I not only agree with Krugman but I love the way he put it!! I'm also suspicious of money managers who go on CNBC to give their rosy predictions about a stock. It has been my experience that usually those guys and gals have taken huge positions in those stocks and wish that you would run out and buy some, driving up the price for and augmenting their returns. One such manager tore me a new one when I downgraded a stock that he was the largest holder of. He wasn't the only one - just the meanest. Just flip that scenario for short positions. I have NEGATIVE faith in their ramblings. So, now I think you'll understand that I only keep the TV on in case there's some breaking news. You know, you bring up a good point about what a small investor is supposed to do. After I wrote my post yesterday, I thought about that. In winter of 1999, when tech stocks were flying in the stratosphere, my friends were convinced by their stockbroker to short Yahoo. Now, shorting is very dangerous because the risk profile of a short position is INFINITE RISK. If you buy yahoo at $50, you can only lose $50 because the stock price cannot go below 0. But if you short at any price you can lose an infinite amount because there is no limit on how much a stock can go up!! In fact, for a broker to recommend a short position to an individual investor that investor has meet certain wealth and experience requirements. My friends - both young professionals with a kid on the way - had a large mortgage and maybe $30,000 to their name. But the broker 'knew for sure' that yahoo had to come down. Long story short, Yahoo went up about $100 dollars per share and my friends were wiped out with margin calls. Knowing that what the broker did was against the rules, I sent them back to ask her one question 'what is the risk profile of a short position?'. In reply, my friends received a blank stare. I looked up the rules on short trading and sent them back to the brokerage threatening a lawsuit for breaching fiduciary duty and they were restored. But I wonder how often this happens. In my personal portfolio I'm completely indexed for the equities piece. Buying the S&P is buying an already perfectly diversified portfolio. I don't have to make ANY decisions about single stocks. As a rule, a single stock has more variance (risk) than a portfolio of stocks because of diversification. Now, if you get about ten or twelve single stocks in uncorrelated industries, you can achieve pretty good diversification. So, if you enjoy picking your own stocks just remember to follow that simple rule. Historically, the bond market and stock market have been negatively correlated. So, that means that as the stock market goes down, your bonds should appreciate and - depending on the proportion of bonds in your portfolio - either partially or fully offset the losses in the equity portion of the portfolio. This strategy will not propel you into the lifestyles of the rich and famous. It will make you richer than you are now. But you will be able to sleep at night and be fairly confident that you can retire if nothing tragic happens. You will also not lose your life savings on any one investment (as people did in the 90's). The exact proportions depend on the factors I mentioned in the previous post. I recommend for any professional in a fairly high tax bracket check out municipal bonds. Here in New York they are not taxed at all (and our tax rate is the highest in the entire country), making the muni bond return similar to a long-term stock market return but with bond risk!! Pretty good! Also, E-series bonds can be cashed in tax-free if you cash them in the year your kid goes to college. Take advantage of ALL tax-deferred opportunities like 401K, IRA, Roth IRA. The ability to compound your returns tax free makes a HUGE difference. As a very simplistic example where I just applied the future value calculation to a one time investment, if you put $10,000 into any tax-deferred retirement account at 0nly 6%, you will have roughly $32,000 in twenty years. If you invest the same amount in an account subject to taxation, you will have only roughly $22,000 if your tax rate is 33%. That's a HUGE difference. These are simple things that any small investor can learn on his or her own. But I recommend that you don't try to determine the trend because you never know when the trend will turn and if the trend has bottomed or topped out and will remain flat. I mean, there's no way to tell - either for you or for me. I outperformed in my personal portfolio because our household income is tied to the stock market doing well and we are heavily invested in all sorts of boring and unsexy government bonds. In the past few years compensation has dropped and the bond market rallied. We outperformed in each year. Once the stock market rallies for a while, our compensation will rise and the bonds will decline some. But I don't care about outperforming the market in my personal portfolio. I care about being able to put my kids through school, paying my bills and retiring. As long as my personal portfolio does that, it's met my goals. And even though that means that I fill it with unsexy bonds, there is nothing sexier than being able to sleep at night. I get my fill of excitement at work!! Good luck in these endeavors to you and anyone who reads this post. I hope that my advice may have been of some help to someone.

Subject: Re: ALWAYS pays to save From: Pete Weis To: Econochick Date Posted: Wed, Mar 10, 2004 at 22:44:21 (EST) Email Address: Not Provided Message: Agree with you that shorting is 'risky business'. I don't think this is a good time to be in a stock index. I'm concerned about all those people with 401K's heavily invested in the S&P or other stock indexes at this time. If this last rally was a bear market rally and we're in a bear market which has much further to go (I suspect this is the case for a number of reasons), then dwindling 401k's will be just another negative factor for this economy. I also wonder whether this is one of those rare times when the bond market won't serve as a hedge against a fall in the equity markets.

Subject: Re: ALWAYS pays to save From: Econochick To: Pete Weis Date Posted: Thurs, Mar 11, 2004 at 11:03:08 (EST) Email Address: Not Provided Message: Well, Pete, those points are only relevant if you are retiring in the next five years or so. Ups and downs are built into the risk calculation of investing in a stock index. Therefore, if you have 15-20 years or more to go, don't worry about the decline in the S&P right now. You will spend more in transactions costs constantly churning your portfolio than you will gain from it. The bond market is up currently and it has been a wonderful offset to declines in the stock market. In fact, on a day to day basis right now, when the stock market drops, bonds rally. But again, I bring up the point that in the long run 'today's market' won't matter. These ups and downs (variance) is essentially what the 'risk' measurement is. Risk and reward are positively correlated. Thus if you have deep lows, you expect high peaks and in the end you will get the long time average return. Nothing brings returns down more than the transaction costs from churning your portfolio.

Subject: Re: ALWAYS pays to save From: Pete Weis To: Econochick Date Posted: Mon, Mar 08, 2004 at 22:29:57 (EST) Email Address: Not Provided Message: This is some good stuff. I agree with the need to save. However, the way we're being told to invest serves those who are making some really big money off of the small investor and does not serve the interest of of us who will depend on a reasonable retirement. When I get some more time, I'll elaborate on this.

Subject: Re: ALWAYS pays to save From: Econochick To: Pete Weis Date Posted: Thurs, Mar 11, 2004 at 11:11:10 (EST) Email Address: Not Provided Message: I must admit that, because I run my own portfolio, I've never really listened to those people much. But I have overheard some very very bad advice - mostly because people claim to 'know' where the market is going. The market has no memory. If last year it reacted one way to a piece of news the next year it will react completely the opposite way to the same exact piece of news. That happens ALL the time. Please do elaborate on this when you have time. I would be interested to know what misinformation is floating around. Meanwhile, I still think the best way to build a portfolio is to consider your: Time Horizon Liquidity needs Risk Tolerance Return objectives (what do you want out of your life that the portfolio will finance for you) Build a portfolio with plenty of diversification and churn it as little as possible. Always take full advantage of tax deferred savings accounts. By the way, this is the way that we build portfolios for our 'high net worth individuals' who can afford to pay us.

Subject: ALWAYS save From: Emma To: Econochick Date Posted: Thurs, Mar 11, 2004 at 15:16:24 (EST) Email Address: Not Provided Message: Terrific exchange. I also run portfolios and love investing. What I try to do is know and think as much as possible, and do as little as possible. I have used Vanguard funds for many years in addition to buying individual stocks. Bonds only through Vanguard funds, since the cost and quality benefits they give can not be matched by building an individual bond portfolio no matter how much you have to invest. Stocks through indexing and selectivly accumulating shares in companies I have followed for many years. There is almost always need to save and invest and it can be done as simply as you wish or with considerable study. Index and you at once become a superior long term investor. Add bond funds as you grow older and you have fine diversity. Then, think how fancy you wish to get or whether you can find really reliable help.

Subject: Econochick From: Emma To: Emma Date Posted: Thurs, Mar 11, 2004 at 15:18:16 (EST) Email Address: Not Provided Message: Econochick such knows her stuff!

Subject: Not Inflation But Wages From: Emma To: Pete Weis Date Posted: Sat, Mar 06, 2004 at 14:48:47 (EST) Email Address: Not Provided Message: The problem is not inflation but jobs and wages, and the problem will be resolved..... Problems you describe are there but over-done. When Bikll Clinton was President, intelligent fiscal policy lead to terrific job creation and wage increases. There were problem of labor dislocation but job creation was enough to readily solve the problems. We can create jobs and quicken wage increases with fiscal policy designed to create jobs. The world is not ending. We will be fine, and Japan has long been recovering. Japan will be fine as well. We find all sorts of nice things going on when we visit. We had 8 years of excellent economic policy, we will have many more such years.

Subject: Re: Not Inflation But Wages From: Pete Weis To: Emma Date Posted: Sun, Mar 07, 2004 at 12:41:02 (EST) Email Address: Not Provided Message: The world is definitely not coming to an end - I agree. It's just that periodically when 'irrational exuberance', excessive debt, bottom/middle to the top wealth migration, systemic risk in our banking system, and now unbalanced trade (allowed to grow by the accumulation of debt) get 'way out of whack', then we're due for some 'hard times'. You obviously don't agree with my 'way out of whack' statement and certainly most people wouldn't. We've all been constantly told to view the 'glass is half full' and those who view the 'glass is half empty' are are often refered to as 'end-of-the-worlders'. Because of this the bias is heavily weighted to the positive. I believe the good economic times of the early to late 1990's had more to do with the development of the integrated circuit and the shift of investment from other world markets to the US, than it did to any of our fiscal policies. When it comes to fiscal policy, I believe our political leaders have greater power to 'muck' things up than foster any long lasting (as opposed to short term stimulus) economic benefit. In the industrial age, long lasting economic benefit seems to always find its roots in major technological advancements. Unfortunately these technological advancements don't turn up every decade or two. Japan? What would have happened to Japan's economy in the 1990's if, at the very time they were having their economic difficulties, the US was simultaneously having difficulties? If all those American consumers were not buying Japanese cars and electronics? The Japanese banking system is still in a precarious state - strung out on, among other things, a collapsed real estate market. What happens to Japan if American consumers really begin to 'tighten their belts'? If the American consumer is not that important to the Japanese, why do they keep driving their currency into the ground as we are? They seem to be willing to buy huge amounts of US securities in which they are being paid very low rates with dollars that have been falling rather steeply. Is their recovery tied to our 'recovery'? I absolutely agree with you that jobs and increased wages are the solution. But I don't expect those extra, better paying jobs to materialize in the coming decade or perhaps the decade after. That's because fiscal or economic policy (if it's bad) can destroy jobs but it can not meaningfully create more private sector jobs. Naturally the government itself can directly create jobs as it did in the 1930's. But that would come about only in truely hard times. And I don't mean to imply that we will see over 20% unemployment (atleast I hope not) as we did in the 1930's. Lower paying jobs are likely to replace atleast some of the higher paying professional jobs lost overseas unless there is a severe drop in consumption. As to your assertion, in another post in this thread, that there is no real asset inflation and that 'short term debt' is not really a problem, the coming months will tell. Short term debt tends to push interest rates higher. So if we are, in fact, in a recovery and short term debt is not much of a problem and there is no real asset inflation, then the stock markets should correct by only the 5% or so as the consensus is predicting. The markets won't continue a steep prolonged fall as they did in 2000 thru 2002. Also, the housing market should not fall significantly over the next 5 years or so. We'll see. I don't share your 'glass is half full' view, Emma. I do agree with many of the ideas and material you post on this site, though. Perhaps you could explain what fiscal policies could be enacted which would significantly foster an increase in more jobs and increasing wages in the next 5 to 10 years. Retraining is important, but retraining with no place to go won't be of much benefit.

Subject: Re: Not Inflation But Wages From: Econochick To: Pete Weis Date Posted: Sun, Mar 07, 2004 at 22:27:21 (EST) Email Address: Not Provided Message: 'When it comes to fiscal policy, I believe our political leaders have greater power to 'muck' things up than foster any long lasting (as opposed to short term stimulus) economic benefit.' Oh my God!! I could not agree more. Sometimes I wonder if people realize that the President cannot 'create' jobs. The president can't do ANYTHING without congress. And it's far easier to set policy that screws things up in the short term than policy to make things better in the long run (because of political pressures, etc. etc.). And it's about darn time people said that the we are not all going to be living in boxes tomorrow. We do have SOME control! We are smart and innovative and we live in a free country! So, thanks to you and Emma for stating that important (and obvious, of course) reality.

Subject: Fiscal Policy From: Emma To: Pete Weis Date Posted: Sat, Mar 06, 2004 at 14:22:46 (EST) Email Address: Not Provided Message: The problem is wasted fiscal policy that has lowered taxes with far too little added demand to show. Monetary policy is fine now. we have a long term problem with debt, but not a short term problem. The near problem is not debt, but jobs! Not the dollar, but jobs. The dollar can fall or rise, the issue is jobs. The problem is not China, but our fiscal policy.

Subject: asset bubbles From: Nat To: Pete Weis Date Posted: Sat, Mar 06, 2004 at 00:47:13 (EST) Email Address: Not Provided Message: Ahhh, asset bubbles: one of my favorite terms of the moment. There are a number of blogs (including Brad Delong's, I think) that have discussed this in detail lately. Very scary. Sorry, but I don't have any links at hand. A very large number of Americans have recently refinanced their home and extracted equity to cover other debt. So a very significant number of Americans now have a very, very low amount of equity in their homes. When interest rates head back the other way (and they will, driven by either market forces or the Fed) it will tend to drive home prices down (remember the 80s?) So, low equity may soon be negative equity. And negative equity means the seller has to cut a check to the mortgage company to cover the shortfall at sale time. (Or like Houston in the 80s when many owners just walked the mortgages...)

Subject: Re: asset bubbles From: Emma To: Nat Date Posted: Sat, Mar 06, 2004 at 14:16:37 (EST) Email Address: Not Provided Message: There do not seem to be any asset bubbles about. Home prices in Boston may be high, but there is also Baltimore and Portland and Houston. The job of the Federal Reserve is not to regulate asset prices. Some families may have problems if interest rates rise, many many more will not have problems. Boston will be fine when rates rise, if Administration fiscal policy creates enough jobs by then.

Subject: Re: asset bubbles From: Kosh To: Emma Date Posted: Mon, Mar 08, 2004 at 18:01:25 (EST) Email Address: Not Provided Message: http://www.philly.com/mld/philly/business/8123383.htm 'U.S. housing boom poised for a bust' Whether later this year or next, the real worry is will it just pop or slowly deflate? By Ken Moritsugu Inquirer Washington Bureau WASHINGTON - A three-year home-buying frenzy has set the soaring U.S. housing market up for a likely fall. Driven by the lowest mortgage rates since John F. Kennedy was president, people are buying more homes in a sluggish economy than they did during the late-1990s boom. Prices have risen faster over the last four years than at any time in the previous decade. Yet the good times might end soon, painfully for some. Economists worry that a housing bubble might have developed, similar to the steep climb in stock prices in the late 1990s. Federal Reserve Chairman Alan Greenspan warned again this week that interest rates could not remain so low forever. Many economists think they might start to rise late this year and next year. When they do, it will be the equivalent of sucking oxygen from a raging fire. Home sales will slow. Price increases will tail off - and could reverse in some markets. Jan Hatzius, an economist at Goldman Sachs investment bank in New York, thinks the national average home price could fall for the first time in the history of the House Price Index, which dates to 1975 and is published by the Office of Federal Housing Enterprise Oversight, an agency responsible for mortgage market oversight.

Subject: Re: asset bubbles From: Nat To: Emma Date Posted: Mon, Mar 08, 2004 at 10:22:30 (EST) Email Address: Not Provided Message: Asset bubbles: the term is not mine, but it resonates with me having lived through the 80s foreclosures (admittedly a complex phenomenon.) Two good friends walked mortgages on houses that significantly depreciated. This issue is getting seriously discussed by those far more knowledgeable than myself. While the Fed is not supposed to regulate asset prices, its actions affect asset prices. Cheap money has tended to drive home prices up and it has also caused the largest re-fi boom in our history. If you are in a new or old home with very low to no equity you are on the bubble. Bubbles do not always burst and I have no doubt there may be regional variations as to where the bubble starts. However, when interest rates head north a perhaps unintended consequence will be an increased foreclosure rate. Perhaps it will be a modest increase. But if folks are counting on a jobs recovery to moderate the blow that seems to me to be the equivalent to drawing to an inside straight in poker.

Subject: Re: asset bubbles From: Econochick To: Nat Date Posted: Mon, Mar 08, 2004 at 11:50:03 (EST) Email Address: Not Provided Message: You call yourself less knowledgable, yet you hit the nail on the head, Nat. The Fed will not increase its lending rate because it doesn't want to stifle investment. But folks need to realize that a fixed rate mortgage is better than a floating - if interest rates go up, yours won't. And don't buy every last square inch of house you can afford given the low interest rates now because if interest rates go up, you will no longer be able to afford it and - as Nat says - you risk foreclosure. Also, if inflation goes up in future, you may lose your job and you may be foreclosed.

Subject: Re: asset bubbles From: Roach To: Emma Date Posted: Mon, Mar 08, 2004 at 10:16:29 (EST) Email Address: Not Provided Message: 'There do not seem to be any asset bubbles about' Thats not what Steven Roach thinks, check out his article last friday in the MSDW global economic forum.

Subject: Re: asset bubbles From: Nat To: Roach Date Posted: Mon, Mar 08, 2004 at 13:47:55 (EST) Email Address: Not Provided Message: Brad Delong discusses this in one of his current postings. I like a lot of what Roach thinks, but there is not a chance in the world interest rates will head north prior to the election. Bush II or Kerry will inherit that little mess. On a 'sort of related' note, about a month ago Roach engaged in a point counter point with another MSDW economist on outsourcing that was very interesting. Roach is of the opinion that the current offshoring is much more than just the latest manifestation of the movement of jobs overseas. I really need to bookmark these things... sorry I can't provide a link.

Subject: Investment From: Emma To: Emma Date Posted: Fri, Mar 05, 2004 at 17:51:57 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/webfeatures_snapshots Increase in hi-tech investment obscures weakness in overall manufacturing A closer look at how the growth in investment in the last half of 2003 was divided between hi-tech and the rest of the manufacturing industries reveals a less-than-encouraging picture for overall manufacturing investment.

Subject: Educated, Experienced, Out of Work From: Emma To: All Date Posted: Thurs, Mar 04, 2004 at 17:21:51 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/issuebriefs_ib198 Educated, experienced, and out of work: Long-term joblessness continues to plague the unemployed By Sylvia Allegretto and Andy Stettner Long-term unemployment—when unemployed workers have been seeking work for six months or more—is the most severe form of joblessness. The consequences of extended periods of joblessness are significant: the long-term unemployed often face financial, personal, and health care hardships as well as the loss of their unemployment insurance benefits. An analysis of long-term unemployment from 2000 to 2003 (a period spanning the recession that occurred between March and November 2001) shows that the number of people without work for six months or more has risen at the extraordinarily high rate of 198.2% over this period. Job seekers with college degrees and those age 45 and older have had an especially difficult time finding work, with long-term unemployment for those groups rising by 299.4% and 217.6%, respectively. Since the recession ended in November 2001, elevated rates of long-term joblessness among the unemployed have persisted longer than during any similar period in the past 30 years. The long-term unemployment situation continued to worsen between 2001 and 2003 as job creation lagged....

Subject: Out of Work From: Emma To: Emma Date Posted: Thurs, Mar 04, 2004 at 17:50:41 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/issuebriefs_ib198 • In 2003, 22.1% of all unemployed workers had been out of work for more than six months, an increase from 18.3% in 2002. This proportion is higher than at comparable points in the recovery periods of the four most recent recessions, and it is the highest annual rate of long-term unemployment since 1983. • College graduates represent 15.3% of total unemployment, but 19.1% of long-term unemployment. Long-term unemployment among college-educated workers increased by 299.4% between 2000 and 2003, a much faster rate than the increase of 156.1% for workers with a high school degree or less. • While long-term unemployment hit all age and occupational groups, more experienced jobless workers had a disproportionately difficult time getting back to work in 2003. Although job seekers age 45 and older made up 25.7% of the total unemployed population, the rate of long-term unemployment for this group was 35.4%. • Workers in the manufacturing industry are the largest share of the long-term unemployed (19%). In comparison, they represent 13% of total unemployment. The ranks of long-term unemployed manufacturing workers grew by 259% from 2000 to 2003. Workers laid-off from the well-paid professional and business services sector suffered along with those in manufacturing, posting the second highest long-term unemployment share, at 14%.

Subject: Re: Out of Work From: Pete Weis To: Emma Date Posted: Thurs, Mar 04, 2004 at 21:28:05 (EST) Email Address: Not Provided Message: Yet many point to the '5.6%' unemployment rate as evidence that the economy is not doing that badly and unemployment has been dropping since the middle of 2003. Paul Krugman, as well as other economists, point out that the economy needs to produce about 150,000 new jobs a month to keep up with the increasing population in the US. I recall that in the early summer of 2003 we had some months where the government reported a net loss of jobs. One month was reported to have lost over 70,000 jobs. Even so, the unemploment rate was dropped a tenth or two. The next month we had another net loss of jobs and the unemployment rate dropped again. The reason given, for anyone who had an interest at the time, was that those who an been unemployed for a given period where no longer included in the nation's labor pool and therefore didn't factor into the unemployment number. It occured to me that this had been going on since the start of the downward slide in employment in 2000. The data you present underscores the lack of credibility in our present 5.6% unemployment number. That number seems to be floating out there with no tangible support and doesn't seem to have any relevancy. Thanks for your post Emma. This is relevant information. Afterall, even if the government no longer includes the long-term unemployed in their '5.6' number, they are still an important loss to the consumption side of our economy, regardless of 'productivity gains' reducing their productive importance. And it's anybody's guess where those productivity 'gains' really come from.

Subject: Re: Out of Work From: Econochick To: Pete Weis Date Posted: Fri, Mar 05, 2004 at 01:48:27 (EST) Email Address: Not Provided Message: One thing occurred to me while reading your response, Pete. Some of the folks who lost their jobs are no longer counted as unemployed, thus dropped from the calculation, as you say. and a portion of the 'dropped' people want and, indeed, need to be employed and are therefore truly 'unemployed'. However, a some of those people dropped are no longer looking for employment because they decide to start their own business. They are still contributing to economic activity - including consumption - but not as an employee. Are they even counted? Also, let's assume that a man lost his job but his wife - let's say because of 'productivity gains' and/or promotion - now makes the same amount of money or even MORE than the couple did when they were both working. The guy decides, given the circumstances, he'd rather spend his time with the kids and is eventually dropped from the unemployment numbers. However, because the family disposable income has not changed their consumption doesn't change. Also, he is still productive because he will (theoretically) raise better kids - which also has economic value. Other people may just decide to call it 'retirement' and use their nest-egg to travel to all 50 states or move to the French countryside and live out their long-nurtured dream of cheese-making. So, if you take the number of unemployed dropped from the calculation, subtract the people who fit the above examples and add the difference back into the unemployment figure, would the differnce be small enough so that the real unemployment number does not exceed the upper limit of 'normal' unemployment - approximately 6%?

Subject: Re: Out of Work From: Nat To: Econochick Date Posted: Sat, Mar 06, 2004 at 00:23:24 (EST) Email Address: Not Provided Message: I find it frustrating that there is a great deal of anecdotal evidence on the erosion of jobs in America, but little of it is making it to real numbers. For example, I am a software developer in the medical reimbursement world. Our customers are large public sector hospitals and they are seeing a spike in their rolls. Public sector hospitals are owned by counties and cities and bear most of the burden of care for those without medical insurence. The numbers of the unemployed are growing in my world, as are the numbers of those who are employed, but don't have medical insurance. I would find it very interesting to see the details of this captured from all the public sector hospitals in the country. And a question to the board: does anyone out there know if the FICA and SECA head counts (for any timeframe) are published anywhere? I would imagine they lag a bit and it might be hard to produce a monthly count, especially for SECA. Quarterly might be better. We can see the dollars the Social Security Administration collected in a year (try cbo.gov) but not the count. I would think the FICA SECA count by month would be most interesting these days. I would also think this would pretty much be the definitive head count of those working in the above ground economy. A pair of anecdotal takes on unemployment: a co-worker's son graduated in May with a degree in engineering. They have read that 60% of the May engineering grads are still unemployed so they are funding grad school. So their son is not looking for work, but... I am of an age where many, if not most, state and federal employees are now retired but nowhere near 'retirement'. I know a few (and suspect many) of these 50 somethings (along with the younger military retirees) who expected to work are part of the 'no longer looking for work' crowd, although they are obvously in better shape than most to avoid eating dog food.

Subject: Data From: Emma To: Nat Date Posted: Sat, Mar 06, 2004 at 14:26:17 (EST) Email Address: Not Provided Message: There is enough data from the Bureau of Labor Statistics to answer your question. Also, look to the fine labor market analyses on epinet.org.

Subject: Re: Out of Work From: Pete Weis To: Econochick Date Posted: Fri, Mar 05, 2004 at 10:30:51 (EST) Email Address: Not Provided Message: I don't believe wages and salaries have increased much over the last half dozen years. Productivity gains don't seem to be finding their way into wage and salary increases. I would tend to believe it is rare when one spouse's wage increases make up for the loss of the other spouses job. Regarding those who start their own business - this would be difficult to measure. Two questions apply to this: what percentage of unemployed are actually succeeding at this and how does the income from their business compare to their previous job? Small businesses are typically supported by employment at larger corporations and businesses in their marketing area. My answer to the question in your last paragraph (I know others will disagree) is no.

Subject: Re: Out of Work From: Econochick To: Pete Weis Date Posted: Fri, Mar 05, 2004 at 13:19:07 (EST) Email Address: Not Provided Message: This morning the new unemployment number came out and I was talking to a friend of mine who is a bond trader. He didn't know the answers to my questions either. So, I accessed the DOL website - VERY interesting. I'll post the links to their statistics page and the definitions of terminology page for your reference: http://www.bls.gov/news.release/empsit.t01.htm http://www.bls.gov/dolfaq/bls_ques23.htm I'm sorry you can't just click on these links. I don't know how to do that in this message board. In the second link you will find that the DOL includes people who drop out of the ranks of unemployed by starting their own business are counted as employed. So, that answers my question. I completely agree that the other questions are very hard to answer without constant surveying. But we do know that these scenarios are true for some percentage of the unemployed and that the unemployed number should be reduced by that. Now, I realize that the one person making as much as the two combined is not common. But I know plenty of people for whom this is true (anecdotal evidence - I know). As an example, the wife was a social worker (low pay) and the husband a bank manager (high pay). She quits and he gets promoted - the promotion could easily make up her (for example) $20,000 income and she could easily say that at that level of income, it is better to tend to the teenagers! I'm not making the case that this is happening a lot. I was just wondering how often those scenarios occur - what percentage of the total 'unemployed' are dropped because they longer want to be employed. Obviously, we can't answer that on this board - it's just interesting to think about. So, we all agree that the 5.6% number is flawed - but how deeply? Twice as bad, three times as bad, or insignificantly worse? People on this board are interested in thinking about these things and I just wanted to throw that out as the other side of the coin. As far as people making as much money from their businesses, that is an interesting question but outside of the unemployment number question. I would imagine that would be an even more difficult question to answer. If you have the time and desire, you may want to check professor Stern's website. He is a labour economist at University of Virginia. I'm not sure if he has done that research but you'd think SOME labour economist out there did the research. Check out the DOL website though. It's very interesting and pretty easy to understand.

Subject: Still Out of Work From: Emma To: Econochick Date Posted: Fri, Mar 05, 2004 at 14:40:28 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/webfeatures_econindicators_jobspict Persistently weak job growth leads to labor force contraction The nation's job market was far weaker than expected last month, according to today's report from the Bureau of Labor Statistics (BLS). Payrolls expanded by a mere 21,000, but even this amount was fully accounted for by government hiring. Private-sector employment was unchanged in February, the first such month since private-sector hiring picked up last September. The persistently weak labor market continues to take a toll on wage growth, with hourly wages up only 1.6% over the past year—the weakest growth rate since 1986. In a sign that employers continue to be extremely reticent about committing to permanent hires, February's payroll gains were more than explained by the addition of 32,000 temporary jobs. Most other sectors showed small gains or losses, including manufacturing, which shed 3,000 jobs. While this is the 43rd consecutive month of employment contraction in the nation's factories, the loss of 3,000 jobs is the smallest reduction in any of those months. A particularly notable aspect of the weak labor market is the declining trend in the share of the population in the labor force, i.e., the share of persons either working or seeking work. While February's unemployment rate was unchanged at 5.6%, this reflects the fact that the number of labor force participants fell steeply last month, by 392,000, presumably due to the lack of available jobs....

Subject: Data From: Emma To: Emma Date Posted: Fri, Mar 05, 2004 at 14:43:27 (EST) Email Address: Not Provided Message: http://jobwatch.org/ Unemployment measures understate job slack Despite a steady unemployment rate of 5.6%, jobs increased by only 21,000 in February 2004, underscoring the fact that the typical unemployment measures are failing to convey the labor market's current distress. Evidence of this distress is obvious when taking into account both underemployment rates and the number of those who have dropped out of the job market altogether.

Subject: Ethnicity and Education From: Emma To: Emma Date Posted: Fri, Mar 05, 2004 at 14:52:53 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/webfeatures_econindicators_jobspict For minorities, the declines in participation rates are much larger: down 2.7 points for Hispanics and 2.6 points for African-Americans, with African-American men exhibiting a decline of -3.2 points. Interestingly, participation rate declines are larger for the more highly educated, underscoring the difficult job market for college graduates. Their labor force participation rate last month was 77.7%, down 1.6 points since the recession and the lowest level on record since BLS began publishing this series in 1994.

Subject: hmmm... From: Econochick To: Emma Date Posted: Fri, Mar 05, 2004 at 17:52:27 (EST) Email Address: Not Provided Message: Okay....I'm thoroughly depressed.

Subject: Re: hmmm... From: Joel Friedland To: Econochick Date Posted: Sat, Mar 06, 2004 at 00:06:56 (EST) Email Address: joeltfriedland@yahoo.com Message: The statistics cited verify my reality. Since I graduated Wharton undergrad in 1977, I have spent 1/3 of my time underemployed and 1/3 of the time unemployed. Although my underemployment and unemployment are primarily due to weak motivation and continual depression, even if I did search hard, I'd be unlikely to find work, now. So, I've helped improve the Bush administration unemployment statistics because I have left the labor force. Note that when I work more than 15 hours in a week, I am considered to be employed full time; the Labor Department no longer converts part-time workers to full-time equivalents. (3 folks working 15 hours each are considered 3 full time employed workers, not 1 worker with 5 hours of overtime.) Also note that every year, more and more people work flexible schedules, at their employer's direction, not their own, so many middle-aged middle-income people have no more autonomy over their working hours than their teenage children working in fast food restaurants.

Subject: Re: hmmm... From: Econochick To: Joel Friedland Date Posted: Sun, Mar 07, 2004 at 22:34:29 (EST) Email Address: Not Provided Message: Note also that people working 80 hours per week at three jobs are considered to be employed only once. It's a wash. If you want complete control of your work schedule, start your own business! You're a Wharton graduate, for God's sake!!

Subject: Harvesting Poverty From: Jennifer To: All Date Posted: Wed, Mar 03, 2004 at 17:47:42 (EST) Email Address: Not Provided Message: http://www.nytimes.com/ref/opinion/harvesting-poverty.html?pagewanted=all The Times's editorial page is focusing on the damaging impact that American, European and Japanese agricultural subsidies and trade barriers have on farmers in developing nations. The project is being led by editorial writer Andrés Martinez, who is travelling to Asia, Africa, Europe and South America to research the issue. The following is an archive of all the editorials from the series:

Subject: Globalization Score-Card From: Paul G. Brown To: All Date Posted: Tues, Mar 02, 2004 at 18:45:16 (EST) Email Address: Not Provided Message: I find the data William presents pretty compelling. Things today are much shittier for more people than they were twenty years ago. But I don't buy his conclusion that it's all somehow the fault of free trade, or the idea that the best policy response is protectionism. (Cards on table: I hold the opinion that fair trade represents the best chance many of the world's poor have for pulling themselves out of poverty, including those in the US.) To justify that conclusion, he'd need to show that none of the other historical features of the last twenty years -- disease and war in Africa, for example -- made no contribution to the mess. And there are examples -- China is one, and India is emerging as another -- where a commitment to trade is showing economic benefit (not for everyone, I'll be the first to admit). I also agree with William that the lessons of IMF failure in Latin America says something. I just don't think that failure is a lesson about trade. Many of these countries have been slow to liberalize their economies in other ways; more equitable tax systems, investment in public infrastructure, etc. Anyway - I don't see how you can blame much of the world's malaise on free trade. Before you can have free trade, you have to have a functional legal system, rule of law, etc.

Subject: Re: Globalization Score-Card From: William To: Paul G. Brown Date Posted: Wed, Mar 03, 2004 at 01:08:41 (EST) Email Address: Not Provided Message: So the fact that every country that has completely liberalized has seen their economy go straight down the tubes, but others that have only slightly liberalized have shown some improvement (usually less than before they liberalized at all) is proof that complete liberalization works. On the other hand, if one shows a close correlation between increased liberalization and increased poverty and decreased economic growth, one still has to prove that no other factors are responsible for these phenomena. I’ve got to admit, I am very far from an economist, but I find this reasoning bizarre. But perhaps that’s why I do. And no one said anything about protectionism (if by protectionism you mean tariffs). I’m talking about foreign ownership of a nation’s assets (which means western, and especially American ownership, since they’re the ones who have most of the money at present, due to historical factors that have much more to do with organized violence than organized industry), and the organization of a nation’s economy according to the demands of the developed world through the IMF and World Bank. This includes the developing world on average spending $13 on debt repayment for every $1 it receives in aid, for a debt which was usually created with little or no democratic accountability, and often under corrupt despotic leaders (many or most of whom rose to power and maintained rule through the assistance of the developed nations for their own personal benefit [notwithstanding the fact that they sometimes depose them when they disobey as so recently happened in Iraq]). Also among the demands of western capital and its international financial institutions are minimal social spending, low wages, and a concentration on export of raw materials and the simplest of manufactured goods instead of building up industry and intellectual capital, etc. The production of complex manufactured goods and the possession of technical expertise are superior means of making a living for the people of a nation, and there’s no reason one country is better suited for it than another, except that it started later in the game, an accident of history reinforced and exaggerated by western imperialism. As with all other human endeavors, far more is accomplished through cooperation than competition (I hear the cries of “socialist” from the kneejerk “capitalists” and “free marketers”), and tariffs are merely another form of competition. In my opinion, there should be an international organization to help third world countries “actually” develop, rather than an organization that reinforces the status of some countries as natural resource extraction sites and cheap labor pools. Competition among unequal participants does nothing except reinforce their inequality. If you spend your life eating well and copiously, engaging in intense physical training, and acquiring the athletic skills of boxing and wrestling, while I spend my life on the edge of starvation and sealed in a small, featureless room, if someone forces us to fight each other for our food, you are going to get stronger, and I am going to get progressively weaker. I’m not going to be able to get a share of the food by specializing in “getting my ass kicked”. And this goes for competition among people within a country, and well as for competition among countries. Countries like India and China are able to develop a minimal level of industrialization in part thanks to western capital, but they will do so only as long as these countries agree to keep wages near subsistence level and any taxes on business that might be used for social programs or infrastructure at an almost non-existent level. As soon as they let their workers unionize and ask for benefits and higher wages, or try to impose a minimum wage or increase the level of social programs for the general population, you’ll see the coattails of that capital “board flat with running” as one of my favorite writers William Faulkner would say. I might not make it back to the board for a couple of days, so feel free to have at my post (and since I'm running low on sleep at present, there's likely plenty to have at).

Subject: Re: Globalization Score-Card From: Paul G. Brown To: William Date Posted: Wed, Mar 03, 2004 at 15:42:14 (EST) Email Address: Not Provided Message: Well first, I challenge the 'fact' you state here. Off the top of my head I can't think of a single economy that has 'completely liberalized' if by that term you mean 'removed all restraints on trade and commerce' (except possibly natios like Liberia, Somalia and so on where the state structure has basically collapsed). So all of the nations whose recent history we can comment on have liberalized to some degree or another, and have followed different paths in doing so. Second, you don't have to be an economist to appreciate the point that correlation does not imply causation. The facts are that *some* countries have benefited at the same time they have embraced open, global markets and more liberal domestic economic policies. Some have not. But look, nations like China and India have avoided the war, disease and famine that has ravaged Africa, and -- in contrast to latin America, as you point out -- told the IMF and World Bank economists to go stuff their advice where the sun don't shine (currency controls in Malaysia, China managing its currency rather than floating it, India's investment in education rather than agriculture). The picture is more complex than that. That said, I buy your critique of IMF and World Bank (Though not your observation that the US is the primary source of money. The US is the world's biggest debtor nation. Most international investment capital is Asian, or European. The IMF and the World Bank have often given very, very bad advice, frequently because of the ideological views of the bankers. But the problem is that, in order for these nations to ascend from poverty, private and public investment -- which means capital -- is needed. This seems to me to be a 'lesser of two evils' situation. But then your argument turns silly. Nations have inherent advantages in production of certain goods and services as a consequence of immutable factors like geography, history, and local resources. There is no moral implication in this. In contrast to the simplistic model you seem to have in mind, comparative advantage can be different in different times and places (even if, say, Australia can produce rum at 2/3 the price of Carribean nations at the same quality, the geographic proximity of Jamaica to US and European markets gives them an inherent advantage) and it can change over time. And I would flat out deny that 'as with all human endeavours, cooperation beats competition'. Social and economic success involves a blend of cooperation and competition. To flourish, a nation needs the framework of a neutral state in place to arbitrate disputes, enforce rule of law, invest for the public good, and so on. For forty years we (the liberal west) have tried to 'help third world countries 'actually' develop', and we have proven ourselves really, really shitty at it. Indeed, the greatest social and economic progress is to be seen among those 'non-aligned' nations who told 'us' to go jump. I would take IMF capital and 'seed' it. Small loans to individuals in third world countries. By-pass the corrupt powerful elites and go directly to the street. Let the individual members of these societies compete and cooperate as they see fit. And ensure that there are open markets for what they produce. You seem to think, to judge by the way you've used the example, that unionization, and policies aimed at promoting social equitability, are *bad* things. Hell - the day workers in a Chinese garment factory band together and have their demands for a ten hour work day with Sundays off met is going to be a banner day for social justice! KR Pb

Subject: Re: Globalization Score-Card From: william reed To: Paul G. Brown Date Posted: Wed, Mar 03, 2004 at 23:04:59 (EST) Email Address: Not Provided Message: I must be speaking an ancient, dead language here without realizing it. True, a correlation is not proof (please show me any cause and effect proof in economics), but at least my argument has a positive correlation! Free market globalization has a negative correlation! I think the point is that the US government is the world's biggest debtor, not private US investors. The US still has most of the world's billionaires. They use the US government for their own purposes, and if it were to fall one day, they would simply move their money elsewhere, and the rest of us would be f*cked (though it is nice to have that big military to enforce what little the bullying of capital can't accomplish). Just as Indonesian poverty and debt doesn't bother Suharto, US poverty and debt wouldn't bother these yahoos. They don't share the patriotic fervor that they shove down the rest of our throats. What I in fact said, though unclearly, is that China and India's industrialization is 'in part' funded by western capital, along with its own. But under current 'free trade', that capital will quickly evaporate (as will the Chinese and Indian capital unless prohibited by law [as it used to be in S. Korea] - its not gonna stay out of patriotism). 'Nations have inherent advantages in production of certain goods and services as a consequence of immutable factors like geography, history, and local resources.' If you're talking about which agricultural products a nation should export (coffee or blueberries), or which language its authors should perhaps write, then your argument is correct. But that's not what we're talking about here, is it? We're talking about who designs and manufactures high-end automobiles, computers, and satellites, and who sews Disney t-shirts in a sweatshop. We'll just have to disagree on the 'competition vs. cooperation' argument. It's far too big a can of worms to open in the midst of this dialogue. But I can only stare in dumbfounded disbelief at the statement 'we (the liberal west) have tried to 'help third world countries 'actually' develop'. And if you think that I believe that 'unionization, and policies aimed at promoting social equitability, are *bad* things', then you haven't read a single word I've posted.

Subject: Re: Globalization Score-Card From: Paul G. Brown To: william reed Date Posted: Thurs, Mar 04, 2004 at 14:36:53 (EST) Email Address: Not Provided Message: Regarding dead languages, you may be more correct than you know! Disentangling causes and effects is an especially knotty problem, not just in economics but anywhere. I suggest you have a look at this usunually good primer, even though it's from a completely different field. The point is that the picture you are painting -- a policy of openning markets and economic liberalization negatively impacts social outcomes: evidence is a decline over time in global and several regional measures of social outcomes -- doesn't explain everything we observe even though a broad correlation holds. But a detailed discussion won't change your mind. So I'll switch to another mode. Look, I carry no flag for the Bushies and their ilk. I am and remain a card-carrying, bleeding heart, progressive. But I try very hard to apply reason and to learn from experience. The 'liberal west' has, over a much longer period of time than open markets have been a global cause, spent billions of dollars on aid and support to third world countries. We achieved butkas. Whenever I ask the question 'Well then, what should be done?' of unreconstructed leftists, they come up with something like what you're presenting; a laundry list of quite valid complaints about the way the west has abused its power, legitimate outrage at economic and social inequality, and vague appeals to 'cooperation over competition'. But nothing in the way of coherent strategies for solving the problems. Everyone in the world will benefit when the poorest among us have a ladder out of poverty. But every ladder has a first rung. I have enormous faith and optimism that, given a chance, the people of the third world have the desire, creativity, energy, and the ability to improve their lot. A policy that supports open markets and fair trade -- I'm not advocating a new kind of 'economic colonialism' -- is a pragmatic response.

Subject: Re: Globalization Score-Card From: William Reed To: william reed Date Posted: Wed, Mar 03, 2004 at 23:10:07 (EST) Email Address: Not Provided Message: That second sentence of the third paragraph should read: But under current 'free trade', that capital will quickly evaporate when people in China and India begin demanding higher wages, and better social programs and environmental protections.

Subject: Re: Globalization Score-Card From: Econochick To: Paul G. Brown Date Posted: Wed, Mar 03, 2004 at 17:58:53 (EST) Email Address: Not Provided Message: Paul, Your second to last paragraph made me think about the Grameen Bank in Bangladesh. It was founded by a Bangladeshi economics professor, Mohamed Yunus, and is wildly successful in providing capital in the exact manner that you mentioned. It achieves the results that we - as you say - are shitty at achieving. If I understand you correctly, you are essentially suggesting that the IMF become a micro lender of this sort. And, if the Grameen Bank is an example, this may be a much better plan. I have provided the link to the Grameen Bank below. http://www.grameen-info.org

Subject: Re: Globalization Score-Card From: Paul G. Brown To: Econochick Date Posted: Wed, Mar 03, 2004 at 20:46:16 (EST) Email Address: Not Provided Message: Oh heavens. It wasn't an original idea. The Grameen Bank's micro-loans program were exactly the kind of initiative I had in mind. A balanced look at the Grameen Bank's loans policy can be found here. Another view here. Promising as this is, it needs more scrutiny. Another piece makes the fairly obvious point that micro-loans by themselves are not enough. And this link provides an interesting overview: some positive and some mixed results.

Subject: Re: Globalization Score-Card From: Econochick To: Paul G. Brown Date Posted: Thurs, Mar 04, 2004 at 00:47:52 (EST) Email Address: Not Provided Message: Are you sure that the Grameen Bank was not the first micro-lender? I always thought it was. Huh...interesting. No, no micro-lenders are not the holy grail. But they are much more efficient at starting the, shall we say, economic 'ball' rolling for these villages. My husband went to high school in Bangladesh (his dad, a doctor with WHO, was stationed there at the time) and actually saw first-hand the effects of the Grameen Bank. If you don't have first-hand knowledge already, you would be amazed at how large a step this actually is for these villages. Anyway, I think that was a good idea you had there. Thanks for posting the links.

Subject: Re: Globalization Score-Card From: Pete Weis To: Paul G. Brown Date Posted: Tues, Mar 02, 2004 at 22:49:39 (EST) Email Address: Not Provided Message: I think an additional thought here, is that globalization does not 'float all boats' at the same time. In time labor costs in China and India will rise to an extent where 'unskilled jobs' will eventually leave their shores for other shores as it did for Japan. However, China and India have such large labor pools it may take some time for this to happen. I also have to agree with those who point out that, especially when it comes to manufacturing, other developing countries don't 'play by the same rules' (no requirements for social security and health contributions by employers, no or few environmental restrictions, etc.). But this is not about fairness, simply because fairness will have no role to play. This is about survival. I just view this as trying to 'go against the tide'. Any company which doesn't take advantage of cheaper labor when they have little pricing power and increasing energy and raw material costs will not be around in the next decade (perhaps in the next 5 years). This shift in labor resource will happen in very short order. The considerable difference in labor costs between the US and other Western industrialized nations on one side and countries such as China and India on the other will ensure that it happens rapidly. It will happen especially fast for white collar professional jobs which do not absolutely require the physical presence of the employee in the country where the company is headquartered. I think it is especially important to realize the magnitude of the problem now and to further realize the depth of the anger likely to eminate from those on the losing end. The US, for its part, needs to spend considerable effort to develope new technologies - especially when it comes to energy. We can not expect cash strapped companies to spend large amounts of capital on research. This may be sizing up to one of the greatest economic problems in history. When changing economic conditions happen rapidly they foment considerable unhappiness. I'm concerned about where that unhappiness might lead.

Subject: Re: Globalization Score-Card From: Econochick To: Pete Weis Date Posted: Wed, Mar 03, 2004 at 07:03:44 (EST) Email Address: Not Provided Message: Pete, You bring up an interesting point about the difficulties that individuals face upon losing their jobs. I certainly personally understand as I've been layed off as a result of business failure from menial labour jobs that I took to put myself through college as well as professional jobs afterward as companies merged and cut redundant staff. I went through three mergers in a two year time period and although I only lost the job once in that time period, the distress and fear can be overwhelming. There was an article in 'The Economist' about (specifically) white collar jobs going abroad - but the article talked about the job market in general. If the statistics in the article are correct, things are much better than a lot of people - on this board, anyway - believe. I have pasted in a portion of the article below and here is a link to the whole thing: http://www.economist.com/opinion/displayStory.cfm?Story_id=2446951 '...And what of China? Still piffling. Certainly, China competes with some labour-intensive American industries that have long been in decline, such as textiles and stuffed toys. In the mid-west, metal-furniture makers and small tool-and-die foundries face growing competition. Yet most Chinese imports are of consumer goods, competing with imports from other poor countries, whereas America's manufactures are chiefly capital goods. Even at their peak in 2001, the number of all “trade-related” layoffs represented a mere 0.6% of American unemployment. As for the Indian threat, “offshoring” is certainly having an effect on some white-collar jobs that have hitherto been safe from foreign competition. But how big is it, really? The best-known report, by Forrester Research, a consultancy, guesses that 3.3m American service-industry jobs will have gone overseas by 2015—barely noticeable when you think about the 7m-8m lost every quarter through job-churning. And the bulk of these exports will not be the high-flying jobs of IT consultants, but the mind-numbing functions of code-writing. Meanwhile, there is another side to the ledger. Instead of focusing on jobs lost to the globalisation of information technology, Catherine Mann of the Institute for International Economics in Washington looks at globalisation's power to reduce prices and so help spread new technology, new practices and job-creating investment through the economy.... Ms Mann concludes that, if IT software sees falls in prices, thanks to globalisation, similar to those that IT hardware has seen, then the second wave of productivity gains—notably in the service sector—could be greater than the first, which was based mainly on manufacturing. Some service sectors, such as construction and health care, are ripe for gains, because their efficient use of IT is low. Will the trend lead to jobs going overseas? You bet, but that is not a disaster. For a start, America runs a large and growing surplus in services with the rest of the world. The jobs lost will be low-paying ones, such as bank tellers and switchboard operators. Trade protection will not save such jobs: if they do not go overseas, they are still at risk from automation. By contrast, jobs will be created that demand skills to handle the deeper incorporation of information technology, and the pay for these jobs will be high. The demand for computer-support specialists and software engineers, to take two examples, is expected by the Bureau of Labour Statistics (BLS) to double between 2000 and 2010. Demand for database administrators is expected to rise by three-fifths. Among the top score of occupations that the BLS reckons will see the highest growth, half will need IT skills. As it is, between 1999 and 2003 (that is, including during the recession) jobs were created, not lost, in a whole host of white-collar occupations said to be particularly susceptible to outsourcing. Yes, individuals will be hurt in the process, and the focus of public policy should be directed towards providing a safety net for them, as well as ensuring that Americans have education to match the new jobs being created. By contrast, regarding globalisation as the enemy, as Mr Edwards does often and Messrs Kerry and Bush both do by default, is a much greater threat to America's economic health than any Indian software programmer.' Personally, I believe the public money is well spent in retraining labour to take it from low paying, manual labour jobs to higher paying (and less back-breaking) IT services and manufacturing. Subsidized education and retraining would go a long way toward easing the painful transition. Where would we get the money? We can probably OVERfund retraining just by cutting farm subsidies that totaled something like $400 Billion in the last decade. Let's face it - we are the fattest country on earth. There is no food shortage in America. And almost all the subsidies go not to small, poor farmers but to huge, wealthy farmers who already earn over $200,000 a year before subsidies. Meanwhile the subsidies encourage overproduction that drives smaller, poorer and more efficient farmers in the third world out of the market and makes them poorer still. How about if we pull free money for bloated, inefficient, rich farmers and set up training programs for those in our economy who lose their jobs to foreign competition?

Subject: Re: Globalization Score-Card From: William Reed To: Econochick Date Posted: Wed, Mar 03, 2004 at 23:03:13 (EST) Email Address: Not Provided Message: So when Chinese and Indian labor costs go up, and the capital flees, they'll also be 'free' to concentrate on 'higher paying' jobs than sweatshop worker and telemarketer. And when I lose my job, I'll be free to follow my dreams of writing novels, with out all that time-consuming, mind-deadening 'work' to worry about. I see how it works. This is a really nice theory and all, but it's not what's really happening. A small percentage of the population that was already well off are getting richer, while the majority of people are seeing their standards of living remain stagnant or decline. This is true in both the developed and developing nations. There are a lot of people that are very well paid to rationalize as benign what business wants to do for profits, regardless of its effects on the rest of society. It seems to me this is what a lot of econotalk is today. Economists for the most part teach and are taught free market theory because this is what will get them jobs: it’s what business and its handmaiden government want to hear, and it’s the message they want to promote. I don't trust those numbers on how many jobs have been lost. How are they calculated? That seems an impossible thing to give numbers for. Jobs aren't discreet, unchanging units that can be shuffled around like tokens. Individual jobs can be split up into many different jobs, combined into a single job, created where no job was before, or discontinued altogether (or changed beyond recognition). Also, keep in mind that the competition itself, the threat to workers of sending jobs elsewhere, when it becomes feasible and there's no disincentive not to, is enough to drive down wages and taxes on business and profits, etc. that might fund social programs. People are not moving into higher-paying jobs, and the government is doing little to nothing to give people real retraining. A lot of people are breaking their necks going into debt to get more education in the US right now, but this has not led to an overall rise in salaries. They are just working harder and getting more qualifications to compete for the more limited number of jobs available. This will only continue as long as people are able to go further and further into debt, which will get worse as other debt increases, competition becomes more fierce, and tuition becomes higher because of government budget cuts (because of tax cuts for quadrillionaires). I can't tell you how many Ph.D.s I've run into on the construction site when I was a carpenter that after several years of trying to find a job had given up and were the same place they would have ended up with no education at all. Bravo on your idea to cut subsidies to huge agrobusiness that drives small farmers out of business, though.

Subject: Re: Globalization Score-Card From: Econochick To: William Reed Date Posted: Thurs, Mar 04, 2004 at 00:08:01 (EST) Email Address: Not Provided Message: William, I don't have the energy to go into your whole post - mostly because you're just ranting - but a lot of that last bit's just not true. I am from a poor immigrant family and my parents, in the beginning, often worked two jobs to support us. There was no money for college, so I took loans, took a full load in school and waited tables 40 hours per week. For years and years - I was very tired. I even worked as a carpenter for a summer! But when I graduated, I was obviously able to get a much better job, worked hard and my income increased tremendously from my waittressing days. My husband had basically the same experience, except that he is the grandson of very poor small third-world farmers and poor merchants. Our educations have paid off tremendously and we aren't the only ones. Countless empirical economic studies (that is studies that are based on observed evidence rather than theoretical assumptions) have shown that dollars spent in education are returned more than 100 times over during the lifetime of the person. True, you get diminishing marginal returns with successive degrees - so your return on a PhD would not be as high as high as on your initial Bachelors degree. And I think that 'The Economist' makes the point (and I agree) that to ease the transition from working in a saw-mill to working in, say, hi-tech, less back-breaking and higher paying job requires at least a vocational education - and for people who can least afford to finance that education themselves. Since we know the pay-off from education is high, that would be a good place to invest government dollars. You're right on at least one point - the government is NOT doing it and in places where it is, it's not doing a good job. That needs to change. It is not good for anyone (inefficient) - even the 'quadrillionaires' - to have even a relatively small number of desparate people in the population. That's why every advanced country has at least some kind of social welfare system. And that's a good thing. On a personal note: most of your recent posts have been rants. You accuse whole segments of the populations of one kind of ill will or another. To claim that you know the motives of large and varied segments of the population from Economists to Corporations (that are run and owned by individuals) to Billionaires is silly. To proclaim that you know with certainty that the motives of these many different individuals are malignant is insane. It is not conducive to discussion because any discussion would essentially disintegrate into childish name calling and debate over who's the bigger a--hole. In the end everyone gets mad and no-one learns anything. Plus, people start ingoring you, writing you off as a lunatic. Based only on your posts, I think you are fully capable of presenting a strong case without maligning half the population.

Subject: Re: Globalization Score-Card From: David H. To: Econochick Date Posted: Sun, Mar 07, 2004 at 01:03:30 (EST) Email Address: Not Provided Message: You should deal with people's arguments and not attack them personally, econochick.

Subject: It's a race! From: Pete Weis To: Econochick Date Posted: Wed, Mar 03, 2004 at 22:56:57 (EST) Email Address: Not Provided Message: And I not talking about a marathon here. I view that prediction regarding the 3.3 million jobs lost to offshoring by 2015 with the same skepticism I have with the government's prediction of 2.5 million jobs to be created in 2004 or the Larry Kudlow's of the world predicting the market will go up another 20% every year. I believe the best way to get a feeling for the likely direction and size of offshoring is to consider the point of view of a corporate CEO. Obviously, this is a touchy subject and shifting your operations more and more to places like India needs to be accomplished under the 'radar screen' as much as possible. Today's robber barons (I'm not using this label in a derogatory way) are high tech titans like Gates, Balmer, Ellison and Dell. They are very much like sharks and there is always blood in the water. This is how they rose to the top and this is how they mean to stay on top - by making sure they take their bite out of their competitor before their competitor is able to take a bite out of them. These 'sharks' operate in a corporate world of paranoia. It's survival of the fittest in its purest form. These corporate heads pay no attention to economists predictions for the future. They deal in the 'here and now' and a moment's hesitation or a wrong decision can be fatal. So it was with Gates and Balmer - in the 90's, when they had to turn Microsoft around in a hurry as the landscape, being shaped by the emerging internet, was changing rapidly. They succeeded and left alot carnage in their wake. Today, India and China are rapidly changing the landscape. These two countries present both a very severe threat and a huge opportunity for US companies like Microsoft. You can bet that Gates and Balmer consider India and China their most important focus now, as they did the internet in the 1990's. As the price of computers has continually dropped, software has become a steadily larger percentage of the total cost of a new computer. The pressure to lower the price of software has become much more intense. It's likely computers and software will continue to fall in price. Microsoft and just about every medium sized to large software company and computer hardware company sees the need to get into China and India in a very big way and to do it very rapidly. Those who lose this race (believe me it's a race) will be gone, period. They all realize that they need to dominate the playing field and companies like Microsoft would like to shape the playing field. There is a very large and talented pool of high tech labor resource in India and it goes for less than half the price of equivalent talent in the US. Additionally, office space leases for less in India. The cost to construct new office space is much less in India. I believe it will not be long before Microsoft employs considerably more programmers in India than they do in the US and this will be true of many software companies. The savings are just too good to pass up. The same goes for many of the white collar jobs in the financial sector. Insurance companies having lost considerable money in the markets are looking for anyway they can cut costs to survive. This will not be a gradual, linear progression of offshoring it will be exponential. This is not a moral issue - there is no right or wrong of it. Any attempt to stop it will likely create a more rapid onset of hardship. But let's not deny that it's happening.

Subject: Re: It's a race! From: Econochick To: Pete Weis Date Posted: Thurs, Mar 04, 2004 at 00:33:18 (EST) Email Address: Not Provided Message: Pete, I don't really understand what you mean by 'sharks' and 'there's always blood' and such. I mean, I could draw my own conclusions, but I don't want to put my own definitions on your terms. Also, what do you mean by 'under the radar'? It's late, computer software and hardware markets are not my specialty and maybe I'm just to brain-dead at this hour but I would be very interested to understand your point. Are you saying that you believe that the rate of white collar offshoring will increase in the near future, rendering the 'The Economist' current figures irrelevant? And that the faster rate will exacerbate the unemployment problems in America, sharply increasing the near-term unemployment level well above the 'normal' unemployment of 5-6%? If this will happen, why should we care if it's 'below the radar'. Anyway, the 'radar' sounds like protectionist restrictions. I won't make any more guesses. I feel like I'm missing something. I guess what I'm asking is: What do you think is happening? What is the likely outcome? And what do you think the consequences that outcome are? Thanks.

Subject: Re: It's a race! From: Pete Weis To: Econochick Date Posted: Thurs, Mar 04, 2004 at 23:53:32 (EST) Email Address: Not Provided Message: Perhaps the references to 'sharks' and 'always blood in the water' was being a bit overly dramatic. It was refering to the constant, ongoing, competitive carnage in the high-tech industry. James Wallace wrote two books, 'Hard Drive' and 'Overdrive', which provide insight into the competitive ferocity of the high-tech industry. As you probably know they are about Bill Gates and the beginings of Microsoft in 'Hard Drive' and Gate's and Ballmer's refocusing on the challenge of the internet in 'Overdrive'. Anyway, anyone who has followed the rise and fall of so many high tech companies over the last 20 years realizes that corporate leaders in this industry will quickly adapt any strategy which gives them even the slightest edge. As we all know, labor is the primary cost when we are talking about most 'white collar' industries. In a corporate world where 5%-10% cost cutting is a big deal, 50% is absolutely overwhelming. And if you are head of a US corporation and you don't take advantage of this, you know that your competitor will. It should be obvious that most US companies will jump at this challenge and move very quickly. In fact, I can think of no other time in history when this kind of urgent challenge faced such a broad range of US industry sectors. We could go into details about the specific challenges to particular companies. We could talk about the growing threat of Linux as it has become very popular in India. This, of course, represents a grave threat to Microsoft and its Windows based operating system as well as all the application software based on a Windows platform and the companies which produce that software. There are many who would welcome the conquest of Windows (and Microsoft) by Linux and I don't wish to debate with these people - I'm not 'equipped' for that. Pretty much any company in the service sector must worry about challenges coming from India. The new computer/communication age has virtually destroyed geographical boundries when it comes to the commerce of services. In contrast, geographical boundaries (atleast for the time being) do provide an effective boundary for a differential in labor costs. The only effective way to deal with this is to shift corporate resources into the area of threat and turn the threat into an advantage. It's very much like the line in The Godfather' - 'I'm about to make you an offer you can't refuse'. US companies can not and will not refuse the offer. Of course, US politicians may try to put obstacles in the way. If they do, it may help them get elected in the short term, but in the long term we'll not only lose the jobs but we'll lose the companies headquartered here in the US. In fact, if I'm Microsoft or any other software, financial services, insurance company, etc., and the US puts fairly restrictive regulations on my offshoring, then I'm moving my company to India. This may sound 'Benedict Arnold' like but I wouldn't watch my company be destroyed just to get a warm feeling. And I'm no George W Bush fan. In summary, what I'm saying is - put yourself in the shoes of someone who has the responsibility of making sure his or her company survives and somehow prospers while you are facing grave threats in a rapidly changing world. I think it's the best way to gain an appreciation for the rate at which jobs will leave the US.

Subject: Re: It's a race! From: Econochick To: Pete Weis Date Posted: Fri, Mar 05, 2004 at 01:14:34 (EST) Email Address: Not Provided Message: Thank you for such a thorough explanation of your previous post. It was very informative. There are three things that I will touch on. I realize you confined your post to the high-tech industry but, of course, some industries are better suited to offshoring than others. Computer software and most computer hardware comes to mind. Some industries are less suited. Financial services comes to mind. You can outsource mind-numbing work like data collection but to do investment banking, research and institutional sales you have to be located in the US. Consulting, construction, real estate sales, tourism, recreation (like skiing), education are a few more examples. I'm just thinking 'out loud' here: I wonder if anyone has tried to quantify what percentage of US jobs are 'offshorable'. In the middle of your post you imply a good point - and one I don't see made as often as it should. You say that Indian labour is cheap for now, implying that eventually the gap between American wages and Indian wages will close. In fact, that - not growing poverty - is the theoretical outcome of free trade. By 'US politicians may try to put obstacles in the way' I assume you mean protectionist policies. That would make Microsoft (for example) less competitive, reduce revenue - forcing lay-offs (the job losses in your post). I understand. I would take the illustration further... Microsoft now faces a choice: continue to lose revenue and close down or move to India and survive. The 'protection' protected nothing. At the limit, either Microsoft closes entirely and American workers lose their jobs and the government loses the tax revenue or Microsoft moves to India and keeps a small number of American employees and the government loses all but a few dollars of tax revenue. Both outcomes of 'protectionism' are huge losses. Better to let Microsoft offshore some jobs and keep most of the US employees as well as Microsoft's taxable earnings here. This is an incredibly simplistic argument but illustrates why every economist (disclaimer: that I'm aware of) from Friedman and Mankiw to Krugman are against hinderances to free trade. And it's what make's Kerry's 'Benedict Arnold' mantra so idiotic. Here I should say that Bush makes an idiot of himself plenty too. For those ready to pounce, for the record, I favour neither party - I hate both liberals and conservatives equally. Please do not savage me in your posts!

Subject: Re: It's a race! From: David E... To: Econochick Date Posted: Fri, Mar 05, 2004 at 22:40:57 (EST) Email Address: Not Provided Message: Here is Kerry's Benedict Arnold accusation. 'A prosperity where we create jobs here at home and where we shut down every loophole, every incentive, every reward that goes to some Benedict Arnold C.E.O. or company that take the jobs overseas and stick Americans with the bill. ' Econochick here is the 'mantra'. please tell me which part of it is idiotic. It seems plain to me. John Kerry thinks that tax breaks that encourage outsourcing is bad policy. I think a fair free trade tax policy would be revenue neutral on outsourcing. Obviously a tax policy that is revenue positive on outsourcing is anti-free trade. But a policy that is revenue negative(tax breaks for outsourcing) is stupid.

Subject: Re: It's a race! From: Pete Weis To: Econochick Date Posted: Fri, Mar 05, 2004 at 10:06:09 (EST) Email Address: Not Provided Message: 'I wonder if anyone has tried to quantify what percentage of US jobs are 'offshorable'?' This is a good question and I believe it is alot more than most of us realize. I don't believe I savaged you in my post. Did I?

Subject: Re: It's a race! From: Econochick To: Pete Weis Date Posted: Fri, Mar 05, 2004 at 12:52:10 (EST) Email Address: Not Provided Message: No NO, Pete!! You didn't savage me in your post!!! I didn't mean that. In my response, I made a less than flattering comment about John Kerry. I know that people can get upset if someone says something less than flattering about the political candidate they support and things can get pretty nasty. So, it was a general plea to anyone who might read my post to not attack me for that comment!

Subject: Re: It's a race! From: Pete Weis To: Econochick Date Posted: Fri, Mar 05, 2004 at 15:00:15 (EST) Email Address: Not Provided Message: Oh, OK. Good!

Subject: Re: Globalization Score-Card From: Econochick To: Paul G. Brown Date Posted: Tues, Mar 02, 2004 at 19:09:02 (EST) Email Address: Not Provided Message: You made my point better than I did. I never ment to imply that people suffering in, for example, Africa and Eastern Europe is not compelling. That fact is simply not a compelling argument against free trade.

Subject: 30 Little Turtles From: Emma To: All Date Posted: Mon, Mar 01, 2004 at 16:46:10 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/29/opinion/29FRIE.html 30 Little Turtles By THOMAS L. FRIEDMAN BANGALORE, India Indians are so hospitable. I got an ovation the other day from a roomful of Indian 20-year-olds just for reading perfectly the following paragraph: 'A bottle of bottled water held 30 little turtles. It didn't matter that each turtle had to rattle a metal ladle in order to get a little bit of noodles, a total turtle delicacy. The problem was that there were many turtle battles for less than oodles of noodles.' ...

Subject: Nottage of Economy.com on Krugman and free trade From: Kosh To: All Date Posted: Mon, Mar 01, 2004 at 11:19:53 (EST) Email Address: Not Provided Message: Nottage comments on Krugman's recent column: 'The Trade Tightrope': 'In that spirit, let me close with a 'you can’t make this stuff up' moment. Paul Krugman, an ardent free trader, is going to pains to certify John Kerry’s free trade credentials. While helpfully reminding us that 'the two most protectionist presidents of the last 70 years have been Ronald Reagan and, yes, George W. Bush,' he assures us that Kerry has simply “proposed speed bumps, rather than outright barriers to outsourcing: rules requiring notice to employees and government agencies before jobs are shifted overseas, steps to close tax loopholes that encourage offshore operations, more aggressive enforcement of existing trade agreements, and a review of those agreements with an eye toward seeking tougher labor and environmental standards.” I’m not sure how to handle outsourcing, but I’m pretty sure a lot of damage can be done by “reviewing” previously negotiated trade agreements. Does Krugman think refighting Nafta, for instance, would be a good thing? The closing tax “loopholes” line is also humorous, mainly because the definition of loophole seems to be any tax policy that does not positively discriminate in favor of keeping services here. Krugman is justifying Kerry’s proposals to alter tax law to make international trade in services more expensive. Hmmm, in another context, Krugman might refer to that as a tariff, no? Interesting.' http://www.economy.com/dismal/pro/article.asp?aid=2668

Subject: Krugman!! From: Econochick To: Kosh Date Posted: Mon, Mar 01, 2004 at 12:18:16 (EST) Email Address: Not Provided Message: Let's face it, Republicans never achieve their stated goal of 'smaller government'. They scream 'free trade' and then can't ever get behind it 100% for fear of losing votes. In fact, I can't think of a single politician on either side who isn't two-faced. But I expect better of academics. Krugman's paritsianship drives me crazy. For example, in his discourse on Reagan he, of course, fails to mention that his deregulation of several key industries and reduction in taxes lead to one of the most sustained economic booms in US history. Krugman suspends a logical and analytical mind in favour of spewing some deeply held emotion - and all with the credibility of a Princeton economist put weight behind his lame-brained whining. Also, any time he writes for public consumption it seems that he automatically (and maybe rightfully) assumes that we are all idiots. How does an 'ardent free trader' embrace a guy (John Kerry) who says he supports free trade and then calls anyone who shifts jobs offshore a 'Benedict Arnold'? And then he writes the gibberish Kosh just posted above to justify an unjustifiable position. No doubt Krugman is smart but his political agenda undermines his credibility. As an aside interested parties, the Economist magazine ran a few stories about free trade and jobs going abroad in the past two or three issues. You can access them at www.economist.com

Subject: Re: Krugman!! From: Dddavid E... To: Econochick Date Posted: Mon, Mar 01, 2004 at 13:08:53 (EST) Email Address: Not Provided Message: Econochick - 'How does an 'ardent free trader' embrace a guy (John Kerry) who says he supports free trade and then calls anyone who shifts jobs offshore a 'Benedict Arnold'? ' I can call them Benedict Arnolds easily. Kerry makes two points. 1. Lets enforce all of the trade treaties. 2. Lets stop the $140 billion in tax incentives that cause U.S. corporations to move their headquarters to the Caribbean. I think its more than fair to call companies that moved their headquarters offshore 'Benedict Arnolds'. They are avoiding paying their fair share of costs of government. And I also think its fair to call companies that trade in goods that don't satisfy trade regulations 'Benedict Arnolds'. They are profiteering by taking advantage of an unlevel playing field.

Subject: Re: Krugman!! From: Econochick To: Dddavid E... Date Posted: Mon, Mar 01, 2004 at 15:07:21 (EST) Email Address: Not Provided Message: David- Kerry calls anyone who moves any part of their business out of America - inclcuding manufacturing jobs and service jobs 'Benedict Arnolds'. He does not reserve that distinction solely for those who incorporate in the Carribean. To be fair to those companies who do move headquarters offshore, they do not get the benefits of the protection of United States law either (I'm talking about property and intellectual rights, copyright etc. - not tarrifs). I do not know the percentage of all US companies that move their headquarters offshore but suspect that is too little to make it a pressing priority. You may already know that even the number of jobs that America has moved to other countries is a negligable amount. To illustrate my point: even if you are correct in your $140 billion number, you have to view it in the context of a $10 Trillion US annual GDP. I have not done the research, nor have I seen any but I might venture to guess that savings in tax dollars for those companies of which you speak may translate into faster and more robust growth and more jobs in the United States and elsewhere. It's just thinking in print, I'm not making statement. I think either I didn't make my point clearly or you misread it. I believe that both Bush and Kerry are wavering equally on free trade. The only one with a clear stance is Edwards - he's against it. In fact, Bush and Kerry's positions on free trade are not different. The particular protections each bends to may be dictated by their own constituants but the net effect is the same. As a strong believer in free trade, they both annoy me. What I really took issue with is Krugman himself. In the column in question, he disregards these similarities in Bush's and Kerry's position and comes out strongly on the side of Kerry without backing up his position. Never once does he mention where Bush differs with Kerry and what the likely results would be of one position or the other. Nor does he give a single example of what Bush has done to be more protectionsit than what Kerry has done or proposes to do. For example, in his column he says that he does not see Kerry's proposals as barriers to free trade - but he gives no example of Bush's proposals and how they would be! In fact, he does this to the degree that you might forget that he's an academic!! Krugman comes out on the side of Kerry without clearly stating why except that you should follow Krugman's lead because he is a mighty Princeton Economist snd you are not. Such blatant partisianship is unhelpful to his readers, who may rightfully wish to depend on Krugman to sort out difficult economic questions and arm themselves with knowlegde when it comes time to vote. Instead, Krugman is blatantly angling for an appointment in a democratic administration. He is a wolf in sheep's clothing and I am quickly losing respect for him.

Subject: Re: Krugman!! From: David E... To: Econochick Date Posted: Mon, Mar 01, 2004 at 16:47:26 (EST) Email Address: daveellis_39@hotmail.com Message: Econochick - >>To be fair to those companies who do move headquarters offshore, they do not get the benefits of the protection of United States law either (I'm talking about property and intellectual rights, copyright etc. - not tarrifs). Me – I think Foreigners and offshore companies can get and enforce US patents and copyrights. Maybe I am missing something. But it sure looks to me like a gravy train. I think $140 Billion a year is a significant sum of taxes. It would pay for 1.4 wars in Iraq. You too can get these special incentives if you pay your senator. Econochick >>Kerry calls anyone who moves any part of their business out of America - inclcuding manufacturing jobs and service jobs 'Benedict Arnolds'. He does not reserve that distinction solely for those who incorporate in the Carribean. My original comments- >>I can call them Benedict Arnolds easily. Kerry makes two points. 1. Lets enforce all of the trade treaties. 2. Lets stop the $140 billion in tax incentives that cause U.S. corporations to move their headquarters to the Caribbean. I couldn’t find your rebuttal to my point about enforcing trade treaties. Without enforcement of regulations on labor and environmental protection this will become a race to the bottom. And those who ignore human costs and environmental costs will win the race to the bottom. And the rest of the world will suffer. Why not call those who take advantage of a uneven playing field - 'Benedict Arnold's'? Paul Krugman's take on John Kerry from his column is below. Notice that he along with Kerry believe that trade agreements are not being aggressively enforced. >>Mr. Kerry's Wednesday speech on trade seemed consistent with that interpretation. He decried the loss of jobs to imports, but was careful not to promise too much. You might say that he proposed speed bumps, rather than outright barriers to outsourcing: rules requiring notice to employees and government agencies before jobs are shifted overseas, steps to close tax loopholes that encourage offshore operations, more aggressive enforcement of existing trade agreements, and a review of those agreements with an eye toward seeking tougher labor and environmental standards.

Subject: Re: Krugman!! From: Econochick To: David E... Date Posted: Mon, Mar 01, 2004 at 17:12:30 (EST) Email Address: Not Provided Message: David- I may have made light of the $140 billion. I take it back. If companies (read: TYCO) try to move offshore purely so that its criminal CEO can steal more money for himself - in other words, cheat - then that loophole should be closed. If they are not fueling free trade but robbing the United States of tax dollars, then it not productive and must be stopped. And corporate taxes are certainly a much bigger issue than income taxes as Corporate taxes accound for over 90% of US tax receipts. The whole 'Benedict Arnold' issue has gotten out of hand. First of all, I don't care what YOU call CEOs who move jobs offshore - you're not running for president. You can call them Satan for all I care. I do care what a possible future president calls them. This is a quote from one of Kerry's speaches in January: '...A prosperity where we create jobs here at home -- and where we shut down every tax loophole, every benefit, and every reward for any Benedict Arnold CEO or company that sends jobs and profits overseas.'. We have already agreed about cheating by incorporating offshore. However, sending jobs overseas is an integral part of free trade and thus I don't understand how one can claim to be 100% behind free trade (as kerry does) and call CEOs who send jobs overseas 'Benedict Arnolds'. How Krugman just ignores that is also a puzzle. See my point? Also, I never took issue with Krugman's agreement with Kerry (as your reply implies). My point was that he agreed with him without support and that he sided with kerry and against Bush again without support. And that NEITHER Bush nor Kerry are as big a supporter of free trade as they claim they are. Thus, Krugman should be indifferent between the two on the basis of free trade. However, the 'great academic' managed to side with Kerry when Kerry's side looks almost identical to the one he apposed. He never made a clear argument for Kerry over Bush. See my point? I would love to respond to the bit about labour regulations and environmental protections. However, I didn't know what you mean exactly. I also don't know what you ment about an 'even playing field'. A free trade person and a Fair Trade Federation person would have different definitions for those terms. Having a competitive advantage (certainly not a crime) implies an 'uneven playing field'. I'm afraid that to mount a rebuttal (assuming I don't agree with you) I would need examples of what you mean.

Subject: Re: Krugman!! From: Nat To: Econochick Date Posted: Tues, Mar 02, 2004 at 11:19:16 (EST) Email Address: Not Provided Message: FYI, here's a great link for a perspective on the declining corporate tax contribution and the very high contribution of FICA and SECA on the combined budget: http://www.cbo.gov/ Check out the historical data. In real dollars corporate taxes are now at the same level as 1993. So much for the boom years.

Subject: Re: Krugman!! From: Nat To: Nat Date Posted: Tues, Mar 02, 2004 at 11:36:32 (EST) Email Address: Not Provided Message: And here is one of the many reasons why the corporate taxes are falling: http://www.cnn.com/2003/ALLPOLITICS/10/22/cities.taxes/ This is one of my absolutely favorite corporate scams.

Subject: Re: Krugman!! From: Econochick To: Nat Date Posted: Tues, Mar 02, 2004 at 16:05:35 (EST) Email Address: Not Provided Message: Nat, thanks for the links. I've only had time to read the CNN article but it reminds me of the years of digging through company financial statements exclaiming 'You're doing WHAT? You've GOT to be kidding. This is LEGAL?'. I was not aware of this little trick. It would be funny if it weren't so sad!

Subject: Re: Krugman!! From: David E... To: Econochick Date Posted: Mon, Mar 01, 2004 at 17:52:39 (EST) Email Address: daveellis_39@hotmail.com Message: Econochick - I dont know the difference between a 'free trade person' and a 'Fair Trade Person'. Here is an example of my point.(and Kerry's and Krugman's). Yes, some competitive advantages are criminal (not legal). They were they were defined as illegal by the trade agreements we signed. Free Trade is a good thing. But is it good that China uses prison labor to make its products? (some of its products are you know). So obviously their labor costs are very low. This is not a level playing field. The chinese manufacturer of wireless phones has a huge cost advantage, and this cost advantage is prohibited by our trade agreements. We didnt sign trade agreements that allow the use of prison labor. But we dont enforce those trade agreements. Wholesalers who buy prison made goods in china and sell here in the states are 'Benedict Arnolds'. They have sold out our country for money. True, these 'Benedicts' have the lowest price, but somebody maybe in the U.S., maybe in Mexico, maybe in India loses his job. The only way to compete is throw people in jail, make them work, and don't pay them. That is a race to the bottom. Thank god we didnt sign treaties like that. But let's enforce them. Let's not import any more prison made products. p.s. Corporate taxes account for 7% of income tax receipts. Twenty plus years ago corporate taxes were about 25% of receipts. The change is due to smart buying of 'pages in the tax code'.

Subject: Re: Krugman!! From: econochick To: David E... Date Posted: Mon, Mar 01, 2004 at 20:33:07 (EST) Email Address: Not Provided Message: David- I find it interesting that you refuse to answer my criticism of Krugman's column but choose to take issue with things I did not take issue with. As far as Chinese prison labour is concerned - that's bad. But how do you propose to retaliate? Stop trading with China? Wouldn't China slap us with equal tarrifs? Now that would INDEED be a race to the bottom. Also, what percentage of Chinese labour does prison labour make up? There will indeed be abuses and abuses are never good things. But let's see the big picture. GDP/Capita (in real purchasing power, no less) ws up between 350% and 450% in China, India, and Thailand between 1998 and 2001. For the US that figure is 17% for the same time period. I ran those stats myself and will be happy to provide the source for the data if you want. In addition, both the United Nations and World Bank say that worldwide poverty is down and down dramatically in East Asia (China is the star there). Poverty has increased in pockets where there are civil wars and where collapsed economies are being rebuilt (read: parts of Africa and Eastern Europe). So, it seems that abuses (however nasty) are not dragging anyone down. I don't believe I've ever heard Krugman make the argument that they are - which makes me even more surprised that he's backing Kerry's arguments. In fact, I don't think he is. I think it's just partisian crap. What say you, David? As for my remark about corporate taxes making up 90% of total tax receipts, I can't find my source at the moment. It was a textbook (and I've not read a text book in years). I will find it. In any case I don't want to make this is a central point as this is not what this thread is about and because, as Robert J. Barrio writes in his textbook 'Marcroeconomics': 'We can think of the corporate profits tax as a levy on the capital owned by the corporations. But since the households own the corporations, the tax amounts ultimately to another levy on households' income from capital'.

Subject: Re: Krugman!! From: William To: econochick Date Posted: Tues, Mar 02, 2004 at 11:20:09 (EST) Email Address: Not Provided Message: The Scorecard on Globalization 1980-2000: Twenty Years of Diminished Progress ...For economic growth and almost all of the other indicators, the last 20 years have shown a very clear decline in progress as compared with the previous two decades. For each indicator, countries were divided into five roughly equal groups, according to what level the countries had achieved by the start of the period (1960 or 1980). Among the findings: · Growth: The fall in economic growth rates was most pronounced and across the board for all groups or countries. The poorest group went from a per capita GDP growth rate of 1.9 percent annually in 1960-80, to a decline of 0.5 percent per year (1980-2000). For the middle group (which includes mostly poor countries), there was a sharp decline from an annual per capita growth rate of 3.6 percent to just less than 1 percent. Over a 20-year period, this represents the difference between doubling income per person, versus increasing it by just 21 percent. The other groups also showed substantial declines in growth rates. · Life Expectancy: Progress in life expectancy was also reduced for 4 out of the 5 groups of countries, with the exception of the highest group (life expectancy 69-76 years). The sharpest slowdown was in the second to worst group (life expectancy between 44-53 years). Reduced progress in life expectancy and other health outcomes cannot be explained by the AIDS pandemic. · Infant and Child Mortality: Progress in reducing infant mortality was also considerably slower during the period of globalization (1980-1998) than over the previous two decades. The biggest declines in progress were for the middle to worst performing groups. Progress in reducing child mortality (under 5) was also slower for the middle to worst performing groups of countries. · Education and literacy: Progress in education also slowed during the period of globalization. The rate of growth of primary, secondary, and tertiary (post-secondary) school enrollment was slower for most groups of countries. There are some exceptions, but these tend to be concentrated among the better performing groups of countries. By almost every measure of education, including literacy rates, the middle and poorer performing groups saw less rapid progress in the period of globalization than in the prior two decades. The rate of growth of public spending on education, as a share of GDP, also slowed across all groups of countries. Cont. http://www.cepr.net/globalization/scorecard_on_globalization.htm

Subject: Re: Krugman!! From: Econochick To: William Date Posted: Tues, Mar 02, 2004 at 11:50:22 (EST) Email Address: Not Provided Message: Not the point of this thread. Interesting nonetheless. The above clipping makes no compelling arguments. Check the United Nations Human Development report (complete with statistics) and the World Bank. I'm sure you can find websites without my having to provide the links. At first blush, these conclusions fail to distinguish between the areas of the world that are emerging markets and the hell-holes of African nations embroiled in civil wars (and similar). The life expectancy conclusions fail to mention what part is explained by AIDS in Africa what part by alcaholism and collapsed economies of Eastern Block countries - not globalization. Also, whether accurate health statistics for such things were collected before the 1990's for those countries (I doubt it) for accurate comparisons. Reductions in child mortality rates may have slowed as a result of a lower over-all level of child mortality as a result of vaccinations and higher living standards. As infant mortality decreases the rate of decrease also decreases. Lower education rates in the worst performing group may be due to lack of reach of globalization, not because of it. Hard to concentrate on book-learnin' when you're totin' a kalashnikov. In fact, is the 'best performing group' Asia and is the 'worst performing group' Eastern Europe and Africa? There may be an actual point somewhere in there but it's not supported and cannot be drawn from what you posted.

Subject: Re: Krugman!! From: William To: Econochick Date Posted: Tues, Mar 02, 2004 at 12:11:06 (EST) Email Address: Not Provided Message: Way to skirt and misrepresent every single issue in the post and the article it links to. All the distinctions you claim don't exist are in fact made in the study. So here's how I see it: what one does is, look at the areas of the third world doing the best, and attribute that to [corporate] globalization. Look at the other areas, and brush them off by attaching an adjective or adjective phrase to them and then keep trucking hoping no one will notice. In fact, the opposite of what you claim is true. The areas of the world that most closely followed IMF and World Bank 'recommendations' (privatization and financial market liberalization), Eastern Europe and South America, fared the worst economically. Areas of the world that followed these policies least (China and Korea, for example), fared best. Here are World Bank statistics that also back this up, an organization that I've read uses a measurement of poverty that undercounts poverty over time (and they certainly have an interest in showing a decline in poverty): http://www.worldbank.org/research/povmonitor/ (see the table at the bottom of the page). For someone with absolutely no formal (and almost no informal) training in economics, I'm surprisingly unimpressed with your conclusions and your arguments.

Subject: Re: Krugman!! From: Econochick To: William Date Posted: Tues, Mar 02, 2004 at 13:11:32 (EST) Email Address: Not Provided Message: As someone who has had formal training as well as practical experience in economics, I am not surprised that one who hasn't wouldn't know how to slog through the data and conclusions. I start by pointing out to you that Eastern Europe's dire circumstance arises not from privatization and liberalization of financial markets but from the lack of political stability and rule of law - both necessary for economic growth. In other words, you have to have industry to privatize and markets to liberalize before you can blame them for driving you into poverty. China HAS followed the recommendations - albeit slowly and to a smaller, but growing, extent - AND has opened its markets fairly wide to free trade and has won. Thailand and India are two more examples. I should subsitute 'are better for it' for 'won'. The reasons for the outcome are more important than the outcome because the reasons you can control to change future outcomes. The reasons for the conclusions were not included in your post, thus you post proved nothing. I'm afraid that presenting conclusions in the absence of explanations is like saying something and then keeping trucking along hoping that no-one asks you how you got to that conclusion. Frankly, I'm puzzled by your anger. Are you upset that my position is capitalist democracy versus marxism? I'm afraid we'll just have to chalk that up to philosophical differences - I'm from Eastern Europe and know all too well the realities of that life. If you're angry that I'm clearly pro free trade, then I'm sorry for you. Most economists are pro free trade, even the very liberal ones for a reason. Paul Krugman (I have to single him out in honour of the thread) once wrote that if there were an economists' creed it would surely include 'I advocate free trade'. The last sentence was a quote from 'International Trade Theory and Policy Lecture Notes' by Peter Suronovic, 1997.

Subject: Re: Krugman!! From: William To: Econochick Date Posted: Tues, Mar 02, 2004 at 14:34:09 (EST) Email Address: Not Provided Message: 'As someone who has had formal training as well as practical experience in economics, I am not surprised that one who hasn't wouldn't know how to slog through the data and conclusions.' Well, I guess I needn't bother since you're the 'expert'. And all 'expert' economists agree on how to handle an economy, as you point out above. It's a wonder its still taught in university when it hasn't changed in two-and-a-half centuries and everyone today still agrees on all its details. You'd think they could cover it in a few classes in middle school or something. I guess you are a fan of E. European liberalization. Since you've had formal economic training, its obvious you're not among the majority of people to have suffered from the 'free market shock therapy' of Eastern Europe. You are instead either one of the minority of elites who has benefitted from the privatization and deregulation, or you moved to the western nations that are the primary beneficiaries of the liberalization of third world markets. I happen to be from the lower socio-economic class in the US and know all too well what benefits 'free market fundamentalism' and corporate globalization have brought people I grew up with. My grandfather's generation, and the older of my father's, could get a blue collar paying triple (in real dollars) what a person from that economic strata could get today. Those people now can choose from Walmart, waitress, and drug dealer. I see no more 'reasons' or 'specifics' in your posts than mine, and a lot more errors (addressing your economic posts alone). Also, I think you were the first one to exhibit anger. 'The above clipping makes no compelling arguments.' 'There may be an actual point somewhere in there but it's not supported and cannot be drawn from what you posted.' I'm not going to address your 'capitalist democracy vs. marxism' black-and-white dichotomy. It's quite clear that you are a free market fundamentalist who will label anything that doesn't agree with your theory as 'marxism', and anything that gives the economic decision making power of the world to small wealthy elite 'democracy'. I have no interest in this, only in creating the best economic system for 'all' people, now and in the future. And from what I know of Krugman's economic views, your idea and his idea of 'free trade' are the same in name only.

Subject: Econochick the winner! From: Paul G. Brown To: William Date Posted: Tues, Mar 02, 2004 at 18:17:10 (EST) Email Address: Not Provided Message: In a close bout. But - I'll take this to another thread.

Subject: Re: Krugman!! From: Paul To: William Date Posted: Tues, Mar 02, 2004 at 18:16:29 (EST) Email Address: Not Provided Message:

Subject: Re: Krugman!! From: econochick To: William Date Posted: Tues, Mar 02, 2004 at 15:10:49 (EST) Email Address: Not Provided Message: My apologies. I didn't mean to anravel you. I do hope that you did not choose 'drug dealer' from your limited choice of occupations. Speaking of which, I have to drop out of this thread and tend too my occupation. Happy trails and all the best!

Subject: Re: Krugman!! From: William To: David E... Date Posted: Mon, Mar 01, 2004 at 18:33:23 (EST) Email Address: Not Provided Message: You beat me to it. Corporate revenues represented only 7.4 percent of all federal tax receipts in 2003. With the exception of 1983, this represents the lowest level on record (these data go back to 1934). http://www.cbpp.org/10-16-03tax.htm

Subject: Re: Krugman!! From: David E... To: William Date Posted: Mon, Mar 01, 2004 at 20:15:41 (EST) Email Address: daveellis_39@hotmail.com Message: Thanks for the link. I misremebered how far back you had to go to get a 25% rate. Looks like 40 years, instead of 20 years.

Subject: Can fix Social Security? So How? From: Frans Bouman To: All Date Posted: Sat, Feb 28, 2004 at 23:57:04 (EST) Email Address: frank@ttmassociates.com Message: For Paul: Just started reading 'The Great Unravelling' which so far is pretty good. However, I'm wondering if you are still as confident that you can suggest a workable plan for saving/fixing/replacing the Social Security System. If yes, then how? Can you tie it to the loss of high intellect jobs to low cost countries and/or the dependence on illegial aliens to handle the low/no intellect jobs in this country? Chrs Frank

Subject: Can fix Social Security? So How? From: Frans Bouman To: All Date Posted: Sat, Feb 28, 2004 at 23:56:19 (EST) Email Address: frank@ttmassociates.com Message: For Paul: Just started reading 'The Great Unravelling' which so far is pretty good. However, I'm wondering if you are still as confident that you can suggest a workable plan for saving/fixing/replacing the Social Security System. If yes, then how? Can you tie it to the loss of high intellect jobs to low cost countries and/or the dependence on illegial aliens to handle the low/no intellect jobs in this country? Chrs Frank

Subject: Can fix Social Security? So How? From: Frans Bouman To: All Date Posted: Sat, Feb 28, 2004 at 23:54:54 (EST) Email Address: frank@ttmassociates.com Message: For Paul: Just started reading 'The Great Unravelling' which so far is pretty good. However, I'm wondering if you are still as confident that you can suggest a workable plan for saving/fixing/replacing the Social Security System. If yes, then how? Can you tie it to the loss of high intellect jobs to low cost countries and/or the dependence on illegial aliens to handle the low/no intellect jobs in this country? Chrs Frank

Subject: Re: Can fix Social Security? So How? From: Paul G. Brown To: Frans Bouman Date Posted: Sun, Feb 29, 2004 at 03:25:16 (EST) Email Address: Not Provided Message: Not the Paul you were looking for, but don't expect birthday boy (Many Happy Returns, BTW) reads and responds to much that is said here. But let's break up your issues: Social Security/Medicate, and trade. For starters, there's this 1996 book review. In it, PK sets out what the book says: drop benefits, raise retirement age, limit public spending on medical intervention for the end stage terminally ill (hey! the market will do it anyway!) and increase a little tax. Well, Mr Greenspan has already broached the first two. Perhaps the most enlightening thing about the Krugman review is that the Social Security train wreck could be seen a long way off. Then you might go here. It's a Krugman piece from 2001 that sets out the issues. In it, Paul quotes approvingly a Republican congressman from Arizona: 'Anyone that tells you there is a painless way to fix Social Security simply isn't telling the whole truth,'. In another column he explains the relative sizes of Bush Tax cut and the Medicare/Social Security deficits. The take away: the Bush Tax cuts are several times *larger* than the size of the social security deficit. (For giggles, regular readers might like to revisit what the inestimable Luskin had to say at the time. The funniest part is Luskin characterizing what the CBO, Treasury and now even Alan Greenspan believe as 'a pack of lies'.) Now, your second point. At the outset I'm going to object very, very strongly to your characterization of 'low/no intellect' jobs, and your linking of 'low/no intellect' to 'illegial aliens'[sic]. Intellect is a human attribute -- like how tall you might be -- over which none of us has an iota of control. But with better diet, and a better basic education, we can all be taller, or smarter, than we would otherwise be. That said [end of self-righteous sermon] I think I see what you're getting at. You might begin by reading something someone else said about Krugman and trade theory. The basic idea is that trade moves jobs around in the medium term, although in the short run there are winners and losers. Overall, the number of jobs that have gone overseas (I've seen numbers in the few hundred K region) are a drop in the bucket relative to the 4 million jobs we're missing. (Note that slide shows that between 3 and 4% of the population are now out of work. 1% is about 2.9 million people, but 62% is very high, so 4 million feels about right.) Anyway, hope this helps. Basically, we're either going to need to raise taxes to close both the deficit and the social security gap, or else we will simply abandon social security and medicare. Hope this helps!

Subject: 'Heading for a fall, by fiat?' From: Pete Weis To: All Date Posted: Sat, Feb 28, 2004 at 13:08:46 (EST) Email Address: Not Provided Message: An article yesterday (Feb 26) on Economist.com entitled 'Heading for a fall, by fiat?', talks about the rise in the dollar price of precious metals, base metals, and commodities 'even though official inflation is low'. It gives a short history of what led to a fiat money system. The article goes on to say, 'Japan's attempt to coax its economy back to life have left it with a gross national debt of some 160% of GDP, the highest of any big country.' 'No country has tried harder to debase its currency.' Of course, the US only includes a small portion of its total obligations in its reported 7 trillion dollar gross national debt, which amounts to just under 70% of GDP. As the article points out - 'the present value of the American government's future obligations, taking into account promised pensions and health-care benefits, is a staggering $45 trillion' (over 400% of US GDP). The article further states - 'In theory, such debts would not be tolerated for long by investors, since the easy way out for central banks is to 'monetise' them with inflation'. 'Bond prices would fall, and thus yields rise, as investors worried that they would be paid back in debased currency.' 'But capital markets currently seem oblivious to spiralling debts.' There is also mention of Paul Volker's 1979 'saturday night special', where he 'raised interest rates sharply to clamp down on inflation'. When you look at the situation we have today, the very low interest rates and huge increases in money supply have led to inflated housing and equity markets. This was not the case in the 1970's. Herein lies Greenspans terrible predicament - if he raises interests rates sharply to support a rapidly dropping dollar and concurrent uncontrollable rise in inflation (if it begins to occur), as did Paul Volcker in 1979, he could set off both a housing and equity market collapse. And he has gone on record as saying 'it's a good thing consumers have been able to extract equity out of rapidly increasing home valuations to support the economy'. However, if he doesn't increase rates himself, the bond market will do it for him anyway as bond investors (foreign or otherwise) will finally realize (as the US government continues to spend way beyond its means and the current account deficit continues at heady levels) that (a) their dollar denominated bonds are actually going down in value and (b) future interest rates are likely to be higher (meaning - why buy a bond now when you can buy one later paying a higher yield?). Isn't this part of what Paul Krugman was saying in 'Thinking About The Liquidity Trap' ? In his concluding remarks he talks about the expectations of the private sector. If investors finally begin to anticipate a continued fall in the dollar and interest rates will go higher in the near future and stay higher, then the 'liquidity trap' has sunk it's teeth.

Subject: The liquidity trap is a possibility From: David E... To: Pete Weis Date Posted: Sat, Feb 28, 2004 at 15:21:15 (EST) Email Address: daveellis_39@hotmail.com Message: Paul Krugman's take on liquidity trap - http://www.wws.princeton.edu/~pkrugman/zero.html In this article, Paul Krugman talks about falling inflation expectations (and even deflation expectations) being the trigger that moves demand down. Because the government's cost-of living calculations do not show the price inflation in housing and energy we have a situation where reported inflation is very low. But truly though, inflation is high when housing and energy costs are included. It is unrealistic to expect that price inflation in housing can continue, so it is reasonable to assume that we are close to a Krugman's liquidity trap condition of falling inflation expectation. In Greenspam's last appraisal he moved from an equal risk of deflation/inflation to a slightly greater risk of inflation. The reason for his improvement in prospects was the 4th quarter spurt in growth. The growth spurt has become much more modest. Recent information is conflicted, consumer sentiment is down and earnings look good. To me our situation looks similar to Japan's during the its first few years after the collapse of the Nikkei index. The similarity is the weakness of response to tremndous amounts of pump priming. What should we do? John Maynard Keynes (though there is no evidence that he actually said it) states ‘the market can stay irrational longer than you can stay solvent’. Japan has managed to keep its economy growing with massive amounts of stimulus. Possibly, we will be able to do the same. Verifying my quote from Keynes I ran into an interesting Aussie post on speculation and bubbles. http://mentalspace.ranters.net/quiggin/archives/001478.html

Subject: Re: The liquidity trap is a possibility From: Pete Weis To: David E... Date Posted: Sun, Feb 29, 2004 at 14:11:09 (EST) Email Address: Not Provided Message: As you point out - 'Recent information is conflicted, consumer sentiment is down and earnings look good'. But with energy prices rising steeply you wonder how long earnings will keep improving. The irony - while large increases in money supply stimulate the economy (as they did with GDP in 2003), they also served to substantially increase the dollar cost (due to a falling dollar) of energy and raw materials used by US companies to manufacture their products. The falling dollar is supposed to make US products cheaper but China and Japan won't 'cooporate' prefering to buy US securities while 'cheapening' their own currencies. Looks like Europe is now about to be dragged along. The big question - will the US consumer be willing to 'belly-up to the bar' and pay the inevitable higher dollar costs required to offset the higher material and energy costs for manufacturing, shipping, storing and retailing US products? If not, can US companies absorb the extra costs, hold pricing levels, and still remain in business? All of this is perhaps another facet of the liquidity trap (not addressed by Paul Krugman in 'Thinking About The Liquidity Trap'). The idea, here, is that if all this liquidity doesn't find its way into higher wages and more jobs for consumers than the higher consumer debt (through borrowing) needed to cover the higher costs of production can only last so long before it runs out of 'gas'. One article by an Aussie economist (I read it long ago and don't remember by whom or where) offered, partly in jest, that the only successful way to inject liquidity into an economy is to give consumers across-the-board wage and salary increases of 10% or more on a continuing annual basis until the threat of deflation is gone. Anyway, my original reference to Paul Krugman's article on the liquidity trap related more to the bond market. The first paragraph in his concluding remarks states the following: 'The whole subject of the liquidity trap has a sort of Alice-through-the-looking glass quality. Virtues like saving, or a central bank known to be strongly committed to price stability, become vices; to get out of the trap a country must loosen its belt, persuade its citizens to forget about the future, and convince the private sector that the government and the central bank aren't as serious and austere as they seem.' Perhaps I was 'warping' this into my own thoughts. When he said 'private sector' I thought of bond investors needing to be 'persuaded' that despite increased liquidity that central banks need not and would not steadily increase interest rates in coming years. Buffet sold $9 billion in bonds at Berkshire-Hathaway in the spring of 2003 because he believed interest rates had likely reached a bottom and would steadily rise over the coming years making the trading of bonds (most bonds are traded nowadays) a losing investment. Any panic selling in the bond market could become a grave threat to the economy.

Subject: Re: The liquidity trap is a possibility From: David E... To: Pete Weis Date Posted: Mon, Mar 01, 2004 at 12:39:43 (EST) Email Address: Not Provided Message: Your comments on bonds reminded me that I just read that Bill Gross has pulled his personal funds out of his bond funds. His reason is, of course, that bonds can only go down. It isnt only the bond market that looks different than ever before. How strange that Greensap, chairmen of the committee that fixed Social Security in 1983, says, 'Whoops, forget your $1.4 trillion in prepayments on social security, we have to cut social security benefits now!'

Subject: Re: The liquidity trap is a possibility From: Pete Weis To: David E... Date Posted: Mon, Mar 01, 2004 at 22:48:17 (EST) Email Address: Not Provided Message: David. Your comment about Social Security points to a big fallacy regarding the Reagan years. It's often pointed out by Reagan admirers that he reduced income taxes for the middle class. While there may have been some small reductions in income tax for middle class wage earners, Social security taxes were jacked up significantly. Of course it's those who earn wages and salaries who pay into social security and not those who extract income from dividends and investments. The Social Security taxes were targeted at the middle class, and you are right it's quite ironic that the very man Ronald Reagan appointed to be chairman of the federal reserve (who oversaw this boost to social security taxes, presumably to save it) now advocates reducing social security benefits. Another fallacy that seems to survive out of the 'Reagonomics' era is that budget deficits really don't matter. The government spent, literally like there was 'no tomorrow' (mostly on defense) during the '80's. Bush senior cut much of the spending and ('read my lips') raised taxes in an attempt to right the ship. But the hangover was too much and an early '90's recession cost Bush his job. I'd like to give Clinton credit for the turn around, but it was much more the booming computer/internet phenomenom as well as investment money shifting from Japan, Asia and Europe to the US that did the trick (which turned into a bubble). Now we're left with the massive budget deficits of the Reagan years on which we are mounting further massive deficits.

Subject: Re: The liquidity trap is a possibility From: Maurice Allais To: Pete Weis Date Posted: Tues, Mar 02, 2004 at 17:03:50 (EST) Email Address: nma@hotmail.com Message: A propos, Kudos for David and Pete, very interesting debate with lucid economical analyses.

Subject: PENTAGON SOUNDS ALARM ON GLOBAL WARMING From: EZ To: All Date Posted: Thurs, Feb 26, 2004 at 11:13:18 (EST) Email Address: Not Provided Message: 'THE PENTAGON SOUNDS THE ALARM ON GLOBAL WARMING; WHY ISN’T PRESIDENT BUSH LISTENING?' By Arianna Huffington If he’s smart enough to use it, the Democratic nominee may have just been handed the perfect cudgel with which to pummel President Bush — and cripple Karl Rove’s attempts to position his man as America’s go-to guy on national security. The weapon in question is a new report on the grave and gathering threat posed by global climate change — and the potentially cataclysmic consequences of the Bush administration’s obstinately ignorant approach to global warming. And the thing that makes the report so frightening — and the prospective bludgeon so crushing — is that it wasn’t authored by some crunchy granola think tank or a band of tree-hugging EarthFirsters, but by the U.S. Department of Defense. That’s right, the Pentagon — Rummy’s playpen. In fact, the report, which was slipped to the press earlier this month after being kept under wraps by the White House for four months, was commissioned by Andrew Marshall, a legendary DOD figure, nicknamed “Yoda” for his sagacity. As head of the Pentagon’s secretive Office of Net Assessment, Marshall has offered national security assessments to every president since Richard Nixon. And this latest assessment pegs climate change as a far greater danger than even the scourge of international terrorism. Dryly entitled “An Abrupt Climate Change Scenario and Its Implications for United States National Security,” the report reads like the plot summary of the upcoming Dennis Quaid doomsday flick, “The Day After Tomorrow,” in which global warming pushes the planet to the edge of anarchy and annihilation. But this scenario is not science fiction. According to the Pentagon study, the question is not if abrupt climate change will happen, but when. It could be, according to the report’s authors, as soon as the next three years, with the most devastating fallout potentially occurring between 2010 and 2020. At that point, we could find ourselves in the midst of a new ice age in which mega-droughts devastate the world’s food supply, drinkable water becomes a luxury worth going nuclear over, 400 million people are forced to migrate from uninhabitable areas, and riots and wars for survival become commonplace. I believe that would qualify as a Red Alert in Tom Ridge’s color-coded book. But the Bush White House remains unwilling to address — or even acknowledge — this looming peril. Instead, the oiligarchs in the administration continue to fiddle while the atmosphere starts to burn, routinely ignoring scientific evidence and international consensus, and casting a questioning eye on the very idea, let alone the fact, of global warming. It’s a stance that has warmed the hearts — globally, no doubt — of the Bush Pioneers and Rangers in the oil and energy industry, making them feel very generous indeed. As last week’s release of a scathing letter signed by 60 prominent scientists — including 20 Nobel laureates and former science advisers to both Republican and Democratic administrations — makes clear, the Bush administration has made an art out of ignoring science. Particularly when it comes to the issue of global warming. Who can forget the president’s famous CO2 flip-flop, or the way the White House tried to force so many changes to a section of an EPA report dealing with climate change that Christie Todd Whitman finally threw up her hands and decided to eliminate the section on global warming altogether? But blinding the voters with pseudo-science may no longer be an option now that the Pentagon report threatens to put the issue front and center — and reframe it as a key component of our national security debate. This is particularly good news for John Kerry, should he prevail, given his long history of leading the charge in the Senate to cut down on greenhouse gases by raising fuel efficiency standards for cars and trucks. The president, of course, has done just the opposite, giving Kyoto the kiss-off, and pushing through unconscionable loopholes that reward gas-guzzling monster SUVs and allow carmakers to effectively reduce fuel economy for millions of the vehicles they sell. One of the defining traits of leadership is the ability to see not just the crisis right in front of you, but the one lurking around the next corner. Bush’s steadfast refusal to act upon the potential desolation that awaits us if we do nothing to confront global warming makes him a major national security liability. Everyone in the Bush administration acted shocked and surprised when 9/11 happened — even though there had been red flags aplenty warning of al-Qaida’s evil intentions. Well, let there be no surprise this time. We have all been warned. While the Pentagon is sounding the alarm on an environmental Armageddon, the president is covering his eyes, crossing his fingers, and whistling about the “national importance” of a constitutional amendment banning gay marriage. The Democratic nominee needs to remind the White House — and the American people: It’s not nice to fool with Mother Nature. © 2004 ARIANNA HUFFINGTON. DISTRIBUTED BY TRIBUNE MEDIA SERVICES, INC.

Subject: Re: PENTAGON SOUNDS ALARM ON GLOBAL WARMING From: byron To: EZ Date Posted: Sat, Feb 28, 2004 at 23:16:54 (EST) Email Address: bluefin76020@yahoo.com Message: I don't know why the media hasen't picked up on this. I really think yhey are somewhat controlled by the White House. I have sent letters to local newspapers, but they are mostly republican. Every once in a while they will print my article, but only if it is not controv- ersial.

Subject: Greemspan House Commitee address From: Richard John Walters To: All Date Posted: Thurs, Feb 26, 2004 at 04:17:58 (EST) Email Address: richardjwalters@netzero.net Message: Didn't anybody watch Greenspan today? In his prepared remarks states that solving the current budget deficit crisis requires a cut in social security benefits. When asked directly to comment on the repeal of the estate tax (or increase the cap to $3 million for individuals) he responds, 'I've struggled with this . . . I just don't have any comment. . . ' Social Security is presently solvent. More workers will arrive via immigration or birth (if the jobs aren't outsourced). Krugman has already stated figures to the contrary are misleading. NOBODY ON THIS WEBSITE COMMENTS ON GREENSPAN!?!?! Fewer individuals are covered by pensions, with fewer still for the future. It's obvious that the current deficit is the result of decreased revenue that is the direct result of Bush tax cuts, not social security. Doesn't anybody care?

Subject: Re: Greemspan House Commitee address From: Paul G. Brown To: Richard John Walters Date Posted: Thurs, Feb 26, 2004 at 17:00:13 (EST) Email Address: Not Provided Message: The way I read it, Greenspan is a patriot, and apparently someone who gives a damn about public policy. Not because the policy changes he advocated -- decreasing retirement benefits -- is the right thing to do, but because what he did with his testimony was to point at the warm-turd-on-the-plate everyone was ignoring and say, 'Hey! Look! A turd!' Reading Brad DeLong on the Suskind/O'Neal book, it seems to me that the public policy wonks in the administration -- Greenspan, Powell, Whitman -- were out-maneuvered early by the 'mayberry machiavellis'. They over-estimated the integrity and independence of Cheney, the competence of Rice, the willingness of Rove to compromise when politics and policy were in conflict, and the intellect and character of the present POTUS. It's purely a guess, but my feeling is that in his private moments, Greenspan must feel a bit disappointed. What he did before the house committee was to state the bleedin' obvious: but it's news the Bushies (they ain't even honorable enough to call Republicans) don't want to talk about. Greenspan has set off a discussion. Andrew Marshall's Pentagon study of the impact of global warming has started another. Honorable conservatives aren't just manning the life-boats: they're drilling holes in the bottom of the boat.

Subject: Re: Greemspan House Commitee address From: Pete Weis To: Paul G. Brown Date Posted: Thurs, Feb 26, 2004 at 23:04:02 (EST) Email Address: Not Provided Message: Greenspan may have eposed the turd (and perhaps helped to hide some others) but the federal government intends to wrap that turd and all the others in nicely printed dollars. Few may want those dollars after the wrappings have been completed. We here in the US will be stuck with them when it's time to unwrap.

Subject: Re: Greemspan House Commitee address From: Nat To: Richard John Walters Date Posted: Thurs, Feb 26, 2004 at 10:46:24 (EST) Email Address: Not Provided Message: I agree with you 100%. This is one of my favorite topics, one of the reasons I surf Krugman's columns and this message board. I cannot imagine Greenspan's motivation for his recommendations. I can imagine him thinking this, I just cannot understand why he would bring it up now. Our so-called political leaders are allowing our ballooning federal budget deficits to damage our ability to meet our future debt obligations. We have many creditors, including the boomers who through their working prime (the last 22 years) have paid extra into the system to help cover the generational shortfall. Shorting the boomers seems to be the path of least resistance, I hope a political miscalculation. Mr. Greenspan is saying it is better to transfer trillions of future dollars owed to many millions of recipients so that the upper few per cent of our society can benefit. Most people do not understand how the two budgets are entangled and what they don't know will hurt them. I actually think Greenie's coughing up a fiscal hairball will help people better understand this situation.

Subject: Re: Greemspan House Commitee address From: Pete Weis To: Richard John Walters Date Posted: Thurs, Feb 26, 2004 at 10:42:25 (EST) Email Address: Not Provided Message: In previous threads we've talked about the great transference of wealth to the upper one percent and how this is and will continue to reduce consumption in this economy - see thread on 'Execs vs grunts'. A reduction in social security benefits is merely a continuance of this, as is an unwillingness by Greenspan to address the estate tax issue. An article in Reuters today stated 'personal bankruptcies for all of 2003 rose 5.6 percent...'. This flies in the face of Greenspan's testimony about how much better the consumer was doing with his finances in the last year. Guess all those 'tax reductions' for the middle class didn't quite do the trick!

Subject: Re: Greemspan House Commitee address From: WRS To: Pete Weis Date Posted: Fri, Feb 27, 2004 at 09:26:24 (EST) Email Address: Not Provided Message: You might want to read the actual Greenspan testimony on debt instead of relying on Reuters simplistic economics reporting. Here's the link: http://www.federalreserve.gov/boarddocs/speeches/2004/20040223/default.htm Greenspan says bankruptcies are a poor measure of financial health and instead refers to debt service, which the Fed tracks. Overall, he describes manageable debt service, largely due to low interest rate savings. Levels should fall as the economy improves. But if rates were to rise, then we'd need to take another look.

Subject: Greenspan is on crack From: Me To: WRS Date Posted: Tues, Mar 09, 2004 at 08:07:31 (EST) Email Address: Not Provided Message: I think Atrios best summed it up when he asked what kind of koolaid Greenspan is drinking. Recently, Greenspan has encouraged people to get variable interest rates on their home mortgage. Indeed, many people, according to Atrios, have financed their home using a variable rate rather than a fixed. When the interest rate goes up, people who can't afford their homes will be people who REALLY can't afford their homes, and if they overbought and can't sell, they will end up in bankruptcy court and finally, a cardboard box. I saw an interview with Donald Trump. He was asked about the economy. He gave the patent GOP answer: 'it's looking good.' But he added, if anyone was paying attention: 'If the interest rates go up, all bets are off.' I for one feel as if we are living in a house of cards. One false move and everything will end up on the floor.

Subject: Re: Greemspan House Commitee address From: Pete Weis To: WRS Date Posted: Fri, Feb 27, 2004 at 10:06:58 (EST) Email Address: Not Provided Message: I wonder if that average debt service isn't a misleading number. We know that just under 40% of homeowners own their homes free and clear and the remaining 60% have little equity in their homes and rather high monthly payments. Just over 40% of credit card holders carry no unpaid balance on their credit cards while nearly 60% carry high unpaid balances. There seems to be a split among savers and spenders. The steadily increasing bankruptcy rate in this country seems to highlight this split. Are the spenders running out of 'steam'? This last Christmas retail sales seemed to show that.

Subject: NYT colums From: someone To: All Date Posted: Thurs, Feb 26, 2004 at 02:29:00 (EST) Email Address: Not Provided Message: Hi Pk hasn't written any colum since the 17th Feb. Does anyone know why, and when he'll resume the good work?

Subject: Vacation From: Emma To: someone Date Posted: Thurs, Feb 26, 2004 at 16:14:18 (EST) Email Address: Not Provided Message: Please please come back soon!

Subject: 1980 Chrysler Bailout From: Pete Weis To: All Date Posted: Wed, Feb 25, 2004 at 12:56:36 (EST) Email Address: Not Provided Message: Tuesday's article in the New York Times about the 'tired Saudi oil fields' added an exclamation point to a previous thread on these boards about reaching the downward slope of world oil supplies. Numerous news reports today and yesterday predict gas to reach $3/gal at the pump by this summer. Even if it only gets to $2.50 a gallon this is a bad situation for US automakers. It brings back memories of the 1970's. Chrysler was a US automaker well known for its large gas guzzling luxury cars. But rising fuel prices combined with competing fuel efficient Japanese autos left Chrysler teetering on the brink of bankruptcy. The federal government, of course, provided a bailout for Chrysler. GM also came close to bankruptcy and barely avoided the need for a bailout. The present sudden increases in gas prices couldn't come at a worse time. We now have such a glut of vehicles in the US, they exeed the total number of driver's licenses. Auto manufacturers have been surviving more off their financial services divisions (GMAC Financing, etc) and losing money in auto sales (Ford lost over 700 million in Q4, '03). US automakers have increasingly geared their manufacturing to meet the demand for fuel hungry trucks and SUV's. A demand they fed through 'Madison Avenue'. But consumer demand is very fickle, and history shows (as it did with Chrysler in the '70's) that the consumer changes his tastes much faster than US automakers can retool their factories. The US automotive industry directly and indirectly accounted for a large percentage of total manufacturing jobs in the 1970's. Now with the loss of so many manufacturing jobs overseas, US automakers likely represent an even larger percentage of today's total US manufacturing job market. GM has such a large pension fund liability (over 70 billion) that it's been refered to as a 'mutual fund' with an auto company attached. If I had been one of those who bought some of the 19 billion in GM bond offerings (used to shore up their pension plan) recently, I'd be hoping the government will once again come to the rescue if necessary.

Subject: Re: 1980 Chrysler Bailout From: SK To: Pete Weis Date Posted: Thurs, Feb 26, 2004 at 00:58:50 (EST) Email Address: Not Provided Message: My 2c on this: The same can be said about the housing bubble in the US. The rate of new home construction is outpacing growth in number of families. Residential housing starts are running close to a 2 million annual rate - with the number of families expanding at half that rate. This is likely to come back and haunt home buyers in the decades to come. I wonder if I should have posted a new topic?

Subject: Re: 1980 Chrysler Bailout From: Paul G. Brown To: SK Date Posted: Thurs, Feb 26, 2004 at 17:28:28 (EST) Email Address: Not Provided Message: Greenspan made some reference to the housing market in his testimony too. He pointed out that, as quasi-government enterprises, with the 'implicit' support of the US treasury, Fanny Mae and Freddie Mac have access to funds at rates their underlying portfolios don't justify. This has the effect of distorting capital allocation. Faced with a choice of investing in some kind of long term capital good or in a portfolio of mortgages, financial types crank the numbers and come to the conclusion that the 'lower' risk of Fanny & Freddie is decisive (while in the strict letter of the law, Freddy & Fanny are no more or less risky than any other financial institution). This mis-allocation of funds is partly what is fueling new-home starts.

Subject: Re: 1980 Chrysler Bailout From: Pete Weis To: SK Date Posted: Thurs, Feb 26, 2004 at 10:22:01 (EST) Email Address: Not Provided Message: Agree with your 2c, SK. See thread entitled 'Snake Oil Salesmen' below.

Subject: Re: 1980 Chrysler Bailout From: E To: Pete Weis Date Posted: Thurs, Feb 26, 2004 at 11:24:39 (EST) Email Address: Not Provided Message:

Subject: catastrophic climate changes From: byron To: All Date Posted: Tues, Feb 24, 2004 at 23:33:34 (EST) Email Address: bluefin76020@yahoo.com Message: Has anyone read the recent pentagon report on dramatic worldwide ecosystem changes? This report was commissioned by Andrew Marshall, a strategist and futurist who has advised the Pentagon for 30 years. This report describes rapid climate change over the next 20 years. From food shortages to violent storms,mass human migrations and wars for survival. The study suggests that the Bush admin reverse its position on climate change immediately. The Bush admin has yet to publicly acknowledge the study, or reverse any of its positions on global warming. Just last week, the Union of Concerned Scientists issued a report on behalf of over 60 scientists, including 20 nobel laureares, accusing the Bush anmin of syatematically disyorting scientific findings to serve policy goals on the enviroment, health, biomedicine and nuclear arms. any take on this?

Subject: Re: catastrophic climate changes From: Pete Weis To: byron Date Posted: Wed, Feb 25, 2004 at 10:47:27 (EST) Email Address: Not Provided Message: Byron. Where did you read this? I read the same article in two London papers, The Observer and The Guardian. I've not seen it anywhere else. Although I believe environmental concerns are of high importance, this alleged report seems a bit on the outrageous side - predicting that drastic environmental changes are to happen in the next 20 years. I'm skeptical about the authenticity of this report. We'll see if it ends up in more main stream media - London Times, New York Times, etc.

Subject: Re: catastrophic climate changes From: byron To: Pete Weis Date Posted: Thurs, Feb 26, 2004 at 23:24:40 (EST) Email Address: bluefin76020@yahoo.com Message: I got it off a site called BushGreenwatch.org It seems that all the news today has to come from the internet. The news media will not print any of it.I guess the are controlled by the government.

Subject: Re: catastrophic climate changes From: Nat To: Pete Weis Date Posted: Wed, Feb 25, 2004 at 12:53:07 (EST) Email Address: Not Provided Message: Yeah, it's in an article in Fortune. Just do a search on something like 'marshall pentagon global warming' and it will show up. The point of the article is that recent discoveries appear to show sudden climatic swings and some models pin it on the shutdown of the Gulf Stream that moderates the northern hemisphere. This leads to a very cold Europe and a very hot equator in very short order.

Subject: Re: catastrophic climate changes From: Nat To: Pete Weis Date Posted: Wed, Feb 25, 2004 at 12:42:02 (EST) Email Address: Not Provided Message: How about Yahoo...? It was front page Yahoo a few days ago and a link led to Fortune magazine, I recall. It is real, apparently. But I just went looking for it and couldn't find it. I'll try again later.

Subject: Re: catastrophic climate changes From: economchick To: Nat Date Posted: Wed, Feb 25, 2004 at 15:38:40 (EST) Email Address: Not Provided Message: I read about this and even saw a program about this 'conveyer belt' at least a couple of years ago. The only thing is that the conveyer belt last stopped suddenly about 10,000 years ago and it happened within a generation (15-20 years) and brought on an ice age (England became a frozen wasteland, etc.). One thing, though...there were no cars back then, no frion, no pollution. So, scientists are not sure they can pin it on human pollution rather than a natural earth cycle. Scientists cannot find a clear correlation.

Subject: Re: catastrophic climate changes From: Pete Weis To: economchick Date Posted: Wed, Feb 25, 2004 at 19:41:36 (EST) Email Address: Not Provided Message: Although the reasons for the slowing in the 'conveyor belt' have not yet been established, it is suspected by some scientists that global warming has a role. Apparently the high concentration of salt in the North Atlantic is the driving force behind the conveyor belt and it's the higher density of this salty water which causes it to sink and thereby results in the flow of water. It's believed by some scientists that global warming has accelerated melting of the arctic ice cap which has resulted in a 'diluting' of the North Atlantic waters which reduces the density of the surface waters (which reduces the sinking) and thus the flow rate. I read a report regarding measurement comparisons of the flow rate of the North Atlantic portion of the conveyor belt taken over the last 50 years. The measurements show a '20% drop' in the flow rate during this period. But the alarming part of the report stated that over half the measured change in flow rate has occured in the last '5 years'. The Pentagon report is apparently a 'worst case scenario'.

Subject: Re: catastrophic climate changes From: Nat To: economchick Date Posted: Wed, Feb 25, 2004 at 18:38:20 (EST) Email Address: Not Provided Message: All true. However, a significant point is that mother nature's history is not necessarily measured in millenia. Global warming may not be something like our budget deficit, something that will be passed on to some future generation for resolution, but it might actually seriously impact those of us alive today. Oh, Mr. Greenspan just moved the deficit resolution pain a generation or two sooner. I guess the Bush tax cut for jillionaires will be paid for by a cut of our Social Security retirement and Medicare. Evidently a trillion dollar trust fund surplus isn't worth the paper it's written on.

Subject: 'Fair' Trade Organization From: Econochick To: All Date Posted: Tues, Feb 24, 2004 at 17:02:34 (EST) Email Address: Not Provided Message: I just read their 'manifesto'. This John Cavanagh claims to be an economist but writes as though he has never been face to face with a supply/demand curve. The language certainly inflames but I could find no backing for any of his claims. How exactly is poverty on the rise in countries that practice free trade when GDP/capita is increasing along with health spending, school enrollment and telephones lines? What is so good about subsistance farming that the FTO supports so heartily? How does closing the doors to companies who want to employ heretofore unemployed people help them out? Worse, how is it better to negotiate a cushy contract for less than half of the potential labour force while letting the rest of the citizens starve rather than work in larger, less cushy factories and eat? I don't understand why the 'fair' trade thing is so popular. Does anyone have any comment?

Subject: Re: 'Fair' Trade Organization From: Mik To: Econochick Date Posted: Thurs, Feb 26, 2004 at 18:20:10 (EST) Email Address: Not Provided Message: I have not read the manifesto. Can you please post a link for it? The comments that I can make is that we are definately moving towards a poorer world. Although GDP has been on the rise in developing countries, so has the population (at a faster rate). Thus the GDP per capita has been on a decline. This is stressful as it appears we are simply not winning the war on poverty and it appears poverty is on the rise within our own borders. I am curious to see the issues and comment related to subsitence farming etc. In my opinion, there are some issues about free trade that doesn't seem to gell. On the one hand the developed countries talk about promoting free trade but on the other hand, let's be honest, the more free trade we have, the more we will export jobs out of the developed world. In other words, as much as we would like to see a better environment for the developing world, the better off they are the more threatened we may well be... comments?

Subject: Re: 'Fair' Trade Organization From: econochick To: Mik Date Posted: Thurs, Feb 26, 2004 at 19:42:34 (EST) Email Address: Not Provided Message: But see, that's just it. Poverty is on the decline, according to both the United Nations (Human development Report) and the World Bank. It is on a sharp decline in Asia - where we are exporting unskilled jobs - and there are pockets of increases in poverty in the war zones of Africa and as a result of rebuilding collapsed econcomies in the former Eastern Block. I did more research. GDP/Capita is on the rise in almost all countries. I specifically calculated the increases for China, Thailand, Taiwan, India and even Zimbabwe (although the 'Mugabe effect' may not have appeared yet). From 1998 to 2001 the GDP/Capita in purchasing power parity dollars (that is the real buying power of citizens) INCREASED between 350% and 450%! In case you're interested, the increase was 17% in the US, a huge number for the larget and most developed economy on earth. Further, healthcare spending as a percentage of GDP, telephone lines per 100 people and school enrollment are all on the rise in those countries. All hallmarks of increasing standards of living. Poverty is NOT increasing. As we export jobs for unskilled labour, we free up our own labour force to take more technical, higher paying jobs and the price of goods (clothes, toys, plates, etc.) drops so that everyone can buy more goods, driving world demand. This is not just important for our own endless consumerism but also for the poor kids in india who can now afford basic sanitation and medicine for the first time. The FTF wants to promote worker-owned small farms that do not benefit from economies of scale. Your basic communist model - they're communes. And communes are great on a small scale. They work very well. Unfortunately the suffer from smallness and thus any drought or flood can mean no crop and no crops means no food or medicine - in other words, famine. Small farms provide just enough to subsist on and every economy, as it develops, moves away from them ASAP because of these inefficiencies. The 'Fair' trade guys want to make these small producers the norm - rolling back to 18th century economies. The 'fair trade' thing only accounts for 0.01% of totsl world trade - so I'm not panicking. But they've gotten some very good press and I can't for the life of me figure out how people are just buying their argument without doing any research. I admit, my education and work is in the field of economics and finance and some of my friends and family members work for the United Nations - mostly in places like Bangladesh and India - but I would think that people less involved would at least do some basic research before buying in. I'm puzzled. I cannot figure out how to copy in the links but I will try to type them. www.freetradefederation.com.ab_whyft.html There is a very interesting article about exporting jobs from America (speaking to the last part of your post) in last week's 'Economist' issue. You can look it up on line at www.economist.com and search for the name of the article 'The Great Hollowing Out Myth'. I'd be interested in your reply

Subject: health care From: Jo Ann Aiton To: All Date Posted: Tues, Feb 24, 2004 at 15:22:02 (EST) Email Address: s0456464@monmouth.edu Message: thank you to everyone who answered my question - very helpful!

Subject: Nader From: Pete Weis To: All Date Posted: Mon, Feb 23, 2004 at 15:14:36 (EST) Email Address: Not Provided Message: Would we be embroiled in Iraq if Nader had not run in the last election? This question would and will raise the ire of Nader and Naderites alike. Of course, the question hinges on whether or not Nader's 'run' for the presidency actually cost Gore the election in the first place. But if it did, would we, now, be in the business of 'nation building' in Iraq?

Subject: March 9 polls, Kerry beats Bush From: Me To: Pete Weis Date Posted: Tues, Mar 09, 2004 at 10:36:17 (EST) Email Address: Not Provided Message: Good news, a new poll published on March 9, shows Kerry pounding Bush 52 to 44. And in Florida, Kerry is fairing just as well. Apparently Nader is not a factor. In addition, there are people who are suggesting that while people are choosing Nader in polls, when it comes right down to it, those people won't waste their vote when they step into the voting booth. Even so, many independents are the angriest at Bush. Getting him out of office is more important than making a statement and for those who vote for Nader, they would have done so anyway. Bill Mahr, an independent, voted for Nader in 2000, but said, this time, he won't be so stupid.

Subject: Re: Nader From: WRS To: Pete Weis Date Posted: Mon, Feb 23, 2004 at 15:46:04 (EST) Email Address: Not Provided Message: We'll never know. But with or without Bush's invasion, there would be a huge problem in Iraq. The sanctions were untenable strategically and inhuman morally. The old post-Gulf War containment policy had to go, because thousands of people were starving and Saddam was getting richer than ever. Whether Bush's approach to remove Saddam was the right way to go remains to be seen. There are strong argument in favor, in my mind. But I am not blind to the problems unfolding there and have become increasingly pessimistic, at least in regard to the short-term (12-18 months).

Subject: Re: Nader From: dirk To: WRS Date Posted: Tues, Feb 24, 2004 at 07:45:34 (EST) Email Address: uuuuh@1000dinge.net Message: 1. Of course Nader spoiled gores CHANCES TO MAKE the elECTION. Can you imagine anyone that would say: hmmm bush and nader are so much alike. I don't really know which one to vote for? I personally think that it is utterly irresponsible of nader to run for president this time. espescially if he really worries about the US going to much right wing... 2. The US would not be in Iraq without Bush. No other politician than someone who's in the business for so little time would treat the rest of the world so carelessly. (the result shows why) 3. Iraq. well...

Subject: isreali nuclear weapons From: isreal To: All Date Posted: Mon, Feb 23, 2004 at 04:11:45 (EST) Email Address: dfasdf@fuuk.com Message: isreal has nuclear weapons, but are never questioned, can anyone explain just why that is, when the usa chases everyo9ne else down? they have 200 nuclear weapons!

Subject: Dear Ass... From: Israel To: isreal Date Posted: Mon, Feb 23, 2004 at 11:10:50 (EST) Email Address: you@smuck.com Message: If you are going to make statements about a country at least LEARN to SPELL it correctly. And secondly Israel has had nuclear weapons since the 1960s and has fought in 2 wars since. Have they used them? NO. Have they ever threated to use them, No. It is for deterent purposes only. And they have never confirmed or denied having them. Third, which country would you rather possesed weapons, Pakistan that has threated to use them in a war with India, or Iran run by a radical radical clerics. I rest my case

Subject: Re: Dear Ass... From: dirk To: Israel Date Posted: Tues, Feb 24, 2004 at 07:31:47 (EST) Email Address: uuuuh@1000dinge.net Message: I think it doesn't really matter whether someone used a weapon in a previous war or not, or whether one threatens to use a weapon. Where do you want to draw the borderline? Those are good guys, they won't use their weapons and those are the bad guys, they will use them. I think the point really is that if you own a weapon, you acquired it with some purpose...

Subject: Re: Dear Ass... From: William To: Israel Date Posted: Mon, Feb 23, 2004 at 23:24:46 (EST) Email Address: Not Provided Message: Only one country has used them so far. I would prefer that no one had them, including the one nation that has proven its willingness to use such obscene weapons. I may be wrong, but I would imagine this is the poster's point, as well.

Subject: Re: Dear Ass... From: econochick To: William Date Posted: Tues, Feb 24, 2004 at 16:51:11 (EST) Email Address: Not Provided Message: Only one country has used them against a country that a.) attacked first and b.) promised to kill every one of its own soldiers in kamakazee operations against said country. Using the atomic bomb (modern nukes have never been used) hastened the end of the war and spared America from dragging on a pointless fight. Let's not get all precious about it. Israel is on the 'unofficial' list of nuclear nations - meaning that it was never cleared to have them. Frankly, the whole territorial war in that part of the world is snot-nosed childish.

Subject: Brown's advice not that bad From: Me To: econochick Date Posted: Tues, Mar 09, 2004 at 10:43:18 (EST) Email Address: Not Provided Message: Hmmm, chic, 'Frankly, the whole territorial war in that part of the world is snot-nosed childish.' Perhaps you would do well to take Paul Brown's advice to Paul Krugman and stick with what you know. I am sure the whole issue over there is much more complicated than just two spoiled children fighting over a toy.

Subject: Re: Dear Ass... From: William To: econochick Date Posted: Tues, Feb 24, 2004 at 17:51:30 (EST) Email Address: Not Provided Message: The US attacked Iraq first, not to mention Cuba, the Philippines, quite a few Native American tribes (I think genocide is the word I'm looking for here), Russia, Nicaragua, Mexico, Haiti, Vietnam, Laos, Cambodia, Granada, Panama, Serbia, Lebanon, etc., etc. etc. Not to mention all the governments overthrown and countries attacked through proxy armies and CIA coups. It's a good thing none of those countries had nuclear weapons. Let's forget about the fact that Japan was trying to surrender when the bombs were dropped. Japan attacked the US one time - and what it attacked was a US military base on a US colony. The US, on the other hand, dropped the atomic bombs on Hiroshima and Nagasaki (in which 150,000 civilian men, women, and children were instantly vaporized, while many thousands more died later of radiation poisoning) because they were the only cities left intact enough to show the bombs' impacts (one nighttime conventional fire-bombing of Tokyo alone had killed 80,000 people). This was hardly a nation about to annihilate us. Say Iraq had succeeded in repelling our recent preemptive attack (to make the analogy work, pretend we only attacked a far outlying colony of Iraq that they had gained by almost completely wiping out its former inhabitants, rather than the country itself), and then proceeded to completely level almost every American city with wave after wave of carpet bombings from their deadly state-of-the-art airforce. It then decided to drop atomic bombs on the centers of the two cities still most intact (say, hypothetically, Saint Louis and Philadelphia), giving as their reason 'they continue to defend themselves, threatening to kill every one of the soldiers we send to attack them.' What would you do if an Iraqi said to your face 'what we did hastened the end of the war and spared Iraq from dragging on a pointless fight. Let's not get all precious about it.'

Subject: Re: Dear Ass... From: econochick To: William Date Posted: Wed, Feb 25, 2004 at 16:35:37 (EST) Email Address: Not Provided Message: What I fear most is not nuclear weapons but ignorance of historical fact. Do you seriously not know that the attack on Pearl Harbour was a declaration of war and that the US was fighting on two fronts? ONE time? Are you kidding me? It is further baffling that you don't know that the US never attacked - and, indeed, never fought - Russia and Lebanon? You have no clue that Vietnam was by invitation of France, of which Vietnam was a colony? That Laos and Cambodia were offshoots of that conflict? Do you seriously consider putting a stop to genecide is Kosovo and Bosnia 'attacking' Serbia without provocation. I hope you're not Jewish because with that logic in WWII, you wouldn't BE here. Did you not realize that the attack on Cuba was called off? Did it escape your memory that the Cuba thing happened Russia was trying to park Nukes essentially off the coast of Florida? A turf war with Indians is genecide? The logical extension that is that every single country committed genecide in its struggle to it's current borders. There is no further discussion on this topic as you have obviously never run a across a history book in your life. I stand by my statement.

Subject: Re: Dear Ass... From: William Reed To: econochick Date Posted: Wed, Feb 25, 2004 at 21:27:28 (EST) Email Address: Not Provided Message: Many countries have fought on more than one front. Nazi Germany was fighting a war on two fronts. Did that give it a right to nuke its adversaries? All of the participants of WWI and WWII were fighting multiple adversaries, as did Iraq in the most recent war. In fact, the armies of each one of the nations Iraq faced in the latest war was vastly superior to its own, while one of them possessed the most powerful military ever to exist on the face of the earth. Iraq, by contrast, possessed one of the weakest militaries on the planet. Furthermore, Iraq was forced to face them all alone. Lucky it didn't have nukes. Furthermore, unlike the United States in WWII, the nations I listed, and the many more I did not, were being attacked by an adversary far more powerful than themselves, and were in much greater danger of military annihilation (as in fact happened in most cases) than the US in WWII, which was in no danger of being conquered (no bullet or bomb ever struck the mainland United States). And the United States dropped the atomic bombs, if I may reiterate, after all of their enemies had been defeated. Germany had fallen and Hitler had committed suicide three months before, and Japan had been all but crushed and was trying to negotiate a surrender.

Subject: Re: Dear Ass... From: William Reed To: William Reed Date Posted: Wed, Feb 25, 2004 at 21:34:02 (EST) Email Address: Not Provided Message: Now I’ll deal with the other issues you raise. In 1918, the United States, Britain, France, and Japan sent troops into Russia to crush the Bolsheviks and in the words of Winston Churchill, 'strangle the communist infant in its cradle.' I’ll quote president Jimmy Carter on the intervention in Lebanon: 'We sent Marines into Lebanon and you only have to go to Lebanon, to Syria or to Jordan to witness first-hand the intense hatred among many people for the United States because we bombed and shelled and unmercifully killed totally innocent villagers -- women and children and farmers and housewives -- in those villages around Beirut. ... As a result of that ... we became kind of a Satan in the minds of those who are deeply resentful. That is what precipitated the taking of our hostages and that is what has precipitated some of the terrorist attacks.' He doesn’t address what led to the taking of hostages in Iran, of course, which is US support for the Shah, the murderous dictator we installed after overthrowing Iran’s democratically elected government. It appears that Iran’s prime minister, Mossadegh, had committed the sin of nationalizing Iranian oil so that it would benefit Iranians instead of the British oil companies installed after colonization. But Jimmy Carter had wholeheartedly supported the Shah himself, so it’s not surprising that he might want to gloss this over. Yugoslavia was engaged in a small-scale civil war no more bloody than a dozen others raging throughout the world at the time (and a tiny, infinitesimal fraction of the US Civil War, for example), with atrocities on both sides. Had it been in the United States' interest to side with Serbia (as it did with many other states carrying out far worse atrocities at the time), Serbia would have merely been 'fighting terrorism'. I’m not taking sides in the conflict, I’m simply pointing out that the US attacked Serbia before Serbia attacked the US (which, of course, it never would have wanted to do, nor have contemplated doing), thus giving it the right to nuke American cities (had it, in fact, possessed nukes). Any country at all, if it had the desire and ability, could attack the US on the same grounds we attacked Serbia, using the extremely incomplete list I give above. As far as your reference to Hitler: am I glad Hitler's regime was destroyed? I certainly am. But the US didn't intervene in Germany to stop the Holocaust, did it? It supported Hitler during his rise to power, aware of his fanatical racism, and it continued to turn away Jews fleeing Nazi Germany with full knowledge that the Holocaust was taking place. The United States never entered the war against Germany until Hitler had been stupid enough to declare war on the US after Pearl Harbor. Cuba – remember the Maine? As for the Cuban missile crisis, I'm quite sure the US didn't want nuclear warheads near its borders. I'm just as sure that Russia didn't want nuclear warheads near its own borders in W. Europe. It's a good thing it never tried to stop them from possessing them, though, for I really don't think any of us would be here right now if it had. Indochina: since Vietnam's colonial master invited the United States to destroy it because it dared rebel, that makes it okay? And your use of the word 'offshoot' allows you brush aside the killing of hundreds of thousands of innocent people in Laos and Cambodia as irrelevant? And finally: what the United States did to Native Americans was not genocide? What happened to them, pray tell? Did they evaporate? Were they an extremely volatile race, chemically speaking? You may be quite happy with the act and its results, but you cannot deny that it was genocide.

Subject: Re: econochick statements From: E To: William Reed Date Posted: Thurs, Feb 26, 2004 at 10:06:10 (EST) Email Address: Not Provided Message:

Subject: isreal From: isreal To: All Date Posted: Mon, Feb 23, 2004 at 04:11:20 (EST) Email Address: dfasdf@fuuk.com Message: isreal has nuclear weapons, but are never questioned, can anyone explain just why that is, when the usa chases everyo9ne else down? they have 200 nuclear weapons!

Subject: Trolling From: Troll To: isreal Date Posted: Mon, Feb 23, 2004 at 12:50:07 (EST) Email Address: Not Provided Message: Another idiot troll.

Subject: Re: Trolling From: NotSoTroll To: Troll Date Posted: Tues, Feb 24, 2004 at 07:38:30 (EST) Email Address: Not Provided Message: why a troll? it IS a fact that Israel has nuclear weapons and practises apartheid on the palestinians. Refusing to acknowledge that is what i call being a rightist troll.

Subject: Health Care Spinning From: Jennifer To: All Date Posted: Sun, Feb 22, 2004 at 12:34:38 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/22/politics/22HEAL.html Taking Spin Out of Report That Made Bad Into Good Health By ROBERT PEAR WASHINGTON — The Bush administration says it improperly altered a report documenting large racial and ethnic disparities in health care, but it will soon publish the full, unexpurgated document. 'There was a mistake made,' Tommy G. Thompson, the secretary of health and human services, told Congress last week. 'It's going to be rectified.' Mr. Thompson said that 'some individuals took it upon themselves' to make the report sound more positive than was justified by the data. The reversal comes in response to concerns of Democrats and the Senate majority leader, Bill Frist, Republican of Tennessee. They are pushing separate bills to improve care for members of minorities. 'African-Americans and Native Americans die younger than any other racial or ethnic group,' Dr. Frist said. 'African-Americans, Native Americans and Hispanic Americans are at least twice as likely to suffer from diabetes and experience serious complications. These gaps are unacceptable.' President Bush's budget would cut spending for the training of health professionals and would eliminate a $34 million program that recruits blacks and Hispanics for careers as doctors, nurses and pharmacists. On Wednesday, more than 60 influential scientists, including 20 Nobel laureates, issued a statement criticizing what they described as the misuse of science by the administration to bolster its policies on the environment, arms control and public health.

Subject: Snake Oil Salesmen? From: Pete Weis To: All Date Posted: Sun, Feb 22, 2004 at 12:12:48 (EST) Email Address: Not Provided Message: There are alot of bogus statements being thrown out for public consumption. For instance: 'the stock market has fallen so much since 2000 that many stocks are now good values' is one of many. But one statement, I believe, is especially damaging since it is such a threat to our financial sector. It goes like this: 'Realestate prices will always appreciate with only minor and short lived corrections since populations are always expanding and land is a diminishing resource.' It occurred to me that there is no relationship whatsoever between population growth and realestate appreciation. This may be obvious to posters on this site and probably there is much written on this subject. But if this statement were true, areas around the world with the highest population densities would have the highest realestate valuations and often the opposite is true. After giving this subject a little consideration, it's obvious that growing numbers of jobs, increasing wages, lowering mortgage rates and easing of lending requirements coupled with the availability of land are factors relating to appreciating realestate. While the availability of land is fixed, we have to ask ourselves will the other factors mentioned still run in favor of appreciating realestate in the coming five to ten years? You also have to wonder about all the equity removed from the realestate markets due to record amounts of refinancing in recent years. There's not much margin for even a 10-20% drop in realestate valuations when so many homes have only about 5% or less equity. For those of us who remember the S&L debacle of the 1980's, it had to be worrisome to hear Greenspan say it was a good thing Americans were refinancing equity out of their homes to help support the US economy.

Subject: Housing Prices From: Jennifer To: Pete Weis Date Posted: Sun, Feb 22, 2004 at 12:39:13 (EST) Email Address: Not Provided Message: Suppose there are areas of inflated real estate prices, and there appear to be, why should the Federal Reserve worry? Asset prices fluctuate, the Federal Reserve should not try to regulate asset prices other than for short term bonds in response to inflation or deflation pressures. Why should we worry about rising housing prices?

Subject: Re: Housing Prices From: Pete Weis To: Jennifer Date Posted: Mon, Feb 23, 2004 at 03:46:51 (EST) Email Address: Not Provided Message: Certainly the Federal Reserve should not and can not 'regulate' asset prices. However, despite statements to the contrary, I bet there is considerable worry at the Fed about unprecedented increases in housing prices due to unprecedented Fed rate cuts (13 in 30 months). The last three years have seen huge volumes of mortgage money flowing into the US economy. In a Feb 4, 2004 article entitled 'Refinancing boom turns to bust' in the Portland (Oregon) Tribune there is the following: 'Mortgage originations nationwide reached an estimated $3.8 trillion last year (2003), according to the Mortgage Bankers Association, with refinance originations constituting about 68% of the total, or some $2.58 trillion'. The article goes on to say that the Mortgage Brokers Association projects total mortgage originations to be '$1.99 trillion' in 2004 and '$1.72 trillion' in 2005. Now that's about $1.6 trillion that went into a $10 trillion dollar US economy in 2003 that won't be there in 2004. To put this into perspective - 1998, a pretty good year for the stock markets and housing, saw a little under $1 trillion in total mortgage originations. When you compare that to $2.58 trillion in refinancings in 2003 you come away with two conclusions - (1) refinancing money was extremely important to the economy in 2003 and (2) the amount of equity refinanced out of US housing in just one year was truely extreme! Guess the point I'm trying to make here, Jennifer, is that this isn't simply 'fluctuating asset prices'. This is a one time in history situation where we have, by far, the least amount of home equity following the longest and largest run-up in housing prices ever. If any poster on this site can come up with a period in US history that comes close to matching this, I stand corrected, but I don't think anyone can. Five to ten years ago, mortgage lenders limited home buyer's monthly payments to 28% of their gross income because they expected home buyers to take on more debt after purchasing their home (new vehicle, credit card purchases, etc). In recent years, that limit has been raised to 48% (if there is no additional debt at time of loan approval). Five to ten years ago a home buyer was required to have held his job for a minimum of 2 years. Recently, that requirement has been reduced to 6 months. The average turnover rate of homes in the US is only 5 to 6 years. A 10% to 20% or more drop in housing prices due to higher future interest rates or faltering economy or both would likely result in a significant percentage of US homes being 'upside down' where the value of the house was less than its mortgage. It also costs a seller an average of about 10% in expenses to sell his or her house. So, for a seller to break even, he or she needs to get slightly more than 10% of the value of the mortgage. Believe me, there have been times in the past where a faltering economy or rising interest rates have seen increases in home owners handing the keys to their house to the lender when they didn't wish to pay the difference between the selling price and the remaining mortgage balance. None of those times, even remotely, compare to the present with the drastic reduction in equity due to the extreme amount of refinancing that has gone on in the last three years. The 1930's saw home equity disappear due to economic collapse. Today we seem to have been able to destroy home equity even before any possible economic collapse. I just don't believe the top execs at today's largest banks are any more sophisticated or less greedy than the Savings and Loan execs of the 1980's.

Subject: Household Finances From: Jennifer To: Pete Weis Date Posted: Mon, Feb 23, 2004 at 15:03:12 (EST) Email Address: Not Provided Message: http://www.nytimes.com/aponline/business/AP-Greenspan-Consumer-Debt.html Greenspan Says Households in 'Good Shape' By ASSOCIATED PRESS American households' finances are generally in good shape....Federal Reserve Chairman Alan Greenspan said Monday. Decades of low interest rates and extra cash from refinancing have given people flexibility to better manage their debt, the Fed chief said in a speech to a credit union conference.... Greenspan noted that delinquency rates on credit card payments have been falling during the past year even as consumers' credit card debt has grown. The rise in credit card debt in the latter half of the 1990s, he said, is mirrored by a fall in unsecured personal loans. That suggests homeowners have shifted a variety of payments to credit cards given their wide availability and convenience, he said. Two gauges the Fed likes to use to assess the extent of American household indebtedness and to get a view of the financial health of the overall sector ``rose modestly over the 1990s,'' Greenspan said. ``During the past two years, however, both ratios have been essentially flat.'' The debt-service ratio measures the share of income devoted by households for paying interest and principal on their debt. When the debt-service ratio is high, households have less money available to buy goods or services, the Fed chief explained. The Fed's second measure, called the general financial obligations ratio, incorporates households' other recurring expenses, such as rents, auto leases, homeowners' insurance and property taxes, he said. ``Overall, the household sector seems to be in good shape and much of the apparent increase in the household sector's debt ratios over the past decade reflects factors that do not suggest increasing household financial stress,'' Greenspan said. ``And, in fact, during the past two years, debt-service ratios have been stable,'' he added. Greenspan pointed out that U.S. households own more than $14 trillion in real estate assets -- almost twice the amount they own in mutual funds and directly hold in stocks. Home mortgage refinancings and a solid rise in home values helped to bolster consumer spending during economic hard times as well as during the recovery, Greenspan said. ``Over the past two years, significant increases in the value of real-estate assets have, for some households, mitigated stock market losses and supported consumption,'' Greenspan said.

Subject: Re: Household Finances From: Pete Weis To: Jennifer Date Posted: Mon, Feb 23, 2004 at 17:08:12 (EST) Email Address: Not Provided Message: You have to remember this is the guy who said 'it's difficult to recognize a bubble when one is inside a bubble'. It's also interesting to see him keep making reassuring statements now with asset prices having reached such high levels and PE ratios running higher than they were in 1996 when he made his famous 'irrational exuberance' speech. If he's not worried about debt, why is he pounding the pavement reassuring everyone consumer debt is not a problem. With housing values and equity markets presently propping up the economy and not employment, wage increases, and massive refinancing to rely on in 2004, Greenspan has been reduced to cheerleading and hoping for a miracle. A good article 'The Debt Bomb' in Barrons dated Jan 20, 2003 debunks much of what Greenspan had to say about 'households being in good shape'. The article states: 'Credit-market debt now equals 295% of gross domestic product, compared with 160% in 1980 and less than 150% during much of the 1960's. More ominously, debt as a percentage of GDP exeeds the previous record reading of 264% from early in the Great Depression when the aftermath of the Roaring Twenties borrowing binge collided with a sharp economic contraction. And today's debt load is clearly starting to pinch consumers ...'. The article goes on to talk about increased personal bankruptcy filings, increased mortgage deliquincies and credit card charge-offs. There's a chart which provides a great visual of the total debt to GDP ratio from 1915 to the present. By the way, since Jan of 2003, consumer debt has risen substantially - by more than the $2 trillion plus in mortgage refinancing debt accumulated in 2003. If you think that some or much of this refinancing served to alleviate other debt such as credit card debt, recent articles asserted the opposite has occured. A Financial Times article stated that despite the massive refinancing in 2003, credit card debt has increased to 'record levels'. The Barron's article finished with a description of the dangers of a bursting housing bubble. 'Academic studies show that changes in home prices have nearly double the impact on consumer spending than does the wealth effect from rising or falling stock prices.' 'And home prices have been on a tear, rising nearly 50% nationwide over the past six years, bolstered by falling interest rates and looser credit standards. Consumers have tapped this surging equity value through wave after wave of cash-out mortgage refinancings, transforming their homes into ATMs.' Here we have the result of the waves of refinancings: 'At the same time, American's equity in their homes, net of debt, has dwindled to 57%, compared with 85% a half-century ago, even with the recent powerful surge in home prices. Economist Gary Shilling calculates that 39% of US homes are owned free and clear - and that the remaining homeowners have debt burdens exeeding 80% of the value of their homes. In other words, many Americans have little margin of safety...'. I might add that 2003 set a record for refinancings and this problem has actually gotten worse since the article was written. Is Greenspan lying when he says household finances are in good shape? I really think he is doing his job trying to keep things propped up while waiting for employment to finally come along. If he thinks there are serious problems with this economy and voices them publicly then he could get blamed for touching off an asset collapse. What else could we expect him to say at this point?

Subject: op-ed piece 2/17/04 From: Jo Ann Aiton To: All Date Posted: Sat, Feb 21, 2004 at 11:38:04 (EST) Email Address: s0456464@monmouth.edu Message: The subject op-ed piece was in the NY Times. Does anyone know the name of the report mentioned in the 7th paragraph? It reads: 'A recent study found that private insurance companies spend...'etc. Thanks for any help.

Subject: Re: op-ed piece 2/17/04 From: David E... To: Jo Ann Aiton Date Posted: Sat, Feb 21, 2004 at 15:58:06 (EST) Email Address: daveellis_39@hotmail.com Message: http://www.forbes.com/home/newswire/2003/08/20/rtr1062315.html The name of the study and more detail can be found here.

Subject: Health Care Study From: Terri To: David E... Date Posted: Sat, Feb 21, 2004 at 18:16:00 (EST) Email Address: Not Provided Message: http://www.forbes.com/home/newswire/2003/08/20/rtr1062315.html February 20, 2004 Bureaucratic Waste dogs U.S. Health Care By Gene Emery - Reuters BOSTON - Thirty-one cents of every dollar spent on health care in the United States pays administrative costs -- nearly double the rate in Canada, according to a new comparison that sees colossal bureaucratic waste in the American system. Researchers who prepared the comparison said Wednesday that the United States wastes more money on health bureaucracy than it would cost to provide health care to the tens of millions of uninsured Americans. Americans spend $752 more per person per year than Canadians on medical administrative costs alone, according to the study by investigators from Harvard University and the Canadian Institute for Health Information that was published in this week's New England Journal of Medicine. The team, led by Steffie Woolhandler of Harvard, said a large sum of money might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style, single-payer health care system.

Subject: Re: Health Care Study From: Picono-Klast To: Terri Date Posted: Sat, Feb 21, 2004 at 18:27:56 (EST) Email Address: nma@hotmail.com Message: The Health Care System in Sweden Good health and equal access to health services for everyone are the goals of the Swedish health care system. A fundamental principle is that the provision and financing of health services for the entire population is a public sector responsibility.... http://www.sweden.se/templates/FactSheet____6856.asp

Subject: Nice Reference From: Jennifer To: Picono-Klast Date Posted: Sun, Feb 22, 2004 at 12:40:19 (EST) Email Address: Not Provided Message: Thanks.

Subject: The New Age Economy From: Jennifer To: All Date Posted: Fri, Feb 20, 2004 at 16:23:16 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/20/business/20jobs.html In the New Economics: Fast-Food Factories? By DAVID CAY JOHNSTON - New York Times Is cooking a hamburger patty and inserting the meat, lettuce and ketchup inside a bun a manufacturing job, like assembling automobiles? That question is posed in the new Economic Report of the President, a thick annual compendium of observations and statistics on the health of the United States economy. The latest edition, sent to Congress last week, questions whether fast-food restaurants should continue to be counted as part of the service sector or should be reclassified as manufacturers. No answers were offered. In a speech to Washington economists Tuesday, N. Gregory Mankiw, chairman of the president's Council of Economic Advisers, said that properly classifying such workers was 'an important consideration' in setting economic policy. Counting jobs at McDonald's, Burger King and other fast-food enterprises alongside those at industrial companies like General Motors and Eastman Kodak might seem like a stretch, akin to classifying ketchup in school lunches as a vegetable, as was briefly the case in a 1981 federal regulatory proposal....

Subject: Re: The New Age Economy From: Joseph To: Jennifer Date Posted: Wed, Feb 25, 2004 at 23:11:15 (EST) Email Address: jlawrenceiv@hotmail.com Message: Who cares? Why do we need manufacturing at all?? Of course I am not stupid, I am voting for the democrats. However, manufacturing is not something to be protected, nor are McDonalds jobs. If a robot or a peasant labourer can do the job for less money, then they should 'manufacture' things. This outsourcing offshoring whatever is only indicative of progress to me.

Subject: Re: The New Age Economy From: Mik To: Joseph Date Posted: Thurs, Feb 26, 2004 at 18:39:09 (EST) Email Address: Not Provided Message: Well I care. I do believe that the US will change its economy away from factories. But we still have many people who are in the 'blue collar labour' sector. It will be many years before this sector is phased out. In the mean time, we do need some sort of stats to understand this sector and understand the dynamics of this sector. I can see pros and cons to making the kitchen staff at a McDonalds part of this sector. But I question the accuracy of any stats that lumps Kitchen staff at a fast food restaurant with the Blue Collar workers. Just simply extrapolating this - any kitchen staff at any restaurant or canteen will then be a blue collar factory worker. And all this can easily be blown out of proportion. The real issue here is the benefits of making such a move. The obvious benefit is that the republicans can artificially change the stats and make themselves look good. It will however be very interesting when we look at how the tax revenues (per capita) in this sector will decrease. My argument is that in this sophisticated world we live in - why do we need to lump them into the same sector as Blue Collar workers - why not create their own sector, such as, 'Semi-industrial and Semi-service Sector.' But keep the sector distinct.

Subject: Hamburgers - mmmmm From: Homer Simpson To: Jennifer Date Posted: Fri, Feb 20, 2004 at 17:51:19 (EST) Email Address: Not Provided Message: Hamburgers - mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm

Subject: Health Insurance From: Emma To: All Date Posted: Thurs, Feb 19, 2004 at 16:21:04 (EST) Email Address: Not Provided Message: http://www.cbpp.org/2-18-04health2.htm Administration's Proposed Tax Credit For The Purchase Of Health Insurance Could Weaken Employer-Based Health Insurance - 2/18/04 To address the problem of the uninsured, the Administration again proposes to provide a tax credit for the purchase of health insurance in the individual market. The tax credit, however, poses substantial risks to the employer-based health insurance system, relies on the flawed individual market, and is likely to be ineffective in reducing the ranks of the uninsured.

Subject: Resources and Growth From: Emma To: All Date Posted: Thurs, Feb 19, 2004 at 14:42:13 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/19/business/19scene.html Resources Form the Basis for Economic Growth By JEFF MADRICK A POPULAR notion in economics today is that an abundance of natural resources is a 'curse' for developing nations. Such an endowment, it is argued, encourages corruption, undermines institutional development, pushes the value of a currency uncompetitively high and cannot support long-term growth because the reserves eventually run out. Small wonder, then, that oil-rich nations like Iraq and Venezuela are poor or in decline. Gavin Wright will have none of this. Mr. Wright, an economic historian at Stanford and long a specialist in the role that natural resources play in economic growth, agrees that overdependence on a single resource can lead to poor policies, but it is by no means inevitable. To the contrary, many developed and developing nations have used their mineral resources as springboards to wealth and broader-based development - not least the United States itself. Mr. Wright and a colleague, Jesse Czelusta, have written a fascinating study (at www-econ.stanford.edu) on the subject that should be required reading. The lessons to be drawn are especially pertinent for countries like Iraq. The economists start their analysis by looking at the evidence compiled by advocates of the resource curse. The seminal study was done by Jeffrey D. Sachs and Andrew M. Warner in 1995 and showed a strong statistical relationship between resource abundance and slow growth. Many follow-up studies using the same method draw remarkably sweeping conclusions about the inevitable disadvantages of resource abundance. One recent study explicitly concludes that poor institutional development, including weak governance and property laws, is 'intrinsic' to nations with oil and other minerals. Mr. Sachs and Mr. Warner have recently concluded that the curse is a 'reasonably solid fact.' But Mr. Wright and Mr. Czelusta point out that almost every one of these studies uses the proportion of exports of the particular natural resource as a proxy for a nation's mineral abundance. Among other obvious problems with this measure, a high proportion of resource exports may simply reflect a lack of other kinds of exports, which is almost a definition of underdevelopment in the first place....

Subject: Chad From: Emma To: Emma Date Posted: Fri, Feb 20, 2004 at 14:04:32 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/18/international/africa/18CHAD.html The Making of an African Petrostate By SOMINI SENGUPTA NGALABA, Chad — As night fell and the bright lights of the brand-new oil field wrapped this hamlet in their golden glow, Neurmbaye Elie, a local farmer, pointed across the field before him. There, Mr. Elie said, just left of the blazing gas flare, under the streetlight, once stood the village initiation site. Animals were sacrificed there, spirits were supplicated, and the village boys became men. Then it became part of the oil complex, fenced in, a patch of earth not unlike the rest; the village got about $130 for it. Now, he worries. What if the spirits, displeased, sprang from that sacred ground and spread willy-nilly across the land? ...

Subject: Chad - Continue From: Emma To: Emma Date Posted: Fri, Feb 20, 2004 at 14:10:50 (EST) Email Address: Not Provided Message: Oil is bringing big changes to Chad, some cultural, like the one Mr. Elie worries about, others practical, like the way the World Bank will be overseeing how Chad manages its new wealth. Chad, among the poorest countries in the world, is now Africa's newest petrostate. Its $3.7 billion underground pipeline, stretching 670 miles, began ferrying crude oil through neighboring Cameroon to the Atlantic coast last year. The pipeline is the largest single private investment in Africa. Because the pipeline stands to transform this landlocked country, for better or worse, Chad is under a special glare — from the oil industry, global lending institutions and development groups. The investment has come with strings attached: the oil revenues are to be transparent, and the government is to use the wealth to better the miserable lives of its nine million citizens. A citizens' committee is to review all spending to see that it conforms to the law. If the rules work as intended, they could set a new model for how oil business is done in Africa. But if the usual corruption sets in, if democratic reforms are postponed, it will be just one more case of the spectacular misery that has befallen Africa's oil states, like Sudan, where oil greased the engines of war, or neighboring Nigeria, where living standards plummeted since oil production began 40 years ago. 'You're dealing with a government that's certainly not a model of governance,' said Jerome Chevallier, who oversees the pipeline here for the World Bank, which partly financed the project. 'It's basically a high risk, high reward project. If you can use oil to lift Chad out of its extreme poverty, it's a win. The risks, of course we know.'

Subject: Chad - Continue From: Emma To: Emma Date Posted: Fri, Feb 20, 2004 at 14:12:21 (EST) Email Address: Not Provided Message: It is the World Bank's first foray into oil development, and early missteps since ground was broken in 2000 suggest that the risks are indeed formidable. When the group of oil companies offered a $25 million 'signing bonus' four years ago, the government spent the first chunk on arms and another refurbishing ministers' offices. According to the oversight committee, one ministry tried to buy rice and millet at twice the market price. Another wanted six off-road vehicles. The oversight committee blocked many of those requests. 'We said, `No, no, no guys, too much,' recalled its chairman, Mahamat Mustapha. [His future as chairman is unclear; President Idriss Deby's brother-in-law was recently appointed to the committee.] This year, Chad will see its first share of oil royalties, about $100 million, an amount that will enlarge the government treasury by about 40 percent, virtually overnight. While this allotment will be closely watched, another $100 million from taxes and customs duties is entirely at the government's discretion.

Subject: Indonesia From: Emma To: Emma Date Posted: Fri, Feb 20, 2004 at 14:05:47 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/19/business/worldbusiness/19oil.html Indonesia Takes a Tortuous Path to Oil By WAYNE ARNOLD Deep underground near a town called Cepu on the Indonesian island of Java lies more than 600 million barrels of crude oil, $20 billion worth at current prices and enough to increase daily output in that impoverished country by 15 percent. But Exxon Mobil, which has an exclusive contract to extract the oil at Cepu (pronounced CHEH-poo), will not pump a drop. Since finding much more oil than expected in 2a001, Exxon Mobil has been locked in negotiations with Indonesia's national petroleum company, Pertamina, which has demanded that Exxon Mobil share more of the bounty. So it goes with oil investment in Indonesia, Asia's only member of the Organization of the Petroleum Exporting Countries. Indonesia this year assumed the rotating presidency of OPEC, which on Feb. 11 announced production cuts to stabilize prices. Indonesia will not have to cut: it already falls short of its OPEC quotas, and analysts say that falling investment is hastening an end to Indonesia's days as a net oil exporter....

Subject: Re: Resources and Growth From: Pete Weis To: Emma Date Posted: Thurs, Feb 19, 2004 at 22:57:30 (EST) Email Address: Not Provided Message: Tried to come up with a country which relied almost completely on the profits from its natural resources and the general population prospered as a result. Couldn't think of any.

Subject: Re: Resources and Growth From: Paul G. Brown To: Pete Weis Date Posted: Thurs, Feb 19, 2004 at 23:43:24 (EST) Email Address: Not Provided Message: Nauru. Well, for a while, anyway.

Subject: Re: Resources and Growth From: Pete Weis To: Paul G. Brown Date Posted: Fri, Feb 20, 2004 at 10:24:00 (EST) Email Address: Not Provided Message: Pretty funny and fairly sad at the same time. Guess this demonstrates how far one must go to find an example and yet it still does not have a happy ending.

Subject: Re: Resources and Growth From: Paul G. Brown To: Pete Weis Date Posted: Fri, Feb 20, 2004 at 14:05:38 (EST) Email Address: Not Provided Message: I once read a novel about a fictional, newly post-colonial African country whose sole export to the rest of the world was the phosphate mined from an extensive cave network running beneath practically the entire country. In effect, the entire country rested on, and was sustained by, a gigantic pile of bat-shit. The plot of the novel was the story of the literal and figurative undermining and collapse of the country as the pile of bat-shit diminished. Its climax occurs when the parliament building -- built at enormous expense from a unique metamorphic rock created when a volcano intruded lava into the caves -- collapses into a subterranian void left when the last of the bat-shit was extracted.

Subject: oops From: Pete Weis To: Pete Weis Date Posted: Fri, Feb 20, 2004 at 10:26:29 (EST) Email Address: Not Provided Message: I posted my reply in the quoted message box!

Subject: Health care . . From: Paul G. Brown To: All Date Posted: Wed, Feb 18, 2004 at 14:11:06 (EST) Email Address: Not Provided Message: A much better effort. Health care is an issue that can be subjected to economic analysis. This was a good start. I'm looking forward to the rest of the series. FWIW: I'm Australian originally. Socialized medicine has been an element of Australia's public policy since the early 1980s. I'm old enough to remember the arguments that raged about it at the time it was instituted. Deja vue.

Subject: Re: Health care . . From: Pete Weis To: Paul G. Brown Date Posted: Thurs, Feb 19, 2004 at 22:46:00 (EST) Email Address: Not Provided Message: Those of us who have health insurance end up paying for those who don't. When a significant portion of the US population has no health insurance, medical care is almost always avoided by those without insurance until it becomes a crisis requiring expensive procedures. Preventative medicine, whether it's prescribed drugs to lower blood pressure, cholesterol, or just advice to start eating healthier or get on a bicycle several times a week is not authoritatively offered or available to those without insurance. Putting the responsibility of paying for the world's most expensive prescribed drug market on the backs of US taxpayers without any pricing regulation is definitely a drag on our economy as is the high cost of health insurance. This is an economic issue as well as a health and moral issue. Hopefully the new administration when it takes office in 2005 will put this issue near the top of the list!

Subject: Long Term Care. . From: Emma To: Paul G. Brown Date Posted: Wed, Feb 18, 2004 at 15:46:43 (EST) Email Address: Not Provided Message: http://www.cbpp.org/2-18-04health.htm Administration's Proposed Deduction For Long-Term Care Insurance Premiums Likely To Be Ineffective and Costly, and Of Primary Benefit To Higher-Income Individuals - 2/18/04 The Administration again proposes a costly deduction for the purchase of long-term care insurance that would provide little or no assistance to low- and middle-income families, is likely to be ineffective in helping more people purchase long-term care insurance, and would serve as yet another tax cut for high-income individuals.

Subject: Re: Health care . . From: Emma To: Paul G. Brown Date Posted: Wed, Feb 18, 2004 at 14:24:54 (EST) Email Address: Not Provided Message: Agreed! Love the guy, however, no matter what the column is about. This is an economist and humanist.

Subject: Democracy in America From: Jennifer To: All Date Posted: Tues, Feb 17, 2004 at 16:17:03 (EST) Email Address: Not Provided Message: http://www.dissentmagazine.org/menutest/articles/wi04/wilentz.htm Democracy in America, 2003 By Sean Wilentz - Princeton University Over the past ten years, there has been a growing gap in perception over the state of American democracy. The vast majority of the Washington press corps-including many pundits critical of the Bush administration-is inclined to see what has happened (and is happening) as basically hard-knuckled politics as usual. The fights may sound harsher, the media blare may be much louder, the reigning politics may be more conservative than anyone expected-but the basic institutions of American democracy are, supposedly, secure. Those like economist and New York Times columnist Paul Krugman who disagree, and who see something more dangerous unfolding, are branded as wild radicals, or paranoids, or both-and, as Krugman has mordantly observed, they receive the wild hate mail and e-mails that prove it. There is, of course, always a danger of paranoia setting in at a time of intense polarization, when one political party controls all three branches of the federal government-all the more so when that party in charge looks less like the usual coalition of internally contending forces than a disciplined army. Such is certainly the case today, especially in Washington, where a virtually unanimous Republican Party-the House Republicans whipped into shape by Majority Leader Tom DeLay, the Senate Republicans only slightly less unified, both houses well coordinated with the adamantine Bush White House, and the Rehnquist Court standing by as the final forum-makes the Democratic minority look like a chorus of scorched cats. But isn't this just the result of the Republicans' superior political skills-playing the rules of the game to the utmost, always keeping their eyes on their prizes?

Subject: Re: Democracy in America From: Mik To: Jennifer Date Posted: Wed, Feb 18, 2004 at 17:56:53 (EST) Email Address: Not Provided Message: We look at global and philosophical issues but what about practical issues that show clear signs of a threat to democracy? There seems to be a growing movement of people against the economic power of countries and the goings-on at the WTO. I'm sure there are many ligitimate causes and many mala-fide causes too. But the problem is in giving fuel to a movment that may be over-run by mala-fide causes, or 'rebels without a cause'. The fuel that I talk about, simply put is: Jobs. Our great system of democracy coupled with capatilism has relied on the premise that economic growth gives employment and then all else falls into place. Am I wrong? We have now seen (in my opinion) some startling results where the US has reached 8% GDP growth - for all intends and purposes, this should be labelled an economic boom. But where are those jobs? Even Greenspan has been surprise by the jobless growth. He has predicted a pick up in employment in the later part of the year. But this may lead to a very meagre pick-up. Has our great system started to fail us? If we can achieve wonderful GDP growth that does not translate to a better environment for the people, is this not a sign that we are entering a whole new realm? Keynes principles of economics took the world from one era to another. We have seen the limits of Keynes and in the absence of issues such as the money-market, we have have substituted new economic princples that had served us well. But the fundemental remains: good growth = more jobs = happiness. This seems to be an issue that is no longer working challanging not only our principles of economic growth but perhaps even our principles of democracy. Comments?

Subject: Re: Democracy in America From: Jennifer To: Mik Date Posted: Thurs, Feb 19, 2004 at 14:45:09 (EST) Email Address: Not Provided Message: While I agree completely that we have an important labor market problem, I think Keynes speaks directly to the problem. We need fiscal policy designed to generate jobs, not simply to give tax breaks to the wealthiest. The problem is not trade or outsourcing, but need for proper domestic stimulus.

Subject: Re: Democracy in America From: Mik To: Jennifer Date Posted: Mon, Feb 23, 2004 at 19:00:21 (EST) Email Address: Not Provided Message: Jennifer, I have no argument with your point of direct fiscal stimulus. But could you please give practical examples? I do not support the current US administration's policies, but as a weird twist of events, it appears that the US administration is currently investing heavily into the US military sector for obvious reasons. I don't support this - but the issue I am raising is that it does appear (on paper) that there is in deed a heavy fiscal stimulus focused on industries that employs US citizens. I see this only as an example of fiscal stimulus that does appear to be heavily driven towards improving the US job market. But it doesn't appear to be helping in the more grand scheme of things. Again, comments?

Subject: Re: Democracy in America From: Paul G. Brown To: Jennifer Date Posted: Thurs, Feb 19, 2004 at 18:41:02 (EST) Email Address: Not Provided Message: Yup. It's not yet time to put the Lord of Tilton to bed. I'm moved to poetry . . . An economist prof, name of Keynes was known, at the time, for his brains but then he wrote a long book, at which few bothered to look, for it made the most outlandish claims! 'Supply creates its own demand!' bellowed bankers throughout the land. 'Not so!' said our don, 'You've got it all wrong!' 'An economy's better if partially planned.' Well from that day, in 1938, to our late great matters of state, Keynes' had his detractors, and adders, and subtractors, but he's basically won the debate. Thank you, thank you, I'll be here all week . . . .

Subject: Kerry and Fonda - Photoshop job? From: Kosh To: All Date Posted: Tues, Feb 17, 2004 at 10:31:21 (EST) Email Address: jrgallag@earthlink.net Message: Andrew Tobias' site says yes: 'You may have seen the photo of John Kerry standing at a podium with Jane Fonda that has been making the rounds. I’m told it is completely valid except for the Jane Fonda part – she was Photoshopped in. More widely circulated has been the – legitimate – photo of John Kerry two or three rows behind Jane Fonda at some kind of anti-war rally.' Writes Thomas M. Cleaver (like Kerry, a Vietnam vet who wound up opposing the war): 'It was taken TWO AND A HALF YEARS BEFORE Jane Fonda went to North Vietnam. When she went there, John Kerry, as a leader of Vietnam Veterans Against The War, CONDEMNED her actions, as did ALL members of VVAW.' http://www.andrewtobias.com/

Subject: Re: Kerry and Fonda - Photoshop job? From: Yann To: Kosh Date Posted: Tues, Feb 17, 2004 at 11:43:02 (EST) Email Address: Not Provided Message: Why all that? Why is the Vietnam war so important in a presidential election in 2004 in the USA? Why is 'J. Fonda and J. Kerry on the same side or not in a photo' so important for this election? Maybe the more important is 'what J. Kerry has done as a politician in the past' and 'what is his 2004-2008 program of action'...? No? Please tell me why. Yann (French citizen)

Subject: Re: Kerry and Fonda - Photoshop job? From: Paul G. Brown To: Yann Date Posted: Tues, Feb 17, 2004 at 13:41:25 (EST) Email Address: Not Provided Message: > Why all that? Why is the Vietnam war so important in a presidential > election in 2004 in the USA? Would the French have voted for a Nazi collaborator in a hypothetical 1972 presidential election? That's how deep the emotional and political divide is over Vietnam in the US. The uncontested facts are that Jane Fonda visited North Vietnam in 1972. She made several innacurate statements concerning the treatment of US prisoners, was photographed in the sighting-seat of an anti-aircraft weapon, and made a number of propoganda broadcasts. Whatever your position on the Vietnam War, you have to admit that in exercising her free-speech rights in this way Fonda came very close to treason. Kerry has a distinguished Vietnam service record. He has an equally distinguished anti-Vietnam War record. By linking him with Fonda, his political opponents are trying to focus attention on one part of the story. In the US a politician's 'character' counts for as much, if not more, than their political positions. The idea is to avoid electing incurious and narrow children of privilege. It's a good idea, in principle. Hope this helps clarify the situation . . .

Subject: The Dollar From: Pete Weis To: All Date Posted: Mon, Feb 16, 2004 at 13:47:20 (EST) Email Address: Not Provided Message: Through what appears to be an effort by the US to devalue the dollar ('benign neglect'), the dollar has fallen over 30% against the Euro over the past two years and has fallen substantially, during the same period, against a 'basket of currencies'. We're told by most economic pundits that this will help with the current account deficit. However, the Chinese have 'tagged' their currency to the dollar and the Japanese have relentlessly driven the Yen downward in near lock-step. Thus the dollar drop has had little effect on the current account deficit. However, the dollar drop has had significant effect on the 'bottom-line' of US businesses. GE reported that their 2003 profits were reduced by the increasing dollar costs for energy and the raw materials used to manufacture their products. Much of the focus for the upcoming OPEC meeting will deal with the falling US dollar. As posters on this board are aware, the US dollar's status as the world's reserve currency has served to garner worldwide support for the dollar. But nations that produce commodities such as oil are becoming very concerned about the 'reduced-value' dollars they are receiving in exchange for their commodities. From what I'm reading, there are two ways OPEC will deal with this problem - (1) reduce oil production which gets them a higher dollar price for their oil or (2) demand payment in another currency, such as Euro's. Both are to be discussed, but it is generally agreed that an approximately 10% drop in oil production will be their solution. There are alot of rumblings about Russia eventially demanding Euro's for their oil. I don't have specific articles to reference, but if you have been following this in the news you are aware of what I'm talking about. It's hard to overstate the importance of this issue, since the increased dollar costs of commodities (especially oil and natural gas) factor into, not only, the increased costs for manufacturers but subtract from discretionary personal income. Another negative effect - if companies are being squeezed by higher energy and commodity costs, it puts a greater urgency on them to find other means to reduce their costs (offshoring?). It's ironic that the dollar drop is tauted as a solution for the current account deficit, but hasn't the greater effect been to increase manufacturing costs, reduce discretionary income and make offshoring a more urgent solution for US companies?

Subject: Re: The Dollar From: Dirk To: Pete Weis Date Posted: Mon, Feb 23, 2004 at 05:00:26 (EST) Email Address: dirk@1000dinge.net Message: Through what appears to be an effort by the US to devalue the dollar ('benign neglect'), the dollar has fallen over 30% against the Euro over the past two years and has fallen substantially, during the same period, against a 'basket of currencies'. We're told by most economic pundits that this will help with the current account deficit. However, the Chinese have 'tagged' their currency to the dollar and the Japanese have relentlessly driven the Yen downward in near lock-step. Thus the dollar drop has had little effect on the current account deficit. However, the dollar drop has had significant effect on the 'bottom-line' of US businesses. GE reported that their 2003 profits were reduced by the increasing dollar costs for energy and the raw materials used to manufacture their products. Much of the focus for the upcoming OPEC meeting will deal with the falling US dollar. As posters on this board are aware, the US dollar's status as the world's reserve currency has served to garner worldwide support for the dollar. But nations that produce commodities such as oil are becoming very concerned about the 'reduced-value' dollars they are receiving in exchange for their commodities. From what I'm reading, there are two ways OPEC will deal with this problem - (1) reduce oil production which gets them a higher dollar price for their oil or (2) demand payment in another currency, such as Euro's. Both are to be discussed, but it is generally agreed that an approximately 10% drop in oil production will be their solution. There are alot of rumblings about Russia eventially demanding Euro's for their oil. I don't have specific articles to reference, but if you have been following this in the news you are aware of what I'm talking about. It's hard to overstate the importance of this issue, since the increased dollar costs of commodities (especially oil and natural gas) factor into, not only, the increased costs for manufacturers but subtract from discretionary personal income. Another negative effect - if companies are being squeezed by higher energy and commodity costs, it puts a greater urgency on them to find other means to reduce their costs (offshoring?). It's ironic that the dollar drop is tauted as a solution for the current account deficit, but hasn't the greater effect been to increase manufacturing costs, reduce discretionary income and make offshoring a more urgent solution for US companies? --- Furthermore, if the low dollar is supposed to stimulate demand, it will lead to rising interest rates, which is not so good for repaying the budget deficit. Another thing is that most of the us-bonds are being sold to China. If mister Snow succeeds in convincing the chinese to let their currency rise, this might be unfortunate when it comes to debt service...

Subject: war on terrorism From: paul berner To: All Date Posted: Sun, Feb 15, 2004 at 13:11:39 (EST) Email Address: llynora@hotmail Message: It seems to me nothing's being done about terrorism because no one anywhere addresses the causes. No one may dare suppose it may be a reaction to something we've done, or that the architects and facilitators who brought this all upon us might actually live in our midst and sit at the drivers wheel of national policy. I don't think 9/11 happened on the anniversary of the overthrow of Allende by some coincidence. It seems to me Henry Kissinger's resume alone provides ample justification as to why some people somewhere might conclude our nation is the 'Great Satan'. Henry Kissinger sounds like Satan. He could do voice overs for the movie. truthout

Subject: Trolly Trash From: Trolly To: paul berner Date Posted: Tues, Feb 17, 2004 at 15:15:20 (EST) Email Address: Not Provided Message: Typical trolly trash.

Subject: Trollish Trash From: Trolly To: paul berner Date Posted: Tues, Feb 17, 2004 at 15:05:53 (EST) Email Address: Not Provided Message:

Subject: Re: Trollish Trash From: William To: Trolly Date Posted: Mon, Feb 23, 2004 at 23:46:55 (EST) Email Address: Not Provided Message: Except for the fact that it's posted twice, I don't see anything trollish about this post. Kissinger bears a large part of the responsibility for the deaths of 3 million people in Indochina, 100,000 people in East Timor, and thousands more in Chile. This, along with the United States' many other foreign interventions (installing and propping up dictatorships here, overthrowing democracies there) that the American people know little to nothing about, make it surprising the US has gone this long without a major terrorist attack on its shores.

Subject: war on terrorism From: paul berner To: All Date Posted: Sun, Feb 15, 2004 at 13:09:27 (EST) Email Address: llynora@hotmail Message: It seems to me nothing's being done about terrorism because no one anywhere addresses the causes. No one may dare suppose it may be a reaction to something we've done, or that the architects and facilitators who brought this all upon us might actually live in our midst and sit at the drivers wheel of national policy. I don't think 9/11 happened on the anniversary of the overthrow of Allende by some coincidence. It seems to me Henry Kissinger's resume alone provides ample justification as to why some people somewhere might conclude our nation is the 'Great Satan'. Henry Kissinger sounds like Satan. He could do voice overs for the movie. truthout

Subject: Re: war on terrorism From: Mik To: paul berner Date Posted: Wed, Feb 18, 2004 at 17:26:37 (EST) Email Address: Not Provided Message: Paul, Very good post there. I think the issue is, How far is one going to push the pendulum?.' What I mean by this is: You have raised the issue of OPEC dropping supply or changing to Euro. At what level will this happen? You raised the issue of China pegging their currency to the dollar. Well from what I remember, China has a trade surplus with the US of 250billion and a trade defecit with other countries of 225Billion (a full trade surplus of only 25 Billion). A drop in the US$ and subsequent drop in the Chinese currency may well push them into trade deficit and force them to either change their fixed exchange or float their currency. But again at what level will this happen? There is a serious can of worms that will be opened with OPEC moving away from the US$ and China breaking away from its current fixed rate. I'm sure there will be good and bad to this scenario. I'm just not sure which will be greater, the good or the bad. I look forward to reading more debate on this issue. It would be of more interest to read Paul Krugman's take on this issue.

Subject: Re: war on terrorism From: Mik To: Mik Date Posted: Wed, Feb 18, 2004 at 17:40:18 (EST) Email Address: Not Provided Message: Sorry about the above post - it was meant for the thread on the Dollar.

Subject: CBS Sunday Morning From: Mark To: All Date Posted: Sun, Feb 15, 2004 at 10:44:32 (EST) Email Address: mark_hanis@yahoo.com Message: Please post Krugman's great 'opinion' piece on CBS Sunday Morning 2/15/04 or let me know where to find it. Your help is greatly appreciated.

Subject: Buy or rent? From: Yann To: All Date Posted: Fri, Feb 13, 2004 at 09:52:59 (EST) Email Address: Not Provided Message: Please would you know any serious economics book or any serious economics paper which deals with the following issue: is it better to purchase or to rent one's house/apartment? Thanks in advance. Yann

Subject: Investment From: Jennifer To: Yann Date Posted: Fri, Feb 20, 2004 at 14:15:56 (EST) Email Address: Not Provided Message: The question is whether a purchase is meant to be an investment. Renting is not an investment, buying is. Will the investment be affordable and will it pay off?

Subject: Re: Investment From: Gnao To: Jennifer Date Posted: Fri, Feb 20, 2004 at 18:46:03 (EST) Email Address: Not Provided Message: A purchase is bought? responsability!

Subject: Re: Buy or rent? From: David E... To: Yann Date Posted: Fri, Feb 13, 2004 at 11:51:42 (EST) Email Address: daveellis_39@hotmail.com Message: Here is a link to the clearest, simplest article I have seen on your subject. http://www.dallasnews.com/sharedcontent/dws/bus/scottburns/columns/2004/stories/021004dnbusburns.65190.html

Subject: Profile of Krugman in British magazine. From: Matthew Bristow To: All Date Posted: Fri, Feb 13, 2004 at 00:43:14 (EST) Email Address: matthew.bristow@britishcouncil.org.hk Message: There's a profile of Krugman in the New Statesman: http://www.newstatesman.com/site.php3?newTemplate=NSTemplate_NS&newTop=Section: Front Page&newDisplayURN=Section: Front Page For those who like that sort of thing, it is the sort of thing that they will like.

Subject: Weak . . . From: Paul G. Brown To: All Date Posted: Fri, Feb 13, 2004 at 00:39:36 (EST) Email Address: Not Provided Message: Friday's (13/02/2004) column is not our man's best. These rumours of Bush's neglect of duty could have been phoned in, and Bob Herbert has better prose style. Stick to numbers, Prof. Krugman. You have no peer when it comes to pointing out the perfidity of the present president's pre-occupations.

Subject: Re: Weak . . . From: WRS To: Paul G. Brown Date Posted: Mon, Feb 16, 2004 at 20:52:45 (EST) Email Address: Not Provided Message: I hope PK listens to Paul, because his posts are supported by reason instead of emotion. I don't recall PK making an issue of Clinton's war record, with a long paper trail of draft dodging. The moveon crowd was established to keep dirt like this in perspective, but only if it splatters on their guy. The issue is pure partisan, all heat and no light. Bush has served for three years as commander in chief with 2 major victories in the books. This nation's strategic position is far stronger now than before 2001. Opponents blinded by hate him will reject this and any accomplishments of a president as he tries to protect this country from Islamic fascists who are bent on killing all of us.

Subject: Bush is a great leader??>> From: Me To: WRS Date Posted: Tues, Mar 09, 2004 at 09:21:26 (EST) Email Address: Not Provided Message: I think it's very funny when people point out Bush's great war record since his inception as President, but fail to mention his greatest failure which was allowing 9/11 to happen in the first place. And that's what it comes down. He failed this country and allowed the death of 3,000 people, but all we are supposed to remember is how he lead us AFTER the fact. I would trade his leadership after 9/11 for just a hint of leadership BEFORE. I can't help but think that if 9/11 happened on Clinton's watch, we wouldn't be discussing how great his leadership had been, but what a failure he had been for allowing such a huge breech in security and intelligence in the first place.

Subject: Re: Weak . . . From: Paul G. Brown To: WRS Date Posted: Mon, Feb 16, 2004 at 22:05:58 (EST) Email Address: Not Provided Message: Well, my criticism was *very* narrow. The Bush Administration will have to answer for its foreign policy adventurism, and the President deserves to be called to account on his character. In my judgement he will be found wanting: wars started badly usually end worse. But my point is that such issues are not PK's strong suit. This administration has generated enough cant and hypocracy to supply a cottage industry of critics. I just think PK's best when numbers are involved and in this column he deviated from that rule.

Subject: If not him, who? From: Me To: Paul G. Brown Date Posted: Tues, Mar 09, 2004 at 09:25:18 (EST) Email Address: Not Provided Message: I love u Paul B., but if Krugman doesn't say it, who will? It's his cross to bear whether we like it or not. It takes courage to put that stuff out there week after week and if all columnist and news anchors and commentators only commented on their field of expertise, what quiet air waves and blank editorial pages we would have. Indeed.

Subject: Re: Weak . . . From: WRS To: Paul G. Brown Date Posted: Tues, Feb 17, 2004 at 16:37:51 (EST) Email Address: Not Provided Message: I agree with your premise and think PK doesn't do himself favors when he holds Bush to a different standard than Clinton, or his predecessors. What sort of policy would you have preferred to 'adventurism' in light of the Sept. 11 attacks and continuing threat posed by Islamic fascists?

Subject: Too funny to think about From: Me To: WRS Date Posted: Tues, Mar 09, 2004 at 09:29:31 (EST) Email Address: Not Provided Message: The fact that you truly believe that Bush is held to the same standard as Clinton on any aspect of anything shows you to be a troll. And the fact that you agree with Paul Brown should not give Mr. Brown any comfort. In fact, if I were him, I would rethink the whole Paul should stick with what he knows premise. When a troll agrees with you, you might just be wrong.

Subject: Re: Weak . . . From: Paul G. Brown To: WRS Date Posted: Tues, Feb 17, 2004 at 21:06:25 (EST) Email Address: Not Provided Message: Oooh, now you've gotten me on the soap-box. Anyone uninterested in yet another squidgy progressive screed on the Bush Administration's foreign policy can just cut here and neglect to paste . . . I read a lot of Robert D. Kaplan, Atlantic editor and travel writer who specializes in the prescient. I've read others too, like Joseph Nye, but Kaplan's take on it convinced me because his was the ant's eye view of the elephant dance. His method was pretty simple. He walked through the highly populated and under-reported corners of the world and wrote down what he saw. He was the first writer I recall describing problems like the collapse of the nation/state (Africa and Six-Ex-Soviet-Satellites-istan). He wrote about the increasing importance of pan-national and non-government organizations (criminal gangs, pan-arabist fanatics, rival tribes in africa and the trans-caucases) in many people's lives. He explained why poor people around the world choose religous devotion as an alternative belief system to western materialism and secularism (for both good and ill). And he talked a lot about the challenges to western liberalism these trends present. Re-reading him today, the 9/11 attacks begin to look pretty inevitable. US interests had been attacked before, both abroad (US Embassy in Lebanon, Kobar Towers, USS Cole) and at home (the 1993 World Trade Center bombing). During the 1990s, and most notably on the eve of the millenium. A cynic might say that the big difference with 9/11 was that it all happened 'with the cameras rolling': but the danger was and is real, and it has been present for some time. And I'm kind of open to buying what the Bushies have to sell. By temperament, I'm a liberal hawk. Military intervention in the Balkans saved lives. Putting the Marines into Rwanda/Burundi would have, also. I would argue that the threat of genocide in Zimbabwe and Haiti are approaching the point were our tough-guys-with-guns represent the lesser of two evils relative to their tough-guys-with-guns. So I was not opposed, in principle, to the administration's efforts in Afghanistan and Iraq. And Powell and Blair said Saddam had nukes. I believed em'. Fool me once. . . . Then why, 'adventurism'? Because it has become clear to me that the Bush Administration is just making it all up as it goes along. And adventurism is a really, really dangerous way to run foreign policy. First, just who is the enemy? We should be clear about it; they are theocrats and fascists. Their ideology has always existed. It will always exist. It cannot be bombed out of existance. It can only be discredited, and marginalized, eventually to be forgotten and replaced. But the Bush Administration apparently believes that the main enemy is 'terrorism' (or 'the axis of evil' on wednesday, and 'Al Queda' every other tuesday). Confusing the enemy's operational strategy with the enemy itself is an unprecidented dumb-dumb. It gives no guidance to operational types about how to prioritize or plan anything. This lack of clarity about just who the enemy is smacks of adventurism. (Kill 'em all! Let God sort it out.) Second, just how do we win? Our grand strategy -- to judge from Perle, Frum and Wolfowitz -- is to invade nation states or remake their government by force. But the enemy's strategy relies on trans-national mobility (pace Kaplan). They take cover among the enormous numbers of people crossing porous borders. We might re-make Iraq as an islamic democracy but that won't change for a moment the fact that we can't prevent really bad people from driving a really big truck from Islamabad to Tartus. The disconnect between the nature of the enemy and the design of our strategy reeks of adventurism. Instead of going after our current enemy, we are going after the kind of enemy we have had glorious triumphs over before: nation states. Third, how can we judge our progress so far? On the one hand, to judge from Saddam's lack of progress on WMDs in Iraq, the rather less sexy Bush I/Clinton multilateral strategy of enforcing border constraints (through embargoes) was pretty successful. But if we're to judge from their latest book the views of the Bush Administration's favorite fellow-travellers represents a triumph of hope over experience. Misunderstanding the rules of conflict and the lack of flexibility smacks of adventurism. I could go on. The repeated understimation of the cost (in lives and dollar: what else could be have achieved for $250 Billion and 500 lives lost?). The triumphalism (Mission Accomplished!). It's all such bullshit. We have been engaged in this grubby, squalid, and unheroic conflict for years. But I would argue that the Bush foreign policy (if it can be called a policy) is based on a set of false premises about the way the world works, who enemy is, how to fight them, and how to defeat them. Instead of a coherent set of guiding ideas we are fed a shimmering collage of justification and denial. Winning this struggle ain't about splendid armoured division charges across the desert and laser guided smart bombs. It's going to be won through long term policies that create the possibility of a better life, as well as the occasional sharp knife on a dark night. Boring stuff. No photo ops. But effective, and efficient. The opposite of adventurism.

Subject: Re: Weak . . . From: WRS To: Paul G. Brown Date Posted: Tues, Feb 17, 2004 at 21:51:33 (EST) Email Address: Not Provided Message: Thanks for the references and your well-considered response. But I still don't get where you stand. You don't like Bush's policy, which is fair enough. But what's the alternative? I presume 'the possibility of a better life' means we smile and maybe send money to certain developing countries (which ones?) And 'the occasional sharp knife' requires we sneak attack the really bad guys when we get the chance. OK. But I think you underestimate the threat against us and how serious these guys are. I don't think cold steel is enough for the high stakes at issue: your life and mine. I gather from reading Arab media that many folks in Muslim countries respect the power of the 'splendid armor division' because it offers the only hope for the mess their leaders have made through corrup and feckless policies designed to enrich themselves and exclude women. I agree we have a tough situation in Iraq, and that White House bungling has made it worse. Dump Cheney, I say. But I still think the previous policy of sanctions was the worst of all worlds, with women and children starving by the thousands on account of our policy. Can you blame Arabs for hating us? Isn't 12 years of siege warfare long enough? The present situation in Iraq, as lousy as it seems today, is a much better both morally and strategically for America and Iraq. The only thing I know for sure is that if Saddam were still in power, Kerry and the other Democrats would be in Bush's face for failing to deal with the problem. Peace.

Subject: Yeah, that's it, we'll blame Cheney From: Me To: WRS Date Posted: Tues, Mar 09, 2004 at 09:42:20 (EST) Email Address: Not Provided Message: First blame Clinton, then when all else fails, blame the Vice President? (I agree Cheney is evil) But never, under any circumstances blame the man who bears the title of President. (A title I might add, he wanted so badly, he took it) Hmmmm. Why Not blame Bush? Is he that damn dumb that we, as a country brimming with empathy, can't force ourselves to blame the dim-witted guy? If that's true, then I don't want a dumb guy at the helm of my country. Don't blame him because Cheney is calling all the shots? Or Karl Rove? Well then, again, I don't want a guy who doesn't have the balls to call the shots. He's not a great leader, he's just a puppet. Don't blame him because he's had to deal with a lot of stuff that's been heaped on him during his presidency? Well, boo hoo, if he can't handle it, then I don't want someone who can't handle pressure as my president. And everything he has had to deal with during his presidency has been his own doing, yes, even 9/11. When you get warnings that someone might try to use airplanes to blow things up, you PAY ATTENTION. Don't blame him because he's our President??? Not really, he stold the Presidency from Al Gore, and then proceeded to act like he actually won by a large majority. God Forbid we blame George W. Bush for anything!!! We must all remember, he's a dumb, irresponsible, spineless thief, who but for Judge Scalia would be clearing brush in Texas.

Subject: Re: Weak . . . From: Paul G. Brown To: WRS Date Posted: Wed, Feb 18, 2004 at 14:04:00 (EST) Email Address: Not Provided Message: You're right. I ought to be more explicit. First, I buy your judgement about the relative position of Iraq today and yesterday. The evidence I've seen supports the conclusion that the sanctions were bad news. And I also buy the argument that, as the US put Saddam there in the first place, the US was morally obliged to remove him. But, I question the price. Was removing SH and liberating Iraq the best way to spend $250 Billion and > 500 American lives (not to mention the Iraqi dead)? It seems to me that it could have been done more cheaply, albeit more slowly. But in my judgement, the Bush Administration are bumbling incompetents where foreign policy is concerned (perhaps even more hapless than they are at domestic policy). I am also not convinced it's Cheney. I actually think Bush is really calling the shots! So even if George II was to adopt all of these suggestions I doubt he has either the intellectual resources or the character qualities needed to execute. Looking Ahead: 1. A return to multi-lateralism. Robert McNamara said recently that for him, the biggest lesson of the Vietnam War was that if the US can't pursuade the rest of the world to get behind a policy initiative, then it ought not pursue that policy. Looking at it from a historical perspective this rule of thumb would have kept the US out of the Spanish American War, and Vietnam, but would have had us in both World Wars, Korea, the Gulf War and the Kosovo intervention. In fairness, it would have prevented getting involved in Rwanda/Burundi. 2. Shift the strategy balance from primarily a military response, to a diplomatic and aggressive, even 'pre-emptive' police action response. Militarily, the rest of the world doesn't bring much. But the rest of the world represents a significant 'force multiplier' in terms of intelligence, and on-the-ground police muscle. The goals of the diplomatic/police strategy would be to eliminate the pan-national organizations responsible for people smuggling, crime and arms proliferation. The strategy to use is attrition: arrest them whenever we find them, try them publicly, make it harder to make money that way than through honest means. 3. Make a clear distinction among the international threats we face. Lumping Korea (secular fascism) with Iran (domestic theocratic fascism) while ignoring the pan-national threats confuses the mission. Identify goals and strategies for each challenge. Boring stuff that takes focus and attention span. 4. The key long term foreign policy goal is, as you say, to address issues of social justice in the middle east. I get kind of cranky with some progressives who have swallowed the whole 'relativity' thing: you shouldn't cricitise arab cultures because to do so implies a cultural superiority. Women who testify that the burkha is 'liberating' because it means they are not treated as sex objects seem to me to be suffering from some kind of social Stockholm syndrome! In Iraq/Afghanistan. 1. Make it work. The west has too much at stake. Leave the troops there: even reinforce them. Do not turn the country over to the Iraqis (who have no experience at living in an open society). Share administration with the UN because they're good at that kind of thing. 2. Politically: institute a federal system with local, regional and national authorities. Start with elections for local office: mayor, council, judges, camel-catcher. Let 'em figure out how that works for two years. Rinse, repeat, now at the regional level, then nationally. 3. Figure out how to pay for it. In 2002, the US imported $78 Billion worth of crude oil. Imported oil accounts for about 50% of consumption. Pass a 2% crude oil tax, which would generate, say, $30 billion annually. We are in these countries for the long haul. Institute a 5 year re-building plan for Iraq/Afghanistan. I can't speak for Kerry et al, except to point out that the policy of regime change was a Clinton/Democrat thing and that he made precious little progress towards the goal either. The previous administration's failure would have blunted any Democrat criticism.

Subject: Re: Weak . . . From: WRS To: Paul G. Brown Date Posted: Wed, Feb 18, 2004 at 22:00:48 (EST) Email Address: Not Provided Message: I don't disagree with anything you've said, but would like to add two thought to close a fruitful discussion. 1) While the quote you ascribe to McNamara appears sensible enough, he is one of history's all time losers and his endorsement automatically makes the idea suspect, in my book. 2) I seriously doubt whether Kerry or any of the Democrat candidates has spine enough to implement and successfully lead the policies you suggest. The weasely, blame America-for-all-ills rhetoric coming out of that crowd is seriously counterproductive and will turn off many voters at the polls in November, especially in 'red' America. To most of the country Sept. 11 is far more more relevant than Vietnam. I thought we had put goofy hippie politics behind us. But if Bush continues with his present stupor, Kerry could prove me wrong.

Subject: Re: Weak . . . From: David E... To: Paul G. Brown Date Posted: Fri, Feb 13, 2004 at 02:33:50 (EST) Email Address: daveellis_39@hotmail.com Message: I like it, hits em where it hurts. President Bush has wrapped himself in the flag, let him prove that his service is not a stain on the flag.

Subject: Goes to heart of Character From: Me To: David E... Date Posted: Tues, Mar 09, 2004 at 09:52:33 (EST) Email Address: Not Provided Message: Why not? We had to listen repeatedly to what a draft dodger Clinton was. But apparently, Bush's flag he's wrapped in is teflon coated and stain resistant. Our President shirking his duty, even when he was only in his early 20's, should be an indicator of the kind of man he is today. He didn't have to take responsiblity or face the music for bad decisions then, and he hasn't had to now. I know I teach my children consequences so that they can be better people when they grow up. But George and Barbara didn't feel that same need. So now we have a man who thinks it's ok to get away with stuff as long as the poop doesn't blow back on him (Has he ever said he was wrong or apologized for anything?????) and we, as citizens, think that's just fine. The issue goes to Bush's character, or lack of it. His policy seems to be deny and cover up. And the media and GOP are enablers. I hope none of you are raising your children like that, or we are all screwed.

Subject: More to say From: David E... To: David E... Date Posted: Fri, Feb 13, 2004 at 12:27:56 (EST) Email Address: daveellis_39@hotmail.com Message: The President Bush military records story has got legs. Here is the latest from Eschaton - http://atrios.blogspot.com/2004_02_08_atrios_archive.html#107668186793169771 And in case you had forgotten how stupid are president is. Here is a recent quote - 'I was a prisoner too, but for bad reasons.'—To Argentine President Nestor Kirchner, on being told that all but one of the Argentine delegates to a summit meeting were imprisoned during the military dictatorship, Monterrey, Mexico, Jan. 13, 2004 link - http://slate.msn.com/id/76886/ This is the same guy that looked in Putin's eyes and thought he saw a kindred spirit. How can you be too shrill? Krugman's on a roll and I am cheering.

Subject: Re: More to say From: RGB To: David E... Date Posted: Mon, Feb 16, 2004 at 11:18:39 (EST) Email Address: Not Provided Message: ...how stupid 'are' president is...

Subject: Nope, 'Are' is fine From: Me To: RGB Date Posted: Tues, Mar 09, 2004 at 09:56:05 (EST) Email Address: Not Provided Message: I actually think that's appropriate or maybe just a typo from the poster; Atrios is a very educated man. But indeed, let's keep it 'are' because it certainly isn't 'our' Bush is not my President, and he never will be.

Subject: Budget Cuts From: Emma To: All Date Posted: Thurs, Feb 12, 2004 at 17:11:53 (EST) Email Address: Not Provided Message: http://www.cbpp.org/2-5-04bud.htm President's Budget Contains Larger Cuts In Domestic Discretionary Programs than Has Been Reported - 2/11/04 The budget books the Administration released this week omit information on the President's proposed funding levels for programs in years after 2005, but the OMB documents that — underlie the budget show the Administration is proposing cuts in domestic discretionary programs that reach $50 billion a year by 2009.

Subject: 'Perfectly Legal' From: Terri To: All Date Posted: Wed, Feb 11, 2004 at 17:43:21 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/01/books/review/01GALBRAT.html Perfectly Legal': Nothing Is Certain but Death By JAMES K. GALBRAITH As Johnston Cay Johnston knows, the real scandal of our federal tax system isn't so much what the rich didn't pay. It's what the rest of us now have to -- particularly the middle and upper middle classes, with incomes from $50,000 to $500,000. This is the group Bush is squeezing, to benefit what Johnston aptly calls the ''political donor class.'' This truly shocking story emerges later on in ''Perfectly Legal.'' First we have the repeal of the estate tax, which shifts the tax burden downscale and from the dead to the living. Johnston, a business and financial reporter for The New York Times, explains how this tax, affecting only a handful of the very, very rich, fell victim to the arts of propaganda: ''The term death tax is a superb example of marketing triumphing over reasoned debate. So thoroughly has the phrase been infused into Washington that many journalists . . . employ this term of advocacy instead of the neutral, and correct term, estate tax, without rebuke by their superiors.'' He notes that the pollster Frank Luntz, the carnival barker of this operation, would have advised the Democrats to call it the ''billionaire's tax.'' No such luck. Next there is the Alternative Minimum Tax, the ''stealth tax,'' designed for the very rich but now set to overrun Middle America. In 2000 this tax hit just 1.3 million households; Treasury estimates held that it would affect 17.9 million by 2010. But the Bush tax cuts doubled this number to 35.6 million by design: ''Between 2003 and 2012 the Bush tax cuts will force an increase of $560 billion in taxes to be paid under the alternative minimum tax. . . . It is a subsidy of the super rich paid for by the middle class and the upper middle class.'' And it is a horror -- attorney's fees in legal settlements or medical expenses can't be deducted (to the same degree), or even the costs of having many children. Still the very rich escape. Promises that this train wreck will be averted are not credible, in Johnston's view. The tax was a betrayal, and the Bush people who committed it knew exactly what they were doing. Then there is the payroll tax, a travesty ever since 1983, when Alan Greenspan sold the public on the myth of paying for Social Security in advance. And the difference between the amount brought in through the payroll tax and the amount needed to pay benefits underwrote Reagan's tax cuts for the rich, while the government stuffed a ''Trust Fund'' with I.O.U.'s. But with what? Paying them off will require either more borrowing or a rise in taxes -- exactly as if the trust fund did not exist. Meanwhile, the $1.7 trillion in excess payroll taxes already paid would be enough to completely pay off all consumer debt in 2001. And we are told that there is a ''crisis'' because the Trust Fund will eventually ''run dry.'' In fact, there's no need to cut the benefits for which soon-to-be-retired workers have been overcharged for decades, or to raise payroll taxes even more on the next generation. The only issue is whether wealthy Americans will pay any part of the bill.

Subject: Re: 'Perfectly Legal' From: Pete Weis To: Terri Date Posted: Wed, Feb 11, 2004 at 18:15:39 (EST) Email Address: Not Provided Message: Not to worry Terri. The barons at the top will 'trickle down' their excess and sew seeds of prosperity, turning it right back into the 'soil' of this economy. Or maybe, with the steadily falling dollar, they're buying Swiss securities and oil stocks. Which do you think it is?

Subject: India From: Jennifer To: All Date Posted: Wed, Feb 11, 2004 at 16:00:48 (EST) Email Address: Not Provided Message: http://www.livingontheplanet.com/bl/archives/000209.html Excerts from a report by Morgan Stanley's Mumbai correspondant Chetan Ahya. * The number of students being admitted for engineering studies in India will increase to 600,000 by 2004 compared with 455,000 in 2000. * Every year, India adds about 2.3 million English-speaking graduates (15 years education). This compares with around 1.2 million graduates every year in US. * India's population in the 15-64 age group will rise to 758 million and in the 25-59 age group to 501 million. The bulge will be in the age category of 15-24 years. This bracket will have 223 million people by 2010, up from the current 186 million. * Even if GDP growth accelerated to 6.5% over the next few years, this stock of unemployed work force would only rise.... To overcome the problem of unemployment, GDP would have to grow in the range of 8-9%. * The pharmaceuticals sector is emerging as a big area creating job opportunities for Indian scientists, doctors and laboratory analysts whose costs in India are about one-fifth to one-eighth of those in the US. * Globally, about US$40 billion worth of drugs are going off patent over the next four to five years. This should throw open a big opportunity for Indian companies.

Subject: India and Pharma From: Jennifer To: Jennifer Date Posted: Wed, Feb 11, 2004 at 17:01:09 (EST) Email Address: Not Provided Message: The pharmaceuticals sector is emerging as a big area creating job opportunities for Indian scientists, doctors and laboratory analysts whose costs in India are about one-fifth to one-eighth of those in the US. This sector is already generating revenues of about $2.5 billion. Currently, the key sources of revenue are contract manufacturing of bulk drugs, developing and selling generic drugs globally, and in the future it may be the development of proprietary drugs. For India, the most promising area seems to be global generic market exports. Globally, about $40 billion worth of drugs are going off patent over the next four to five years. This should throw open a big opportunity for Indian companies. The number of product filings with the US FDA by Indian companies over the last three years has risen sharply. A point to note is that though India currently has a 2% market share in US generic drugs, it accounted for 30% of the incremental relevant filings over the last four quarters.

Subject: Re: India From: Parerino To: Jennifer Date Posted: Wed, Feb 11, 2004 at 16:15:36 (EST) Email Address: nma@hotmail.com Message: I do love Solow and Paul!

Subject: Don't look down, Part II From: Paperino To: All Date Posted: Wed, Feb 11, 2004 at 15:59:39 (EST) Email Address: nma@hotmail.com Message: Dead Rambo Bounce? '...Something similar happens to economies.When the fundamentals worsen, there is often a drastic initial effect, followed by a partial recovery.Economists sometimes call it the 'accelerator principle'(yes, it works for deceleration too)... In garden-variety recessions the 'accelerator principle' operates mainly because of inventory effects.When consumer demand drops (or merely grows more slowly than expected!) businesses are caught by surprise;unsold items pile up(prodictivity lq 2003: 8,2% interest rate 1%, 1%?) on the shelves and in the warehouses.To get rid of the excess inventory, companies must temporarily cut their production sharply(stores lower prices as well?), laying off workers(jobless recovery? raising individual productivity?) and buying less from suppliers;this in turn further reduces consumer demand, and so on.For a time..., the recession (=deflation) feeds on itself.But eventually?(Nash equilibrium = redemption = banks = 1%) inventories are reduced to normal levels, and production recovers part of the lost ground, even if the original causes of the slowdown have not been cured.This conventional inventory 'accelerator' was part of the story in Asia?, but less conventional effects were also 'still?' at work.

Subject: Paul's latest book review From: David Keating To: All Date Posted: Wed, Feb 11, 2004 at 14:01:44 (EST) Email Address: ddt000@hotmail.com Message: I just wanted to mention (to Paul but I have no way of contacting him) that I have a thought on the major blank he drew in the book reviews from the most recent NYT Review of Books (I recieved it on 2.10.04 but don't have it in front of me). The blank was why are the religous right (christian coalition etc.) banking on the Bushes? Molly Ivins touches upon this in her book Shrub - from his time as govenor of Texas. But more interesting to me is this: http://www.yuricareport.com/ Ms. Yurica investigated the 700 Club for the Federal Government back in the 1980s. In the first article on her home page, the author discusses the extent of the Christian Coalition's infiltration of the GOP and their likely plans, with Pat Robertson as the Kingpin... I have to stop here to note that Molly Ivins in here book Bushwacked talked about how she hated that the Bush Administration made her feel like a paranoid conspiracy theorist. There is more on Pat Robertson at Greg Palast's website: www.gregpalast.com. He investigated Pat during the Bank of Scotland incident. Look at the links on the left side and click on Robertson's name. Very strange character indeed this ex-minister. What I am trying to say is I think that the religous right, or their most active arm, the christian coalition, is making their power play, with the Bushes. Reminds me of the unholy alliance of the house of al Saud and the Wahabbis in Saudi Arabia! http://www.amazon.com/exec/obidos/tg/detail/-/0385506929/104-0689616-8561538?_encoding=UTF8&coliid=I1NI3NOKXAJ9YP&colid=U63X9M4OZOBN The Yurica Report www.yuricareport.com/

Subject: Re: Paul's latest book review From: DK To: David Keating Date Posted: Fri, Feb 13, 2004 at 11:46:13 (EST) Email Address: ddt000@hotmail.com Message: Just a little follow up on why the alliance between Pat and Bush. I can't vouch for the group but they have a little Campaign 2000 info that I wasn't aware of: McCAIN HITS ROBERTSON, BUSH GROVELS TO O'CONNOR Web Posted: February 28, 2000 he race for the Republican presidential nomination heated up today as Arizona Sen. John McCain took his campaign to Virginia, and condemned religious leaders Pat Robertson and Jerry Falwell as 'agents of intolerance' who were 'pandering to the outer reaches of American politics.' The salvo was just the latest in a round of exchanges over the role of religion in the election 2000 races. ¶ McCain delivered his stinging rebuke in the evangelists' home state. Falwell's Liberty University operates in Lynchburg, and Robertson has established a sprawling complex of organizations including Regent University, American Center for Law and Justice and his Christian Broadcasting Network in Virginia Beach. During recent primary contests in South Carolina and Michigan, Robertson and his Christian Coalition mobilized fundamentalist and evangelicals to turn out in heavy numbers to support Texas Gov. George Bush. Bush wandered into the fever swamp of religious bigotry when he opened his South Carolina campaign with an appearance at Bob Jones University, a school which until recently refused to admit blacks, but still bans interracial dating. The founder of the school spoke of Roman Catholicism as an apostate religioun of the antichrist. McCain was emphatic in trying to reinforce his credentials as a true religious conservative, though; he told a crowd of supporters that he was passionately pro-life. Standing with McCain at today's Virginia Beach rally was Gary Bauer, head of the Family Research Council who until last month also a candidate for the GOP presidential nod. Bauer has signed-on to McCain's campaign, suggesting a split within the religious right over the issue of trusting George W. Bush on crucial issues such as abortion. McCain was careful to not distance himself from his party's religious conservatives, taking to task only 'a few of their self-appointed leaders.' He accused the Bush campaign of misrepresenting his stand on abortion 'because I don't pander to them.' He also labeled Bush a 'Pat Robertson Republican' who could not defeat Al Gore if the vice president succeeds in becoming the Democratic nominee. 'Neither party should be defined as pandering to the outer reaches of American politics and the agents of intolerance, whether they be Lewis Farrakhan or Al Sharpton, on the left, or Pat Robertson and Jerry Falwell on the right,' McCain told the campaign rally. ¶ McCain was specifically responding to a last-minute telephone campaign conducted by Pat Robertson's supporters in Michigan. Voters were warned that McCain's campaign cochairman, former Sen. Warren Rudman, had made disparaging remarks about Christian conservatives and was a 'vicious bigot.' In a political autobiography, Rudman had warned against 'antiabortion zealots, would-be censors, homophobes, bigots and latter-day Elmer Gantrys to discredit any party that is unwise enough to embrace such a group.' Robertson's Christian Coalition issued a statement demanding that McCain repudiate Rudman, calling the statements 'a direct assault on people of faith.' ¶ All of this followed Bush's appearance at Bob Jones University, part of a larger pattern involving candidates in both parties rushing for the endorsement of religious leaders, and conspicuously bringing their campaigns into churches. Referring to the flap over the Bob Jones University appearance, Bush campaign strategist Karl Rove denounced McCain for supposedly using religion as a wedge issue. 'This is a reprehensible attempt to bring religion into American politics in a very ugly way,' Rove gushed on the ABC program 'Good Morning America.' ¶ Feeling the heat over the Catholic issue, Gov. Bush released the contents of a letter he send last Friday to New York Cardinal John O'Connor. Bush claimed, 'As a public official, I take seriously my duty to encourage tolerance and respect for the religious views of others,' and told the powerful Roman Catholic prelate that his appearance at Bob Jones University was not to be an endorsement of 'racially divisive views associated with that school.' 'In my speech to the student,' Bush wrote, 'I emphasized that I am a uniter not a divider and that Americans can work together for the good of all. On reflection, I should have been more clear in disassociating myself from anti-Catholic sentiments and racial prejudice. It was a missed opportunity, causing needless offense, which I deeply regret.' Underscoring his commitment to faith-based partnerships between church and state, Bush went on: 'I have proposed a broader role for churches and charities in providing social services -- and the Catholic Church has always led our nations in acts of justice and charity.' The New York Times described Bush's letter as 'measured, possibly underscoring his need for the continued support of the kinds of religious conservatives who support Bob Jones University.' The paper added that 'Mr. Bush condemned neither the school nor its officers, and he did not say that his decision to go there was in and of itself a mistake.' The McCain camp was quick to seize on the Bush letter. Mr. Rudman told the Times that Bush's statement came more than three weeks after his Bob Jones University campaign stop. 'It took a long time in getting there,' Rudman said. ¶ Tomorrow, GOP primaries will be held in Washington State and Virginia. The Washington primary is considered a 'beauty contest' since no delegates are at stake, and both the Bush and McCain camps are preparing for the March 7 votes in delegate-rich California and New York. ¶ News reports, polling organizations and other sources indicate that increasingly, candidates are focusing on the 'religious vote' in both primary races and the November general election. 'A profile of which candidate is getting the 'religious vote' is starting to emerge,' reports today's Washington Times. Citing the religion factor in electoral races, John Green of the Ray C. Bliss Institute for Applied Politics at University of Akron, Ohio said: 'It's much more widely discussed than in recent campaigns.' He added that while issues like abortion and other 'pro-family symbols' remain important, this election has focused on character. 'These character issues cut across traditional voting blocks, and that may create new coalitions. This is especially apparent in the GOP, where the coalition is diverse religiously.' The importance of the 'religion card' as a campaign issue was underscored last week when pollster George Barna released a special report: 'The Faith Factor in Election 2000: Christians Could Be a Swing Vote.' Barna noted that while the organizational structures of the religious right had changed, 'the born again constituency may emerge as a key voting block in the November presidential election.' Among Barna's findings: -- A race between George W. Bush and Al Gore would find 51% of America's born again Christian segment supporting the Texas governor, with about 31% standing by Mr. Gore. 'Among likely voters who are not born again, the Gore lead remains stable at 44% to 36%.' 'The upshot is that without the born again vote, Mr. Bush would likely fall short of the votes needed to win the election...' -- Born again Christians 'are more likely to be registered to vote than are non-Christians.' -- Contrary to some perceptions, those describing themselves as born-again Christians who have party affiliation divide themselves equally -- about 35% each -- between the two major parties. -- The born again voting block could cast up to 45% of the total votes in the November general election. ¶ Election 2000 continues to be dominated by religious themes, public appeals to religious belief and groups, and promises that churches and other sectarian groups will have more, not less, of a voice in government. Copyright © 2004 American Atheists, Inc. All rights reserved. http://www.atheists.org/flash.line/elec8.htm

Subject: Re: Paul's latest book review From: DK To: DK Date Posted: Fri, Feb 13, 2004 at 15:37:56 (EST) Email Address: ddt000@hotmail.com Message: Wow, this stuff doesn't stop. Here is a little bit from 2002 on the link between the Christian Coalition and Enron (well, sort of). ====================================== A Walk in the Valley of Greed By Robert Scheer Published January 29, 2002 in the Los Angeles Times What would Jesus do? It's a no-brainer; he would leave the Christian Coalition, take a consulting job with Enron and then use his divine power to make George W. Bush president. Read that way, there's nothing sinister in the recent revelation that it was Bush's top political advisor, Karl Rove, who in 1997 hooked up former Christian Coalition leader Ralph Reed with Enron. After eight years of making Pat Robertson look good, Reed was exhausted and ready for a career change. The private sector is even more lucrative than televangelism, and Enron was just one of many fat consulting contracts that was Reed's for the asking. For the Bush people, it was also a good deal. George W. was still a few years away from announcing for the presidency. In the meantime, it wouldn't hurt to park the former spokesman for the Christian right with the Bushies' close friends at Enron. Think of the synergy in that relationship. Two years later, when the campaign was officially announced, Reed would be added to the Bush payroll without having to sever his ties to Enron, since there were lots of other folks in the Bush camp doing the same thing. Reed knew that Bush would win because 'He (God) knew that George Bush had the ability to lead in this compelling way.' But in the interim, a fellow has bills to pay and that Enron consulting job--which paid $10,000 to $20,000 a month and lasted until Enron's bankruptcy--was a nice little favor. Of course, that's not the way White House Press Secretary Ari Fleischer sees it. He 'fesses up that 'Karl Rove gave Ralph Reed a good recommendation' for the Enron job but insists that was only because he was the most qualified. 'Ralph Reed is excellent at what he does,' Fleischer opined. Makes perfect sense. What Reed did before entering the private sector was spread the message of the Gospel, and of course that's exactly what Enron was looking for. Particularly the commandment that says, 'Thou shall not honestly report corporate profits.' Or the other one, 'Thou shall not regulate electricity.' Reed hit the corporate ground running: 'I met with three executives at Enron in September of 1997. They wanted assistance in building grass-roots support for electricity deregulation in Pennsylvania, which was supported by then-Gov. Tom Ridge and which, by the way, has become a model for the nation.' Apparently, Reed was expected to mobilize the state's Christian right to support deregulation. Unfortunately, Reed is right about Enron's approach to deregulation becoming a model for the nation--all the way to California and bust. But why be so modest? It was a hard sell. Otherwise Enron wouldn't have had to spend all those millions lobbying, not to mention bringing out the big guns, such as then-Texas Gov. George W. Bush, to make its case. A month after Reed came on board, as Enron's erstwhile chief executive, Kenneth Lay, tells it, 'I called George W. to kind of tell him what was going on, and I said that it would be very helpful to Enron, which is obviously a huge company in the state of Texas, if he could just call the governor [of Pennsylvania] and tell him [Enron] is a serious company, this is a professional company, a good company.' Darn right it is, or was, 'serious,' 'professional' and 'good' up until the whole dang company mysteriously imploded. Reed now says he didn't witness any evidence of wrongdoing during his four years with the company and he is happy to report that Enron paid the bills owed him right up to the day of bankruptcy. Some guys have all the luck. He's not alone in that category among the Bush folk. There seems to be no end of Bush administration officials and former campaign consultants who made a bundle off Enron but had not a glimmer of warning that anything was ever wrong. Even the president himself, who was exchanging chummy birthday cards with his 'good friend' and patron 'Kenny Boy' Lay, wasn't clued in enough to save his mother-in-law from losing more than $8,000 on Enron stock. As in a messy divorce, sometimes those closest to the family are the last to know. So, what would Jesus do? Heck, according to the teachings of the Rev. Pat Robertson, he'd be out there just like Ralph Reed and George Bush serving God and greed--or rather Mammon--in the same moment. But what would he really do, faced with all those employees who lost their pensions? Jesus would cry. Copyright © 2002 Robert Scheer

Subject: Productivity & Depressions From: Pete Weis To: All Date Posted: Wed, Feb 11, 2004 at 13:08:28 (EST) Email Address: Not Provided Message: This is the last time I will bring up this issue unless there is any real interest in it. It deals with the idea that rapid jumps in productivity leading to a rapid transference of net wealth to a very tiny segment of the population. I first heard of this idea while reading about the theories of an SMU economist, Ravi Batra. Batra wrote a book in the 1980's entitled 'The Great Depression of 1990' and followed it up with the inevitable 'How to Survive the Great Depression of 1990'. Of course, while he may have made some money on his books, he suffered considerable damage to his reputation when his predictions did not materialize (although Japan did start a decade long decline). He now says he did not envision the flow of investment leaving markets that consecutively began having problems (Japan, Europe, Asia) and flowed into the market that looked, at the time, to be solid (the US). Hence, all of this contributed to an even bigger market bubble in the US. Like Jennifer, I thought his idea was 'interesting speculation'. While, rummaging through a used book store recently, I came across an old history book (written in the early 50's). I went to the section on the Great Depression and found Batra's exact same theory expounded as the major reason for the Great Depression. That is - the great spurt in productivity preceding 1930 fostered the transference of a large percentage of the net wealth, in industrialized nations, from the mass majority of consumers to a tiny segment of the population. I wondered about McCarthyism of the early 50's and the effort to erradicate anything that smacked of socialism - the hated subject of all conservatives, 'wealth distribution'. I very much believe in Capitalism, but I also believe all ideas should be considered. Recently, though, during an online search I found the same idea expressed in MSN's online Encarta under 'Causes of the Depression'. So the idea still lives and atleast at one time was fairly mainstream. I still would like to know where the idea was first generated - was it Keynes? As I listen to Greenspan talking before Congress, he's talking about the slow job growth and attributes it to increasing productivity. Of course he's refering to increased productivity of present workers (whether offshored or domestic) obviating (he loves that word) the need for new hires. It's interesting to note that there is no discussion about the concentration of wealth issue. In other words, is it really a flattening of consumption that is inhibiting job growth? Clearly, 'offshoring' is having a temporary negative effect on job growth, but is it the biggest issue? Is Greenspan not seeing the bigger picture of wealth concentration, a lack of sharing of the benefits of productivity across the broad range of consumers, and the considerable build-up of debt?

Subject: What Does AG See? From: Jennifer To: Pete Weis Date Posted: Wed, Feb 11, 2004 at 14:54:26 (EST) Email Address: Not Provided Message: 'Is Greenspan not seeing the bigger picture of wealth concentration, a lack of sharing of the benefits of productivity across the broad range of consumers, and the considerable build-up of debt?' Excellent question.

Subject: the matthew effect From: pasquino To: All Date Posted: Tues, Feb 10, 2004 at 15:46:20 (EST) Email Address: pasquino@er-h.com Message: why is what i call the rule of accumulated advantage, what robert k merton called the matthew effect, never referenced, never demonstrated, seldom brought up as the odious opposite of the demonized affirmative action?

Subject: Re: the matthew effect From: Paul G. Brown To: pasquino Date Posted: Tues, Feb 10, 2004 at 16:42:37 (EST) Email Address: Not Provided Message: why is what i call the rule of accumulated advantage, what robert k merton called the matthew effect, never referenced, never demonstrated, seldom brought up as the odious opposite of the demonized affirmative action? --- Because that would be speaking truth to power.

Subject: Global Labor Arbitrage From: Jennifer To: All Date Posted: Tues, Feb 10, 2004 at 15:08:10 (EST) Email Address: Not Provided Message: http://www.morganstanley.com/GEFdata/digests/20040209-mon.html Coping with the Global Labor Arbitrage Stephen Roach Month in and month out, the basic story really hasn’t changed. The United States remains in the midst of the most jobless recovery in modern-day, post-World War II history. It’s not the lags — especially after a 6% annualized growth spurt in the second half of 2003 and indications of more vigor to come in early 2004. Nor is it a measurement problem — with a small sample of households conveying a truth that a much larger sample of businesses is missing. Let’s face it: The Great American Job Machine has finally met its match. To be sure, jobs are finally increasing. But the current hiring upturn pales in comparison with historical norms. Gains in private nonfarm payrolls have averaged only 84,000 over the past five months (September 2003 to January 2004) — less than half the 183,000 norm that was recorded, on average, over the comparable five-month interval of the previous six recoveries. Scaled for the expanded size of the US economy, this shortfall is even more serious. When compared with the 6.5% increase in private sector hiring that has occurred, on average, in the first 26 months of the past six cyclical upturns, the current decline of a little less than 1% translates into a shortfall of 8 million Americans who would have been at work had the US economy been on the hiring trajectory of the typical recovery. The income implications of this hiring shortfall are equally profound. Private sector wage and salary disbursements — by far the largest component of personal income — are still down about 1% in real terms relative to levels prevailing at the trough of the last recession in November 2001; that compares with gains that averaged about 9% over the 25 months of the previous six upturns. That’s the functional equivalent of a $400 billion shortfall in real consumer purchasing power. Lacking in the fundamentals of income support, the current rebound is being fueled by more “toxic” sources of growth — budget deficits, reduced private saving, debt, and the extraction of purchasing power from over-valued assets such as property. Until that changes, the sustainability of this recovery remains an open question, in my view.

Subject: Korea and China From: Jennifer To: Jennifer Date Posted: Tues, Feb 10, 2004 at 15:38:03 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/10/business/worldbusiness/10korea.html Koreans Look to China, Seeing a Market and a Monster By JAMES BROOKE SEOUL, South Korea - After a century of looking east, first to Japan and then to the United States, Korean business leaders are now gazing west, to China. But it is a fascination tinged with fear. In 2003, nearly half of South Korea's foreign investment went to China, and its exports to China jumped 50 percent. Winging west over the 250-mile-wide Yellow Sea, China-bound flights are filled with business executives bearing deals intended to ensure that China replaces the United States as South Korea's major economic partner. Samsung Electronics announced that it would make China the main base for production of its personal computers and flat screens. Hyundai Motor, the nation's biggest carmaker, and Kia Motors, a subsidiary, announced plans to make a million cars a year in China by 2007. But as South Korea's blue-chip companies funnel new investment into China, economists here worry that South Korea's economic sparkle - 'the miracle on the Han River' - will lose its luster.

Subject: Social Security From: Bill Fishlore To: All Date Posted: Tues, Feb 10, 2004 at 04:27:28 (EST) Email Address: fishlore@nhfreepress.com Message: Wouldn't the easiest 'fix' for Social Security be to remove the cut-off ceiling and flat tax all income, not just the first $65,000? Would this raise enough additional money to help?

Subject: Re: Social Security From: Nat To: Bill Fishlore Date Posted: Tues, Feb 10, 2004 at 11:09:32 (EST) Email Address: Not Provided Message: The easiest 'fix' for Social Security is for the pols in DC to honor the commitments made 20 years ago when they raised the FICA & SECA taxes to set aside a surplus to cover the boomer retirement surge. We boomers were to help 'pay ahead' for our own retirements, not just support the current retirees. Remember, SS is an 'intergenerational support system', not a personal retirement fund. It has always been this way. If it were a true retirement fund then no one would have been able to retire with full benefits until about 1975. Our true 2004 budget deficit is over 600 billion without the roughly 150 billion SS surplus. The SS surplus is no longer growing, it is shrinking, year by year. In 6-10 years SS contributions fall short of the retirement payment obligations. Since Washington has, in effect, 'loaned' this money to the budget, the budget needs to pay it back. This is an obvious problem since we are already running with a shameful deficit. Did you notice the latest Bush budget only projected out 5 years instead of the customary 10? It gets ugly when we boomers start to retire... Social Security is fine, it just has a major problem with somebody it loaned a bunch of money to. Ohh, that's us. If our pols behave responsibly with the federal budget there is no problem with Social Security. I recall Krugman's latest info is that Social Security is ok thru 2044, up from 2041.

Subject: Re: Social Security From: Emma To: Nat Date Posted: Tues, Feb 10, 2004 at 14:06:37 (EST) Email Address: Not Provided Message: Fine comments - http://www.maxspeak.org/mt/ The total payroll tax rate is 15.3 percent. Half is 'taken out' of employee wages, the other half excluded from wages. In effect your gross pay is really 107.65 percent of what you see on your paystub. Of the 15.3 percent, 2.9 percent is for Medicare (also split between employer and employee). The rest is for what is popularly known as Social Security, but actually for Old Age, Survivors, and Disability Insurance (OASDI). The OASDI rate of 12.4 total, 6.2 each for worker and employer, goes to zero for earnings over a cap that is adjusted annually for inflation. This year the cap is $87,900.

Subject: Outsourcing and India From: Jennifer To: All Date Posted: Mon, Feb 09, 2004 at 14:30:10 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/09/technology/09india.html Indians Fearing Repercussions of U.S. Technology Outsourcing By SARITHA RAI BOMBAY - The rising political reaction in the United States to the loss of some American jobs to workers overseas is creating a whiplash effect among India's leading technology companies. 'The dramatic buildup of opposition before the U.S. elections is disturbing,' Jaithirth Rao, the chairman of a leading software and call center company, MphasiS BFL Ltd., said in an interview at the three-day annual meeting of Nasscom, India's software industry trade association. MphasiS, based in Bombay, has 6,000 employees and its operations spread across Bangalore and Pune. More recently, it has expanded to Shanghai and Tijuana on the Mexican border with the United States. Companies like MphasiS are the biggest beneficiaries of a movement among many of the largest corporations in the United States to shift certain white-collar work to low-cost India, where local companies are adding thousands of skilled, English-speaking employees every quarter to meet the increased demand. At the same time, companies like General Electric and Microsoft are expanding their operations in India on everything from basic customer service to high-end research and development....

Subject: Book Review - New York Times From: Emma To: All Date Posted: Mon, Feb 09, 2004 at 12:56:45 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/08/books/review/08KRUGMAT.html 'Bull!' and 'Origins of the Crash': Executives Gone Wild By PAUL KRUGMAN Eighteen months ago, American capitalism seemed to be in crisis. Stocks had plunged, and some of the nation's most celebrated business leaders had been exposed as phonies if not crooks. Now the economy is growing, and the Dow's been back above 10,000. Alan Greenspan gave himself a big pat on the back at the American Economic Association meetings, in effect declaring that he was right all along. So is it safe to buy stocks again? After you read Roger Lowenstein's ''Origins of the Crash'' and Maggie Mahar's ''Bull!'' you'll have serious doubts. Both tell the story, from different angles, of how ordinary investors got suckered into supporting the lifestyles of the rich and shameless. And you have to wonder whether anything has really changed.

Subject: Misrepresentation of Krugman? From: Kosh To: All Date Posted: Mon, Feb 09, 2004 at 10:17:45 (EST) Email Address: jrgallag@earthlink.net Message: Brian Nottage of economy.com in his Feb. 9, 2004 column says: 'When a significant portion of the electorate agrees with economist Paul Krugman that the president has repealed democracy, is starting wars to help his oil buddies, and is turning the U.S. into a third world country, a few good months of good payroll employment gains probably won’t sway them to the president’s side.' Did Krugman ever suggest that Bush is starting wars to help his oil buddies? I sure don't recall this! http://www.economy.com/dismal/pro/article.asp?aid=2634

Subject: Re: Misrepresentation of Krugman? From: David E... To: Kosh Date Posted: Mon, Feb 09, 2004 at 15:43:52 (EST) Email Address: Not Provided Message: I searched this site for 'Iraq, oil, war' - Use this link and you will see the hits I got, http://www.google.com/search?q=site:www.pkarchive.org war oil iraq&hl=en&lr=&ie=UTF-8&oe=UTF-8&start=0&sa=N One column had a tiny hint about 'the spoils of war'. http://www.pkarchive.org/column/022103.html Based on this quick search of his columns, I would say that Brian is exaggerating. Ask Brian for his source. Do you think his site is worth the money?

Subject: Re: Misrepresentation of Krugman? From: Kosh To: David E... Date Posted: Mon, Feb 09, 2004 at 18:34:31 (EST) Email Address: Not Provided Message: It's not Brian's site, he's just a weekly columnist. I look at it kinda like the WSJ, there's good information at economy.com, if you can get past the editorial slant.

Subject: Re: Misrepresentation of Krugman? From: Picono-clast To: David E... Date Posted: Mon, Feb 09, 2004 at 16:22:06 (EST) Email Address: nma@hotmail.com Message: What about this:http://math.stanford.edu/~lekheng/krugman/nber/w0554.pdf and :http://math.stanford.edu/~lekheng/krugman/nber/w0658.pdf, still defensible?

Subject: Truth Squad From: Rick To: All Date Posted: Sat, Feb 07, 2004 at 17:54:46 (EST) Email Address: Not Provided Message: Can we respond to misleading allegations by the Krugman Truth Squad?

Subject: Re: Truth Squad From: Paul G. Brown To: Rick Date Posted: Mon, Feb 09, 2004 at 14:02:45 (EST) Email Address: Not Provided Message: I think we should. We're styling ourselves as Krugman's Army, after all. I have a slap at one of them from time to time. One problem reading Luskin is that I often have a hard time figuring out exactly what criticism ol' poor-n-stupid is making. You can't argue with incoherence. Trying just doubles the number of fools. Pb

Subject: Re: Truth Squad - Who? From: Jennifer To: Rick Date Posted: Sat, Feb 07, 2004 at 18:23:04 (EST) Email Address: Not Provided Message: Who are such people?

Subject: Re: Truth Squad - Who? From: Peppone To: Jennifer Date Posted: Sat, Feb 07, 2004 at 21:09:44 (EST) Email Address: nma@hotmail.com Message: People who'd rather prefer to be pitied than envied

Subject: EXECS VS grunts From: Pete Weis To: All Date Posted: Sat, Feb 07, 2004 at 00:04:20 (EST) Email Address: Not Provided Message: This is actually a continuation of an exchange involving the 'Chinese-Indian' thread but is an issue unrelated to that discussion. So I decided to start a new thread. Some posters on this board may be familiar with the ideas I'm about to talk about. They're really a conglomeration of thoughts I've come across in numerous writings and added some of my own. Anyway, here goes. Take two families in America - one is the family of Bill and Melinda Gates and the other is Jack and Jill of 'middle' America. Admittedly this is the most extreme case, but I'm shameless at trying to seize any advantage to make my point. Bill and Melinda have a net worth of say 30 billion (I'm pulling this out of the air) and Jack and Jill a net worth of 300,000. In other words, Bill and Melinda are worth 100,000 times more than Jack and Jill. Now Jack and Jill own 2 cars, a boat, a $200,000 house, 3 tv's (I'm sure you see where I'm going with this Paul), 2 cats and a dog. Now to keep up with Jack and Jill in a way that represents their true wealth, Bill and Melinda need to buy 200,000 cars, 20 billion worth of housing, 100,000 boats, 300,000 tv's, 200,000 cats and 100,000 dogs. But it gets much worse. If Bill and Melinda had a massively, wide variety in tastes they would buy one or more (as necessary to equal 200,000) of every car sold in America. Jack and Jill buy Fords and Chevy's but Bill and Melinda have a hanker'n for porsche's and Ferrari's (so do I, but I ended up with a Mazda). Ford and GM end up having to offer unprecedented deals to offload their offerings which the Bill's and Melinda's of the world won't buy. Heck, Ford and GM borrow the money to give to Jack and Jill at zero interest rates to buy their vehicles. Bill and Melinda pay cash for their Ferrari's. If all of this sounds a little rediculous, think about this last Christmas season. Which stores did well and which did poorly. That's right -Nordstroms, Saks, etc. had a banner holiday while the malls where middleclass America shops had Santa's, just not many buyers. It's not surprising why! All the while small investors were pumping money into the markets trying to get back the money they lost in the previous 3 years, insiders were selling at record levels. Thompson Firstcall reported it was the highest level of insider selling they have ever recorded. Insiders had alot of extra cash to spend on some pretty extravagant Christmas gifts! Warren Buffet, the supreme stock market investor of all time, declared in his letter to Berkshire-Hathaway investors on March 3, 2003: 'We can find few if any stocks at a value worth buying'. This was before the rally got going! This has been, and is continuing to be, the largest transference of wealth from the bottom 99% to the top 1% in history! And this is nothing new. This has repeated itself more than once in the past. This is the part that is most intriguing: There have been a number of booms and busts over the last 200 years. But four really stand out. All were fostered by technological advances which produced great and sudden increases in productivity. Ordinarily you would think great productivity gains are good for an economy, and they are for the long haul. But for the short haul, 10 to 30 or more years, they always (atleast to this point) come with alot of pain. I bet some may think, at this point, that I'm talking about the lost employment due to automation type productivity. But I'm not. It actually has much more to do with human behavior. The first three great technological advances leading to great productivity gains (and hence powerfull worldwide economic effect) all involved new energy sources. They were in order - water power, steam power and electric power. The fourth, of course, is artificial intelligence - our present computer age. There are interesting differences with this fourth great technological advance. I happen to believe those differences are not benevolent ones, but that's another discussion. Productivity gains result in two main 'benefits' - (1)lower production costs for each individual unit of production and (2) more units of product produced in less time. The first benefit increases profit for the business involved. The second benefit requires a buyer, and herein hides the flaw of this system. In each of the four great boom and busts the productivity gains created increasing profits for companies, but wage earners got vary modest increases in wages. The vast majority of profits went to those at the top of the money chain. But the wage earners (Jack & Jill) represent the vast majority of the consumers and to keep this whole 'enterprise' going consumers are needed to take care of the second benefit of productivity. This is where the banking system (today the Fed)steps in and saves (atleast temporarily) the day. Interest rates are lowered and lending requirements are relaxed. Wage earners borrow to the hilt, corporations expand and borrow to the hilt, banks initially make great deals of money but take on great risk in the process. This is a characteristic of all four great booms and busts. 'Greed' and 'fear' (fear of being left out) take over. 'Irrational exuberance' becomes the bane. Eventually the wage earners are left with a load of debt, those at the top are the recipients of the procedes. And the banks are left 'holding the empty bag'. Of course the officers of the banks suffer little since it wasn't their money they were risking. Afterall risking other people's money made them very wealthy. Each of the first three booms and busts resulted in worldwide depressions - 1819 (waterpower, industrial revolution), 1870 (steam power, railroads), 1929 (electric power, internal combustion engine, assembly line). Our present boom has been the greatest. The computer age has brought with it 'plastic' money and the greatest buildup of debt the world has ever seen. Our financial system is concentrated in relatively few very large banks. A failure of one or two of these banks would be very bad. Have we gone down the very same road taken in the first three great boom to bust scenario's? The coming months and years will reveal the truth. But if you look at the tremendous accumulation of debt by the middle class and the tremendous accumulation of wealth by the top 1% or so, the similarities are startling. By the way, I didn't mean to pick on Bill and Melinda Gates, who I believe are fine people who have given a great deal of money to very worthy causes. I also have nothing against very wealthy people as long as they didn't mislead or commit fraud to obtain the wealth. It's just the way the system works and I don't believe anyone thus far has figured a way to 'fix' it - Milton Friedman and Ben Bernanke notwithstanding.

Subject: Technological Revolutions From: Paul g. Brown To: Pete Weis Date Posted: Mon, Feb 09, 2004 at 13:54:21 (EST) Email Address: Not Provided Message: I would argue that we are living in an age of many scientific revolutions. In addition to the ones you cite, Pete, I would add several others. First, there is the biological revolution. While the technological factors you cite are very real they had (arguably) less of an impact on humanity than, say, germ theory, or an appreciation of evolutionary theory (and its impact on agricultural productivity. Another balancing view here.). Half the world now has a degree of control over its fertility that it never had before, and a freedom from communicable disease with comensurate improvements in quality of life. Second, there is the still ongoing atomic revolution. All of the other technologies you describe rest upon a physical world view set down in the last quarter of the 19th century (computer hardware anyway: software involves mental apparatus assembled during the 20th). Splitting the atom may prove to be the most important technical revolution of all. And finally (for this list) there is nano-technology, which is just plain wierd in its implications. What will be the effect of all of these revolutions? Maybe I'm too much the optimist, but I really believe that harnessing the wonderful machinery of capitalism to the engine of scientific innovation and mounting them on the wheels of law and liberty will put us all on the road to human contentment (provided we avoid the speeding ticket of ecological collapse or the ... no I'd better stop there). Pb

Subject: Re: Technological Revolutions From: Pete Weis To: Paul g. Brown Date Posted: Mon, Feb 09, 2004 at 22:14:23 (EST) Email Address: Not Provided Message: Perhaps I didn't do a very good job conveying what I was trying to get across in my original post above. I agree with you that many of the advances of which you speak were of and are of great benefit to humanity. We could debate about the relative value of biological advances vs power and mechanized machinery when it comes to agriculture. Farms have become increasingly large. Perhaps the best way to settle that debate would be to ask a farmer which he would rather give up - the biological advances which have made his 2000 acres so fertile and productive or the mechanized machinery and electric power which make it so much easier to till and maintain. Perhaps he would choose to till those 2000 acres with a plow pulled by oxen and keep the biological advances. I truely couldn't say for sure - I'm not one of those noble farmers. However, my original post was not about that. My original post was about a sudden and significant increase in productivity, brought on by a technological advance and its affect on world economies. It was about a sudden and large increase of capital flowing from the masses of wage earners to the top 1%. It was about a large accumulation of debt acquired by those wage earners who make up 99% of the consumers. In other words, it was about a large percentage of total capital being effectively removed from the normal circulation of economic activity, leading to an eventual collapse in consumption and resulting depression. Have you ever come across this idea in your readings, Paul - a sudden, significant increase in productivity leads to economic depression? If you have where did it originate? I'm hoping someone who visits this site knows something more than I do about the origination of this idea. And I would like to get some further opinions on this. From the site inequality.org information provided by the Congressional Budget Office (fig. 1): between 1979 and 2000 the top 1% - after-tax income increased by 201%, the top 96-99% - 53% increase, the top 81-95% - 36% increase, next to top 5th - 24%, middle 5th - 15%, second 5th - 13%, bottom 5th - 9% (only a 9% after tax increase in 21 years - can you believe it?). Remember this does not reflect the massive amounts of insider selling in the last 4 years! In 1976 the top 1% possessed 20% of the nation's net wealth. By 1997 the top 1% possessed 40% of the nation's net wealth. I haven't more up-to-date numbers on net wealth. I'm willing to bet it's increased considerably in the last 6-7 years - what do you think? The following quote is from 'The New, Definitive CBO Data on Income and Tax Trends' by Robert Greenstein and Isaac Shapiro: '...before-tax income was more concentrated among the top 1% of the population in 2000 than at any point since 1929. Well, that's all for now.

Subject: Mystery From: Pete Weis To: Pete Weis Date Posted: Mon, Feb 09, 2004 at 10:43:46 (EST) Email Address: Not Provided Message: There's some additional information about the idea that I briefly 'shoved' out into the open in my post. I purposely did not bring it up because I didn't want posters on this board to be predjudiced either for or against it - just wanted honest opinions on it. If I were to to have discussed this idea before a group of folks with an interest in economics, say, 50 years ago, it's unlikely anyone would have called it 'interesting speculation'. In fact, I might have gotten a response from one or two that it was a 'dangerous' idea. In our present environment, once again there are those who are very worried about 'dangerous' ideas especially if they can not easily be disposed of. If you think I'm being overly dramatic do a search in google for 'distribution of wealth' or 'redistribution of wealth'. I was very aware of which direction the wealth was actually being redistributed over the last 20 years and the search results came up overwhelmingly (and I do mean overwhelmingly) with people afraid that the masked bandito in the form of the IRS was comm'n to get em! Guess the more loot you have, the more you're worried someone is going to take it away. Anyway, I changed my search criteria and came up with some results and will begin to post them in response to Jennifer's - 'where's the numbers'. The fact that this idea is now considered 'interesting speculation' is interesting in itself.

Subject: Re: EXECS VS grunts From: David E... To: Pete Weis Date Posted: Sun, Feb 08, 2004 at 14:12:57 (EST) Email Address: daveellis_39@hotmail.com Message: Pete, I am happy to see the thread you have started. I think this is a subject that needs discussion. Since the early 1990's people have been predicting the return of a great depression. I dont know when it will happen, and have invested using Keyne's dictum, (I think it was him),, 'The markets can be irrational longer than your money will last'. But it does seem to me that we are at a pivotal point in history. The decline and future decline of the middle class point to a future not as bright as our past. Greenspan himself recently said that the risk of deflation is as great as the risk of inflation. That means he thinks the 'liquidity trap' was close. If this modest surge in GDP falters, deflation could happen quickly. And this is a new kind of recession recovery. The middle class gets none of it, the only new jobs are low paying 'service' jobs.

Subject: Re: EXECS VS grunts From: Pete Weis To: David E... Date Posted: Sun, Feb 08, 2004 at 19:16:43 (EST) Email Address: Not Provided Message: David From the tone and subject matter of my recent postings on this site, you can sense that I am very much in agreement with you that we are at a 'pivotal point in history'. This is difficult for most to accept because we've been inundated with the 'glass is (always) half full' mantra for a long time - its been ingrained into are brains. There are examples, in history, where the 'glass is half full' type of thinking was instrumental in overcoming difficult times (the FDR years). But then again you might have wished that Robert Macnamara and our present Rumsfeld had a few more 'glass is half empty' people around them - in fact, maybe, there were, but Macnamara and Rumsfeld just weren't interested in listening to them. Anyway, if you begin pointing out things that don't jive with the 'glass is half full' consensus thinking, you become very unpopular. I'm willing to bet Paul Krugman and Stephen Roach receive more than their share of hate mail. Even Bernanke chimes in with his grumblings about 'that Roach guy'. Like you, David, I originally approached these issues from an investment stand point. I take to heart that old saying - 'fool me once, shame on you; fool me twice, shame on me'. I was dazzled by the hightech boom of the nineties, but had an uneasy feeling about market indexes going up 25-30% a year, year after year. I listened to Warren Buffet say he wasn't investing in hightech because 'he didn't understand hightech'. Later, when I was reading John K. Galbraith's very good book on the 1929 stockmarket crash, I came across the following passage: 'the financial luminaries of the day remained strangely silent, lest their break in silence would ruin those who had succumbed to the madness'. I thought of Buffet when I read that. I'd like to say, I was smart enough to see what was coming but I wasn't. I no longer believe in the 'buy and hold' bunk that is peddled out there. I've spent alot of time over the last couple of years reading and thinking as much as I can about various investment strategies and various economic theories - my only background in economics is a couple of semesters in college (and that's no background at all). Anyway, I now believe investing is all about recognizing shifting economic trends - miss the trend or enter it late and stay too long and you'll be left out in the cold. I believe that a day of reckoning of sorts has arrived. Economic theories are going to be put to the ultimate test. If I'm right, some segments of economic thought will not survive. David is right - the liquidity trap is set and it has very large teeth indeed! Monetarists beware!

Subject: Interesting Speculation From: Jennifer To: Pete Weis Date Posted: Sat, Feb 07, 2004 at 18:21:54 (EST) Email Address: Not Provided Message: This is clever and interesting but the conclusions are too sweeping. Generalizing about a century of technological growth now needs examination of specific periods to know if the conclusions have reasonable validity.

Subject: Re: Interesting Speculation From: Pete Weis To: Jennifer Date Posted: Sun, Feb 08, 2004 at 04:48:23 (EST) Email Address: Not Provided Message: Jennifer You are right to say my 'conclusions are too sweeping'. In truth, it may be very difficult to compare the first two great technological/productivity advances to our present one, especially with the utilization of precise numbers. This is because accurate data on the distribution or change in distribution to wealth during the late 1700's to early 1800's and middle 1800's may be difficult or impossible to come by. However, we do know, through anecdotal information, that each depression in it's early stages brought on a steep decline in wealth for the majority of the population and was proceded by a steep increase in borrowing leading to an increase in debt for those who could not pay in cash for the objects of their desire. I suspect also that, in each instance, the great majority did not share in the wealth building that came with the productivity gains. This most likely has to do more with human behavioral patterns then anything else - we are a very competitive species and wish to maintain our hierarchal status once we've attained it. A very good article which deals with this lack of sharing in the accumulation of wealth is 'The Death of Horatio Alger' by Paul Krugman. I have read, in the past, about the shift in wealth during these periods from the bottom, middle and upper middle to the upper 1% or so. I believe the shift is quite considerable and I will search for the numbers. If anyone else who follows this site has those numbers - if they would share them, it would be much appreciated. There is a startling comparison to be made with the ratio of total debt to GDP in respect to the early 1930's and the present and I intend to bring that up in a later post. Another issue, I would like to talk about in a future post, is the changed nature of debt.

Subject: Competition? From: Jennifer To: All Date Posted: Fri, Feb 06, 2004 at 17:43:36 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/06/international/europe/06TRUF.html Voilà, the Chinese Truffle (the French Accent Is Fake) By CRAIG S. SMITH UZÈS, France — A lively black and white mongrel named Dolly raced around beneath a grove of gnarled oak trees here with its nose to the ground before suddenly scratching frantically in the dark earth. 'Wait for me,' shouted Dolly's owner, Michel Tournayre, a lean man of 40 wearing a brown leather vest and carrying a small pickax. Kneeling beside the dog, he pushed her snout aside, and dug out a hard plum-sized ball of black fungus. 'That's 30 euros,' or nearly $40, he said, holding the truffle and giving it an enthusiastic sniff. If only France's annual $30 million truffle trade were such simple, honest sport. But no, there is fraud afoot in the 6,000-square-mile swath of southern France that truffle lovers call the Golden Triangle. Truffle prices have shot up this year, so even here in the heart of truffleland, Mr. Tournayre says, restaurants are secretly substituting an inferior and far cheaper Chinese fungus to stuff veal sausages, stud terrines and dress up the region's famous sauce Périgord. 'They're killing French culture,' he declared as he pulled a chip of Gruyere cheese from his vest pocket to reward his dog....

Subject: Re: Competition? From: Yann To: Jennifer Date Posted: Mon, Feb 09, 2004 at 04:10:50 (EST) Email Address: Not Provided Message: 1. What is the aim of this post (and of the author of the quoted article)? 2. About the text: there's nothing new under the sun. Yann (French citizen)

Subject: For Fun From: Jennifer To: Yann Date Posted: Mon, Feb 09, 2004 at 12:54:39 (EST) Email Address: Not Provided Message: The article seemed just right after all the fierce debate about Chinese competition. Have fun!

Subject: Paul Krugman upcoming radio appearance From: EZ To: All Date Posted: Fri, Feb 06, 2004 at 15:52:46 (EST) Email Address: ejz23@yahoo.com Message: Paul is going to be on NPR's 'On The Media' Saturday and they repeat it on Sunday (in New York) or find it on the website at this link http://www.wnyc.org/onthemedia/ On the Media www.wnyc.org/onthemedia/

Subject: Social Security in Sweden From: Emma To: All Date Posted: Thurs, Feb 05, 2004 at 11:49:54 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/05/business/05scene.html Retirement Lessons From Sweden By ALAN B. KRUEGER YOUNGER workers,' President Bush said in his State of the Union address, 'should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account.' According to former Treasury Secretary Paul H. O'Neill, the president believes that the reason he was elected was his bold - some would say risky - stance on replacing part of Social Security with personal accounts. If the president holds onto office in November and his party continues to hold Congress, the creation of some sort of personal retirement accounts as part of Social Security seems likely. Although it is impossible to know what form such accounts might take, in 2000 Sweden instituted a system of personal accounts that holds many lessons for any country seeking to reform its retirement system. Sweden now has a blended system, an approach Mr. Bush apparently favors. Employers and employees contribute a combined 16 percent of payroll toward a 'pay as you go'' retirement system like Social Security, and an additional 2.5 percent toward individual retirement accounts. Those born after 1954 are fully in the new system, while older workers are phased in. The reform process began in 1991, when a center-right coalition came to power. At the time, Sweden's generous retirement system was expected to exhaust its 'buffer' funds in about 20 years, a more dire situation than what now confronts the United States; Social Security will not exhaust its trust fund until 2042, according to the latest projections. To address its problems, Sweden set up a committee with representatives from all parties in Parliament. Because the reforms were expected to last for decades, there was pressure to devise a plan with broad support, said Annika Sunden, an expert on pensions at Stockholm University. There was agreement back in 1994 that reform would include individual accounts, so beginning in 1995 the government began tucking away 2.5 percent of payroll for employees to invest once the system was set up. Personal investment accounts were not established until 2000, with a bewildering array of funds to choose from. Some 456 funds participated initially, and the number has since grown to around 600. Most funds invested in stocks, with a quarter primarily in Swedish stocks. Workers could choose up to five funds.

Subject: Re: Social Security in Sweden From: Pete Weis To: Emma Date Posted: Sat, Feb 07, 2004 at 14:50:35 (EST) Email Address: Not Provided Message: Interesting. I'm sure the Bush administration would like to institute such a plan before the next elections since it would bolster (atleast for awhile) the the stock markets. Most, it seems, view the health of the economy in relation to the performance of the stock markets and the increasing valuations of their homes. Unless, of course, one is losing his or her job. I would think, to get re-elected, the Bush administration needs to avoid any substantial drop in the markets.

Subject: Oil From: Lori Glauser To: All Date Posted: Wed, Feb 04, 2004 at 21:42:57 (EST) Email Address: Not Provided Message: There seems to be a wide spectrum of beliefs regarding oil supply, and when it will peak (demand > production capability). Prominent geologists are saying we've pretty much exhausted unknown sources, and now even oil industry execs are using terms like 'coming challenges'. They're building platforms in very deep water in some of the most remote places in the world - not a cheap way to extract oil. Co's are talking seriously about tar sand extraction. Now I don't know much about squeezing oil out of sand, but it sounds pretty costly to me. On the other hand Cato, et. al. are saying we have 'hundreds of years before the oil runs dry'. Maybe so, 'cuz I won't be the one to buy that last barrel of oil. My sense is the Bush admin. is behaving in a way that they see this peak is coming - and few people in the world probably know the complete story better than they do. What do you think?

Subject: Re: Oil From: Pete Weis To: Lori Glauser Date Posted: Fri, Feb 06, 2004 at 10:16:26 (EST) Email Address: Not Provided Message: This is a huge issue. Jerry has framed it well. A couple of informative articles on this subject can be found on the internet. 'Oil Depletion' by David Delaney (written May 2002) and 'Looming Crisis in Worlwide Oil Supplies' by E. Hunter Herron (written July 2000). A search in google should find them. The coming years will almost certainly see a big uptick in oil and natural gas prices and oil and natural gas companies will be big beneficiaries. As the articles point out, once you reach the midpoint of your total resource, prices begin to rise steeply in stages. You can bet we will all be turning our thermostats down and be buying fuel efficient Japanese, Korean and Chinese (expect them to get in the action) cars. How about a low mileage, used, H2 or Lincoln Navigator for under $5000? If you commute to work in an H2, you may want to test 'the greater fool' theory and dump it now.

Subject: Re: Oil From: Picono-Klast To: Pete Weis Date Posted: Fri, Feb 06, 2004 at 12:56:40 (EST) Email Address: Not Provided Message: Bingo!p. 125, 'Policy and Productivity' in PK's book :'Peddling Prosperity'

Subject: Re: Oil From: William Reed To: Lori Glauser Date Posted: Fri, Feb 06, 2004 at 01:33:52 (EST) Email Address: Not Provided Message: For those that didn't already know this, here are some great resources on peak oil: http://www.globalpublicmedia.com/ http://www.dieoff.com/ Here is an excellent summary of the peak oil problem by George Monbiot in the Guardian: http://www.guardian.co.uk/oil/story/0,11319,1097672,00.html A good Scientific American article by two petroleum geologists from 1998: http://www.dieoff.org/page140.htm If nothing else, watch this lecture by petroleum Geologist Colin Campbell (one of the authors of the SciAm article above): http://www.rz.tu-clausthal.de/realvideo/event/peak-oil.ram (http://www.hubbertpeak.com/de/lecture.html)

Subject: Thanks for Sources From: Terri To: William Reed Date Posted: Fri, Feb 06, 2004 at 14:29:06 (EST) Email Address: Not Provided Message: Thanks folks. I am reading away.

Subject: Re: Oil From: Jerry To: Lori Glauser Date Posted: Wed, Feb 04, 2004 at 22:22:12 (EST) Email Address: none Message: Ah, the subject most near and dear to my heart. Yes, when Cato says there's hundreds of years worth of oil left, they are technically correct...kinda like saying there are enough diamonds in the earth for every person on the planet to have a bag full. The question is not quantity, it is simple supply and demand. It appears that around the year 2010 (2015, tops) global oil demand will begin to exceed supply. Now what does this mean? Just take a minute to reflect on just how much of daily life depends on oil - almost all plastics, carpet, jet fuel, CDs, DVDs, your computer parts, vehicle fuel, on and on and on. Without cheap oil the entire planet is looking at MASSIVE - and I mean MASSIVE with a really big M - scale. Something the planet has never experienced. Bush and Co. are acting in the only way they know how - supply side. Secure the supply to keep the price down. But this can never happen. It's always struck me as odd that the guy who cut down the last tree on Easter Island could see the entire island from where he stood, he knew there were no more trees, yet he cut the damn thing down anyway. I think there's a lesson in there somewhere. We can get off oil. In fact to survive we have to do it, if not sooner then later. I think that Big Oil knows what's coming, but they want to make their dough as the demand curve increases. You see, it'll be easier to power cars, etc on alternative fuels, but how far in the future is a solar powered aeroplane? We need to begin rationing this stuff NOW to keep the cost down for as long as possible until new technology emerges. You are right. Most people don't want to know what's coming. The Mayans didn't pay attention when the over farming of corn killed their culture. The Greenland Vikings didn't pay attention when their refusal to adapt to their environment killed their culture. And the Easter Islanders didn't pay attention when the felling of trees almost killed their culture. Is America paying attention as we start extracting oil from sand and invading other countries to secure the oil supply? And how many SUV's did YOU pass on the way to work? That's right...I hear the man chopping that last tree already. J

Subject: Re: Oil From: Lori To: Jerry Date Posted: Wed, Feb 04, 2004 at 23:47:34 (EST) Email Address: Not Provided Message: so why then is the EIA projecting flat oil prices for 20 yrs? This is disconcerting when these price forecasts provide incentives for more capital development of fossil-consuming entities - natural gas power plants, new auto mfg plants, big aircraft - all assets with lives that will extend well beyond 20 yrs - a typical term for debt service for these big projects. Say prices do start to rise unexpectedly in 15 years - then these assets won't be turning a profit. owners will default on loans, bankruptcies or bailouts will ensue. And this with just a modest increase in oil prices above what is expected. of course flat oil price projections also mean disincentives for funding alternatives, which exacerbates the prob. So what are the economics of a resource nearing depletion? do we not feel tightening supplies (via price) until they are at the very end, at which time it's too late?

Subject: Re: Oil From: Pete Weis To: Lori Date Posted: Fri, Feb 06, 2004 at 15:29:21 (EST) Email Address: Not Provided Message: Lori, I don't think we're looking at sudden increases in 15 years. I expect we're looking at substantial increases starting with in the next 5. Typically, as the resource begins to go past the midpoint, the wells begin to slow their production rates. So prices never wait till near the end of the resource to accelerate - they begin accelerating very quickly after the halfway point of exhaustion. In the early 60's the US produced over half of the world's oil. By 1972 the US reached its midpoint and world oil prices began accelerating. Demand dropped or leveled off. This combined with the development of new oil fields in the Middle East, North Sea, etc. brought oil prices down especially relative to inflation. Unfortunately, we're out of new sources and for the short term only conservation will alleviate what will be a truely major problem. Was it Dick Cheney who made the statement, 'the government has no part to play in energy conservation'?

Subject: Oil - Where is the Data From From: Terri To: Lori Date Posted: Thurs, Feb 05, 2004 at 16:46:00 (EST) Email Address: Not Provided Message: 'It appears that around the year 2010 (2015, tops) global oil demand will begin to exceed supply.' Could you please tell us how you know this? Where does the data come from?

Subject: Bogus Budget &Deficit From: Maria Davidson To: All Date Posted: Wed, Feb 04, 2004 at 17:10:18 (EST) Email Address: lindavidso@cox.net Message: Thank you for telling it like it is. One thing you talked around, which I haven't heard from anyone is that we might just be in a 'war economy' and that is what the Bush inner circle is hoping will keep the US economy above water. Besides the outsourcing jobs, our peacetime economy cannot recover or create new jobs because if it isn't tied to the military-industrial complex, the small American businesses cannot survive unless they are tied to war production or homeland security.

Subject: Domestic Programs From: Emma To: Maria Davidson Date Posted: Thurs, Feb 05, 2004 at 12:20:03 (EST) Email Address: Not Provided Message: http://www.cbpp.org/2-5-04bud.htm President's Budget Contains Larger Cuts In Domestic Discretionary Programs than Has Been Reported - 2/5/04 The budget books the Administration released this week omit information on the President's proposed funding levels for programs in years after 2005, but the OMB documents that — underlie the budget show the Administration is proposing cuts in domestic discretionary programs that reach $50 billion a year by 2009.

Subject: Wage Problem From: Emma To: All Date Posted: Wed, Feb 04, 2004 at 13:28:52 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/webfeatures_snapshots In the 25 months since the recession ended, total wage and salary income is up only 0.4%. It should be emphasized that this is growth after the recession ended and does not include income losses incurred while the economy was contracting. This is the slowest wage and salary growth of any recession since 1959, the first year in which monthly data on total wage and salary income is consistently available. Wage and salary income after the previous five recessions was an average of 9.4% higher by this point in the recovery. Prior to this recovery, the worst post-recession spell for wage and salary growth was the last jobless recovery of the early 1990s, which still saw wage and salary income rising nine times faster (3.6%) than in the past 25 months.

Subject: Work Problem From: Emma To: Emma Date Posted: Wed, Feb 04, 2004 at 13:31:24 (EST) Email Address: Not Provided Message: An estimated 375,000 unemployed individuals are exhausting their regular unemployment benefits in January without qualifying for any further assistance — and are receiving neither a paycheck nor unemployment benefits. Based on the latest data, nearly two million unemployed workers are expected to be in this situation during the first six months of 2004. (This analysis also includes state projections for the first half of 2004.) In no other month on record — and in no other six-month period for which data are available — have so many unemployed workers exhausted their regular unemployment benefits without being able to receive additional aid.

Subject: Labor Market Reporting From: Emma To: All Date Posted: Tues, Feb 03, 2004 at 14:36:52 (EST) Email Address: Not Provided Message: September 18, 2003 Pick one: Thejobless rate dropped in August; it didn't; we don't know. By Alan B. Krueger [Alan B. Krueger is the Bendheim professor of economics and public affairs at Princeton University.] 'ESSENTIALLY unchanged' -- that is how Kathleen Utgoff, commissioner of the Bureau of Labor Statistics, described the unemployment rate in August compared with July. The secretary of labor, Elaine Chao, however, hailed the news, saying, 'I'm pleased that the unemployment rate has dropped.' Why the different interpretations? Who is right? In a sense, both are. The official estimate did fall by a tenth of a point, from 6.18 percent in July to 6.08 percent in August. But the unemployment rate is just an estimate based on a sample of the population, and like all estimates, there is no guarantee it is exactly right. It could be off because of sampling errors (results differ from sample to sample) and nonsampling errors (respondents may not answer the questions correctly). Sampling errors alone are enough to lead one to doubt whether unemployment actually fell in August. If everyone in the country were included in the labor force survey, the unemployment rate would be unaffected by sampling errors. But interviewing everyone every month is not feasible. Instead, the survey is given only to a representative sample of households. Granted, the number of households is large -- about 60,000 -- but if the same survey were put to a different 60,000 households, the rate would probably come out slightly different. 'Sampling variability' is the name that statisticians give to differences in estimates that arise by chance because of the particular sample surveyed. This variability can be reduced by drawing a larger or more efficient sample, but not eliminated. Fortunately, the imprecision inherent in statistics because of sampling can be gauged because sampling variability adheres to certain statistical laws. To distinguish the signal from the noise, the bureau computes the 'standard error' of the estimate, a measure of the extent of sampling variability. Under plausible conditions, 68 percent of sample estimates would lie within one standard error of the value that would be obtained from a complete count of the population. The standard error for the change in the unemployment rate from one month to the next is around 0.12 point. To see why the Bureau of Labor Statistics considered the rate 'essentially unchanged,' consider the following: If the 'true' unemployment rate had remained unchanged, there was still a 40 percent chance that the household survey would have indicated a movement of at least one-tenth of a point. Clearly, there is not enough ground to conclude that the rate actually dropped. By way of analogy, consider a coin-flipping experiment. Suppose you have a nickel that you suspect is a fair coin -- meaning it is just as likely to come up with a head or a tail -- but you are not sure. If you flip the coin 10 times and heads comes up 6 times, you would be reluctant to reject the idea that the coin was fair. If heads came up 9 times, however, you would seriously doubt whether the coin was fair. In essence, the movement in the estimated unemployment rate from July to August, if the true rate was constant, was no more unlikely than getting 6 heads out of 10 flips of a fair coin. This approach, known as classical hypothesis testing, is the most widely used method of statistical inference. Like detectives, statisticians gather evidence to see if an initial hypothesis can be rejected. The hypothesis -- in this case, the presumption of no change in the unemployment rate -- is innocent unless proved guilty. If the hypothesis is unlikely given the evidence, the result is called statistically significant. The change in the unemployment rate in August was not statistically significant because chance could not be dismissed as the explanation for the small drop. The Bureau of Labor Statistics does not use a hard and fast rule for interpreting trends in the data, but it does rely on statistical significance in part as a guide. Detecting when the labor market has turned a corner is difficult given the noise in the data. How can mistakes be avoided? In addition to bearing in mind the imprecision of the data, it also makes sense to average a few months' worth of data to smooth out blips, and to examine multiple indicators of labor market performance.

Subject: Labor Market Data From: Emma To: All Date Posted: Mon, Feb 02, 2004 at 13:49:24 (EST) Email Address: Not Provided Message: September 18, 2003 Alan B. Krueger - New York Times In addition to the household survey, the bureau conducts a monthly survey of 400,000 business establishments to gauge employment changes. Because the establishment survey is much larger and is regularly anchored to a complete count of payrolls from tax records, the financial markets have historically reacted more to that measure. Much has been made recently of the divergent trends displayed by the two surveys. Since the official end of the recession in November 2001, the establishment survey indicates that employment fell by 1.1 million jobs while the household survey indicates that it grew by 1.4 million. But the picture is not nearly as cloudy as some have made it out to be. First, the household survey shows an artificial jump of more than half a million jobs in January 2003 because of a technical adjustment that ratcheted up the size of the population that month. Second, the two surveys count jobs differently. The household survey counts people who hold two jobs only once, while the establishment survey excludes self-employed, private household and agricultural workers, for example. If adjustments are made to the household survey to make it count jobs in a manner comparable to the establishment survey, then instead of an increase of 842,000 jobs since August 2002, the household survey indicates a loss of 425,000 jobs -- almost as large as the 560,000 jobs lost according to the establishment survey. These adjustments do not account for the entire divergence between the surveys since the end of the recession, but both surveys point to a job-loss recovery. [Bendheim professor of economics and public affairs at Princeton University.]

Subject: Re: Labor Market Data From: Pete Weis To: Emma Date Posted: Tues, Feb 03, 2004 at 02:20:23 (EST) Email Address: Not Provided Message: In an effort to restore 'investor confidence' the government makes a big deal about requiring accounting transparency and accuracy. Yet when they report economic statistics, it seems they are not above fudging the 'numbers'. There have been many months since 2000 were we've had a net loss of jobs, yet at times, the unemployment rate would drop in the very month there was a net loss. This, because those who hadn't found a job within a certain period of time were conveniently dropped off the labor force. Your post seems to point to the difficulty in calculating, accurately, new jobs being created. Calculating the loss in jobs is a bit easier since those losing their jobs generally apply for unemployment benefits. I wonder about this 400,000 number being quoted so often - when weekly unemployment applications fall below 400,000, we have job growth and when they edge above 400,000 then we have net job losses. What if the equation has changed? Perhaps that 400,000 number is no longer any good. What if, with jobs going overseas and companies squeezing more out of fewer employees, that number is closer now to 350,000 or 300,000? Guess the tax records should eventually reveal the truth.

Subject: Labor Data Answer Above From: Emma To: Pete Weis Date Posted: Tues, Feb 03, 2004 at 14:38:09 (EST) Email Address: Not Provided Message: The answer to you imp[ortant points is above. Alan Krueger is superb.

Subject: chinese and indian thieves From: stopstealingamericanjobs To: All Date Posted: Mon, Feb 02, 2004 at 02:10:08 (EST) Email Address: a@a.com Message: we really need to do something about china and india. first they take our manufacturing jobs and now they are taking our high tech jobs. it's just not fair. chinese and indian workers are willing to work for nearly nothing, their currencies are undervalued, and they have favorable tax structures. we need to stick it to these two mega countries before they steal all of our jobs and makes us into a poor, weak country.

Subject: Offensive and Wrong From: Emma To: stopstealingamericanjobs Date Posted: Tues, Feb 03, 2004 at 17:36:00 (EST) Email Address: Not Provided Message: This post is simply offensive and wrong. The Chinese and Indians are building their economies and we are doing the same. If we employ policy that makes for job creation we can compete quite well in labor markets as we have for decades.

Subject: Re: Offensive and Wrong From: Pete Weis To: Emma Date Posted: Tues, Feb 03, 2004 at 22:53:13 (EST) Email Address: Not Provided Message: Emma, Certainly I agree that many, especially on this board, would find this poster's message offensive. I believe that any human being on this planet who wants a job deserves a job. Employment in this world does not belong to any particular country. However, the frustration I hear in this post points to an extremely serious problem for the US economy for years to come and a very serious problem for the world economy in atleast the short term. Not only is a rapid loss of jobs in the US to overseas competition damaging to us but it will also have fairly immediate tough consequences on the rest of the world. Morgan Stanley chief economist Stephen Roach has talked, at length, about an unbalanced world economy where an indebted American consumer has become the center of world economic growth. This of course can not and will not continue indefinitely. If we continue to run a large current account deficit all the while we are losing jobs overseas to cheaper job markets, this worldwide economic 'house of cards' will fall with the US economy. Perhaps, this is the only way this world economy will become 'balanced'. The reality for the US, in a world where major corporations compete globally for the cheapest labor, is that our present standard of living doesn't jive with our present level of production.

Subject: Re: chinese and indian thieves From: Pete Weis To: stopstealingamericanjobs Date Posted: Tues, Feb 03, 2004 at 01:31:50 (EST) Email Address: Not Provided Message: Actually, your concern about the loss of jobs overseas and its considerable growing negative threat to the US economy is well founded. Unfortunately, the US has been running a current account deficit for about 30 years. Presently, it is running at about 1.5 billion a day. With net cash flow leaving the US at this rate, we desparately need the Chinese and Japanese, among others, to continue returning these 'escaped' dollars back into our economy with their purchases of US treasuries, bonds, etc. They have been willing, atleast to this point, to oblige us as long as the US consumer is willing to go deeper into debt to buy their products. They do this, even though the US provides them with the lowest interest rate return available almost anywhere in the world and the dollar appears to be in a prolonged drop which actually has given them a loss in investment return. If they were to stop returning their surplus dollars into the US economy, the dollar would begin to fall sharply and interest rates rise. Substantially rising interest rates would almost certainly cause a collapse in the US bond, stock and real estate markets. A collapse in the bond markets would further reduce the supply of money for mortgages, etc. and further pressure interest rates higher. In this very nasty situation, if it were to happen, we would find out why Warren Buffet has refered to unregulated derivative contracts (mostly made up of interest rate swaps) as 'financial weapons of mass destruction', to say nothing of what this would do to a bloated real estate market. Unfortunately, the Chinese hold the stronger hand in our trade relationship. Any acrimony in our trading relationship would hurt both economies - it's just that we have much more at stake. The way the Fed and the present US administration has decided to deal with the trade deficit and the loss of jobs overseas is to promote what they hope is a steady, controlled drop in the dollar. It's unclear whether they can 'control' the drop and it would have to fall a long, long way before US labor would be competitive with Asia. Warren Buffet proposed a possible solution to our current account deficit in a recent article in Fortune magazine. Much like strong medicine, it was not without negative side affects. But, perhaps, it's worth further consideration. However, except for the Berkshire-Hathaway faithful, few pay much attention to Buffet.

Subject: Re: chinese and indian thieves From: Paul G. Brown To: stopstealingamericanjobs Date Posted: Mon, Feb 02, 2004 at 12:33:33 (EST) Email Address: Not Provided Message: The only sustainable way forward is to work for social and economic justice here in the United States and in these emerging economies. Trade barriers will just make losers of us all in the long run.

Subject: Re: chinese and indian thieves From: Alhambra To: stopstealingamericanjobs Date Posted: Mon, Feb 02, 2004 at 02:37:49 (EST) Email Address: Not Provided Message: I suggest you read chapter 1 of Paul Krugman's International Economics textbook (Krugman and Obstfeld) to moderate your ignorance (the Ricardian model comments on trade myths). If that is not too taxing, I suggest you move on to the following few chapters on trade models. Your post is as arrogant as it is ignorant. Who says those jobs are 'yours'? And who tells you they are being grabbed by the 'Chinese' and 'Indians'? And where is your evidence of REAL unfair competition (please, really, read the above reference). Your post is full of first world prejudice. Kinda reminds me of the witch hunts we had in Europe. We were getting our arses kicked by epidemics and did not have a clue about their causes, so we blamed the witches. That sure solved the problem. Think before you write and offend people.

Subject: Re: chinese and indian thieves From: stopstealingamericanjobs To: Alhambra Date Posted: Wed, Feb 04, 2004 at 00:33:29 (EST) Email Address: a@a.com Message: b4 i go through the trouble, did the whole china/india phenom exist when krugman/obstfeld wrote their book - isn't it a new thing? isn't there anything more current? okay, i agree that calling china and india thieves is offensive. my bad, pls. forgive me. i employed strong language to evoke a strong response. i want to get to the bottom of this question and see if there are any strong arguments for or against what I posed - because I am of the hope that china's and india's gain will also be the U.S.'s gain. I'm of the hope that this isn't a zero sum game, but the more I read, the less i feel that this hope is founded. at any rate, i believe the offensive post captures a rumbling and growing sentiment among many americans. i put it out there hoping it would get slapped down by a well-reasoned, well-backed argument. But instead I got a pretty strong argument that china and india are economic threats to the u.s., and little to no argument that they are not (and i agree with people that the post is offensive - i wrote it to be offensive). yeah, of course we want china and india's standards of living to improve, but i want to know what that will cost americans. yeah, it's wrong for me to say chinese and indian thieves, but i don't think it is ignorant or arrogant of me to be worried about american jobs. and no, i'm not defaulting to protectionist policies when i bring this up, but i don't know of any other good alternatives either.

Subject: Re: chinese and indian thieves From: Paul G. Brown To: stopstealingamericanjobs Date Posted: Wed, Feb 04, 2004 at 13:20:55 (EST) Email Address: Not Provided Message: > But instead I got a pretty strong argument that china and india > are economic threats to the u.s., and little to no argument that > they are not . . . What constitutes a 'threat'? Something that has the potential to inflict evil, injury or damage. An economic threat then, is something that threatens damage to economic development. But look, if you have ten widgets and only need five, and I have six gidgets but only need three, and we exchange five of your widgets for three of my gidgets, how is anyone damaged? And, more generally, if I'm better at making gidgets than you are, and you're better at making widgets than I am, how is anyone damaged by saying 'Let's each make what we're good at, and trade with each other to make what we're not good at?' China and India have figured out how to make widgets better than the US can. But the US is still better at making lots of other things. In Economic terms, each country has its sphere of comparative advantage. We are all better off -- China, India and the United States -- if we each concentrate on producing those things we are good at and trading with each other for what we are not. This argument is classic trade theory. Google ('David Ricardo'), or read Krugman's 'Pop Internationalism' for more details. These ideas are at least as old as international trade, and certainly pre-date anything Krugman has written. They're just not well or widely appreciated. Mind you, it ain't all sunshine and mai tais. Market transitions are socially painful, and it behooves any nation to continually invest in policies that ease the adjustment. This George ain't doing. A real jobs policy would involve investment in intellectual capital (money to colleges and re-training) and support for R&D. But slamming the door on trade makes us all poorer in both the short and the long run. Hope this helps - Pb

Subject: Re: chinese and indian thieves From: Pete Weis To: Paul G. Brown Date Posted: Wed, Feb 04, 2004 at 15:23:47 (EST) Email Address: Not Provided Message: With all those gidgets and widgets, I was trying to figure out which if anything the US manufactures better or cheaper? And believe me I see nothing right or wrong about our trade situation, only that we're in one heck of a pickle. Perhaps you have a specific widget we manufacture that you could point to which looks like it will continue to have a good future for us?

Subject: Re: chinese and indian thieves From: Paul G. Brown To: Pete Weis Date Posted: Wed, Feb 04, 2004 at 16:59:24 (EST) Email Address: Not Provided Message: Manufacturing is only one part of the economy. Services are just as important, economically speaking, as things! The US leads the world in production of financial services, entertainment, business models, intellectual property, to name a few. And in capital intensive manufacturing US productivity is still world class. The out-sourcing is most prevalent in areas of lower value-add and less differentiation: like garment making, computer tech support, and re-coding modules in enterprise resource planning computer programs. But like I said: it ain't all beaches and cold beer. However, for all innovation to grind to a halt because of changing balance of trade would be historically unprecedented. Given the choice between a set of policies that we know will make us all poorer (trade protectionism) and another approach that doesn't build sand-castles against the rising tide of 3rd world economic development but seeks instead to ride the wave, I say 'Surf's up, dudes!' Pb

Subject: Re: chinese and indian thieves From: Pete Weis To: Paul G. Brown Date Posted: Wed, Feb 04, 2004 at 23:34:34 (EST) Email Address: Not Provided Message: Paul I get your point about the services part of the economy. However, I'm not sure I share your lack of concern about the loss of jobs that make 'things'. After all there are still millions of jobs in this country that make 'things' and they represent a very large percentage of people who buy 'things' in our economy. As far as non-manufacturing jobs are concerned: why would a US corporation in today's competitive environment hesitate to look for equally competent computer programmers, engineers, accountants, etc in countries that pay one tenth the wage? Afterall, if US companies are willing to go to the considerable expense of shutting down factories in the US and rebuild them overseas, it stands to reason they will and are taking white collar, service sector jobs overseas where all they have to do is lease some cheap office space and add some computers and fax machines. The loss of jobs and related tax revenues in Silicon Valley and the rest of California is testament to the loss of service sector jobs - much of it overseas. Intellectual property - ask Bill Gates and Microsoft about how they're doing with their intellectual property in China. Intellectual property is good for one's economy only if it can be enforced outside of one's economy. This is also a problem for the US entertainment industry (I agree its a world leader - if not in quality, at least in quantity). They're having problems protecting their intellectual/artistic property in the US let alone in the rest of the world. Business models - sorry, I can't resist getting sarcastic on this one. Is this where the execs get fat stock options and then sell, at record levels, into stock rallies generated by their pumped up 'guidance' and imaginative proforma accounting? Financial services - I thought J.P. Morgan and Citigroup provided some very special financial services for Enron and Worldcom. You have to wonder why the government is putting so much effort into nailing Martha Stewart for getting inside info through her broker regarding Inclone stock sales to save herself what amounted to about $40,000 in losses. Yet, as far as I know, there is no move afoot to go after Citigroup and J.P. Morgan execs for creating sham offshore companies to funnel loans to Enron and Worldcom and make them look like profits from business dealings. I remember one lady in her 60's who had worked at Enron and had lost her job, her home, and her entire retirement - very, very sad. You wonder if Martha Stewart's case will eventually cast a spotlight on George W's insider sale of $900,000 in Harkin stock just before it announced big losses causing Harkin stock to tank by 50%. George, of course failed, to report (he now blames it on his lawyers after changing his original story) his sale to the SEC as required by law. With the unprecedented Fed rate drops over the last 3 years, consumer loans have gone through the roof and literally hundreds of thousands of new financial sector jobs have been created. Constantly dropping interest rates over the last 20 years has ballooned the financial sector of our economy to where it now represents (from a recent article I read) over 20% of our economy. If this is incorrect someone set me straight on this. Anyway, the way I see it, the financial sector is the kind of easy come - easy go type of job market. If and when interest rates begin to rise, financial sector jobs will begin to disappear, probably faster then they were created. Bottom line - don't spend too much time at the beach Paul. There may be no job for you when you get back. Then, again you may be in a financial situation where you don't require a job. In that case congratulations! Again I take no moralistic view regarding who has a right to what jobs. I just think we should all take note to what is coming down the pike and realize there will be some pretty angry people along the way. Certainly the tariff wars of the 1930's contributed to the great depression and that is not what is needed now. I just hope there is some way to ease us into our new reality without a sudden collapse into it. By the way, I apologize to you Paul if I came across as a jerk in this post. Your posts on this site reveal you to be a very intelligent person and if you decide to rip me for my reply, I probably deserve it.

Subject: Re: chinese and indian thieves From: William Reed To: Pete Weis Date Posted: Fri, Feb 06, 2004 at 02:14:10 (EST) Email Address: Not Provided Message: Nice post, Paul. I don't think anybody should be happy about a 'race to the bottom'. It's not good for anybody, and it's not the kind of competition we want. And having the cheapest labor, the least social programs, and the fewest environmental regulations isn't a 'skill', and it certainly doesn't bring any advantages to the people of the nation that possesses them.

Subject: Nicely Done From: Emma To: William Reed Date Posted: Fri, Feb 06, 2004 at 14:30:18 (EST) Email Address: Not Provided Message: Paul Nicely done, as always.

Subject: Re: chinese and indian thieves From: Paul G. Brown To: William Reed Date Posted: Fri, Feb 06, 2004 at 13:28:28 (EST) Email Address: Not Provided Message: I couldn't agree more. This morning, on NPR, a commentator labored to make a distinction between 'free' and 'fair' trade, and I think it's a good distinction. Citizens of the third world will not benefit one iota if their environment is razed and their labor exploited to the sole benefit of first world consumers and share holders. 'Free' trade has come to stand for this kind of economic exploitation without regard to issues that those of us in the first world recognize as important. 'Fair' trade encompasses the 'free' trade policies of low tarif barriers and open markets, but also takes environmental, health and public development considerations into account. It's 'fair' (just) to all concerned. Maybe it will kick off a race to the top. Pb

Subject: Re: chinese and indian thieves From: Paul G. Brown To: Pete Weis Date Posted: Thurs, Feb 05, 2004 at 15:53:46 (EST) Email Address: Not Provided Message: Pete - In this context I'm making a very narrow claim that trade protectionism is not an economic policy we ought to pursue at this time. I actually concur with a great deal of your thinking, but would disagree that employment off-shoring is the main problem to be solved. My argument goes as follows: 1. In theory (Ricardo), practice (garment manufacturing, ship- building) and as a matter of historical fact (emmigration of entire sections of the economy such as mining, some manufacturing and most recently certain types of computer jobs) international trade is a well studied economic phenomenon. Off-shoring should be looked at in that context *and* in terms of the social trauma it leaves in its wake. I'll talk about a few of your specifics below. 2. For all their flaws (and you're quite right to point them out), first world economies like the US (and Europe) are tremendously dynamic. They retain a competitive edge in many economic sectors, and in the past have 'grown new limbs' when old ones were cut off. I'm prepared to make the medium-to-long-term bet that history will repeat. 3. None of this takes away from the immediate problems that off-shoring is creating. Confronting these problems requires public policy initiatives; but I'd note that the US in particular has rarely been very far-sighted when it comes to running such programs. Retraining, life-time education models, *and* requiring appropriate levels of labor and environmental policing on a global scale would all help. 4. It all boils down to a choice: trade protectionism vs. free trade. Look at it as a min/max problem. In the short run, trade-protectionism ought to have some impact on the social outcome (joblessness) although I don't think that the nature of bits-n-bytes will make it easy to enforce protectionism on high-tech jobs. Over the long run, however, it will make the US economy less competitive as it will oblige us to distort our investment portfolio by putting more money into these areas than other nations. Nothing you're saying is wrong, Pete. But I would urge you to look at both sides of the question. I actually think you agree with me. Some detailed responses: 'making things' Those manufacturing jobs that remain in the US (and in Europe, and Australia) are there because the industries sustaining those jobs have some comparative advantage - most often productivity, but sometimes happy accidents of geography. I mean, the fact that there are still manufacturing jobs in the US says something. 'intellectual property' One striking outcome of the noisy intellectual property debate being conducted over in the other corner of the internet is the realization that very little of what amounts to intellectual product can be protected by patents, copyrights or trade marks. The good folk running digital media are losing their struggle to retain their roles as 'middle-people'. (I'm not taking a side in that debate - just pointing it out.) 'business models' A business model, for instance, *is* intellectual property that can't be protected but can convey enormous advantages. (Look at IP not as a legal/property rights thing but as a product of intellectual effort: thought). Fast food, Wal*Mart, Dell computers, fashion labels that morph brand but retain ownership; these are all US innovations. The point about executive compensation is well made, but not relevant to the off-shoring debate. I believe that the wage spread between executives and grunts is more socially damaging than off-shoring! (A different argument, and not one that can be easily framed in economic terms). 'financial services'/'economic conditions' All of these points are well made. I would point to all of them and say, 'These are the real problems we should be talking about: not off-shoring.' (BTW: according to this financial services website financial services -- which includes real estate -- accounted for 20.6% of GDP in 2001 up from 18.9% in 1997. However, according to the BLS, employment in the financial sector has fallen since 2000, as the rest of the work force has gone.) I expect that many coding jobs will move off-shore. There was a recent, long piece in Wired Magazine examining the phenomenon. And (personal revelation) I'm a software geek. So what I'm doing is madly retraining myself in mathematics, and specifically mathematical analysis. Less coding, but being able to assess and explain what the numbers mean is going to be a valuable skill, and not one that's easily out-sourced (I hope). Hope this helps. And trust me, your netizenship is just fine. Pb

Subject: Re: chinese and indian thieves From: Pete Weis To: Paul G. Brown Date Posted: Thurs, Feb 05, 2004 at 22:56:41 (EST) Email Address: Not Provided Message: Excellent reply. Sadly, I do agree with you that 'offshoring' is not the main problem with our economy, just one of the many. I say sadly, because I do believe we have some more serious problems and in the future would like to post in regard to them. I believe the offshoring is inevitable but the 'growing of new limbs' will take quite some time. Agree that government fostered retraining programs are important. Perhaps, even more critical than training would be a major governmental funding effort to develop new technologies directed at creating new energy sources. If the hundreds of billions spent in an invasion and likely protracted occupation of Iraq were instead spent on new energy technologies it probably would have contributed mightily to the US leading the world in the next great technological boom. When you look back at the US space effort and the tax dollars used to develop the integrated circuit and the the computer industry it fostered in the US, you can see the immense possibilities. I disagree with your assertion that the the grunt/exec wage spread can not easily be 'framed in economic terms'. I believe this is representative of a situation which has repeted itself in the past with devastating consequences. It would take a somewhat long post to deal with this issue and I would like to bring it up in the future to get your's and other's opinions on it. This is a great site. It's hard to find people with an interest in these issues. I especially hope to learn from people who post on this site while exchanging ideas.

Subject: Re: chinese and indian thieves From: Paul G. Brown To: Pete Weis Date Posted: Fri, Feb 06, 2004 at 14:25:34 (EST) Email Address: Not Provided Message: Sign me up! 1. On Energy: it puzzles me why the progressive size of politics has been so reluctant to make the point that dependency on imported energy is perhaps the single biggest national security vulnerability confronting liberal democracies. Perhaps they are afraid that stirring up this debate will lead us to revisit nuclear power. Perhaps they are just uncomfortable using language ('national security') that takes the conversation closer to guns than butter. 2. Grunts and Executives: when I say that this issue is not easily 'framed in economic terms', I mean that the tools of technical economic analysis makes it hard to define just what 'the problem' is. For example, is this a 'labor market' issue? You might argue that the 'spread of prices' in the labor market is so great that it implies an underlying inefficiency. Trouble is, units of labor are not complementary (or are they?) Some labor markets appear contrived to produce this result: look at professional sports, or entertainment more generally. Can skewed income distribution be associated with underperformance in some economic metric? GDP growth? Employment? According to this report from the census bureau, an increasing Gini co-efficient is associated with recessionary periods. But that might be co-incidental (I'd need to get *really jiggy* with the data to figure this out; my judgement is that it would be very hard to say either way, given the fact that recessions are unusual, and the Gini Co-Efficient has been going up overall). (Note: By the way, check out Figure 3. Next time a Naderite tells you that there is no difference between the parties, point 'em at this chart and give 'em a 'please explain'.) On the other hand, the US economy has outperformed most other OECD economies both in terms of overall GDP growth and productivity growth *but* has the third highest Gini Coefficient. This paper looks at the question and can't find any clear relationship. This one is even more blunt. And is 'inequality' really the problem? Or is it poverty? We can all be equal and very poor, but can we all be equal and very rich? Anyway, the point is that income inequality is huge issue, but it's not one where you can point to an obvious economic analysis that quantifies how much of a problem it is. IMHO, the truly important problem isn't income equality: it's poverty. I'm prepared to put up with a lot of inequality (money don't buy you happiness, afterall) on the condition that we take as a goal minimizing poverty (money does buy housing, education, medical and dental).

Subject: Re: chinese and indian thieves - Interesting From: Terri To: Paul G. Brown Date Posted: Thurs, Feb 05, 2004 at 16:48:19 (EST) Email Address: Not Provided Message: Interesting exchange.

Subject: Re: chinese and indian thieves From: Jennifer To: Alhambra Date Posted: Mon, Feb 02, 2004 at 17:25:39 (EST) Email Address: Not Provided Message: With proper fiscal policy in America there will be enough work as there was till 2001. American jobs are not being stolen by any nation.

Subject: California Electricity Deregulation From: Mads K To: All Date Posted: Sun, Feb 01, 2004 at 13:18:18 (EST) Email Address: Madskel@worldonline.dk Message: If there is somebody who knows of academic papers on the California Deregulation, with focus on Krugman's take on the trouble I would like to read them.

Subject: Electricity Deregulation From: Emma To: Mads K Date Posted: Sun, Feb 01, 2004 at 14:44:14 (EST) Email Address: Not Provided Message: Paul Krugman cites the specific University of California study on deregulation in articles. Important and damning evidence of market manipulation in wake of deregulation....

Subject: Wolak Joskow Borenstein From: Emma To: Emma Date Posted: Sun, Feb 01, 2004 at 14:52:00 (EST) Email Address: Not Provided Message: We're approaching the first anniversary of the sudden, unexpected end of California's energy crisis. I went way out on a limb, at least by journalistic standards, by saying that market manipulation was a key feature of that crisis. I have since been vindicated: arguments that people called leftist nonsense a year ago are now conventional wisdom. But of course I wasn't a brilliant investigative reporter; I just knew enough to talk to the right people, and to understand what they were saying. Paul Joskow and Severin Borenstein were very helpful. But my most helpful source of all was Frank Wolak, the Stanford professor who also heads the CAISO market surveillance committee. (CAISO is the 'system operator'). In a recent paper (which doesn't seem to be on his web site yet) Wolak offers a very nifty model to explain what was going on. However, as they say in the journalistic trade, he buries his lede: the model is in passing, amid a dense discussion of institutions and their reform. So I thought I would lay it out here, to give you an idea of how I think about the whole thing.

Subject: Wolak Joskow Borenstein From: Emma To: Emma Date Posted: Sun, Feb 01, 2004 at 14:53:56 (EST) Email Address: Not Provided Message: As Frank Wolak, the Stanford economist who also advises the state's power grid, has pointed out, an outage at a power plant is a lot like an employee calling in sick. You can't tell directly whether he is really sick or has chosen to take the day off for other reasons, but you can look for circumstantial evidence. And such evidence has convinced Mr. Wolak that 'generators use forced outages strategically to withhold capacity from the market' — a view shared by a growing number of other researchers.

Subject: Re: Wolak Joskow Borenstein From: Mads K To: Emma Date Posted: Mon, Feb 02, 2004 at 17:48:03 (EST) Email Address: Not Provided Message: Thank you. I i knew about Frank Wolak from the articles but the rest was very helpful.

Subject: wmd From: byron To: All Date Posted: Sat, Jan 31, 2004 at 23:08:27 (EST) Email Address: bluefin76020@yahoo.com Message: Now that mr Kay has said that there was not any wmd's in Iraq, where is the prosecutor? If this was happening during the Clinton years the republicans would be hollering impeachment!

Subject: Re: wmd From: Jonathan To: byron Date Posted: Sun, Feb 01, 2004 at 10:15:16 (EST) Email Address: jonathan@lyingsocialistweasels.com Message: Now that mr Kay has said that there was not any wmd's in Iraq, where is the prosecutor? If this was happening during the Clinton years the republicans would be hollering impeachment! --- How can we have a prosecutor when terrorists are trying to hijack flights? How can we hold Bush accountable when everything bad that's happened under his watch either isn't really bad, or isn't his fault, and how dare we say otherwise? Sorry -- feeling a little cynical today...

Subject: Re: wmd From: byron To: Jonathan Date Posted: Sun, Feb 01, 2004 at 22:06:35 (EST) Email Address: bluefin76020@yahoo.com Message: We can hold him accountable because he flat out lied to the American people and the whole world period,end of story!

Subject: wmd From: byron To: All Date Posted: Sat, Jan 31, 2004 at 23:05:11 (EST) Email Address: bluefin76020@yahoo.com Message: Now that mr Kay has said that there was not any wmd's in Iraq, where is the prosecutor?

Subject: Where is the prosecutor? From: Ayn Rant To: All Date Posted: Sat, Jan 31, 2004 at 18:45:59 (EST) Email Address: Not Provided Message: Those of you with long memories may recall the murder of Richard Welch in Athens in 1975. Mr. Welch was a CIA officer assigned to the U.S. Embassy in Greece. He was shot to death on his doorstep after his diplomatic cover was blown by a far-left U.S. magazine called 'Counterspy'. Outraged, the Congress ultimately passed the Intelligence Identities Protection Act. Question: Is Attorney General Ashcroft planning an investigation and prosecution of the people within the Bush Administration who revealed the name of the CIA officer who was posted to Niger? Or is it a different case when the far right does this kind of thing?

Subject: Re: Where is the prosecutor? From: byron To: Ayn Rant Date Posted: Sat, Jan 31, 2004 at 22:59:36 (EST) Email Address: bluefin76020@yahoo.com Message: I guess they don't have to answer to anyone. With all the lies that they have told, what's one more. Saddam couldn't hold a candle to Bush and his bunch when it comes to lies and deception.

Subject: George Orwell, please call your office! From: Ayn Rant To: byron Date Posted: Mon, Feb 02, 2004 at 19:48:00 (EST) Email Address: Not Provided Message: Somewhere in Orwell's writing he noted that the Stalinist Communist's propaganda operation in Spain during the Civil War in the 1930's produced stuff that was so grotesquely false '...that it did not even have the usual relationship between the truth and a lie.' He needn't have blotted a word today if he was writing about our President and his satraps.

Subject: Growth and Jobs From: Emma To: All Date Posted: Fri, Jan 30, 2004 at 15:12:56 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/webfeatures_econindicators_gdppict Fourth quarter output growth generated only 207,000 jobs. This 0.6% growth rate for jobs remains less than half the 1.3% growth rate (about 450,000 jobs per quarter) necessary to keep up with the working-age population. When analyzing these issues, commentators often note the 'lag' from the end of a recession to the start of job growth. But what the analysts often fail to mention is how extraordinarily long the lag was this time. In fact, jobs started to return within three months after all prior recessions on record but took 21 months to reverse course after this latest recession. The weak job market is also reflected in today's data on national income. The final quarter in 2003 saw real labor compensation grow at an annualized rate of only 1.6%, too slow to generate a healthy self-sustaining recovery. Since the last recession ended two years earlier, labor compensation has crept up by only 1.7%.

Subject: a fight song for progressives From: Wgoeshome To: All Date Posted: Fri, Jan 30, 2004 at 08:12:44 (EST) Email Address: wgoeshome@yahoo.com Message: Meant to uplift and inspire, and get people to the polls (with sharp pencils, not electronic screens) It is for sharing. W Goes Home www.goeshome.com

Subject: Robert McChesney Interviews Paul Krugman From: William Reed To: All Date Posted: Thurs, Jan 29, 2004 at 00:34:18 (EST) Email Address: Not Provided Message: Don’t know if this has been posted here yet, but this was a great interview. One of America’s greatest media analysts and critics interviewing one of America’s greatest economists. Doesn’t get much better than that. www.will.uiuc.edu/am/mediamatters/

Subject: Re: Robert McChesney Interviews Paul Krugman From: William Reed To: William Reed Date Posted: Thurs, Jan 29, 2004 at 00:39:28 (EST) Email Address: Not Provided Message: Hmmm, it had a place for a link, but I don't see it here. Here it is: http://www.will.uiuc.edu/am/mediamatters/

Subject: Thanks for the link From: David E... To: William Reed Date Posted: Thurs, Jan 29, 2004 at 18:59:01 (EST) Email Address: daveellis_39@hotmail.com Message: n/m

Subject: Question about economists From: Pete Weis To: All Date Posted: Thurs, Jan 29, 2004 at 00:07:19 (EST) Email Address: Not Provided Message: Since the beginings of the industrial revolution there have been many booms and busts in the US and world economies. Perusing through archives of business sections of newspapers, such as the New York Times, seems to indicate that the consensus thinking of economists and business analysts never foresee the coming of economic downturns. The late 1920's seem to have very few economists warning about the accumulation of debt, overbloated stock markets, overproduction, etc. Yet, the very same problems had caused worldwide depressions in the 1870's and 1819 through early 1820's. The amazing discovery for me, is the constant positive outlooks of a majority of economists during the early 1930's, even as the depression was unfolding all around them. Can any poster on this board cite an example where a majority of economists agreed that a significant economic downturn was in store? Granted there have been, at times, a very small minority of voices who have warned of troubled economic times ahead. Perhaps in these times, Paul Krugman, Stephen Roach, Warren Buffet and George Soros are among those who are members of this small minority who's vision is not obscured by the pressures of the consensus view. You do have to ask the question why anyone would pay any heed to the consensus view when it has a 100% failure rate of predicting downturns? Or is my statement not true? Can anyone give an example to the contrary?

Subject: Re: Question about economists From: Jerry To: Pete Weis Date Posted: Thurs, Jan 29, 2004 at 18:13:30 (EST) Email Address: none Message: Peter - Well, this is pretty easy and pretty damn sad. Ecnomists that predict downturns don't get pay checks for being economists for very long. I remember reading (sorry, I don't have the source) the tale of a corporate economists who began predicting the tech downturn in the mid-90's. His bosses got all over him because it was a matter of stock valuation for the company to get on the band wagon. This is how the bubble gets inflated - everyone gets on the wagon. If everyone had good sense and kept their analyses objective, no band wagon, no bubble, no bust. Jerry

Subject: Excellent Question From: Emma To: Pete Weis Date Posted: Thurs, Jan 29, 2004 at 14:07:50 (EST) Email Address: Not Provided Message: Excellent post! The question answers itself....

Subject: Re: Excellent Question From: Peppone To: Emma Date Posted: Thurs, Jan 29, 2004 at 15:48:07 (EST) Email Address: nma@hotmail.com Message: http://www.epinet.org/stmt/2003/econlist_final_db.html ?

Subject: Brad DeLong From: Emma To: Peppone Date Posted: Thurs, Jan 29, 2004 at 15:58:44 (EST) Email Address: Not Provided Message: http://www.j-bradford-delong.net/movable_type/2004_archives/000160.html And every single senior Republican economic policy appointee comes out of a look back at the past three years looking very badly.

Subject: Deficit Picture From: Emma To: All Date Posted: Wed, Jan 28, 2004 at 16:36:44 (EST) Email Address: Not Provided Message: http://www.cbpp.org/1-28-04bud.htm Deficit Picture Grimmer than New CBO Projections Suggest - 1/28/04 CBO's new projections are unrealistically optimistic because they exclude costs of continuing various policies, such as the recent tax cuts; including these costs raises the deficit estimate to $5.2 trillion over the next decade.

Subject: Deficit Details From: Emma To: Emma Date Posted: Wed, Jan 28, 2004 at 16:38:05 (EST) Email Address: Not Provided Message: http://www.cbpp.org/1-28-04bud.htm The new CBO ten-year projections understate the likely size of future deficits because they do not reflect the costs of continuing various policies currently in effect; for example, the CBO baseline assumes that all of the tax cuts enacted since 2001 will expire. The baseline also assumes that relief from the Alternative Minimum Tax will end, and the number of tax filers subject to the AMT will rise from three million today to 29 million by 2010. The new CBO report projects deficits totaling $1.9 trillion over the ten-year period from 2005 through 2014. A more realistic assessment — one that uses CBO estimates but incorporates likely or inevitable costs, following the same methodology that was used in the September 2003 report by the Committee on Economic Development, Concord Coalition, and the Center on Budget and Policy Priorities — shows a ten-year deficit of $5.2 trillion. Under these assumptions, the national debt climbs from $4.0 trillion today to $9.7 trillion by the end of 2014 (reflecting the $5.2 trillion in deficits for the 2005 – 2014 period, plus the nearly $500 billion deficit in 2004). Debt rises from 33 percent of Gross Domestic Product in 2001 to 54 percent of GDP by 2014. Under the more realistic assessment, the deficit exceeds $400 billion in every year and stands at about $477 billion in 2009, the year in which the President has said that the deficit would be cut in half. The $477 billion figure is essentially identical to the projected 2004 deficit, indicating little progress toward the Administration’s goal of halving the deficit. Furthermore, by 2014, under these more realistic assumptions, the deficit reaches $708 billion. The data show that the large deficits projected for the coming decade are more a reflection of a historically low level of revenues, measured as a share of the economy, than of an unusually high level of federal spending. In 2004, revenues will total only 15.8 percent of GDP under current law, the lowest level since 1950. Although revenues will rise as the economy recovers from the recession, they still will average only 17.1 percent of GDP over the coming decade (2005 through 2014), assuming the recent tax cuts are extended and AMT relief is continued. That is below the average levels for every decade in the second half of the 20th century.

Subject: Revenue and Spending From: Emma To: All Date Posted: Mon, Jan 26, 2004 at 14:22:31 (EST) Email Address: Not Provided Message: http://www.cbpp.org/ CBO Figures Indicate Lower Revenues, Not Higher Spending, Account For The Large Deficit - 1/26/04 New Congressional Budget Office estimates show revenues in 2004 will be exceptionally low, falling to their smallest level as a share of GDP since 1950. Spending won't be particularly high; as a share of GDP it will be lower than throughout the administrations of Presidents Carter and Reagan, and the first President Bush.

Subject: Re: Revenue and Spending From: Jerry To: Emma Date Posted: Tues, Jan 27, 2004 at 16:50:20 (EST) Email Address: none Message: I was happy to see PK take this on. There's no real way to spin these numbers. I buy the argument that the Neo-cons are trying to castrate the G with these tax cuts. It serves their interests on so many levels. George Will has be spinning this crap by saying the GWB is not conservative enough. WTF? True, he passed a big entitlement and he flirted with steel tariffs for a bit. And he seems to have a soft spot for Mexico, but this is all politics...panacea for leaning right independents who think with their glands rather than their brains. Emma, thanks for posting the hard numbers. Jerry

Subject: Detail From: Emma To: Emma Date Posted: Mon, Jan 26, 2004 at 14:23:09 (EST) Email Address: Not Provided Message: http://www.cbpp.org/1-26-04bud.htm On the revenue side: CBO projects that revenues will fall to 15.8 percent of the economy in 2004. This is the lowest level since 1950. (The figures in this analysis focus on revenues and spending as a share of the Gross Domestic Product, labeled here as the “economy.” The Gross Domestic Product is the basic measure of the size of the economy. Measuring spending and revenues as a share of the economy is the standard way that economists and budget analysts examine changes in the levels of revenues and spending over time.) CBO projects that income tax revenues (including both the individual and corporate income tax) will equal 8.0 percent of the economy in 2004. This is the lowest level since 1942. Without the tax cuts enacted in recent years — which will reduce revenues by $264 billion in 2004, according to Joint Committee on Taxation estimates — revenues as a share of the economy would not be close to a historically low level. Key Facts That Emerge from the CBO Data On the spending side: CBO estimates that spending will constitute 20.0 percent of the economy in 2004, a lower level than in any year from 1975 through 1996. If the nation were devoting the same share of the economy to government expenditures in 2004 as it has, on average, since 1980, expenditures would be $120 billion higher this year. The large majority of the spending increases that have resulted from legislation enacted since the beginning of 2001 have come in the areas of defense and homeland security.

Subject: Summing From: Emma To: Emma Date Posted: Mon, Jan 26, 2004 at 16:51:35 (EST) Email Address: Not Provided Message: http://www.cbpp.org/1-26-04bud.htm In 2004, as a share of the economy: Federal revenues will fall to their lowest level since 1950, during the Truman Administration. Federal spending will be lower than in every year from 1975 through 1996 (and thus will be lower than throughout the administrations of Presidents Carter and Reagan and the first President Bush). In explaining the shift from a large surplus in 2000 to a large deficit in 2004, the drop in revenues since 2000 accounts for more than three times as much of the fiscal deterioration as the increase in expenditures.

Subject: Debt and Debt From: Emma To: Emma Date Posted: Tues, Jan 27, 2004 at 16:59:02 (EST) Email Address: Not Provided Message: http://www.cbpp.org/1-26-04bud2.htm CBO Data Confirm That Extending Tax Cuts Would More Than Double The Size Of Its Own Official Deficit Projections - 1/26/04 CBO shows in Table 1-3 on page 6 of its new report that simply extending the tax cuts and AMT relief would add another $2.9 trillion over the next ten years to its official deficit projections, bringing the ten-year total to about $5 trillion.

Subject: debt/deficit From: joe To: All Date Posted: Sun, Jan 25, 2004 at 14:18:57 (EST) Email Address: jpuchal@rcn.com Message: sum of year to year DEFICIT = accumulated DEBT. INTEREST paid on DEBT. current DEBT = around $6 TRILLION give or take? yearly interest expense on DEBT $200 BILLION give or take? present value (discounted) of future government obligations exclusive of general government expenses = $40 TRILLION (mostly social security)? last entry means we need $40 TRILLION in the bank right now, collecting interest, to meet future government promises or in other words to treat our future retirees the same way we treat current retirees. This is based on a study done under Paul O'Niell and then suppressed by the Bush administration. I quess they fiqured they have a hard time passing tax cuts if this was known.

Subject: Test yourself... How bad is it? From: OMB To: All Date Posted: Sun, Jan 25, 2004 at 00:34:35 (EST) Email Address: Not Provided Message: Okay, so PK says things are bad under Bush. And I'm sure many PK readers think things are awful. So test yourself. How bad is it? Here's the question... How bad is our federal debt level right now on a historical basis??? And here is the one key sub-question... How does the 2003 debt level as a percentage of GDP compare to the past? For the answer, see... http://www.whitehouse.gov/omb/budget/fy2004/pdf/hist.pdf and jump to pages 120 and 121. Look at the column 'Gross Federal Debt' under 'As Percentage of GDP.' Your thoughts?

Subject: Re: Test yourself... How bad is it? From: David E... To: OMB Date Posted: Sun, Jan 25, 2004 at 14:22:15 (EST) Email Address: Not Provided Message: I dont think a comparison of the total debt to GDP means very much. It is missing the future obligations of the government, this includes social security, medicare, government pensions, Fannie Mae and many others.

Subject: I'll take Krugman's and Delong's word for it From: Me To: David E... Date Posted: Tues, Mar 09, 2004 at 10:12:00 (EST) Email Address: Not Provided Message: indeed. I was waiting for Emma and Paul to jump on this. The answer, it's bad, it's very bad. And economists like Paul Krugman and Brad Delong and a few others are trying to tell us just how bad it is. What you are reading on the White House website is called 'spin' my friend. It's a good term to familarize yourself with. There's a lot of in floating around.

Subject: Why does Paying Down the Debt Help? From: Brian Williams To: All Date Posted: Thurs, Jan 22, 2004 at 01:25:30 (EST) Email Address: Not Provided Message: I've heard several economists say (Alan Greenspan, Robert Rubin, and even Paul Krugman), that paying down the debt will put the US in a 'better position' to deal with future SS problems. I was wondering, why? Why would paying down the debt help our future fiscal situation? Would it allow us to borrow more when the time comes, and if so why?

Subject: Each deficit $ costs $.07 GDP From: David E... To: Brian Williams Date Posted: Fri, Jan 23, 2004 at 13:00:54 (EST) Email Address: Not Provided Message: ' One dollar of deficit reduces the annual level of net national product by seven cents. Run deficits of $4 trillion over the next decade (as one would project from an honest baseline plus current Bush proposals), and you shrink annual national product by $280 billion' Brad DeLong's site - http://www.j-bradford-delong.net/movable_type/2004_archives/000115.html

Subject: Re: Each deficit $ costs $.07 GDP From: Jerry To: David E... Date Posted: Fri, Jan 23, 2004 at 17:31:33 (EST) Email Address: Not Provided Message: Holy crap! I had no idea the numbers were that serious. Thanks. Jerry

Subject: Re: Why does Paying Down the Debt Help? From: Mads K To: Brian Williams Date Posted: Thurs, Jan 22, 2004 at 11:41:28 (EST) Email Address: Madskel@worldonline.dk Message: First of all see the national economy as a household. If you pay debt now you can increase it later when needed. Then there is interest on your debt, that is important as should be obvious. There is also the issue of the financiel markets impresssion of the soundnes of the US economy. If that disappers the fed will have to increase thereby slowing down the economy. As always a disclaimer for the languae.

Subject: Debt From: Emma To: Mads K Date Posted: Thurs, Jan 22, 2004 at 15:09:44 (EST) Email Address: Not Provided Message: Paying down debt is less important than avoiding a continual increase in debt. We are accumulating debt at a rapid level relative to economic growth. In time there must be an increase in the cost of more debt. This means rising interest rates, so slower economic growth. The problem is more and more and more debt relative to our national income. We are heading there.

Subject: Re: Debt From: Jerry To: Emma Date Posted: Fri, Jan 23, 2004 at 17:30:19 (EST) Email Address: Not Provided Message: Well, Alexander Hamilton believed (and he is right) that a MANAGEABLE public debt actually inspires confidence. You know sorta like how your Gramma pays cash for everything for 40 years, has no debts, and then tries to by a washing machine on credit and finds she has NO CREDIT. You have to be in debt and pay your bills responsibly to establish a good credit score. The G has to do the same thing...manageable debt actually inspires confidence. Rampant debt scares the hell outta people. The financial sector is already getting nervous and so are some of those international bodies that bail out economies like Argentina. Look at how many currencies are pegged to ours. What happens when the dollar evaporates? There are some early causes for alarm. And from the recent SOTU Bush has no debt management plan. I really believe the NeoCons plan to castrate the government with a 'No Tax and Spend' policy. Bush did it in Texas and now we're paying for it. So I'm a little nervous. I hope a lot of those programs are electioneering and I really hope the tax cuts DO NOT stick. Jerry

Subject: Re: Debt From: Peppone To: Emma Date Posted: Thurs, Jan 22, 2004 at 17:56:31 (EST) Email Address: nma@hotmail.com Message: debt = confidence?

Subject: Moveon.org Ad . . From: Paul G. Brown To: All Date Posted: Wed, Jan 21, 2004 at 23:35:02 (EST) Email Address: Not Provided Message: Relevant to Paul K's themes: http://www.bushin30seconds.org/view/01_small.shtml?CFID=180429&CFTOKEN=20356050

Subject: Re: Moveon.org Ad . . From: B. Constantine To: Paul G. Brown Date Posted: Wed, Jan 21, 2004 at 23:42:49 (EST) Email Address: bluefin76020@yahoo.com Message: I have seen this and it is good. We need a lot more of these ads to wake up the American people.

Subject: Wage Shifts From: Jennifer To: All Date Posted: Wed, Jan 21, 2004 at 13:59:11 (EST) Email Address: Not Provided Message: http://www.epinet.org/content.cfm/webfeatures_snapshots Jobs shift from higher-paying to lower-paying industries In 48 of the 50 states, jobs in higher-paying industries have given way to jobs in lower-paying industries since the recession ended in November 2001 (see map). Nationwide, industries that are gaining jobs relative to industries that are losing jobs pay 21% less annually.1 For the 30 states that have lost jobs since the recession purportedly ended, this is the other shoe dropping—not only have jobs been lost, but in 29 of them the losses have been concentrated in higher paying sectors. And for 19 of the 20 states that have seen some small gain in jobs since the end of the recession, the jobs gained have been disproportionately in lower-paying sectors.

Subject: Re: Wage Shifts From: JIM To: Jennifer Date Posted: Thurs, Jan 22, 2004 at 14:05:49 (EST) Email Address: jzmarg@aol.com Message: Molly Ivins The State of The Union’s Finances - 1/20/2004 AUSTIN, Texas -- My fellow Americans, the state of the union's finances is enough to make an Enron accountant gag. When George W. Bush took office, he was handed a going concern. Projected annual surpluses from 2002 to 2011 were $5.6 trillion. In its most recent projection, the Congressional Budget Office says it expects $1.4 trillion in total deficits from 2004 to 2013. Bush's new future spending proposals -- including everything from the goofy manned-flight-to-Mars to the promotion of marriage -- already total an additional $2 trillion. When Bush took office, the national debt was $5.7 trillion and his first budget proposed to reduce it by $2 trillion over the next decade. Today, the debt is $7 trillion. Last year, Bush predicted a deficit of $262 billion. According of the CBO, the deficit is currently $480 billion. Bush plans to cut biomedical research, health care, job training and veterans funding, and that still leaves a projected deficit of $450 billion. It is unclear to me why anyone would believe anything the president says about our fiscal situation. Keep in mind, this is a man who took three Texas oil companies into bankruptcy. I anticipate a painful skewing of the statistics on jobs, but there's not much even the finest spinners can do with the basic problem. Under Bill Clinton, the economy gained an average of 236,000 jobs every month. Under George W. Bush, the economy has lost an average of 66,000 jobs a month. Nor is the news getting better. Last month, the economy, supposedly in full recovery, added 1,000 jobs. The economy needs to generate 150,000 jobs a month just to absorb new workers. Not only are the 2 million jobs we have already lost not coming back, but the trend will continue. The lead story in Monday's Wall Street Journal is about IBM's plan to shift 3,000 high-paying jobs overseas, known as 'off-shoring.' We are not just hemorrhaging manufacturing jobs. As the Journal reports, 'This ‘off-shoring' process has raised fears that even high-skill jobs that were supposed to represent the U.S.'s future are being lost to countries that have already taken over low-skill factory work.' In the other words, your nice, middle-class butt is on the line here. There are, of course, some jobs that cannot be exported -- farms cannot be moved to another country, nor can restaurants. So the president proposes a giant new bracero program to import foreign workers legally to fill those jobs. As Jamie Galbraith wrote in Salon, the online magazine: 'There is no reason to believe the Bush administration's hand-wringing over its pathetic record on employment. The president's backers want a stagnant job market -- it keeps the help from getting uppity.' In another sign of how deeply Bush cares about workers, the plan to end overtime pay for millions of workers is back. You may recall this little charmer from last year, the Bush proposal to 'update' the Fair Labor Standards Act. Both the House and the Senate nixed the idea by passing an amendment proposed by Sen. Tom Harkin of Iowa, but in the magic way of the Republican-run Congress, the amendment was later dropped from a spending bill after heavy pressure from the White House. Now, in another move typical of the administration, they plan to bypass Congress altogether and issue the new regulations as an 'administrative rules change,' to go into effect in March. The administration claims the new regulations will extend overtime pay to an additional 1.3 million low-income workers. That would certainly be a good thing, except for the fact that it would exempt another 8 million workers from getting overtime by reclassifying them as management or professionals. Another great deal for the corporations -- they get to cut overtime for a lot of higher-paid workers and only have to add a few lower-paid workers. Do you really have any doubts about whom this administration is being run for? We will of course have to listen to the president tell us how wonderful his Medicare drug coverage bill is. I thought there could be no more masterly dissection of that fraud than the one in the current issue of Harper's magazine, in which Lewis Lapham takes the repulsive thing apart. His incisive essay is a model of legislative analysis that should be studied by all political writers. But he actually missed one item found by The Wall Street Journal. Bush said late last year, 'If there's a Medicare reform bill signed by me, corporations have no intention to dump retirees (from existing drug coverage). ... What we're talking about is trust.' The bill includes a special tax subsidy to encourage employers to retain prescription drug coverage for their retirees. But, oops, the Journal reports the White House quietly added 'a little-noticed provision' to the bill that allows companies to severely reduce or almost completely terminate their retirees' drug coverage (SET ITAL) without losing out on the new subsidy. (END ITAL) And guess what? The major backers of that 'little-noted provision' are all major donors to Bush and the Republican Party. It's not about trust, it's about money. FROM JZM, .AND JUST TO ILLUSTRATE THE LAST POINT FOLKS, PLEASE LOOK AT THE FOLLOWING FROM CAL BERKELEY PROF OF ECONOMICS, BRAD DE LONG Can This Be True? Another graph that is currently freaking me out: Take total compensation paid to workers in the nonfarm business sector, and divide it by GDP. Make the result into an index, with 1992 = 100. That is the red line in the figure above. Between 1992 and 1997 this index fell from 100 to 96 or so: employment and compensation of workers grew, but not as fast as total GDP. Between 1997 and 2000 this index recovered to its 1992 value of 100: employment and compensation of employees together grew faster than GDP. Since 2000, as the labor market weakened, the red line has fallen off a cliff. Total nonfarm business compensation has fallen 10% relative to GDP--an extraordinarily large amount. It's as if 10% of the wages, salaries, and benefits that we would expect in the normal course of things to see flowing to workers has vanished in the past three years. Real GDP per capita today is 3% above its year-2000 value. But real worker compensation per capita is 7% below its year-2000 value. Can this possibly be true? Is this a false reading of the data somehow related to the other current data anomalies? Such a large and sudden shift in the distribution of income between workers and capital owners is hard to credit. --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- Not to mention what such a fall in worker compensation would imply for capital income. The money has to go somewhere, after all. Could net capital income possibly have grown by 25% over the past three years? Posted by DeLong at 12:02 AM | Permanent YES, IT IS TRUE

Subject: Re: Wage Shifts From: Nat To: JIM Date Posted: Sat, Jan 24, 2004 at 00:57:29 (EST) Email Address: Not Provided Message: I have a question that someone out there might be able to answer. I am convinced the current NeoCon agenda is as Krugman hypothesizes. And I am not sure Bush is bright enough to more than a sock puppet in all this. But it also seems to me that not all gazillionaires will benefit from the current administration's policies, even in the short run. There have to be some money guys somewhere who are sweating bullets about an America where the best job around is a Walmart greeter, and grandma with alzheimers lives with her kids instead of at the nursing home. If the social safety net (Social Security, Medicare, Medicaid and a host of smaller programs) is pitched in the dumper because we cannot afford the debt service on a gargantuan national debt, some very rich guys gotta be as toasted as those of us who work for a living. And it would seem to me those guys will be squealing like pigs soon, if they are not squealing already (behind the scenes.) Is this reasonable? I am not talking about Soras, he has a soul. Maybe Buffet. I would think those areas of the economy that depend on a healthy middle class: certain banks, credit card companies, insurance, Detroit and even Starbucks all have to be getting nervous. Or do these guys actually believe the NeoCon BS that a feudal America will be good for business?

Subject: Labor and Capital Shifts From: Emma To: JIM Date Posted: Thurs, Jan 22, 2004 at 15:12:48 (EST) Email Address: Not Provided Message: http://www.j-bradford-delong.net/movable_type/2004_archives/000099.html

Subject: Re: Labor and Capital Shifts From: Jennifer To: Emma Date Posted: Thurs, Jan 22, 2004 at 17:04:50 (EST) Email Address: Not Provided Message: http://www.j-bradford-delong.net/movable_type/2004_archives/000099.html Since 2000, as the labor market weakened, total nonfarm business compensation has fallen 10% relative to GDP--an extraordinarily large amount. It's as if 10% of the wages, salaries, and benefits that we would expect in the normal course of things to see flowing to workers has vanished in the past three years. Real GDP per capita today is 3% above its year-2000 value. But real worker compensation per capita is 7% below its year-2000 value. Can this possibly be true?

Subject: More Tax Cuts From: Free Ride To: All Date Posted: Wed, Jan 21, 2004 at 09:47:48 (EST) Email Address: Not Provided Message: Anyone pick up on one of the new tax cuts for the extremely rich bush proposed last night in regards to catastrophic life insurance polices. He wanted to make them 100% tax deductible. While there is some good behind the idea, people holding multi-million dollar policies with large premiums will get a huge benefit. How many middle class americans are going to be helped with this tax shelter....

Subject: Re: More Tax Cuts From: Paul G. Brown To: Free Ride Date Posted: Wed, Jan 21, 2004 at 23:58:05 (EST) Email Address: Not Provided Message: Yeah. I went, 'Hmmmm' at the proposal. But that old debil liberal fairness reared its head . . . Why don't you answer your own question? What is the price of catastrophic health premiums? (I don't know - my company has insured my ass.) How many people can afford it? What is the payout on a large policy? I share your skepticism, but I reserve judgement until some of those numbers show up.

Subject: Re: More Tax Cuts From: Jerry To: Paul G. Brown Date Posted: Fri, Jan 23, 2004 at 17:21:23 (EST) Email Address: texcrazyhorse9@yahoo.com Message:

Subject: Fisking this . . . From: Paul G. Brown To: 129.33.1.37 Date Posted: Wed, Jan 21, 2004 at 14:23:01 (EST) Email Address: Not Provided Message: Where's to begin? Para # 1: Intro. Short version: Anyone who opposes the Bush administration's policies is nutty or outrageous. Para # 2: Krugman is partisan (ooooh!) a) Confuse the middle. ('average tax cut of . . .') b) Energize the base. (see below) c) Grab enough power. Krugman and others (even Andrew Sullivan) have noted that the Bush Administration's style is to ignore or try to work around the usual political checks and balances that have restrained the executive in the past. The argument is that an unfettered executive of any partisan stripe leads to poor decision making. Energize the base: A political base is not a monolith, with a unified set of views. To energize it, you touch on its 'wedge issues': gay marriage, tax cuts, energy deregulation. And there is nothing wrong with the idea of 'energizing the base': the problem arises when it is undertaken at the expense of sound policy. You're right that an increasing number of conservatives are raising their voices in opposition to the Bush White house, and they're doing so because they recognize the consequences to liberty of not blocking gay marriage, that the Bush Admin's fiscal policy is steering the nation towards ruinous deficits, and energy policy has become a vital national security issue. Who then, is living in the 'fantasy world'? Para # 3/4: The poll methodology is reported here. Being a math geek, I am curious to know what the methodological flaws are. And this is only one poll. The Zogby Poll seems to lend support to the NYT poll (and Krugman's point). As for the Gallup Poll, given the time at which it was conducted it's results are fairly consistent with Zogby. Krugman's general point--that an increasing number of voters are increasingly skeptical of the Bush Administration's policy direction--seems to be born out by the (rather narrow) polling. Para # 5/6: Pickering. Actually, I tend to agree with your point here, and think Paul K has overreached. But in fairness, there is evidence that Pickering had ties to segregationist organizations (which he denied under oath, thereby committing perjury). In 1990, Pickering testified that he had had no communication with the 'Mississippi Sovereignty Commission'. He lied. The president has a perfect right to make recess appointments. And he ought to be judged by them. For the record, I think Pickering is probably a reformed man. And from what I can see he would make a decent judge. Others on Bush's list are a bit more dubious. Para # 7: Clark said (emphasis mine). 'He does retain his chemical and biological capabilities to some extend[sic] and he is, as far as we know, actively pursuing nuclear capabilities, though he doesn't have nuclear warheads yet. If he were to acquire nuclear weapons, I think our friends in the region would face greatly increased risks as would we.' and 'We have to work this problem in a way to gain worldwide legitimacy and understanding for the concerns that we rightly feel and for our leadership. This is what U.S. leadership in the world must be. We must bring others to share our views not be too quick to rush to try to impose them even if we have the power to do so.' Look, any fair reading of this transcript would characterize it as nuanced. Clarke argues for reserving the right to pre-emptive military action ('So, all that having been said, the option to use force must remain on the table.'), but not in the case of Iraq. Instead, he advocates a UN lead inspection program, not an invasion. I mean, later at the same session Richard Perle says (of Clarke's testimony): 'Let me first observe that when it comes to inspections that are so obviously flawed, my friend and colleague is wildly optimistic.' Which makes it plain to me that a) Perle didn't think Clarke was supportive enough of his and the administration's case for a pre-emptive strike, and b) Perle was wrong, and Clarke was right, as a matter of fact, on the WMD question. And as for the jibe about keeping the misquotation to himself, well, Krugman as ~700 words, and the substance of the issue has been well covered in other places. Para # 8: Shorter Version: 'Any criticism of President Bush's policies is due to the hatred/craziness/duplicity of the critic.' Sorry: this doesn't cut much mustard.

Subject: Re: Fisking this . . . From: Peppone To: Paul G. Brown Date Posted: Wed, Jan 21, 2004 at 14:34:40 (EST) Email Address: nma@hotmail.com Message: Para # 9: '-chute'

Subject: Trolling From: Trolling To: 129.33.1.37 Date Posted: Wed, Jan 21, 2004 at 14:15:51 (EST) Email Address: Not Provided Message: Them folks is ugly mean and stupid.

Subject: Paul's partisanship From: Man of Reason To: All Date Posted: Tues, Jan 20, 2004 at 23:59:54 (EST) Email Address: Not Provided Message: Paul Krugman said, 'Mr. Bush's relentless partisanship has depleted much of the immense good will he enjoyed after 9/11.' My response to Paul: Check out lyinginponds.com -- then lets talk about relentless partisanship.

Subject: Re: Paul's partisanship From: Neal Martin To: Man of Reason Date Posted: Wed, Jan 21, 2004 at 03:01:29 (EST) Email Address: Not Provided Message: The inference to be made from lyinginpond.com is that in 2003 Paul Krugman has been much more critical of the Bush administration than the Democrats. But we already knew that, didn't we? I reject the implied notion that mentioning an equal number of good things and bad things about the Republicans and the Democrats is some valid metric of fair and balanced reporting. The preference for that notion of 'nonpartisanship' is a tired reiteration of the hollow post-modern fallacy that all ideas are equally valid. Somebody who calls himself a 'Man of Reason' should know better. But I do encourage others on this bulletin board to take a look at that list, because it emphasizes the huge stylistic gap between right-leaning partisans and left-leaning columnists. In particular the top-ten 2003 list juxtaposes Paul Krugman against Ann Coulter. Ann's style (as we all know) is full of vitriol, personal attacks, conjecture, accusations, suggestion, distortion, and not infrequently outright lies. She spurns any actual discussion of Democratic positions, preferring to thrust appaling characterisations at Democrats such as 'stupid' or 'namby-pamby'. She uses the word 'Democrat' as a derogatory term. That is what a right-wing partisan looks like. On the other side of the spectrum we've got columnists like Krugman and Frank Rich. Rich's style is different from Krugman's (as his focus is culture not economics), but both these guys have honest methods. They don't do personal attacks and they don't fudge facts. Paul Krugman's would-be debunkers have only time-after-time demonstrated their ineptness in countering or criticizing Krugman's methods or message. Krugman may be 'partisan' by your definition, but he's not lying to anybody.

Subject: Re: Paul's partisanship From: George Sutherland To: Neal Martin Date Posted: Wed, Jan 21, 2004 at 15:09:08 (EST) Email Address: gs@gs.com Message: I write separately to observe that lyinginponds.com is garbage. It is based on subjective analysis of Krugman's columns compared with the subjective analysis of like 5 other columnists, some of whom don't even write about politics.

Subject: Thanks! From: Jennifer To: George Sutherland Date Posted: Wed, Jan 21, 2004 at 16:47:10 (EST) Email Address: Not Provided Message: lying ponds is simply lying garbage

Subject: Re: Thanks! From: Peppone To: Jennifer Date Posted: Wed, Jan 21, 2004 at 17:11:14 (EST) Email Address: nma@hotmail.com Message: Not 'lying' but 'laying'

Subject: Re: OMG PK IS A LIBERAL From: Juliet To: Peppone Date Posted: Fri, Jan 30, 2004 at 12:38:16 (EST) Email Address: Not Provided Message: There is a definite problem with throwing the word 'partisan' around. I would note that PK is liberal or 'centrist' as Bobby prefers. My question is: so what? For years, the conservatives have tried to claim that the media is run by liberal elitist. Although I have never seen any actual proof to that, they said it all the same. Critics, (true critics and not just critics pretending to criticize) have now declared that the media is little more than propaganda for the right wing and those mainstream media outlets who actually do try to be impartial are squishy and still believe that true journalism must give equal weight to both sides. HE SAID/SHE SAID. Does it really??? No, absolutely not. The job of the media is to inform the public about matters it needs to know, not to keep everyone happy and themselves free of any pesky 'litigation' or Washington 'freeze-outs.' So when someone like PK comes out on the side of liberalism, it astonishes those who, let's face it, just aren't used to hearing from the left. (GET IT? NO LEFT MEDIA) Ask yourselves this, If it is alright for the so called journalists Sean Hannity, Tim Russert, Bill O'Reilly, Chris Matthews, Bob Novak, etc. etc. etc. to beat the drum of the GOP, why on earth, is it unconscionable for Paul Krugman to speak for the left? If we truly had a liberal media like the right wing is fond of saying, no one, I repeat, no one would be criticizing Paul Krugman, because he wouldn't be doing anything out of the ordinary. But since he is criticized, I think my case is made. I would also add that even though PK is a liberal , he is nonetheless right.

Subject: Paul versus David - The Tuesday Battle From: Paul K To: All Date Posted: Tues, Jan 20, 2004 at 23:55:22 (EST) Email Address: Not Provided Message: I was going to write something similar to the text copied below, but Andrew Sullivan summarizes it well... Paul Krugman is a negative asshole while David Brooks shows compassion. Seriously folks, read both pieces and think about the tone and the message. The difference is indeed obvious. --- --- --- --- --- --- THE DIFFERENCE: Just check out both David Brooks' and Paul Krugman's columns in the NYT this morning. One actually tries to look at the opposing party empathetically, attempting to understand what's going on, hoping for the best. The other is pure, demonizing, personal bile. One tries to give others' motives the benefit of every doubt. The other refuses to do anything but impugn the other side's motives. Revealing, I'd say.

Subject: Re: Paul versus David - The Tuesday Battle From: Neal Martin To: Paul K Date Posted: Wed, Jan 21, 2004 at 04:29:53 (EST) Email Address: Not Provided Message: In a recent column Brooks expressed a necessity for a strong Democratic party in order to keep the Republicans honest and true to their conservative values. William Safire has made similar remarks. Many traditional conservatives are increasingly alarmed by Bush's initiatives. Consider Bush's recent marriage stimulus package which solicited vehement redicule last week by none-other-than Pat Buchanan on Mclaughlin Group. Buchanan dismissed the proposal as 'Christian pork for the religious right.' (!) It also brought forth shock from such staunch conversatives as my own father. In general the Bush administration has encouraged the expansion of government, fiscal recklessness, the erosion of civil liberties, and the melding of church and state. Bush offends the bedrock principles of conservativism. Many conservatives, particularly those who aren't filthy rich, have good reason to hope for a Democratic victory. Of course, the conclusion you'd like me to infer is that Brooks is enlightened-empathetic-good while Krugman is demonizing-bile-bad. Your accusation doesn't hold water, primarly because Krugman doesn't 'demonize' anybody. He enumerates some basic facts and makes a prediction about the president's theme in the then upcoming State of the Union address. This prediction (as you may notice from the BIG BOLD BANNER at the top of today's New York Times) was absolutely correct so there's little sense in arguing whether Krugman's conjecture was fair or not. And I doubt you'll find many people here impressed with David Brooks. Brooks is the guy who insinuated that neo-con critics were closet anti-semites. (Spinsanity covers it here: http://www.spinsanity.org/columns/20040113.html). Anti-semitism is an empty, outrageous accusation and one that dissenters on this very message board have not been adverse to making about Paul Krugman.

Subject: Re: Paul versus David - The Tuesday Battle From: Rufus Peckham To: Neal Martin Date Posted: Wed, Jan 21, 2004 at 15:05:45 (EST) Email Address: rfp@rpf.com Message: Perhaps Brooks' column had a more charitable tone to it toward the opposite party, but that alone is more virtue. Brooks' column was blather that tried to stereotype the political attitudes of Iowa caucus-goers based on anecdotal accounts, while Krugman's was substantive policy analysis. So I'll take Krugman any day over Brooks, son.

Subject: Re: Paul versus David - The Tuesday Battle From: Paul G. Brown To: Rufus Peckham Date Posted: Wed, Jan 21, 2004 at 23:54:18 (EST) Email Address: Not Provided Message: Look, Brook's column was, well, it was nice. It was fair, and an improvement on his humorous forays into anti-semiticism. (Anyone heard from Sid lately, by the way?) But from the point of view of the shareholders of the NYT company it was, well, bland, boring, and unlikely to generate additional subscriber revenue. It was 'dog bites man' journalism. Shorter Brooks: 'Democratic voters are people too: they render considered judgement on the candidates they are offered.' I mean, were it not for the way that apologists for George W. Bush try to paint their opponents as lying, insane, playa haters, this whole column would be spiked as, well, 'Yaaawn!'. I doubt it's gonna end up in anyone's anthology. Krugman meanwhile. Facts, numbers, provocative argument. Bland? No. 'Catnip for the president's critics?' Hell, yes. (meow!)

Subject: Meow From: Emma To: Paul G. Brown Date Posted: Thurs, Jan 29, 2004 at 16:00:24 (EST) Email Address: Not Provided Message: Meow

Subject: Krugman's Biography From: Bryan To: All Date Posted: Tues, Jan 20, 2004 at 19:43:32 (EST) Email Address: bcollinsworth@slc.edu Message: LEFT-WING FANATIC PAUL KRUGMAN 'SAD' HE'S NEVER MURDERED ANYONE NEW YORK (FOX NEWS DESK)- Apparently not content with slandering the President of the United States, betraying his faith roots by making anti-Semitic attacks against 'Neoconservatives,' singlehandedly keeping the American economy underperforming with doom-and-gloom predictions, and generally broadcasting the worst sort of partisan political hate-speech from the pages of that 'great' New England newspaper, the New York Times, radical Marxist economist Paul Krugman is now announcing that he wants to take his attacks on America even further. 'Sad to say, I've never murdered anyone,' Krugman writes on his personal website, which is full of the same sort of violent conservative-bashing comments that the Times proudly publishes twice a week. Apparently longing for the attention that only serious criminal activity can bring, Krugman further laments that he hasn't 'even been arrested.' The pundit does proudly lay bare the considerable criminal record he has accumulated, however, including an altercation with police for reckless driving. Strangely, Krugman says he can't 'remember the details'--perhaps this failure is connected to his next gleeful admission, that he has 'tried smoking pot.' Krugman even admits to drinking and operating transportation vehicles; and, embracing the ideals of Liberal, permissive sex-education principles, he and his second wife, after a long period of unmarried cohabitation, decided to consummate their decision to try traditional marriage by taking their two young nephews along on their honeymoon. Perhaps Krugman's most shameful declaration, though, is his love for France, which he suggests supersedes any loyalty to the United States of America. When not praising everything about Frog culture in long, dreary discussions of his many drunken revels there, Krugman even reveals that he keeps 'a helpful connection' in another European country open, anticipating (no doubt joyfully) the time when he is 'forced to flee' America. Though his fellow pot-smoking, law-breaking, homocidal hipsters will surely be sad to see him go if that day ever comes, Krugman may be surprised just how many true Americans turn out to wish him 'good riddance.'

Subject: Re: Krugman's Biography From: Paul K To: Bryan Date Posted: Tues, Jan 20, 2004 at 23:51:18 (EST) Email Address: Not Provided Message: Very funny. I only wish this was a sarcastic article and not true.

Subject: Re: Krugman's Biography From: ...David E To: Bryan Date Posted: Tues, Jan 20, 2004 at 20:32:14 (EST) Email Address: Not Provided Message: See the dead, soulless heart of a brown shirt.

Subject: Ah, these Aussies...? From: Peppone To: All Date Posted: Tues, Jan 20, 2004 at 13:20:58 (EST) Email Address: nma@hotmail.com Message: http://www.mediamonitors.net/paulmarkham1.html

Subject: Cheerful, aren't they? From: ...David E To: Peppone Date Posted: Tues, Jan 20, 2004 at 20:23:25 (EST) Email Address: Not Provided Message: I heard it stated this way, Saddam put the final nail in his coffin when he switched to sales of oil in euros. I like the Aussies, they are like the canadians, plain spoken, and easy to understand.

Subject: Re: Cheerful, aren't they? From: Paul G. Brown To: ...David E Date Posted: Wed, Jan 21, 2004 at 14:29:12 (EST) Email Address: Not Provided Message: Wacko! Sure as eggs, mate. Bushy's furphies are clear as mud, let me tell you. have-anutha-drink . . . .

Subject: Re: Cheerful, aren't they? From: Peppone To: Paul G. Brown Date Posted: Wed, Jan 21, 2004 at 14:52:51 (EST) Email Address: nma@hotmail.com Message: Ah, yes, remembernig(hick!)....these good old times....in T....

Subject: Diane Rehm/Orville Norquist From: Evelyn Elizabeth To: All Date Posted: Mon, Jan 19, 2004 at 15:54:14 (EST) Email Address: snoopeliz@aol.com Message: Why did Mr. Krugman choose not to debate Norquist person-to-person on the Diane Rehm show a couple of weeks ago? I love Krugman (have a copy of The Great Unraveling) and was disappointed that he didn't take Norquist on. (I don't know who Norquist is, by the way.)

Subject: Re: Diane Rehm/Orville Norquist From: Me To: Evelyn Elizabeth Date Posted: Tues, Jan 20, 2004 at 13:49:02 (EST) Email Address: Not Provided Message: It's Grover Norquist btw not Oliver

Subject: Re: Diane Rehm/Orville Norquist From: Evelyn Elizabeth To: Me Date Posted: Thurs, Jan 22, 2004 at 17:36:44 (EST) Email Address: snoopeliz@aol.com Message: It's Grover Norquist btw not Oliver --- Thank you. What's btw?

Subject: Re: Diane Rehm/Orville Norquist From: ...David E To: Evelyn Elizabeth Date Posted: Mon, Jan 19, 2004 at 23:07:57 (EST) Email Address: Not Provided Message: The answer I liked best was that Churchill refused to refute Nazi claims. Others thought in the same way. Debating Norquist would not have been an important event. You can listen to Norquists comments and decide for yourself. Go to Bobby's 'cleaning' message at the bottom, open the link there, and select the latest group of archives, then do a find on Norquist.

Subject: Re: Diane Rehm/Orville Norquist From: Evelyn To: ...David E Date Posted: Thurs, Jan 22, 2004 at 17:49:45 (EST) Email Address: snoopeliz@aol.com Message: The answer I liked best was that Churchill refused to refute Nazi claims. Others thought in the same way. Debating Norquist would not have been an important event. You can listen to Norquists comments and decide for yourself. Go to Bobby's 'cleaning' message at the bottom, open the link there, and select the latest group of archives, then do a find on Norquist. --- Thanks for your reply. I thought it looked as if Krugman was afraid, so I'm relieved. I only know Krugman through his NY Times columns and had no idea he had been on talk shows. I can now go back to loving him again.

Subject: Norquist and Krugman From: Jennifer To: ...David E Date Posted: Tues, Jan 20, 2004 at 15:14:09 (EST) Email Address: Not Provided Message: I usually learn far more from listening to a person present a position than from debate. Norquist makes a case on Bill Moyers 'Now' and Krugman does on 'Now' and in many articles. I listen to Norquist and know I want nothing to do with the gibberish. I read Krugman and know there is a supery economist and person.

Subject: Re: Norquist and Krugman From: Evelyn To: Jennifer Date Posted: Thurs, Jan 22, 2004 at 17:59:02 (EST) Email Address: snoopeliz@aol.com Message: I usually learn far more from listening to a person present a position than from debate. Norquist makes a case on Bill Moyers 'Now' and Krugman does on 'Now' and in many articles. I listen to Norquist and know I want nothing to do with the gibberish. I read Krugman and know there is a supery economist and person. --- Thanks for replying. I'm not a computer person, had never left a message before on a website and was surprised that it works -- people received my message and sent replies! Oh my God. Anyway, I had actually entertained the thought that Krugman had been afraid, so people's replies have reassured me (although it wouldn't have taken much, since I'm pretty much determined to like him). Thanks again.

Subject: California Dreamin From: Jennifer To: All Date Posted: Sun, Jan 18, 2004 at 13:06:23 (EST) Email Address: Not Provided Message: Schwarzenegger Budget Denies Some Health Care By JOHN M. BRODER - NYTimes LOS ANGELES — It is nearly impossible for many Californians to comprehend the sum of $14 billion, the current estimate of the state's budget deficit next year, and the cuts and contortions that Gov. Arnold Schwarzenegger has proposed to make it disappear. So think about $320 a month, the price for Esther Bush to include her 8-year-old daughter, Natalia, on her employer-paid health plan. She says she cannot afford it. Governor Schwarzenegger says the state cannot afford to insure Natalia, either. Until last spring, Natalia received medical coverage under Medi-Cal, the state's Medicaid program. But when Ms. Bush received a small increase in her salary, she no longer qualified for the program and instead was told to apply to Healthy Families, a state-federal health insurance program for the near-poor. Because of computer and paperwork problems, her application was delayed, as the state's fiscal situation continued to deteriorate. Governor Schwarzenegger, in his budget presentation last week, proposed capping enrollment in the Healthy Families program at the current level, 732,000 children. An estimated 300,000 additional children are eligible, but could be enrolled only as new slots open under the cap. New applicants, like Natalia, will be placed on a waiting list, as Ms. Bush put it, 'for God knows how long.' In the meantime, Ms. Bush prays that no emergencies befall her. As it is, she spends four hours waiting to see a doctor at a neighborhood clinic when her daughter has an ear infection or stomachache.

Subject: When Social Security and Medicare... From: Brian Williams To: All Date Posted: Sun, Jan 18, 2004 at 06:39:34 (EST) Email Address: Not Provided Message: come due, why can't we just borrow the money? I mean, once the Baby Boomers start retiring, why can't we just borrow the money to pay it off?

Subject: Re: When Social Security and Medicare... From: SK To: Brian Williams Date Posted: Mon, Jan 19, 2004 at 00:06:11 (EST) Email Address: Not Provided Message: This works as long as people are willing to lend to the government. That is predicated on the confidence lenders have in the ability of the government to pay off the debt. As baby boomers retire, the fear is that tax revenues will simply be too low to service the debt mountain. Secondly, as private savings is low in the US, a significant amount of the government's borrowing is financed by foreigners. This is not (yet) a problem for the US as the foreign debt is denominated in US Dollars. But what happens if foreign lenders start asking for debt to be denominated in Euro or Yen or any other currency? Then a serious relook at the country's sovereign rating would be required. Foreign borrowing (in a foreign currency) has been a key reason for the financial crises in Latin America, Russia, East Asia...

Subject: No Problem From: Emma To: SK Date Posted: Mon, Jan 19, 2004 at 15:51:57 (EST) Email Address: Not Provided Message: Most importantly, there is no problem with Social Security and will be none for another 30 and more years. Social Security is in surplus and will be for amny years. The rest of the government budget is causing the deficit problem, not Social Security. The most important protection against a crisis may be that we are prime global consumers, and cutting off our credit would be fiercely cutting exports. There is reason for concern, but there is ample time for budget repair if we can ever get a decent Administration or Congressional leadership.

Subject: Re: No Problem From: Nat To: Emma Date Posted: Tues, Jan 20, 2004 at 12:53:08 (EST) Email Address: Not Provided Message: Social Security may be in a surplus, but unfortunately that surplus is 'borrowed' by the general revenue to help offset the deficit. The surplus is a stack of IOUs that will have to be met with either a general revenue surplus or additional borrowing. There is a tipping point somewhere out there in the future where the net contributions of the working force no longer exceed the draw of retired folk. Sometime earlier will be a point where the yearly surplus gets too small to cover up the mess. I suspect the net loss of jobs will not exactly help this situation. And I also suspect that one could read between the lines of the recent immigration proposals and conclude that taking a large group of very young non-contributors and adding them to Social Security system might delay the tipping point.

Subject: Social Security From: Emma To: Nat Date Posted: Tues, Jan 20, 2004 at 14:27:23 (EST) Email Address: Not Provided Message: Again, there is no problem with Social Security revenue. The complaints about the program are from those who wish to turn Social Security to private insurance and shrink the program. Social Security with little if any change will be fine for 30 to 40 more years. Fixing a program with a eye to 30 to 40 years, really means harming the program for radical conservatives.

Subject: Re: Social Security From: Nat To: Emma Date Posted: Tues, Jan 20, 2004 at 16:02:04 (EST) Email Address: Not Provided Message: Actually, I agree with your statements. I guess my quibble is that our gutless pols are 'investing' the surplus in our federal budget and obscuring the true magnitude of our deficit spending. At some point the money has to flow the other way. (And so much for Al's 'lockbox'.) To quote a recent Slate article: 'For Fiscal 2004—which began in October 2003—if you factor out the $164 billion Social Security surplus, the on-budget deficit will be at least $639 billion, rather close to the modern peak of 6 percent of GDP.' A 1999 Concord Coalition release states that up to that point the surplus was 647 billion and 2012 was approximately the transition point for the flip from a Social Security yearly surplus to yearly deficit. I am not sure what the current estimates are. PK has a number of article on the archive, mostly on the privatization angle which, of course, siphons money out of the intergenerational support system. Great reading as usual. Generally he makes the point the system is in great shape, but the current administration would love to take an axe to it on principle.

Subject: Board Cleaning From: Bobby To: All Date Posted: Sat, Jan 17, 2004 at 06:16:48 (EST) Email Address: robert@pkarchive.org Message: I had to put everyone's past messages in the message board archive (link above). When the message board gets to 700 messages it begins to eat the oldest messages that are on it, and I didn't want that to happen. So, when it gets close to 700, I clean out the message board and put all the past messages in the archive. I'm really sorry for any interruption in conversations or inconvenience this has caused anybody. All your past messages and conversations on this board are here: http://www.pkarchive.org/MBArchive.html http://www.pkarchive.org/MBArchive.html www.pkarchive.org/MBArchive.html