OECD GDP Down 2.1% In First Qtr, Down 4.2% From Last Year--Krugman, Soros, Roubini, Others Reflect

by: Paul Rosenberg

Sun May 31, 2009 at 14:15


Amidst a recent upsurge of happy talk about economic "green shoots," the Organization for Economic Cooperation and Development (OECD) released a sober reminder this week in the form of its Quarterly National Accounts figures (pdf) showing that the global recession deepened in the first quarter, while the New York Review of Books published a forum, "The Crisis and How to Deal with It" with Bill Bradley, Niall Ferguson, Paul Krugman, Nouriel Roubini, George Soros, and Robin Wells.  It was from an April 30 panel discussion, but things have not improved so much as to render it outdated.  Indeed, Huffington Post just published  a followup report on the "American families" featured in his 30-minute campaign ad.  They've yet to see any real help from his presidency.  And while they are still patient and trusting towards him, the collective picture is not encouraging.

OECD first:

Gross domestic product (GDP) in the OECD area fell by 2.1% in the first quarter of 2009, the largest fall since OECD records began in 1960, according to preliminary estimates, and followed a fall of 2.0% of GDP in the previous quarter.

In the United States GDP fell by 1.6% in the first quarter of 2009, the same rate as in the previous quarter. Japan's GDP declined by 4.0%, following a 3.8% decrease in the previous quarter. GDP in the euro area was down 2.5%, following a 1.6% fall in the previous quarter.

Of the Major Seven* countries, only in France, where GDP fell 1.2%, did the rate of contraction ease in the first quarter.

Compared with the same quarter a year earlier, all the Major Seven* economies recorded a fall in GDP, and a marked deterioration on the previous quarter's year-on-year figures.

The United States contributed 0.9% to the total OECD fall of 4.2% between the first quarter of 2008 and the first quarter of 2009. Japan contributed 1.0%, the euro area (13 countries) 1.3%, and the remaining countries 1.0%.

* "Major Seven" and other groups of countries defined at end of diary.

Paul Rosenberg :: OECD GDP Down 2.1% In First Qtr, Down 4.2% From Last Year--Krugman, Soros, Roubini, Others Reflect
As this table of quarter-to-quarter GDP change shows, the first signs of this recession were seen as early as early 2007, with no growth in the US in the first quarter, and negative growth in Japan the next quarter.  Signs remained scattered until the second quarter of 2008, when change was negative for four of the big seven, and zero for one other, with negative growth overall for the Euro area and the EU.

Quarterly GDP Volume Growth
Percentage change on the previous quarter

The table of changes compared to a year before is less sensitive in terms of showing early declines, with the first negative growth showing up in Italy in the second quarter of 2008, but now shows much deeper ones, with the OECD drop of 4.2 exactly double that of the quarter-to-quarter figure:

Quarterly GDP Volume Growth
Percentage change on the same quarter of the previous year

NY Times reported:

The combined gross domestic products of the 30 countries in the organization fell 2.1 percent in the first quarter when compared with the previous quarter. If that preliminary estimate holds, it would be the largest drop since 1960, when the organization began collecting such data. The G.D.P. of member countries fell 2 percent in the final quarter of 2008.

"The figures confirmed the impression that we already had from the individual countries' reports," said Jörg Krämer, chief economist at Commerzbank in Frankfurt. "It shows the world economy was in free fall in the final quarter of last year and the first quarter of this year."

Despite the dismal data, Mr. Krämer said that "the economy is now in its landing approach." He predicted that the world economy would begin to expand modestly in the fourth quarter of this year, followed by "subpar growth" in 2010.

But economist Nouriel Roubini put a less rosy gloss on things, according to Reuters:

Bottom of US Recession Hasn't Arrived: Roubini

Economist Nouriel Roubini on Wednesday said the end of the global recession is likely to occur at the end of the year rather than the middle, and that U.S. growth will remain below potential afterwards.

"We are not yet at the bottom of the U.S. and the global recession," said Roubini. "The contraction is still occurring and the recession is going to be over more toward the end of the year rather than in the middle of the year."

"There is still too much optimism that a recovery is just around the corner," said Roubini, a professor at New York University's Stern School of Business and chairman of RGE Monitor, an independent economic research firm.

This is consistent with Roubini's earlier assessment, at greater length in the NY Review of Books forum:

Nouriel Roubini: It's pretty clear by now that this is the worst financial crisis, economic crisis and recession since the Great Depression. A number of us were worrying about it a while ago. At this point it's becoming conventional wisdom.

The good news is probably that six months ago there was a risk of a near depression, but we have seen very aggressive actions by US policymakers, and around the world. I think the policymakers finally looked into the abyss: they saw that the economy was contracting at a rate of 6 percent-plus in the US and around the world, and decided to use almost all of the weapons in their arsenals. Because of that I think that the risk of a near depression has been somewhat reduced. I don't think that there is zero probability, but most likely we are not going to end up in a near depression.

However, the consensus is now becoming optimistic again and says that we are going to go from minus 6 percent growth to positive growth in the second half of this year, meaning that the recession is going to be over by June. By the fourth quarter of 2009, the consensus estimates that growth is going to be positive, by 2 percent, and next year more than 2 percent. Now, compared to that new consensus among macro forecasters, who got it wrong in the past, my views are much more bearish.

I would agree that the rate of economic contraction is slowing down. But we're still contracting at a pretty fast rate. I see the economy contracting all the way through the end of the year, going from minus 6 to minus 2, not plus 2. And next year the growth of the economy is going to be very slow, 0.5 percent as opposed to the 2 percent-plus predicted by the consensus. Also, the unemployment rate this year is going to be above 10 percent, and is likely to be close to 11 percent next year. Thus, next year is still going to feel like a recession, even if we're technically out of the recession.

The continued high levels of unemployment could best be countered by a government jobs program, like the WPA, which is at least twice as effective in the number of jobs created per dollar spent than the most efficient parts of the stimulus package.  But that's not going to happen without very significant outside agitation.

No one credibly challenged Roubini's assessment, but the forum was much more wide-ranging in the subjects discussed, and several other observations bear mentioning.  Conservative Niall Ferguson worried about what he saw as the two "contradictory" policies of Friedmanite monetarism--giving tons of cash to the banks in search of liquidity--and Keynesin fiscal stimulus--investing in public spending.  Being a conservative, Ferguson approved of money for the banks, but not for the rest of us.

Krguman followed him, starting from a realistic look at where we are, working through an empirically-grounded explanation of what's happening right now, and swinging around, eventually, to a direct refutation of Ferguson's contradiction" thesis:

Paul Krugman: Let me respond to that a bit. Let's think about what is actually happening to the global economy right now. On the one side there has been an abrupt realization by many people that they have too much debt, that they are not as rich as they thought. US households have seen their net worth decline abruptly by $13 trillion, and there are similar blows occurring around the world. So the people, individual households, want to save again. The United States has gone from approximately a zero savings rate two years ago up to about 4 percent right now, which is still below historical norms; but suddenly saving is occurring.

That saving ought to be translated into investment, but the investment demand is not there. Housing is flat on its back because it was overbuilt; housing bubbles collapsed not only in the United States, but across much of Europe. Many businesses cannot get access to capital because of the breakdown of the financial system. But even those that do have access to capital don't want to invest because consumer demand is not there. Between the housing bust and the sudden decision of consumers to save, after all, we have a world with lots of excess capacity. The GDP report that just came out says that business-fixed investment, non-residential fixed investment, essentially business investment, is falling at a 40 percent annual rate.

This causes a problem. There are lots of people who want to save, creating a vast increase in savings, not only in the US but around the world, combined with a sharp decline in the amount that the private sector is willing to invest, even at a zero interest rate, or rather even at a zero interest rate for US government debt, which is what the Federal Reserve has the most direct impact on.

One way to think about the global crisis is a vast excess of desired savings over willing investment. We have a global savings glut. Another way to say it is we have a global shortage of demand. Those are equivalent ways of saying the same thing. So we have this global savings glut, which is why there is, in fact, no upward pressure on interest rates. There are more savings than we know what to do with. If we ask the question "Where will the savings come from to finance the large US government deficits?," the answer is "From ourselves." The Chinese are not contributing at all.

Those extra savings are, in effect, the savings that America has wanted to make anyway, but that US business is not willing to invest under current conditions. That is the way Keynesian policy works in the short run. It takes excess desired savings and translates them into some kind of spending. If the private sector won't do it, the government will. There is actually no contradiction between the Federal Reserve's actions and the actions of the US government with a fiscal stimulus. It's very much necessary to do both. By buying a lot of private securities, the Federal Reserve is essentially going out there and playing the role that the private banking system is no longer playing properly; by engaging in investment, the federal government is playing the role that businesses are not now willing to play. All that debt-financed spending on infrastructure by the Obama administration is basically filling the hole left by the collapse in business investment in the United States.

Krugman went on to say that his real concern is the GOP senators calling for "another round of Bush-style tax cuts that will reduce revenues by $3 trillion over the next decade."  And he concluded by saying:

This crisis has been so large and the political process has been so sluggish that the difficulties have been greater than expected. And yes, there are some green shoots. Things are getting worse more slowly, but we have not managed to head off a crisis that could turn out to be self-reinforcing, and leave us in this trap for many, many years.

What worried me about this exchange is that Ferguson appears to be something close to the stand-in for the de facto Obama Administration position--a point I'll return to shortly.

But first, Soros weighed in, aiming directly at what Obama is trying to avoid thinking about:

George Soros: There are two features that I think deserve to be pointed out. One is that the financial system as we know it actually collapsed. After the bankruptcy of Lehman Brothers on September 15, the financial system really ceased to function. It had to be put on artificial life support. At the same time, the financial shock had a tremendous effect on the real economy, and the real economy went into a free fall, and that was global.

The other feature is that the financial system collapsed of its own weight. That contradicted the prevailing view about financial markets, namely that they tend toward equilibrium, and that equilibrium is disturbed by extraneous forces, outside shocks. Those disturbances were supposed to occur in a random fashion. Markets were seen basically as self-correcting. That paradigm has proven to be false. So we are dealing not only with the collapse of a financial system, but also with the collapse of a worldview.

That's the situation that President Obama inherited. He's faced with two objectives. One, he must arrest the collapse and, if possible, reverse it. Second, he has to reconstruct the financial system because it cannot be restored to what it was. This is a new situation. When people see this crisis as being the same as previous financial crises, they're making a mistake.

Obama's failure to push for fundamental regulatory reforms now when the banks are least able to resist, is indicative of his failure to really grasp the lessons that Soror is trying to focus our attention on.  From all his market-worshiping talk, it appears that Obama is quite inclined to agree with the following assessment Ferguson offered later on:

N.F.: Well, I tell you what, I feel depressed after what I've heard tonight. We are now contemplating a massive expansion of the state to substitute for the private sector because that's the only thing Paul thinks will deliver growth. We're going to reregulate the markets, we're going to go back to those good old days. Where were you in the 1970s when all these wonderful regulations were in place? I don't remember that going too smoothly. But what else are we going to do? We're going to print money. Almost limitlessly we'll print money. That's going to be fine, too. And when we're done with that, we're going to raise taxes. What a fabulous package we have in store for us. You know, back in late 2007, I was asked what my big concern was, and I said, "My concern is that we're going to get the 1970s for fear of the 1930s." It's very easy to forget, in your iron indignation at the failure of the market, where the true mainsprings of economic growth lie. The lesson of economic history is very clear. Economic growth does not come from state-led infrastructure investment. It comes from technological innovation, and gains in productivity, and these things come from the private sector, not from the state.

Of course, any sane person will tell you that the 1930s were much, much worse than the 1970s, so Ferguson's fears are absurd on their face.  And it's also pure poppycock that "Economic growth does not come from state-led infrastructure investment."  Not only did the immediate post-WWII period of unrivalled growth and broadly-shared prosperity come largely from such investment--the GI Bill boosting massive increases in a highly educated workforce, VA mortgages driving an unprecedented housing boom, the interstate highway system creating a national economy far more integrated and robust than ever before, and military spending at levels never seen in peacetime before--but the "technological innovation, and gains in productivity" he claims are the real well-springs of economic growth also came from state-lead investments, especially in aerospace, with its multi-generational spin-offs into the computer and communications sectors, and their subsequent spill-overs into manufacturing. Without government investments in cutting-edge technologies decades before private markets appeared, there never would have been a computer revolution, a communications revolution, or anything remotely resembling our current high-tech sector.

Getting right back down to everyday brass tacks, though, Krugman pointed out:

The other thing not to miss is the importance of a strong social safety net. By most accounts, most projections say that the European Union is going to have a somewhat deeper recession this year than the United States. So in terms of macromanagement, they're actually doing a poor job, and there are various reasons for that: the European Central Bank is too conservative, Europeans have been too slow to do fiscal stimulus. But the human suffering is going to be much greater on this side of the Atlantic because Europeans don't lose their health care when they lose their jobs. They don't find themselves with essentially no support once their trivial unemployment check has fallen off. We have nothing underneath. When Americans lose their jobs, they fall into the abyss. That does not happen in other advanced countries, it does not happen, I want to say, in civilized countries.

And there are people who say we should not be worrying about things like universal health care in the crisis, we need to solve the crisis. But this is exactly the time when the importance of having a decent social safety net is driven home to everybody, which makes it a very good time to actually move ahead on these other things.

And that brings us right to the Huffington Post story about the families featured in Obama's 30-minute ad, and how little difference his presidency has made in their lives so far:

Obama's "American Stories": Families Profiled In Campaign Ad Struggling Six Months Later
Arthur Delaney

First Posted: 05-29-09 09:55 AM   |   Updated: 05-29-09 07:21 PM

As Election Day neared last fall, the Obama campaign went big with a 30-minute television ad that profiled four American families struggling to keep afloat in a worsening economy. Between each of the "American Stories," as Obama called them, the video showed the candidate on the hustings, promising "a rescue plan for the middle class."

Four months into Obama's presidency, only one of those folks has seen anything resembling a rescue -- and it wasn't because of any government program. After the ad aired, a mysterious angel donor helped cover the costs of surgery and copayments for the Ohio retiree who suffered from crippling rheumatoid arthritis in her right hand.

But not much has changed for the New Mexico educator. And the Ford employee in Kentucky has been anxiously watching the administration as it guides General Motors into bankruptcy, a process with ripple effects that could cost him his job. Things are bad enough for the fourth person featured, Rebecca Johnston, a 34-year-old mother of four in Missouri, that she has come up with a rescue plan of her own.

Obama said in the ad, Johnston is "all about her family." That's why next week she'll be joining the Army Reserves.

"My kids' ages range between 15 to 3. At this point I look at it like I can't contribute anything to their college, I can barely make their health care costs, we're just skimming by paycheck to paycheck," Johnston told the Huffington Post.

The families profiled aren't angry with Obama, as the story goes on to explain:

Despite her personal sacrifice, Johnston said she still thinks President Obama is doing a decent job.

"I believed in everything that he wanted to do for us," she said. "I'm not disappointed yet."

The positive feelings of the participants in the Obama campaign ad reflect recent polls showing that the president continues to receive high approval ratings despite rising unemployment and economic uncertainties.

Mark Dowell, a union rep at a Ford plant in Louisville, Kentucky, also approves of the young administration.

"I really truly think the Obama administration is doing everything they can to help out the domestic auto industry," he said. "This has got nothing to do with the president allowing me to be in this commercial."

And they've even been attacked by rightwingers:

The New Mexico educator, Julianna Sanchez, 43, said in a telephone interview that right-wing radio host Rush Limbaugh didn't like her story.

"I had phone calls coming in telling me Rush Limbaugh's talking about you, everybody's talking about you," she said.

Obama described Sanchez as a widow with two children and a mortgage in Albuquerque, N.M.

"Financially, the pressure is just to keep your head above water," Sanchez said in the Obama ad. "So you don't feel like you're drowning all the time. Health care, food, electric, gas -- it takes out so much out of my pay check. You go buy a gallon of milk and you're like going ok -- is it a gallon or half gallon? What can I afford? You feel like you can't breathe even though you need to breathe."

Limbaugh certainly found something to criticize about the Sanchez segment.

"This humongously large fat family eating dinner at a huge table," the right-wing talk show host told his audience. "I said my gosh, this is a bad TV show. Mom goes off to teach problem kids at what looks like a kid prison...Mom has to ration milk because of high gas prices, bad economy. This fat family had to be twelve people sitting around the dinner table."

"He judged me for two and a half minutes," Sanchez said.

Sanchez said her basic situation hasn't changed since the ad aired. She works at a school for at-risk kids and takes care of a 7-year-old with special needs in the afternoon. At night, she takes business classes online.

....

The Stuarts, an older couple in Sardinia, Ohio, also took some right-wing heat for their role in Obama's ad. Namely, the conservative FreeRepublic.com questioned their existence. (There are no Stewarts in Stuarts' county -- FreeRepublic.com had the wrong spelling.)

And Juanita Stuart, 65, told the Huffington Post that some people called their house to say strange things.

"One gentleman stated that he was my grandson. He said I'm right outside your door cutting your grass," Stuart said. She asked her husband, Larry, to look outside. Nobody was there. "The next week somebody messed with my car."

Well, God bless those folks for their patience, but unlike Paul Krugman, they probably have no idea what a civilized nation does to ensure that it's people can live with dignity, even in the midst of hard times.  And isn't it way past time that they found out first hand?


Definitions

The OECD area (i.e. OECD-Total) covers the 30 OECD member countries: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States.

The euro area (13) covers the following 13 OECD member countries: Austria, Belgium, Finland, France, Germany, Greece, Italy, Ireland, Luxembourg, Netherlands, Portugal, Slovak Republic and Spain.

The euro area covers the euro area (13) plus Cyprus , Malta and Slovenia.

The European Union covers the euro area plus Bulgaria, Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Sweden and United Kingdom.

The Major Seven are Canada, France, Germany, Italy, Japan, United Kingdom and United States.


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. (0.00 / 0)
No, the bottom hasn't arrived. Isn't forecast to arrive until Fall.

I don't know how that disputes the green shoots argument. The fact is, deceleration of decline is occurring and you obviously have to decelerate before your velocity reaches zero and you can go in a different direction. So while we aren't in recovery, it's not like there aren't good signs. Such as the drop in employment claims on the 3 week rolling average, home sales being up, GDP decline slowing in this quarter etc. etc.

The tragic thing about all this data though is the fact that the US can essentially start a world wide recession and most of the countries that bear the biggest brunt are countries other than the US.


The Question Is How Much? And What? (4.00 / 3)
How much deceleration?  And deceleration of what?  The GDP is the big figure, but unemployment is expected to lag very considerably.  And it's unemployment that makes the biggest impact on a person-by-person level.

There was a reason I quoted Roubini as a pivot point:

However, the consensus is now becoming optimistic again and says that we are going to go from minus 6 percent growth to positive growth in the second half of this year, meaning that the recession is going to be over by June. By the fourth quarter of 2009, the consensus estimates that growth is going to be positive, by 2 percent, and next year more than 2 percent. Now, compared to that new consensus among macro forecasters, who got it wrong in the past, my views are much more bearish.

I would agree that the rate of economic contraction is slowing down. But we're still contracting at a pretty fast rate. I see the economy contracting all the way through the end of the year, going from minus 6 to minus 2, not plus 2. And next year the growth of the economy is going to be very slow, 0.5 percent as opposed to the 2 percent-plus predicted by the consensus. Also, the unemployment rate this year is going to be above 10 percent, and is likely to be close to 11 percent next year. Thus, next year is still going to feel like a recession, even if we're technically out of the recession.

Of course Versailles couldn't care less if it feels like a recession.  But we damn sure should.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3


[ Parent ]
. (0.00 / 0)
Whether it's lagging or not doesn't really matter except as far as timing. If the GDP rises then employment should rise too. So i don't exactly know what the issue is here. What, do you want me to call the GDP figures a green shoot of unemployment? Either way you have to crawl before you walk.

[ Parent ]
No (4.00 / 3)
If the GDP rises then employment should rise too.

This isn't true.  "Employment" can mean a few things.  Working age adult workforce participation and employment rate are two, and are different things, but good barometers of "employment."  But they can be fudged if including full-time equivalency, etc.

More importantly than typological issues with what you're talking about, employment does not necessarily or inherently follow GDP growth.  That's a claim usually made by people without much in the way of economics knowledge.  Sorry to sound all elitist and stuff, but if you hear "employment follows GDP" enough times, you believe it.  But it's not true.


[ Parent ]
. (0.00 / 0)
A) i used the conditional term known as "should" for a reason

B) workforce participation changes the subject a bit as there are more reasons for people not to be working then just assuming there are no jobs or they are working part time. People going to school longer because, people retiring early because they have more money, etc. etc. So don't pull this "economics knowledge" shit. I just didn't feel like making the issue more complicated than it is. My point is still my fucking point, you need GDP growth before you get jobs anyways.


[ Parent ]
. (0.00 / 0)
That came off more antagonistic than I wanted it to (OK, i'm lying i like being antagonistic), but like i said, parsing out the details of GDP and unemployment is unimportant to the fact that in america you're going to need steady GDP growth to get low unemployment anyways.

[ Parent ]
Does The Phrase "First Fired, Last Hired" Mean Anything To You? (4.00 / 1)
Multiply that by a couple million people and you bet your sweet ass it matters!

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Thank god for small favors.... (0.00 / 0)
We aren't dead, and we haven't been sent to Iraq. This shows what a good job Obama is doing putting this country back on track.   A jobless recovery is not a recovery, unless you are owned by a bank you own a bank.    

[ Parent ]
i disagree vehemently with this quote (4.00 / 6)
Economic growth does not come from state-led infrastructure investment. It comes from technological innovation, and gains in productivity, and these things come from the private sector, not from the state.

What is aggravating about it is not that it doesn't correctly identify the problem - that technological innovation and productivity gains are the key to growth and especially long term growth.  What is aggravating is that it remains trapped in this ideological fistfight between 'the state' and 'the private sector.'  What works best is if each adopt some pragmatic solutions and do what they're best at.  The state is  in a much better position to perform long run investment - to support infant industries (e.g. subsidising green technologies against the oil companies etc.) while the private sector is better at weeding out politically-but-not-economically viable firms.  These are common sense propositions that don't depend on any ideology other than that the present system exists and we would like it to sustain itself in the short term.  To argue anythign else during a crisis flies in the face of anything claiming to be remotely capitalist, as Soros clearly understands as do most everyone who are quoted above and are not ideologues but capitalists.

btw, thank you for drawing attention to the Obama administration's failure to take up Soros's challenge to confront the collapse of the worldview - it's ironic because his branding is all about 'getting over the past' but his economic policies are so thoroughly imbued with the idea that the 1980s and 1990s can be 'restored.'  Change, it seems, is scarier for Change Man than we might have wished.


- (4.00 / 4)
...it's ironic because his branding is all about 'getting over the past' but his economic policies are so thoroughly imbued with the idea that the 1980s and 1990s can be 'restored.'

As if we WANT to restore the 1980s or 1990s!  What we want is not a restoration of some temporal point of reference (no matter the decades or eras, it's a matter of who did OK and how) but an actualization of ideas of social democracy.


[ Parent ]
You're Right (4.00 / 1)
We've learned a great deal of empirical info about economies over the past handful of decades, such as the differential strengths and weaknesses of public and private sectors that you talk about.  And what's utterly infuriating is the way that Obama ignores the vast majority of this knowledge with his thoroughly discredited Blairite Third Way/Neoliberal, Chicago School-lite approach that played such an enormous role in getting us into this hole in the first place.

The illusion is that because it's somehow "centrist" it can't possibly be ideological, rigid, or blind to empirical reality, when it fact it's about as ideological, rigid and empirically blind as any economic policy any Democratic President has had since Grover Cleveland Alexander.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3


[ Parent ]
i think another problem is that there is not a left voice that is strong (4.00 / 2)
if paul krugman is passing for the left voice - no disrespect meant to him - then the set of common assumptions between progreswsives, centrists, and neoclassical economists is too great.  what is needed is both a more progressive departure that actually gets some credibility and and one that has social forces behind it

- a william jennings bryan against the gold standard -

at which point a politician as smart as obama will try to coopt that.  you can see it in the sotomayor nomination and you can see it in the economic policies - he is simply not caring because he is not afraid the left can bring any poltiical consequences for him.

and i don't blame him, quite frankly, on the level of pure politics.  he has the identity trump card that he can use over and over again until it gets played out.


[ Parent ]
The Chicago PMI Fell Sharply in May (4.00 / 2)
The drop in the midwest business index was more severe than was expected and has been attributed to the looming auto bankrputcies.

Business activity in the U.S. Midwest shrank in May at a far more severe rate than expected, with hiring in the deep-freeze in what many analysts saw as fallout from the collapsing auto sector.

The Institute for Supply Management-Chicago business barometer, released on Friday, slumped to 34.9 in May from 40.1 in April, when the index jumped surprisingly from March's cycle low of 31.4.

..."The Chicago PMI data was very weak. There is every prospect that this data reflects the auto shutdowns," said Alan Ruskin, chief international strategist at RBS Greenwich in Greenwich, Connecticut.



Yeah, I watched this forum (4.00 / 5)
And couldn't stand that petulant idiot Ferguson, who got into full-on George Will-Wingnut mode towards the end with the above diatribe. He was roundly booed by the audience, and Krugman looked about ready to sucker-punch him. Had I been there, I would have been tempted to shout out "Fallacy of the excluded middle, you bloody Tory!", which he is, and which is precisely what he advanced, the idea that the current economic structure is just fine and maybe just needs a little tweaking, that the lack of regulation and oversight had nothing to do with the meltdown, that we're headed towards some hyperregulated, super-high tax Latin American nightmare and we're all going to live on cat food and Marmite, and that if only his most excellent right honorable friends are allowed to run things, all will be well.

He truly made a fool of himself, on a personal, moral and intellectual level, and revealed himself to be just another thin-skinned far-right laissez-faire ideologue who knows nothing of economics, and cares nothing for the majority of people who depend upon a healthy economy for life. In his mind, so long as rich white men run the world, what could possibly be wrong? A revealing glimpse into the delusion and sociopathology that is conservatism. If these people are allowed another shot at running things any time soon, they'll kill us all (oh, wait, his buddy David Cameron's set to become the next Prime Minister!).

As the military historian John Keegan once said of Ferguson when asked his opinion of him at a book reading I attended some years ago, "Well, he is a very handsome man". Indeed.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton


Death to the mass media (0.00 / 0)
We need to take it over and dumb it down simple for the masses the way the Rove people and Rush did. surely we can do that.

We will never get them to think with their useless educations in American public schools that are going south and have been for decades.  On huffpost yesterday but I forget who he is but a great and thoughtful post on education.


[ Parent ]
My anectdotal tales of woe (0.00 / 0)
Yesterday, I went to a festival. The last person I talked to told me that her best friends' daughter and her son-in-law both got laid off, last week. They recently had a baby, too.

Waiting for the train ride home, I started chatting with another passenger, who told me that he had just been laid off. He couldn't collect any unemployment, either, since he had a business. And that business was - you guessed it - dead.



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Thanks once again Paul (4.00 / 1)
Like Soros I also think Obama doesn't have a clue. There are just so many little signals and cues coming from the Obama family that indicate they are not savvy in a visionary sense. The way they raise their children (lots of rules and caution), the way Michelle dresses, the body language(Michelle's vocabulary too slangy), the way they chose their dog, the way they are training (not) Bo, their outings all indicate they are solidly in the middle class. Bourgeois. Completely. We cannot look to them for change but maybe they can hold the line until we regroup.

Obama is a centrist. Edwards is a terrible loss for us. Elizabeth has made a fool of herself with this book. I am embarrassed for her. And now he is completely ruined. For many years at least and then who knows who he will be.

As you see I look to the psychological for my cues. I had George Bush spot on at his very first sentence reaching my ears. I thought we are in for it. This guy is a disaster.

A new paradigm is needed and Arianna is calling for it.


Well, (0.00 / 0)
Psychology isn't everything, I would say.  Nor is class.  (Look at FDR!)  But in all too many cases they seem to be all you need to know--only because so much is already excluded, though.  

Yes, we obviously do need a new paradigm.  Though most of what we need has been lying around since the 60s--or early 70s at the latest--just waiting to be put to work.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3


[ Parent ]
class is very very important (4.00 / 1)
i say this as someone who grew up middle/upper middle class and is also a minority in a few ways.  The progress that is being made on race, gender, and in other ways at a very high elite level is running side by side with a plotline that continues to subvert he poor in the world, the american poor, the working classes of other places, etc.  This would not happen nor would it be possible if you didn't have a multicultural elite made up of people who have similar backgrounds to me, obama, etc.  At a certain point, we have to say, it is great that we have a Black president and a woman secretary of state and powerful democratic leader and a latina woman who may join the SC- but let's talk about policy and policy FRAMEWORKS now.

Because if we don't, the republcians will catch on to this game in a few years and people like michael steele or george p bush or michelle malkin or sarah palin or whoever will be able to manipulate this game in a much worse direction than obama or anyone else.  so he needs to be called on his shit,a nd part of that is that he is implementing economic policies that don't do shit for most of the people in the world, and don't really assist ordinary and poor and working class and middle class americans much more than his predecessor, even though the level of active harm being done has gone down about 1000 levels of magnitude.

After all, most people have een in 'a recession' for far longer than the stock market.  Let's point this out.


[ Parent ]
How did Elizabeth .. (0.00 / 0)
make a fool of herself with the book? ... I haven't read it or anything .. so I'd like to hear why you think so

[ Parent ]
Oh just to drag her husband all through the mud again in public (0.00 / 0)
to go on Oprah and have O ask her if she still loves him and ask him about his cheating. It is just too soap opera for me. I am blushing for her turning her life and family into this fodder for the media. I can't think of any reason for her to do it except for money and hatred toward the other woman.

I am sick of women hating each other over a man's cheating. He should be the one kicked in the ass if his partner feels that way. Why do wives and girlfriends expect another woman, not even a friend, to stay away from her man. That is ridiculous. It just doesn't happen that way. And to blame the other woman for enticing him is foolish and just makes her look like an adolescent.

Having some on the side is only horrible when AIDS comes into the picture. It used to be other diseases, and that is understandable, but such is not the case with Edwards, as far as we know.

Why is the other woman so awful for wanting to have sex with him? She did and maybe it is his child and maybe it isn't. But to forbid the interviewer to mention her name? C'mon.


[ Parent ]
What freaks me out is that oil is at $65... (4.00 / 1)
...at the nadir (hopefully!) of the worst recession since the Great Depression. $65, lest we forget, was an unthinkably high price for a barrel of oil just a few years ago.

Part of the explanation for the price now, I think, is cuts in OPEC production. And part is high inventories. And part may be a certain amount of investment money moving into the oil markets. Nonetheless, the price wouldn't be that high if not for some fundamental pressure on supply limits - and that problem will only become worse when the global economy starts to recover.

We may be in a position now where the economy cannot grow without pushing oil prices high enough to send us right back into recession. And we may be entering a scenario where high energy prices reinforce this cycle of recession and our standard of living gradually ratchets down, at least until we can manage to become much less dependent on oil to fuel our economy. But at the pace we're going, that will take decades...


Except ... (0.00 / 0)
high supply ought to be pushing prices lower .. and it is not .. in fact we know there is presently speculation going on in the markets ..  they've had a run-up like the stock market in the last 2 months .. from $38 to $65(a near doubling) .. that's not the sign of a regularly functioning market

[ Parent ]
It's called hyper-inflation (4.00 / 1)


[ Parent ]
Stop thinking that oil is high. It is the dollar that is worthless which is why the price went up (0.00 / 0)
The sellers of oil know the printing presses have been going non-stop over the financial crisis. They know that the market is being flooded with dollars. So why should they keep selling oil at the same price if the dollar is worth less?

[ Parent ]
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