Wednesday, January 27, 2010
Travel writing first, then tabs.
In an hour (6 pm local time) we head for the airport to grab an 11 pm flight back to Newark. You need that much time to absorb the risk of catastrophic traffic jams. We'll grab dinner at the airport, which in my case will consist of the finest yeasty beverages available and a Nyquil capsule chaser. Herewith, a bit of travelogue followed by my accumulated tabs.
It is not risky to say that Sao Paulo is not a photogenic city. I had my camera in hand all day, and saw nary a shot worth taking through the window of the car (even allowing for the bullet-proof glass). One passes miles of flavelas -- slums -- between clusters of high rises. Neither are very attractive. This shot is as good as it got from my point of view, recognizing that I was here on business rather than to see the sights:
[UPDATE: I found a better picture, more typical, from June 2005.]
Every Brazilian I met was an immigrant or descended from one, drawn here by the extraordinary opportunity and frustrated by the corrupt and obstructionist government. Brazil is on a bit of a roll at the moment, but the generations of lost opportunity is plain to see, stolen by a system that feeds parasitically off the relatively small part of the population that struggles to make business grow against the wind. Time will tell whether Brazil can genuinely unlock its potential. In the meantime there is always churrascaria, which I managed to do twice in 18 hours. That's a lot of meat even by my carnivorous standards.
One final moment in which I delighted -- I just called down to the front desk to get a new password for the wifi, and the fellow reported back "'4n4y': number four, 'n' as in November, number four again, 'y' as in Yankee." 'Y' as in Yankee? I don't think he was referring to the Bronx Bombers.
Now for the tabs, if you've gotten this far.
The hits just keep coming.
The AIG counterparties thingy explained, or at least reflected upon.
Federal personal income tax revenue plunges, its steepest drop since 1939. Glenn notes that "John Galt was unavailable for comment." You know, that Galt fellow sure is elusive. Anyway, I'd put it differently: You cannot simultaneously rely on the top 5% of the population for most of your income tax revenue and threaten them with onerous new taxes. Only one or the other will actually raise revenue, not both at the same time. Which is pretty freaking obvious unless you're a politician. Unless you are Pete DuPont, who certainly was a politician.
Why Obama shouldn't panic: A look at presidential approval ratings after one year and comparing them to approval ratings after two years.
Here's a link to a long paper on surface temperature records and their role in the climate change debate from (apparently) a "skeptic" perspective. I have not read it and probably won't -- I'm a busy dude -- but if you do feel free to write your reactions in the comments of this or any other appropriate post.
Must-read lefty blog post of the day: "Waiting for Barack." You can feel the frustration:
Every Hill office I've spoken to in the past week has had the same complaint. "Where," they ask, "is the White House?"
There's been no clear message on the way forward for health-care reform. No clear articulation of preferences. No public leadership to speak of. The administration is taking temperatures rather than twisting arms. The White House press team is blasting out speeches where the president says he'll never stop fighting on health care but pointedly refuses to throw a punch. The president is giving interviews where he seems to endorse paring the bill back and also seems to argue against doing anything of the kind. The daily message has run from banks to freezes, and early leaks suggest that tonight's speech will focus on education.
According to multiple sources, there's an easy answer for the confusion: The White House is confused.
Read the whole thing.
The "six most statistically full-of-shit professions." Heh.
I'll be flying all night, so talk to you tomorrow.
Watts Up flogs another nonscientific paper, and fails to get anything in the peer reviewed science journals.
Meanwhile a peer-reviewed scientific analysis finds that bad weather stations actually have a slight cooling bias, not a warming bias:
"'4n4y': number four, 'n' as in November, number four again, 'y' as in Yankee." 'Y' as in Yankee? I don't think he was referring to the Bronx Bombers."
NATO phonetic alphabet.
"Meanwhile a peer-reviewed scientific analysis"
What, you mean like the IPCC's or CRU's research?
From your link: "The website surfacestations.org enlisted an army of volunteers..."
What makes that a 'peer reviewed scientific analysis?' With an 'army of volunteers' bringing in the data, how could you control standards or ensure accuracy? Is there a self-selection bias when enlisting such volunteers?
The following goes to the steep drop in personal income tax collections noted by TH. For budget nerds, it's a Holy Shit Headline.
For the most recent quarter, actual federal tax collections from all sources were 17% less than Obama's budget -- a $100 billion shortfall for the quarter. Obama's budget assumed that revenues would rebound to a 2008-like run-rate -- after declining in 2009. Instead they've continued to decline. This is an alarming trend, although I'm not surprised. Understand that this revenue shortfall is happening at a time when Obama & Co have their foot jammed to the floor with extraordinary stimulus spending.
Obama's budget failed to anticipate the depth of trouble for our private sector -- much like how labor expert Larry Summers underestimated the unemployment rate. These guys are clueless about the effect Obama's agenda is having on the true private sector. The overhang of Obama's agenda is actually a big part of the problem.
Our federal taxes mostly come from (1) income taxes on high earners, (2) payroll taxes, together with lesser amounts from (3) corporate taxes and (4) "other."
Because taxes on high earners are progressive, they decline a lot in an economic downturn. The same is true for corporate taxes. Thus, federal tax revenues are actually levered. Thus, if high earners and corporations don't go back to making a lot of money, the federal budget blows up even faster.
There is no reason to expect such a rebound to occur given the course Obama has put us on. I don't expect Obama to say anything tonight to address this, and what he says may even make it worse. To my ears, I expect to hear ... "The beatings will continue, until moral improves."
We can stand a year or two of trillion dollar deficits, but not a continued and worsening trend line.
If we learned anything at all from ClimateGate, it is that the "peer reviewers" in peer reviewed climate literature are so hopelessly compromised that the designation now amounts to BS. Only the skeptical blogs seem trustworthy on the science of climate change.
In Re Nate Silvers's comment that Obama shouldn't panic, I offer this one sign that he should: Hillary is coming.
When Obama was sanctified, err inaugurated, I said (in a dispute with Link, I believe) that one sure sign that the Democrats were losing faith in the Won when Hillary started making noises about "needing some time" or "this isn't a forever job at State".
That time looks to be soon, or even now.
Our real economy will not improve until policy makers recognize that we are in a depression, not a recession, and adjust policy accordingly. First the problem must be diagnosed correctly.
A recession is a temporary economic slowdown typically caused by businesses in the private sector overproducing goods relative to aggregate demand. Workers are laid off to allow for inventories to adjust to demand. Business then kicks back in after a brief adjustment period.
A depression is a deflationary economic event typically caused by the bursting of an asset bubble, which is typically driven by a credit bubble. In the 1930s the assets were primarily stocks. In the 2000s the assets are primarily homes, but stocks are also involved. The event is deflationary because in a debt-based monetary system the collapse of these asset bubble impairs the underlying debt, which destroys money.
Debt-based monetary systems cannot cope with deflation because it drives a wave of insolvency across the economy. (CF: Andrew Mellon's 1929 "Liquidate them All" quote).
There are only two paths out of this mess. The first is to allow the wave of insolvency to wash clean the debt, which means you have to let the banks fail. The second is to devalue the currency sufficiently such that asset values and debts, which are denominated in nominal dollars, are rebalanced.
As long as the Obama administration's policy is to save the banks we are doomed to follow the devaluation option. Obama and the Fed have no choice but to continue printing money and throwing it into the black hole of deflation, hoping that they can eventually cause sufficient currency devaluation to rebalance our debts and asset values. (In a sick way, Joe Biden's asinine comments about 'we need to keep spending this money so we don't go bankrupt' were right on the mark, given our policy choice.)
Our real economy cannot improve until monetary order is restored. This is Wall Street versus Main Street what is fast becoming a zero-sum economic game. Obama, like Bush, chose Wall Street. The only way out of this mess now is to run though a painful gauntlet of inflation and cripplingly high interest rates. Anyone else old enough to remember WIN?
This is all so obvious to me that I can't grasp why everyone doesn't understand this intuitively. Isn't this apparent to everyone? Help??
Wasn't Goldman Sachs involved several years ago with the collapse of Southeast Asia and years later Mexican bonds they sold around the world? And didn't the Federal reserve/Federal treasury cover those defaults? It seems Goldman in no better than Freddie and Fannie.
"we are in a depression, not a recession"
Agreed. But not every depression is the same. People forget, but the "Great Depression" was first used to describe the 1870s. I'm still trying to figure this one out. I'm not close to an answer.
Here are some X factors:
Unemployment. In the private sector, why couldn't unemployment go to 50%. We don't need that many people to get stuff done, and we can outsource a lot of that abroad. From trying to run a start-up -- especially now with Obama & Co in charge -- I've learned the hard lesson that in the USA you should never, ever hire people if you can avoid it. This is tragic ... as the best thing you can ever do for a stanger is to give them a meaningful job at decent pay.
Public Sector. There's a war brewing between those who get government checks and those who pay for them. I'm 52 ... there are many, many 52-year old retired California state employees getting near their employed pay ... but their state is bankrupt. And they want a national bailout? Blow me.
I could go on ....