Numerian's blog

The Simple but Horrifying Fallacy at the Core of the Tea Party

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Originally published on The Agonist

It’s hard to say if the Tea Party has an acknowledged leader, but someone who professes to be just that has chosen a very opportune moment to trash Speaker John Boehner’s attempts to craft legislation that would allow an increase in the debt ceiling. Judson Phillips, the CEO of Tea Party Nation, is the self-acknowledged head of the Tea Party, and in an editorial this morning in The Washington Post, he attacks Boehner’s legislation for providing “almost non-existent budget cuts.”

Phillips says:

As the founder of Tea Party Nation, I feel confident in saying that the Tea Party understands what so many in Washington seem to have forgotten: We do not have a debt crisis. We have a spending crisis. There is only one way you get to a debt crisis — you spend too much money.

Here is what is fundamentally wrong and dangerous with the core assumption of the Tea Party: There are two ways to get to a debt crisis – you either spend too much money or you don’t take in enough revenue. Anyone who has done a family budget or a business budget understands there are two sides to every discussion of cash flow: cash flow in, and cash flow out. In government terms, this equates to taxes received and expenditures made.

Why Some People Are Just Fine With the Collapse of the Debt Ceiling Negotiations

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Originally published on The Agonist

If political functionality were a means test for a country’s credit-worthiness, the US would have lost its AAA rating a long time ago. The country which prides itself as the “World’s Greatest Democracy” has puts its dysfunctional political system on display for months now, in a struggle to get the debt ceiling increased. The resulting spectacle has nauseated even the ever-complacent American public: both Democrats and Republicans are now given losing grades by the voters for their performance in this farce. If the country had a legitimate third party to vote for, the Democrats and Republicans would be in serious trouble. Of course, the political system is geared to prevent third parties from emerging, so the country flounders about, looking for leadership from pusillanimous Democrats or ideological Republicans who consider raising taxes a mortal sin. The voters are probably a few steps away from concluding what is meant to be hidden but by now should be obvious: American democracy doesn’t exist, and the political system in Washington is beyond repair. What is worse: there are people and organizations who like things just the way they are and will fight any attempts at reform.

How to Cripple a Government

Let us look at a sad laundry list of governance failures that have built up over time and which now have paralyzed Washington’s political process.

• The average Congressman spends only about half their time in governance – meaning reading and introducing legislation, attending debates, working on committees, and voting. The rest of the time is spent raising money and campaigning for reelection.

Wal-Mart the Latest Victim of Global Labor Arbitrage

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Originally published on The Agonist

As we enter another round of quarterly earnings “surprises” on the upside for American corporations, one company continues to stand out from the crowd – Wal-Mart. The distinction is not one that Sam Walton would ever have wanted or expected: Wal-Mart has endured eight straight quarters of declining sales in stores opened for at least one year. This is the most important measure of success in retailing, because it strips out the distortions in revenue that come from adding new stores. Consider in particular how difficult it is for a retailer like Wal-Mart to achieve even one quarter of declining same-store sales; Wal-Mart’s two high-volume products are gasoline and food, both of which have experienced percentage price increases in the double digits. It should be easy for the company to achieve substantial revenue growth just on inflation alone, which means something has gone seriously wrong with the business model of the company that is a poster child for globalization.

Dead White Girl Destroys Octogenarian's Criminal Empire! (Details Inside, Nudie Pics on Page 3!)

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Originally published on The Agonist

Rupert Murdoch has always prided himself on his ability to make or break prime ministers, presidents, and princes, but in the end it was a lowly 13-year-old schoolgirl who has reached out from the grave to bring him down. Milly Dowler, a murdered British teenager, has extracted revenge against Rupert Murdoch for his many crimes, something the wealthy and the powerful have never been able to do.

Rupert Murdoch has been about wealth and power from his earliest days as a newspaper proprietor in Australia, but it is power that he lusts after. The power to shape and move public opinion is intoxicating for ambitious men like Murdoch, and when he first got into the business, merely owning a megaphone like the editorial page of a large national newspaper was enough to provide him the tools to guide the general public into a particular voting direction. Those days are long gone. Murdoch may own respectable newspapers like The Times of London, or The Wall Street Journal, but their editorial pages carry a fraction of the influence they had a quarter century ago. The reading audience – or more particularly the voting public – have long since moved on to television, and more recently cable television and the internet. To maintain his influence over the public, and to continue to intimidate, bribe, and possibly blackmail politicians, Rupert Murdoch has had to step up his game in a very nefarious way.

Making a Dying Business Pay

Everyone's a Helot Now

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Originally published on The Agonist

The mountains look on Marathon - / And Marathon looks on the sea; / And musing there an hour alone, / I dreamed that Greece might yet be free. - Lord Byron

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The Greek parliament voted to approve this week what might justly be titled “The Debt Enslavement Act of 2011”. Under this act, everyone in Greece gets to be a helot, and how bad could that be? It’s not like the old days. In ancient Greece the youth of Sparta participated every autumn in the Krypteia, a sort of military training exercise in which Spartans would hunt down and kill helots without fear of legal reprisal. The helots were Greeks too, just the wrong kind of Greeks – lower class, servile, tied to the land. Slaves, in effect.

Modern day slaves aren’t tied to the land anymore – they are tied to their bank. So are governments, for that matter. How often have you read in the past few weeks that unimaginable economic consequences await us if Greece defaults? Angela Merkel said so. So did Nicolas Sarkozy, and now the new IMF head, Christine Lagarde, has said that the Greek opposition party needs to unite with the majority Socialist party to approve new tough austerity measures for the country. If they do, the IMF, the European Union, and the European Central Bank will release the last tranche of a previously-agreed loan. These three noble institutions, called “the Troika” by the press, are basically telling Greece “We are going to default on our loan commitments to you if you don’t deliver even more cutbacks, tax increases, asset sales, and unemployment than you previously promised.” The Troika, no doubt, does not enjoy trafficking in pain and suffering on a national scale, but apparently it is the only collateral they can get. The irony is, if Greece agrees to deliver more collateral – maybe we should call it collateral damage – they don’t really get any money. It just passes through Greece straight to the banks.

Is This the End for Quantitative Easing (and Ben Bernanke Too)?

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A week ago we outlined here how and why Ben Bernanke lost a significant vote in the recent Fed Open Market Committee meeting. The vote was not so much to launch immediately QE3 when QE2 comes to an end this month; it was to keep Quantitative Easing as a tool in the Fed’s arsenal of monetary weapons. So far, the mainstream media have not yet realized how significant a shift this is in Fed policy, but other bloggers are beginning to notice, and so is the stock market. Yesterday Chairman Bernanke spoke at the International Monetary Conference in Atlanta, at which he made no mention of Quantitative Easing now or down the road sometime. The stock market certainly reacted to this omission; having traded noticeably higher during the day, the Dow Jones industrial average closed down 19 points, losing most of its ground in the last fifteen minutes of the session when Bernanke began speaking.

Here are some perceptive comments about the speech from Cullen Roche on his Pragmatic Capitalism website:

*His speech was certainly market moving and as reports of the speech hit the wires the equity markets began to reverse on fears that QE3 is off the table. But there was a more interesting tone in his speech today than we’ve seen in the past. The Chairman was exceptionally defensive. In fact, the entire speech is basically an explanation as to why QE2 did not hurt the economy (of course it did).

Ben Bernanke Loses Control of the Fed

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Originally published on The Agonist

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It took a while, but the financial markets are starting to realize that Quantitative Easing will end next month, possibly once and for all. The unprecedented amount of monetary stimulus being pumped into the global economy by the Federal Reserve will come to a sudden halt. Commodity markets have enjoyed a bubbly expansion since the QE2 program was announced, and they were the first to crumble when the Fed began removing the monetary supports. Stock markets are now slowly beginning to follow suit.

One reason the markets took the news sanguinely was because the Fed engineered it that way. After the May meeting of the Fed Open Market Committee, at which it was decided not to renew QE2 when it expires in June, Ben Bernanke gave a first-ever press conference by a Fed Chairman following an FOMC meeting. The media thought it was a masterful performance – which it was, but not for the reasons cited in the press. Bernanke made it sound as if the end of Quantitative Easing was the most natural thing in the world, and that all the voting members of the FOMC agreed with him. The fact is, the FOMC decision was a defeat for Bernanke and his allies, which included the two other officers of the FOMC, Janet Yellen (Vice Chair of the Fed Board) and William Dudley (NY Fed President). Dudley, just a week before the meeting, had gone public with his desire to have a QE3 program standing by, ready to aid a struggling economy.

Osama Bin Laden: Sui Generis?

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Originally published on The Agonist

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The non-state actor. That’s what he was called in the 1990s, before he became universally known as a mass murderer. Academics used it as a euphemistic term for an individual who took on state power, before they came up with the phrase ‘asymmetric warfare.” Osama Bin Laden was, if not the inventor of asymmetric warfare, the master of the technique, the man who single-handedly took on the world’s hyperpower.

How much more asymmetric could you get by spending $200,000 to bring down the globe’s colossus? In one terrifying morning Osama Bin Laden killed nearly 3,000 Americans, some of them tortured to death - forced to choose between being burnt alive or jumping to their death from 96 stories. In the process, he sent the United States on a path of self-destruction, as the nation lost its way between two schizophrenic and conflicting impulses: living in perpetual fear of terrorists, or strutting about the world stage with military bravado, killing hundreds of thousands of invisible, innocent men, women, and children because they were Muslims.

Quelle Surprise! Democrats Have a Candidate for the Presidency!

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Originally published on The Agonist
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Disclaimer: The Economic Populist is a politically nonpartisan blog. The author's views below are not necessarily those of the editors of EP or of other writers who contribute to this blog.

"This is a political crime of deception, an enormous bait and switch, in which liberals and quite a few independents were misled by a serial liar who purposely characterized himself as a reformer…" Numerian

Did you receive your email from Barack Obama yet? If you are a Democrat, or on his campaign mailing list, the president has promised you are going to be the first to know when he formally launches his reelection campaign. It could be any moment now; apparently the White House is waiting for a slow news day when Libya and Fukushima and Congressional budget negotiations aren’t dominating the media agenda. Once the news is out, you are expected as a loyal Obama supporter to start sending in campaign donations and begin attending campaign organization meetings.

A Little Extortion Never Hurts the Bottom Line

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Original published on The Agonist

It used to be if a corporation wanted to practice the dark art of extortion, it would do so well outside of the public eye. Not these days; company CEOs are out in the open and proud of it when they want to extract yet more money out of the taxpayers.

Take the case of Caterpillar CEO Douglas Oberhelman. He wrote a letter to Illinois state governor Pat Quinn, complaining about the state’s recent increase in the corporate tax rate from 4.8% to 7.0%. He said at least four other states have approached the company offering generous allowances if Caterpillar would move its headquarters out of Peoria, Illinois. Neighboring states of Indiana and Iowa have admitted to lobbying Caterpillar, as has the far-away state of Texas. The company said it wasn’t threatening Gov. Quinn over the tax increase, but it had “to do what’s right for Caterpillar.” That’s corporate-speak for “we’re threatening to leave the state if you don’t rescind this tax increase.”

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