Markets Finally Reflect What Most Americans Figured Out A Long Time Ago: Austerity Is The Wrong Answer

The debt “deal” that the Republican Teahadists convinced an amenable President Obama to agree to won’t actually do much of what it was touted to do.  As usual, the political theater of Washington entertaining Washington took center stage while doing nothing to address the crises bubbling around the country.  The deficit will continue to set records, largely because the Bush-Obama tax cuts still aren’t paid for and the Bush-Obama occupations also continue to be unpaid.  Add to that millions of underemployed Americans, while those who are employed are tending to make less than they did before; none of whom are shopping like they did 5 years ago (because they can’t).  Add to that a refusal to understand Economics 101, which says if businesses aren’t spending (which they aren’t; instead, they think hoarding Trillions of dollars of cash is a good idea), then government should spend (especially when consumers no longer can), but the Teahadists force exactly the opposite action (government spending less), and it should be obvious what’s going to happen to the U.S. economy: it will contract.  It has to.  Every component of GDP is declining, which is exactly what the Teahadists want going into the 2012 election year.

Finally, Wall St. has figured it out.  The markets since the “deal” earlier this week have fallen by multiple percentage points.  In fact, the Dow today lost 512 points to turn in its worst performance since the 2008 financial crisis.  Commodities are all trading sharply lower.  All of this was easily forecastable: none of the fundamentals which led up to the 2008 financial crisis have appreciably improved.  Some of the commentary would be downright laughable if it weren’t so important to actually understand what happened:

“The conventional wisdom on Wall Street was that the economy was growing — that the worst was behind us,” said Peter Schiff, president of Euro Pacific Capital. “Now what people are realizing is the stimulus didn’t work, and we may be headed back to recession.”

Wall St., like Washington, exists in its own self-made bubble.  The reality that the rest of us face (high unemployment, falling wages, foreclosures) were not faced by the moneyed elite.  “The conventional wisdom of Wall Street” is a joke.  What indices were they looking at that indicated the economy was free of the troubles that assailed it in 2007-2010?

“The stimulus didn’t work.”  This is another stupid talking point.  What chance did it have to work?  It was too small (by at least half) and directed at things that would never cycle the money through the part of the economy that actually matters: consumers.  The stimulus couldn’t work when trillions of dollars of taxpayer money were given away to Wall St. firms who continue to sit on it, too dumb to realize they’re still causing the economy harm.

So congratulations, Wall St.  I’m so glad there is a shining example of a leading indicator finally catching up to where many of us have been for a long time.  It must be irony’s sense of humor or something…

Carmakers Agree To Near-Doubling of mpg: 54.5 by 2025

I didn’t think I’d see this day come any time soon: U.S. and foreign carmakers have agreed with the Obama administration to increase miles-per-gallon standards of cars and light trucks sold in the U.S. to 54.5mpg by 2025.  This follows news that standards will be increased to 35.5mpg by 2016.

Note that both of these standards are well within reach of today’s technologies.  Nothing revolutionary has to happen in the next 14 years to achieve these standards, as carmakers have already demonstrated in Europe and Asia.  What’s been missing in America is the will power to do the strategically correct thing: reduce fuel consumption, which will help ease the impact on Earth’s climate system, save consumers money, and boost our national security standards, all at one time.

Another Republican In Favor Of Bigger Government

Not that the rabid right-wing teabaggers will deign to realize the irony of the situation, but Sen. Shelby (RTB-AL) wants to break the Consumer Financial Protection Board under the weight of unnecessary, bloated government.  Instead of letting the agency do its duly appointed business, Shelby wants to set up a five-member panel over the director, give Congress control over its finances and give corporate mega-banks that caused the Great Recession veto power over new regulations.

Stay classy, you big-gubmint lover.

Millions of Gallons of Diesel Fuel Injected into Ground across U.S.

File this under the “I’m Not Surprised” category.  Drilling corporations have spent years and millions of dollars trying to prevent anyone from finding out what the constituents of the fluids they were pumping into the ground to force natural gas and oil up.  Now, thanks to an investigation by the U.S. House Energy and Commerce Committee’s year-long investigation, part of the answer has come to light.

I will borrow a phrase from all the anti-American voices who came out from the shadows during the Bush Regime: “If you have nothing to hide, you have nothing to fear from us looking into your business.”  Hiding behind claims of proprietary business information is just about as cowardly as these corporations can get.

The congressional investigation found that oil and gas service companies have injected over 32 million gallons of diesel fuel or hydraulic fracturing fluids containing diesel fuel in wells in 19 states between 2005 and 2009.  In addition, the investigation finds that no oil and gas service companies have sought – and no state and federal regulators have issued – permits for diesel fuel use in hydraulic fracturing, which appears to be a violation of the Safe Drinking Water Act.

We all know who was “running” the country during these years.  And don’t think I’ll hold back any condemnation if I find out the Obama administration continued these disgusting practices.  I’m not surprised that dirty energy corporations didn’t seek approval for their likely illegal actions – they think they’re above American law.  I also won’t be surprised if they’re never held accountable either – they have worked hard to buy off our elected officials.

Will Republicans Stop Reforms By Not Funding Them? Probably.

One of the little details lost among the health care reform, financial reform and every other reform since President Obama took office was when those so-called reforms were going to take effect.  It turns out that little detail might just come back and bite Obama and the Democrats in the butt.

None of the reforms were scheduled to take effect right away.  That’s because they had to be funded by Congress to take effect.  And since the Congressional Democratic leadership and President Obama’s staff couldn’t take the time to organize themselves and get their business done as quickly as possible, there wasn’t enough time left in this session to pass the 2011 fiscal year budget.  Even though the fiscal year started on October 1st (yes, 2.5 months ago).  So what Congress has done instead is pass funding through continuing resolutions.

Unfortunately, they mean what they sound like: they continue current funding.  They don’t allocate new funding.  They don’t change funding levels for anything.  They continue funding.  The latest continuing resolution that passed Congress today funds the government through March 2011.  That’s after Republican Teabaggers take control of the House of Representatives, where all spending bills must originate.  There will be fewer Democratic Senators in March 2011 than there are now.  The President has displayed an obsessive desire to negotiate with right-wing extremists and beat up on his base.  Guess what’s going to happen the next time the budget comes up for debate and votes?

I’m betting Republican Teabaggers take the budget and de-fund all of President Obama’s and the Democrats’ absurdly over-negotiated reforms. Furthermore, I’m betting President Obama doesn’t fight the Republican Teabaggers on not funding his “victories”.  He’s shown himself to care more that nobody is fighting than in passing good policies.  Too few Democrats realized this political weakness prior to putting him into office.  Now they have no choice.  Democrats got frustrated in 2009 and 2010 when Obama didn’t push for the most he could get even when perfect situations screamed for him to do so.  Just wait until he rolls over on issue after issue as Republican Teabaggers warm up their “spending is too high” talking points and begin investigating his administration for every silly, petty thing Teabaggers can dream up.

Which leads me again to address all the incrementalists that told liberal activists that we had to take what we could get and not expect a centimeter more: if your so-called reforms aren’t funded, what good are they?  How much time, energy and money was wasted moving a pathetic distance toward solving some of this nation’s crises but won’t be enacted because of your overwhelming pragmatism?

How willing will Democrats be to donate to President Obama’s re-election campaign when these things happen?  How many doors will they knock on?  How many phone calls will they make?  When the reforms go down in flames and unemployment stays high (because Obama never seriously addressed the Great Recession), will there be a 2012 “enthusiasm gap” that outshines the 2010 version?  Only time will tell.

General Electric To Buy 25,000 Electric Vehicles

Expect more of this kind of news: General Electric has seen the writing on the wall and has decided to buy 25,000 electric vehicles for its fleet by 2015.  They will make an initial purchase of 12,000 GM cars, beginning with the Chevy Volt.

This is good news on a number of fronts.  Most importantly, tens of thousands of electric vehicles on the road means that much less oil needs to be drilled, transported, sold and burned in the United States.  The next phase in a 21st century grid will require less coal and natural gas burning, but less demand for oil is good for the environment and our national security.  It demonstrates that electric vehicles are viable transportation choices for fleet cars, which means cars like the Volt will be on the road and visible to the public in greater numbers sooner.  It will allow for smarter grid technologies to be implemented in more places.  It will help push the cost of electric vehicles lower moving forward.  Hundreds of thousands of electric vehicle sales will have to be made to start doing this.  The more, the merrier.  This will have a direct and nearly immediate benefit to GE – they are developing charging stations to sell.  There’s nothing like real-world use to make charging stations’ performance more efficient and robust.

Another Possible Reason For Enthusiasm Gap?

A lot has been made of the “enthusiasm gap” that might or might not exist between Republican Teabaggers eager to take our country back to the 1750′s and the Democrats who would prefer to keep moving forward into the 2000′s.  To some extent, I think the enthusiasm gap does exist.  I have provided brief examples in the past few weeks that could help in deciding whether the gap exists and whether it should exist.

Here is the latest:

Mortgage companies enrolled in the Obama administration’s signature foreclosure-prevention initiative may be receiving taxpayer funds despite not having a legal right to the home or to the mortgage, a top Treasury Department official revealed Wednesday.

But despite faulty or missing paperwork, the Obama administration allows mortgage companies to boot homeowners from the program, sticking the borrowers with massive bills that often leave them worse off.

Call me a wild-eyed liberal, but when a Democratic President who campaigned on fixing the economic disaster we were hurtling towards does more to help out those who set us on the course for disaster instead of the rest of us who, for the most part, were simply trying to lead our lives, well, I think you might be able to guess what the result is.  How enthusiastic should those homeowners be toward the President or his administration?  Obama has been riding the campaign trail for fellow Democrats pretty hard since Labor Day, telling crowds that his administration stopped the U.S. from going into another Great Depression; telling crowds that his administration fights for the little person; telling crowds that the bankers should be held accountable for their actions.

Stump speeches are all well and good, President Obama.  But when the banks who first offered loans to people who they didn’t check to ensure could afford them then bundled them up (without the requisite paperwork) and sold them to make a profit, then bought insurance policies on the loans, bundled those up and sold them to make more of a profit, then bet short on the packages because they knew they were worthless to make even more of a profit, then got taxpayer money to bail them out from the mess they created now get more taxpayer money to illegally kick people out of their homes, how much support can you really expect from those homeowners and taxpayers?

Especially when your administration hasn’t forced the banks to actually unravel those packages and see how worthless they really are?  Those bad mortgage default swaps should be fully accounted for on the banks’ ledgers.  Yet your administration has allowed the banks to play accounting games so the losses don’t show up.  Are we really to believe that the only entities who didn’t suffer as a result of the mortgage crisis were the banks?  They didn’t turn unprofitable in the past 3 years; they’ve continued to set record profits.  How glad are American voters supposed to be about that?  By the way, those bad packages will have to come due sometime.  And if your administration continues to kick that can down the road, like you have to so many other cans in the past two years, the result when they do come due will be many times more painful and devastating to the American economy than if they had been handled in the past 2 years.

But by all means, keep campaigning and telling Americans that everything will be alright with you and your buddies in charge.  You didn’t create this mess, but by not taking responsibility for it during your term (much like Afghanistan), the mess will become defined as yours in the annals of history.  Perhaps taking care of the multiple crises you face can take a higher priority in the next two years than you chasing down non-existent Republican Teabaggers who will compromise with you.  They’ve told you there will be absolutely no compromise.  Believe them at their word and start moving this country forward again, Mr. President.

News Items That Have Caught My Eye

Companies are sitting on $1 Trillion in cash.  The economy could be doing quite a bit better; millions of Americans could be employed, all if companies would spend the cash they already have.  They don’t need more tax breaks or incentives.  They don’t need to keep outsourcing American jobs to overseas workers.  They need to participate in good faith.

The Western U.S. will go up in flames if global warming deniers keep having their way.  The median annual area burned by wildfires is projected to jump 300% to 600% over much of Colorado by mid-century.  Oh, and Aspen could feel like Amarillo does today in the same time period.  By all means, keep denying though!

Green buildings, on average, only cost 1-2% more than non-green buildings.  Most of the public believes the number is closer to 17%.

Oldie but important: from a New York Times editorial this summer -

Last summer, pilots working with the United States Forest Service and the Natural Resources Defense Council made low-level flights over 25 million acres of forest, trying to gauge how much damage has been done. The results, released this month, are devastating. Just over half the white bark pine forests are dead; one-fourth have medium to high mortality; few forests have escaped some damage.

Forests continue to die in the face of global warming.  The effects on ecosystems haven’t been devastating yet, but it’s only a matter of time.  Time is non-renewable resource those forest ecosystems don’t have.

As I’ve stated in many of this year’s State of the Poles posts, the Arctic has likely entered a new climatological regime.  Saying it ain’t so with religious zeal isn’t changing things.

“New calculations show that the amount of melting inland ice in Greenland is 25-50% higher in 2010 than normally, reports professional journal Ingeniøren (The Engineer).”

The denialists had great fun pointing out what they said were ethical shortcomings of scientists last year after one of them illegally hacked government email servers.  Isn’t it interesting that not a peep has been issues this year as a prominent global warming critic is being investigated for plagiarism and outright fabrication of data in his now infamous Wegman Report.  Honestly, this is pretty unsurprising.  People who spend most of their time criticizing others for various “shortcomings” quite often are shown to engage in the exact behavior they accuse others of.  Deniers don’t have science backing them up and we’re sure to find that few of them have ethics backing them up either.  Silence from the denialists on this serious breach of conduct is deafening.

Health Insurance & Wall St Firms Part Of Koch-Sponsored June Get Together

That little get together was limited to 210 people.  The purpose was to plot how to put the White House back under their control after the 2012 election.

To all the folks who tried desperately to assure us that incrementalism would work the best for health insurance and Wall St legislation; that since they ran ads supporting tiny pieces of legislation, President Obama won a great battle, what do you have to say about this?  The folks invited from those industries weren’t there advocating for average Americans’ well being.  They weren’t trying to figure out how to deliver better health care to more people.  They weren’t trying to figure out how to limit the kinds of financial instruments they could package, sell, then bet short on.  They were there trying to figure out how to make more and more and more profit – enriching themselves and to hell with the rest of us.

Firms who want to limit “climate change alarmism” were also there.  Would the incrementalists like to refresh our memories regarding how well their grand strategy worked with respect to a climate and energy bill?  Oh yes, I forgot, we don’t even have one of those, and we’re not going to get one any year soon.  In the meantime, the Earth continues to warm, corals continue to be bleached, extreme weather events get more common.  Our species existence will be on the line within a matter of decades.  It won’t matter then what kind of health insurance plan people can buy or what the financial giants can and can’t do.

The other side is playing for keeps.  The sooner rank-and-file Democrats figure that out, the sooner we’ll see the action we so desperately need from them.

11.5 Million Jobs Short

This situation won’t change any time soon, but recent news that the U.S. is short 11.5 Million jobs is disheartening, to say the least.

According to Shierholz’s analysis, the economy is down about 8.1 million jobs from where it was when the recession began, in December 2007. Considering population growth, the economy should have added 3.4 million jobs during the recession, Shierholz notes. To fully recover, the country would need to add 11.5 million jobs.

Democrats can pass all the half-assed stimulus bills they want.  Republican Teabaggers can cut all the taxes they want.  None of it will get those jobs filled any time soon because one of the root problems is our right-wing trade policies.  Those jobs will not be filled in America because they’re filled by foreigners in their countries.  Offshoring has been going on for quite some time.  Corporations have increased their profits because they have lower operating costs but have charged more for their crappy products.  The only downside is that Americans can’t fill jobs because they don’t exist in America any more.

We can begin fixing this problem after we change our self-defeating trade policies.