Posts from — January 2011

The BBC says that Gates cutting Pentagon budget by $78bn over five years

US Defence Secretary Robert Gates has announced a $78bn (£50.3bn) military budget cut, in part by scrapping a $14bn amphibious fighting vehicle.

The cuts over the next five years come in addition to $100bn in internal savings already announced.

Those savings will be redirected to other defence programmes, but the new cuts slow growth in the overall budget.

This isn’t cutting the budget, it is reducing the growth in the increase. The DoD budget will still increase, even with these “cuts”. It is unlikely that much of what Gates has proposed will make it through Congress as it impacts defense contractors who will use their tame Congresscritters to oppose them.

The BBC reports that Obama names William Daley as White House chief of staff

President Barack Obama has named bank executive and former commerce secretary William Daley as the next White House chief of staff.

Just what Obama needs, another banker in the White House. If he would push to put a few bankers in prison for fraud, instead of giving them jobs in the Executive branch, people might think he knows what he’s doing and might fix a few of our problems.

This smells like the handiwork of Rahm Emanuel. Emanuel may be looking for an endorsement from William Daley’s brother, Richard, the current mayor of Chicago.

The Miami Herald reports that Gov. Scott appoints corporate executive to lead Fla. growth management agency

TALLAHASSEE – Gov. Rick Scott has appointed an executive of one of Florida’s largest land development companies to oversee the state department charged with managing growth.

Billy Buzzett, vice president of the St. Joe Co., will take over the Department of Community Affairs, the state’s land planning and community development agency that Scott is eager to overhaul.

Like Florida doesn’t have hundreds if not thousands of surplus and vacant houses, offices, and condos, so let’s make even easier for developers to build more to “generate jobs” in the midst of the foreclosure mess. The Republican policies created the problems, so the voters of Florida elected even more Republicans to fix them. The voters got the government they deserve.

Today marks the Feast of the Epiphany, end of the twelve days of Christmas, and Día de los Reyes in Spanish-speaking countries.

This is the customary day for gift exchanges in many Christian cultures because it is the day that the Magi finally arrived in Bethlehem with their totally inappropriate gifts after putzing around for over a week because they didn’t want to ask for directions.

It only took a matter of picoseconds to figure out that the calls for austerity and deficit reduction were rank hypocrisy on the part of the Republicans, the party that is almost singlehandedly responsible for them, but it takes a deeper look to determine if the deficits are a real problem, beyond the politics, in real world economics.

Thomas Ferguson and Robert Johnson, Senior Fellows at the Roosevelt Institute wrote a paper on the issue: A World Upside Down? Deficit Fantasies in the Great Recession [PDF]

Key findings:

· Claims that economic growth falls off at anywhere near current US levels of debt to GDP are untrue. Neither is it the case that cutting deficits magically stimulates the economy. And stories about 90% limits are untrue.

· The CBO August 2010 budget revision implies that the U.S. is less endangered than most analysts claim.

· Private oligopolies in health and defense spending, along with the possibility of another banking crisis, are the real threats to the deficit, not entitlements.

· Social Security is in essentially no danger for decades and does not require any fix.

· It would be easy to stimulate the economy with a program of public investment that would substantially reduce public debts in the long run.

If you look at the disaster that Ireland, the prime example of the “success” of austerity, has become, you will see where the “Deficit Fantasy” is taking us.

A number of people have linked to James K. Galbraith article, Actually, The Retirement Age Is Too High, for the Unconventional Wisdom section of Foreign Policy. The point is simple, we need jobs for the un- and underemployed, so an increase in the retirement age will make the situation worse, not better. This was the reason for the massive demonstrations among young people in France over the decision to increase that country’s retirement age. France’s college students realized that it meant they were going to have to wait another year for a job to open up.

Jamie Galbraith also writes for New Deal 2.0, the latest addition to my blogroll.

Marshall Auerback is another writer at ND 2.0 and he has a nice piece on Drinking Austerity Kool-Aid in 2011.

You will rarely, if ever see these guys on the talk shows as they have committed the unpardonable sin of getting things right. Talk show time is limited to John McCain and people who have a record of bad analysis. As long as you are willing to spout the “conventional wisdom” of the Versailles dinner party circuit, you obviously deserve to be on television to agree with the corporate owners.

“George Washington” at Naked Capitalism has a nice catch: Michael Hudson on the markets

Take any stock in the United States. The average time in which you hold a stock is–it’s gone up from 20 seconds to 22 seconds in the last year. Most trades are computerized. Most trades are short-term. The average foreign currency investment lasts–it’s up now to 30 seconds, up from 28 seconds last month.

The markets aren’t about economics and fundamentals, they’re about game theory. They don’t know anything about the companies behind the stocks, they are only interested with whether it is trending higher or lower. Gamblers spend more time calculating a blackjack hand, than market traders spend on individual transactions.

I would think that a 60% capital gains tax on anything held for less than a day would put an end to this absurdity.

Michael Collins at the Agonist looks back at the Naughts. While everyone knows things sucked, we really didn’t have the numbers to look at before now. According to the Bureau of Labor Statistics there were 135 million jobs in the US at the beginning of 2000 and 139 million at the beginning of 2010. Four million new jobs may seem good if you don’t know that over 100 thousand new people are attempting to enter the job market every month. You need more than a million jobs per year to stand still, and only an average of 400 thousand jobs per year were available. After 20% job growth in the 1980s and 1990s, the job growth for the Naughts was 0%.

If they raise the retirement age, there will be even fewer jobs available for new workers, because, thanks to the Republicans, the majority of new plants and jobs being created by American corporations, are being created overseas. American taxpayers are subsidizing this practice. This is one of the many reasons that corporations can make obscene profits and still don’t owe any corporate taxes in the US.

If you itemize deductions using the Schedule A, don’t get in a rush to file as the IRS has announced that 50 million taxpayers must delay filing until Valentine’s Day at the earliest.

Congress screwed around and then finally passed a tax bill in mid-December, so the IRS has to make all kinds of changes to its system so that it can deal with what is now the law. Lets be clear on this, this is the fault of Congress. If they had done their job and passed this stuff before October 1^st when the Federal fiscal year begins, the IRS would have been ready.

I was involved in accounting systems for years and I know exactly what the IRS is going through. I would be working through Christmas to change and debug payroll systems so they would reflect the new laws that would be effective for the first payroll in January. The Congresscritters and their patrons don’t know or care about all of the extra costs that business has to absorb when they play games like this and pass things at the last minute.

The rest of world has finally noticed the Queensland floods, with water covering an area the size of Texas. Much of the current flooding is a result of the Christmas arrival of tropical cyclone Tasha which actually came ashore as the Pacific equivalent of a tropical depression. Like most tropical events, it isn’t the wind, it the water that causes massive damage.

Queensland was late to the party as Western Australia and New South Wales had already been dealing with flooding in December. The La Niña generally increases rainfall in Australia, but the effect of the extra moisture in the air due to climate change is certainly suspect.

Grain prices are sure to rise, as the droughts in Russia and floods in Australia are putting a lot of acreage out of production. Crop losses will certainly be in the hundreds of millions dollars. Mining is also affected, so commodity prices will also go up.

С Новым годом
Prosit Neujahr
Feliz Año Nuevo
Bonne Année
Felice Anno Nuovo
Gelukkig Nieuwjaar
Gott Nytt År
Sehe Bokmanee Bateuseyo
Blwyddyn Newydd Dda
Onnellista Uutta Vuotta

May you be safe from the idiots who think gravity is just a theory and fire off guns, failing to understand that what goes up will come down. [The Miami Herald covered this today]

Given the prevalence of accurate timekeeping devices, it is amazing that the explosions that are supposed to signal the new year extend for a four hour period beginning before and extending well after the actual event. Anyone who thinks alcohol and gunpowder is a recipe for a long life should be avoided by insurance agents.

The new year brings new opportunities, so here’s hoping that the good wins out and the world is made a little better.

Oh, and a happy 10^th blogiversary™ to Steve Bates at the Yellow Something Something.