Category Archives: Economics

Live at Walmart! With its business threatened, the megastore tries something new

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I’d never seen this before, but I certainly saw it tonight. I was wandering through the men’s clothing section (did you know you can’t find plain white boxers at Walmart any more? this was the fourth one I’d tried), and I started hearing something that could only be live music. So I flipped on the video on my phone and kept approaching, and above is what I saw.

I’d heard Walmart was troubled. Remember, I put this WSJ story on my Virtual Front Page last night:

Wal-Mart Loses Edge

Perception That Retailer No Longer Has Best Prices Undercuts Sales Turnaround

Wal-Mart Stores Inc. is losing its longstanding reputation for offering consumers the lowest prices, complicating its efforts to end a two-year sales slump in the U.S.

The Bentonville, Ark., retail colossus became the world’s largest store chain by avoiding sales gimmicks through “every day low prices” on everything from food to sporting goods under one roof.

But surveys by retail consultants, analysts and brand experts now find that Wal-Mart’s aura of price leadership has faded since the recession, because customers who searched for better deals sometimes found them at competitors such as Dollar General Corp., Aldi Inc. and Amazon.com Inc….

It certainly didn’t look troubled tonight. Based on my difficulty in finding a checkout line that was neither too long (the “express” lanes”) nor featuring people with more than one filled cart. (I wrote on Twitter while waiting, “Waiting in crazy lines at Walmart. Apparently, a lot of people are simultaneously planning polar expeditions…”)

Not  that I’ll mourn if Walmart suffers a bit. Walmart is just one of a bunch of factors that killed the newspaper business. You’ll recall a time when grocery stores were a huge newspaper advertiser, along with department stores. Well, Walmart threatened and undercut them both with a strategy that did not require regular local advertising: With “Everyday Low Prices,” you don’t need to advertise any specials. You just have to let the word get around town, and you’re permanently set. And a lot of traditional newspaper advertisers were permanently shafted.

But the live music makes it all worthwhile, right?

Yeah, it’s good to cut federal spending, but…

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As I’ve said, with the economy in the dumps, I hate to see us either cutting spending OR raising taxes — even though if we’re going to deal with the deficit, we need to do both.

But I was reminded of the price of it in this piece in The Wall Street Journal today:

Government Spending Holds Key to Growth

As goes government spending, so goes the U.S. economy.

This is the unpleasant reality a weak recovery and already stretched Federal Reserve have bequeathed. Absent a sudden pick-up in private sector activity, economic growth in the months ahead will largely take its cue from Congress and the White House. No wonder markets are jittery.

For one, the hit from spending cuts across all levels of government has already been a major drag on growth. Indeed, these declines shaved 0.7 percentage-points on average from gross domestic product growth in the first two quarters of 2011. Typically, that would be no disaster. Trouble is, this recovery has been unusually weak. So the government cutbacks effectively halved real GDP growth in the first half of 2011, leaving it at just 0.8% annualized.

The pace of underlying growth is expected to pick up a bit in coming months. But so, too, is the pace of government spending cuts. A glimpse of this will come Wednesday with the release of July federal budget figures….

Yeah, I know. Rock and a hard place.

Way to go, guys: You made the Top Ten!

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This just recently in from The Wall Street Journal:

Today’s rout ranks as the sixth-largest point drop in the Dow Jones Industrial Average in history. Here is a list of the top 10:

Date and decline

9/29/2008 — 777.68 points

10/15/2008  — 733.08 points

9/17/2001 — 684.81 points

12/1/2008 — 679.95 points

8/8/2011 — 634.76 points

4/14/2000 –617.78 points

10/27/1997 — 554.27 points

10/22/2008 — 514.45 points

8/4/2011 — 512.76 points

I just want everybody involved in this achievement to get credit. So when I say, “Way to go, guys,” I’m including everyone. The SC5 and their spiritual brethren, of course — couldn’t have done it without you. No one played a bigger immediate role in recent days. But let’s have a big hand for Speaker Boehner and the Establishment crowd, for not standing up to them and keeping their caucus in line. And to President Obama for, I don’t know, for failing to magically make people come to the table. Or for the stimulus that didn’t help enough. Or whatever. And W. for creating the new prescription drug benefit without paying for it. And LBJ, I guess, for giving him the idea by creating Medicare.

And let’s not neglect the private sector, the engine of America’s lack of prosperity: There are, of course, all those scared-of-their-shadow investors. And all the corporations and others who have been sitting on cash and refusing to take the risk of investing it throughout this four-year crisis. And the American consumer for failing since 2008 to keep the economy afloat by spending like it’s going out of style, the way they did for the few years before that. (I did MY part, right up until this past weekend.)

Everybody give everybody a great big hand…

Tell Navin I’m not “somebody” any more

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Somebody tell Navin Johnson I just fell off the grid. I’m guessing I’m not a real person any more, because I no longer have a landline.

On Saturday, we called AT&T and dropped our home phone service AND more than 90 percent of our cable TV. We had just recently signed up for Uverse, and it included three months free HBO and several other services, and I was watching a LOT of HDTV. Too much.

I won’t be doing that anymore. Now, we have the local broadcast channels (which I almost never watch), and a few random junk channels. There’s no HD (and I can hardly bear to watch standard def anymore), no 24-hour news channels, and no sports. The latter two aren’t much of a loss for me. I recently discovered I will watch sports in HD, when I didn’t before, just for the spectacle — about as clear a case of the medium being the message as one is likely to find. And y’all know how I hate 24/7 TV “news.”

What does get to me is losing all the movie channels. The things I tended to watch the most were American Movie Classics (“Mad Men!” — which I won’t get to see at all now!), Turner Classic Movies, TBS and TNT — along with FX and a few others. And the HBO selections were pretty dazzling. Since we signed up for AT&T last month (after dropping Time Warner), I had spent a LOT of time on HBO. When I wasn’t watching a movie, I was recording one, or two, or three, on the DVR.

But part of the point here was that I was spending too much time on TV, period. I’ve got shelves of books I want to read and haven’t touched. I need to get to them. What has worried me lately is that I didn’t even want to get to them, as much as I should. Sure sign of brain rot.

What else did we give up? The phone number we’ve had since moving to Columbia in 1987. The one our kids had growing up. The one that was the reference point for so many different kinds of accounts all over town. I’m bracing myself for the first situation in which someone is calling up my account and says “What’s your home phone number?” And I have to say I don’t have one. (I also worry that someone might NEED to reach me, and has no way of finding me other than through published listings.) Now, I realize that’s not any kind of deal to my kids or their contemporaries. None of them live at home, and not one of them has a land line. But a land line — as irritating as it was, since nothing came in on it but telemarketers — was one of those things that said you were a grownup, you were rooted, you were established. I think that’s why so many people who HATE answering their land lines on the rare occasions when they ring still pay that monthly bill. Not doing so would make them feel — insubstantial, ethereal, not really there.

But NOT paying a bill for something I wasn’t using just didn’t seem a smart option anymore, so we pulled the trigger on the service.

There were a number of factors in the decision:

  • Too much TV. The temptation to watch it was too great. I was losing sleep staying up watching it — that happens when what you’re into is movies.
  • I was paying for Netflix, and wasn’t watching it at all any more. And didn’t want to give that up. And since I still have the Internet, I can still stream that, and that provides more TV than I’ll ever need.
  • The upcoming deadline for dropping the AT&T service without penalty. We had 30 days since we signed up, and about a week left of that. So a decision needed to be made.
  • The S&P downgrade of the U.S. credit rating. OK, that’s an oversimplification, but that was sort of the last straw. It was really a) our failure really to recover from the 2008 crash; b) my getting laid off in 2009; c) the fact that, after a reasonably encouraging start, it seems harder to sell ads on my blog, which beyond the way it hurts my bank account, is indicative to me of people being tighter and tighter with their money; d) the political failure to come to grips with debt last week, and knowing that even if we had, it would have meant cutting more spending and raising taxes, which both tend to cool the economy; e) the turmoil in markets Thursday and Friday, which to me reflected less the usual fact that traders are feckless, fearful jitterbugs, and more the larger situation; f) the debt crisis in Europe and its long-term implications; and g) the downgrading of the credit rating. I didn’t figure any of us was going to be making any more money anytime soon, so spending all this on HD movies (as cool as they are) and telemarketing calls was ridiculous.

As you can see, it takes a lot to make me give up my HD.

I got up Saturday morning thinking that if we were going to move before the AT&T deadline, we had to move soon. And then, right after writing this post about the S&P thing, I told my wife I thought we needed to do it. She got on the phone immediately, because as far as she was concerned, we just had all that stuff for me, anyway.

Here’s the really bad news in all this: You know how much I saved? About $64 a month. That’s all. Which is why so few people actually take this step. Our bundle — high-speed Internet, phone, TV — was $150 a month. You would think you could get Internet service and the local broadcast channels (which is probably about 5 percent of what I was getting) pretty cheap, right? But the new total is $86. My wife — who writes the checks at our house — is pleased with that. I am not. I feel like I’ve given up so much, they should probably be paying ME for the loss.

But I guess that’s not realistic.

Thanks, SC5 and the rest of you; our country has for the first time lost its AAA credit rating

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Well, it became official last night, about three hours after I had wrapped up my first Virtual Front Page in awhile:

S&P Strips U.S. of Top Credit Rating

A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor’s said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world.

S&P removed for the first time the triple-A rating the U.S. has held for 70 years, saying the budget deal recently brokered in Washington didn’t do enough to address the gloomy outlook for America’s finances. It downgraded long-term U.S. debt to AA+, a score that ranks below more than a dozen countries, including Liechtenstein, and on par with Belgium and New Zealand. S&P also put the new grade on “negative outlook,” meaning the U.S. has little chance of regaining the top rating in the near term…

S&P said the downgrade “reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.” It also blamed the weakened “effectiveness, stability, and predictability” of U.S. policy making and political institutions at a time when challenges are mounting…

The WSJ report (and here are others from the NYT, NPR, BBC and the WashPost) goes on to say that it might not be too bad, since the other ratings agencies have kept the U.S. at the triple-A rating, then says…

But the move by S&P still could serve as a psychological haymaker for an American economic recovery that can’t find much traction, and could do more damage to investors’ increasing lack of faith in a political system that is struggling to reach consensus even on everyday policy matters. It could lead to the prompt debt downgrades of numerous companies and states, driving up their costs of borrowing. Policy makers are also anxious about any hidden icebergs the move could suddenly reveal.

Just what we needed, right?

As you see, the reason is that we failed to reach a comprehensive, rational, credible agreement on reducing U.S. debt. That was always the greater danger than the debt ceiling not being raised. And our elected representatives descended to the challenge of eroding the full faith and credit of the United States of America.

Of course, all involved in the government will vehemently defend their agreement against such condemnation as Standard & Poor’s. The Obama administration scoffed at S&P for making “a $2 trillion error” in its calculations. And indeed, well they might lash out, because all will share the blame.

But here’s the thing: Obama was willing to do a real deal. I’m not saying it would have fixed everything, but at least he was pushing the essential elements — both spending cuts and tax increases (or “reform” or “enhancements” or “revocation of cuts” or whatever you want to call it). That was and is essential to real deficit reduction for the simple fact that no one wants to go far enough in cuts.

Oh, four of the SC5 would go far enough. They have a nihilistic desire to cut, slash and burn; they are ideologues, and are not affected by pragmatic considerations. But Joe Wilson wouldn’t be with them; he wants to be re-elected. And if the cuts were deep enough to essentially eliminate the deficit without any revenue increases, they would be replaced in the next election by people who do give a damn about the essential functions of government (or what most voters regard as the essential functions of government, which in political terms amounts to the same thing). It would probably also split our two senators: DeMint cares little for the consequences of cutting, but Graham would balk at emasculating the U.S. military.

Gentlemen, if I may go so far as to call you “gentlemen,” you and those like you have brought us to this. I will watch, not without some trepidation, to see what you do next.

Well, that’s good to hear — sorta, kinda

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Just got this from the state Treasurer:

CREDIT RATING AGENCY MOODY’S REAFFIRMS SOUTH CAROLINA’S AAA CREDIT RATING

Rating agency’s negative outlook for US economy could impact South Carolina

(Columbia, SC) – State Treasurer Curtis Loftis issued the following statement in response to the action taken by credit rating agency Moody’s, who has reaffirmed South Carolina’s AAA credit rating but added a negative outlook similar to that given to the federal government.

“South Carolina has AAA credit for a reason,” Treasurer Loftis said.  “We live within our means and are constantly guided by sound financial principles. The negative outlook for the federal government has spilled over to the states and is a wake-up call that government must not spend more than it has.  The State Treasurer’s Office is monitoring this situation and is in constant contact with the rating agencies.”

South Carolina’s AAA credit rating means it costs less to borrow money for things taxpayers depend on like schools, roads and bridges.

Moody’s Investors Service will be conducting a credit review of select states including South Carolina within the next 90 days.  According to Moody’s, in order for South Carolina to earn a stable outlook, the state must maintain credit quality higher than that of the federal government in the event the U. S. government credit would be downgraded.

“The bottom line is simple: the action by Congress and the President causes uncertainty in the business community,” Treasurer Loftis said.  “We must demand fiscal conservatism and transparency from Washington.  South Carolina is doing its part and I ask D. C. to do the same.”

South Carolina, along with Maryland, New Mexico, Tennessee and the Commonwealth of Virginia, are the five states Moody’s confirmed AAA with negative outlooks with ratings indirectly linked to the U. S. government.  Those five states have a combined $24 billion of outstanding debt.

WEB/TV/RADIO: Click Here for a downloadable soundbite (.mpg) of the Treasurer on the debt issue.

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Well, that’s good to hear. Because I was worried about the credit agencies not being pleased with the debt deal signed earlier in the week. (Hey, neither I nor anyone else was happy with it; why should they be?)

All along, the word had been that the credit rating was endangered less by the debt ceiling deadline, and more by the failure of the gummint to come to terms with the deficit. Which they still haven’t done, of course. But let’s embrace whatever good news we can get.

Yo, and stock markets… Please settle down, as I said this morning:

So calm down, already! Stock market, this means you: “@nytimes: NYT NEWS ALERT: U.S. Economy Added 117,000 Jobs in July; Rate Falls to 9.1%”

ANY deal thrown together like this will do bad stuff

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This release came out a little while ago from Lindsey Graham:

Graham to Oppose Debt-Limit Compromise

WASHINGTON – U.S. Senator Lindsey Graham (R-South Carolina) today said he will oppose the compromise debt-limit agreement negotiated between congressional leaders and President Obama.

Graham said:

“I cannot in good conscience support this deal. Simply stated, it locks us into more debt, bigger government and most devastating of all, a weakened defense infrastructure at a time when we face growing threats.

“This agreement adds over $7 trillion in new debt over the next decade and only makes small reductions in future spending.  We hardly address the future growth of entitlements, a major contributor of future budgetary problems.  Instead of our nation running toward bankruptcy we will be walking toward bankruptcy.

“If fully implemented, the consequences to our nation’s defense infrastructure would be severe.  And these deep cuts would come at a time when threats to our nation are increasing, not declining.  What has happened to the Party of Reagan who viewed the primary purpose of the federal government was to provide a strong national defense?

“This agreement legitimizes the concept that defense spending is not only equal to other areas of federal spending, but is of lesser importance.  This is a philosophical shift I will have no part of.

“I fear this agreement will destroy our nation’s defense infrastructure at a time when we need them the most.  The only part of our nation’s budget which is really exposed to serious consequences under this compromise is the Department of Defense.

“I have always believed we have to raise our nation’s debt-ceiling but it should be done in a responsible manner.  I support raising the debt-ceiling for a period of nine months, the historical average since 1940, accompanied by a dollar-to-dollar spending cuts to debt-ceiling increase.  In effect, this basically is the first portion of the Boehner-Reid proposal.”

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And  it got me to thinking…

Almost by definition, almost any deal at this point that both raises the debt ceiling and addresses the deficit (which must happen to avoid a devastating credit downgrade) will contain elements that do things no intelligent person would want to do.

Such as, as the senator mentions, eviscerating our defense infrastructure.

And yet we have to go ahead and make a bad deal anyway, because we’re out of time to make a good one that would benefit the country.

Helluva situation, isn’t it? For an explanation of how we got here, watch this. Yes, it’s silly, but anything that explained this would be.

The Tea Party might be right about one thing. It may be time for a revolution. Because this whole thing just isn’t working, and hasn’t for a while.

Doesn’t like much like a “deal” to me…

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Normally, I never see the Sunday morning political talk shows. I have other activities I deem more important at that time of the week: sleeping, making coffee, eating breakfast, and getting ready to go to Mass.

But I got up a little early this morning, and had a few minutes, and was burning with curiosity about this “deal” that was supposedly nearing on the debt insanity in Washington.

First thing I saw was Mitch McConnell. I heard him say some standard partisan “Thank God for us Republicans” rhetoric about how far we’d come since April, when the White House simply wanted the debt ceiling raised with no spending cuts.

So he patted himself on the back for that for a moment — apparently in a bid to pull the Tea crazies along, tell them that even if they don’t get the moon the way they want, they’ve gotten a lot, etc.

Then he briefly described the direction in which negotiators were working. The only part that jumped out at me was, “no job-killing tax increases.”

A moment for translation. We of the UnParty just go ahead and say “tax cuts” or “tax increases,” because they hold no deep-seated emotional baggage for us. They are just options, tools, things you might do or not do. To Democrats and Republicans, these things have profound religious significance, and they have ritual words they have to say along with them. For instance, to Democrats there are no such things as mere “tax cuts;” there are only “tax cuts for the rich,” or, if they are inclined to used what they consider to be curse words, “Bush tax cuts.” For Republicans, there are no secular, matter-of-fact references to be made to the expedient of raising taxes. They must say something like “job-killing tax increases.” You must forgive them. They have to do the verbal equivalent of making a face and spitting on the ground on such occasions. They would explode if they didn’t get it out.

Anyway, modifiers aside, I was just hoping he was lying, or misunderstood. Because if that is really what is being discussed, it’s rather disgusting from an UnParty perspective.

Here’s the thing, folks: No sensible person wants to do either — cut spending drastically, or raise taxes — at a moment when the economy seems to be sliding backwards. But we do need to tame the deficit at some point, and there is a gun at our heads to make us do something about it now: Raising the debt ceiling won’t be enough to preserve the nation’s (and South Carolina’s) credit rating. The ratings agencies have to see progress on the deficit. So we need a nice, neutral, everybody-gives-something deal to do that.

But it’s not much of a deal if the Republicans — who hold the House, and therefore bear some responsibility toward the nation rather than the Tea Party — aren’t bringing anything to the table.

I saw a silly movie the other night, “Couples Retreat.” There’s a seen in it in which a guy drops his trousers. Vince Vaughn, not looking, says something like, “Is his junk out?” When the people around him confirm the fact, he adds, “NOW it’s a party!”

I’ve been trying not to watch this stuff myself, in spite of the morbid fascination. But when somebody tells me that both spending cuts and tax increases are hanging out there, I’m going to say, “NOW it’s a deal!”

Slouching toward history’s first intentional Great Depression

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We’ve been here before, back in the late ’20s and throughout the ’30s. But this time, we’re going to do it on purpose.

There’s blame to go around, in the long view. The Democrats did their bit leading us up to this point, but they’ve been offering compromises lately, and occasionally even making sense. Here in the home stretch, most of the “credit” for a crash will belong to the Republicans and their Kool-Aid-drinking — I mean Tea-drinking — friends.

Yesterday, the five Republican members of South Carolina’s congressional delegation “distinguished” themselves by being the most obstinate state bloc in the GOP caucus. Not that the Boehner plan was anything to write home about, or anything likely to get us toward a resolution. Today, I see that Boehner’s doing better among his caucus, but for all I know, our guys are still firing on Fort Sumter. (Anybody see an update on the SC part? I haven’t yet.)

But after all the tears and folderol in the House, whatever they pass will be DOA in the Senate, where Reid has a plan of his own. I fail to see how these two plans lead us to an actual solution before Tuesday.

And here’s the thing, folks — it’s not good enough to raise the debt limit. The ratings agencies will still probably downgrade the nation’s (AND South Carolina’s) credit rating, which will likely take our already staggering economy (did I mention that the newspaper company that laid me off two years ago just posted a 2nd-quarter loss of 32 percent?), and knock it right down onto the mat. UNLESS we take serious steps toward getting the deficits under control. And that’s WAY harder than just raising the ceiling.

You’d think — what with the fact that about the only thing our state’s leaders have had to brag about for the last 20 years has been our vaunted AAA rating — that the SC delegation would want to do something positive toward averting this disaster, wouldn’t you? Well, so far, you’d be wrong.

You know what happened in the U.K. after the Conservatives — the real conservatives, not these ruffians over here who take pride in throwing the Tories’ tea into the harbor — took over the government? They cut spending, and raised taxes. I was there when the taxes went up (see, “The terrible, awful, horrible day that the VAT went up,” Jan. 4) Far as I know, England is still there. Scotland, too. Maybe even Wales, and Northern Ireland.

Nobody wants to raise taxes at a time like this. It can have a cooling effect. Nor does a sensible person want to see drastic spending cuts, which can do the same. But the alternative to doing both looks considerably worse at the moment. And wanting to do one without the other — no, insisting upon doing one without the other, no matter what — is a form of madness.

Just something to think about, guys. Here at the last minute.

All right. OK. Here’s a post about the stupid debt “debate”

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Kept hoping — against hope, of course — this debt thing would get resolved before I had to say something about it. I’ve had observations to make about it along the way, but just haven’t wanted to get into it. I hate the subject; it bores me to tears. But it also makes me angry. Part of the anger is over the substance, of course. But part of it is that they’re making me think about this stuff. This is why we have representative democracy, you see. We elect people to go off and handle this stuff and make sure they don’t drive the country onto the rocks — and NOT bother us with the excruciating details.

They’re not getting the job done. Part of the reason, of course, is that there are a bunch of people in the House — the Tea Party guys — who don’t get what the responsibility of public office is all about. They think their bumper stickers slogans, the things that got them elected, are reality, and don’t understand that the world is more complicated than the concepts that got them elected. Unfortunately, they also have a certain cognitive block from ever learning they are wrong. Most people go into elective office with all sorts of misconceptions and foolish ideas. Most, whether they are “liberal” or “conservative,” realize with experience that there are broader responsibilities to the country (and in this case, to the entire world, since the already-weakened worldwide economy is poised to go over the brink with us). It’s not just about how they and their constituents feel about things, and unfortunately they have very powerful resistance to learning, ever, how wrong they are.

Part of the problem is that a significant part of their ideology involves rejection of the idea that experience is valuable. This is a common populist fallacy, of course, but it’s particularly malignant in this case, in terms of its effect on the world. People who go to Washington — or Columbia, or wherever — and study issues and come to understandings different from the prejudices they had originally… are considered sellouts, under this ideology. Such people who embrace larger responsibilities are not wiser in this view; they are corrupted.

Another obstacle is that this ideology is particularly nihilistic toward what happens to the world at large, as long as the ideology is served.

This makes it very dangerous for people with such a worldview to hold office. Oh, it’s not so bad to have one or two of these anti-Mr. Smiths at the table (Mr. Smith went to Washington to make the world a better place; these guys go to Washington to tell the world to go to hell). Unfortunately, the party that now holds a momentary (and at my age, I consider two-year cycles to be “momentary”) majority in the House knows that it holds that tenuous power because of the knot of such people in its midst. And is held hostage by it.

Speaking of “hostage,” did you see that performance by Boehner last night? He was like the prisoner forced to recite the propaganda with an AK-47 pointed at his head just off-camera. The only think lacking in his performance was the blinked Morse code (or maybe it was there; I don’t read Morse) saying “I don’t really believe this stuff; I just have to say it.” But his tone and body language did that. The performance brought to mind all those meetings I read about in which Boehner was the Soviet commanding officer caught in the middle, trying to do the right thing, and Eric Cantor was the sneering zampolit, ready to report him to the Central Committee for the slightest lack of revolutionary zeal.

Obama, by contrast, was more convincing last night. Part of that was pure talent. I’m not accustomed to watching Boehner, but I doubt that he’s nearly the orator Obama is. Almost no one is, particularly at communicating sober conviction.

I heard some commentary on the radio (NPR) this morning that said neither man gave America what it wanted last night — a way out — but simply acted as apologist for his own side’s position.

I suppose that’s true. But Obama’s position is the defensible one. He wants cuts and revenue increases, which is what a rational person who is not blinded by ideology would choose. Neither is what said rational person would want. Until the economy is ticking along a lot more strongly, both spending cuts and tax increases could have a chilling effect.

But here’s the thing: NOT getting control of our mounting debt, under these circumstances, would have a much worse effect. It’s not just about raising the debt ceiling. If you do that, and don’t reduce the gap between spending and revenue, we’re still likely to have a devastating downgrade of the nation’s credit rating. And we can’t afford that.

To let one’s natural reluctance to cut spending or raise taxes get in the way of dealing with that would be unconscionable. And letting a narrow ideology (particularly one that holds that it is ALWAYS right to do one and NEVER right to do the other, regardless of circumstances, which is the height of foolishness — but I guess that’s a workable definition of ideology) get in the way is much, much worse.

“Again with the negative waves, Moriarty!” (Redux)

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Yeah, I used that headline once before. But I’m making the point again.

This morning’s lead headline in The Wall Street Journal was tiresome:

Economic Outlook Darkens

Markets Stumble as Factories, Hiring Slow Down; Biggest Drop in Stocks in a Year

The drumbeat of bad news about the U.S. economy got louder on Wednesday, rattling financial markets and driving stocks to their biggest drop in a year.

The U.S. factory sector, which has been an engine of the recovery, notched its biggest one-month slowdown since 1984 as companies hit the brakes on hiring and production. Another report showed private-sector hiring dropped precipitously in May, prompting economists to ratchet down their expectations for the closely watched nonfarm payrolls report due on Friday.

The Dow Jones Industrial Average tumbled 279.65 points, or 2.2%, to 12290.14, its biggest point decline since June 4 of last year. Investors piled into the safety of Treasury bonds, sending yields on the 10-year note below 3% for the first time this year. Yields move in the opposite direction of price….

Sheesh. I’m not going to go on and on about my own unified field theory of the economy (after all, I couldn’t even get y’all to watch that hilarious Keynes and Hayek rap video), but in a nutshell it is this: All the bad economic indicators result, at some point down the line, from someone having a lousy attitude.

That applies whether you’re talking the stock market, or manufacturing figures, or retail sales, or jobs, what have you. We start tightening up, and things get as bad as we thought they were, or even worse.

So snap out of it, people! I’m a veteran of the front lines of this singularly monotonous war, and have no glory or medals to show for it. Just a lot of PTSD. Don’t need any more, thanks…

The free market at work in the SC General Assembly

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A couple of weeks ago, I appeared on Cynthia Hardy’s TV show to talk about tort reform. Because I was asked. Which just goes to show, if asked, I will talk about pretty much anything. Seriously, though… I forgot to mention it to y’all at the time, but as far as my comments are concerned, you didn’t miss much. My position on the issue is what it’s been for years — I’m not convinced on caps, and I think punitive damages (that is to say, those damages above and beyond what it takes to make the winning plaintiff whole) should go to the state — just like other punitive fines for criminal offenses. Basically, you would actually punish people who might otherwise write off lesser damages as the cost of doing business, but you remove the incentive for individuals and their attorneys to use the tort system as some sort of lottery.

For more, you can look at The State‘s editorial from earlier this year, and Cindi’s column from last year. I generally agree.

Beyond that, I’ve sort of lost track of the debate this year. I do that sometimes when neither side is pushing the position I would go for, and I have other things to do.

Seems that, according to Wesley Donehue (who works for the Senate Republicans) things are coming to a head today:

Wesley Donehue
Watching the trial lawyers in the SC Senate block tort reform.

36 minutes ago via Twitter for iPhone

Hmmm. Well, I don’t suppose anyone can argue with that. I mean, it’s the free market at work, with each individual selfishly protecting his own economic interests. The Tea Party types and Sanfordistas should be thrilled. And the trial lawyers should certainly be happy.

But come to think of it, not too great for the Chamber of Commerce, or the legislative leadership. Or for the rest of us. But then, unless the legislation has changed considerably since the last time I looked at it, I’m not sure our interests would have been all that well served either way…

Keynes & Hayek throw down, bust some rhymes

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Just got around to viewing this hilarious video, which my son sent me several days ago.

Nothing like economist humor.

By the way, I suspect that the makers of this video are Hayek fans. Nothing against Keynes (I suspect their theories both have their places, depending upon circumstances), but at least in the hip-hop format, Hayek seems to make more sense..

There. So much for y’all who think I’m such a big-spender type…

You and your “filter bubble,” and the impact on society

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This is a fascinating little spoken essay over at TED, and as the site boasts, is indeed an “idea worth spreading.” Actually, a bunch of ideas — ideas and observations I’ve made before — although neatly tied together.

Here are some of the things that it discusses:

  • The idea of the personal “filter bubble,” which is unique to you and yet — and this is critical — not chosen by you. It’s chosen by the algorithms with which you are interacting, based on information that has been gathered about you. I’m not just talking about the obvious ads you see. I’m talking about — to use the example Eli Pariser uses in the video — if you Google “Egypt,” you don’t get the same information that someone else gets when they Google “Egypt.” It’s like you’re in parallel universes.
  • That these algorithms are the things replacing editors like me — the people who made a profession out of filtering the vast amounts of information that is available into something digestible and understandable to a person in the real world with only one set of eyes and 24 hours in the day.
  • That instead of empowering you, though — which is the myth of the Internet, that regular folks have been all liberated from us wicked, manipulating editors controlling what they see and what is published — this new, impersonal mechanism is manipulating you, and doing it in isolation, and in a way that you are unlikely to notice. (As I type that, I start to think more and more of “The Matrix.”) Rather than being more connected to the world, it’s like you are being fed a personalized information flow in your own little solitary confinement cell.
  • There is, in other words, a dark side to the my-this and my-that way that websites are often marketed to you. I’ve always had a visceral, negative response to that stuff, but I always thought it was because of my communitarianism. And the fact that it spelled the death of the mass media in which I made my living, which depended upon a notion of common space, and common concerns. This has given me another reason to be bugged by it.
  • To explore that isolation thing further… back in the 80s, we MSM journalists decried the plethora of specialty magazines that were increasingly popular. People were more and more subscribing to “Left-Handed Gay Bicyclist Journal” rather than publications based in the notion that we’re all in a society together. The Web really exacerbated that tendency. (But that’s not what did in the newspaper industry. What did it in was the business side of that — the fact that businesses started marketing directly to customers and potential customers directly, first through direct mail, then through those little plastic tags on your keychain, then through the Web. That shut out mass media, media aimed at whole communities.) The reason, we kept telling people, that YOU should care was that representative democracy depended upon a sense of shared interests, or at least shared sources of information, to some extent. But at least we thought people were freely choosing this. The fascinating thing about the “filter bubble” is how software is choosing it for you, largely without your full realization.
  • This is like 1915 again. Early in the last century, as people started realizing how important newspapers were to democracy itself, you started to see the development of certain ethics about objectivity and fairness, etc. There started to be an assumption of SOME responsibility by editors, rather than just bulling along being shills for this or that political movement — which is what newspapers had been since the founding of the republic. As imperfect as that system of safeguards was, it was at least something. Now we don’t have it. The Internet is the Wild West. If democracy is to be well served, some sorts of standards also need to emerge on the Web.

Something he doesn’t directly address but I will. What’s going on right now — in a tiny way on this blog, in lots of other ways in thousands of other places — is that people are trying to figure out the new business model for news on the state and local level. The old model has collapsed, but there’s still a strong demand for the information and commentary — as strong as ever. The thing is, the old business model wasn’t related to that demand — newspapers were paid for by advertisers, not readers. I believe in markets enough that I believe a new model for paying for newsgathering in order to meet that demand will emerge. But will it be one that supports an informed electorate, the kind upon which a liberal representative democracy depends?

And by the way, this is not about “that bad Internet.” The message is better summed up in his conclusion:

We really need the internet to be that thing that we all dreamed of it being… and it’s not going to do that, if it leaves us all isolated, in a web of one.

Anyway, that’s enough for me. Y’all are all empowered and everything now. Watch it yourself.

Whew! I feel SO much better…

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No doubt you, too, will sleep more soundly once you read this:

Haley dismisses risk of debt
ceiling disaster

… Haley was asked Sunday on ABC’s “This Week” whether the debt ceiling should be raised.

“Absolutely not,” she said. “We are seeing total chaos in D.C. right now. The very first thing they need to do is make sure that they stop raising the debt.”

However, the federal government finances itself partly by selling debt to investors and other countries through Treasury bills that must be paid back, Obama said in a town hall style meeting shown on CBS’ “Face the Nation.”

“If they thought that we might renege on our IOUs, it could unravel the entire financial system,” he said, and the result would be a recession worse than the last one.

“So we can’t even get close to not raising the debt ceiling,” Obama said.

Asked about the possibility of damaging America’s credibility, Haley said, “Government is notorious for saying the sky is falling.”…

And remember, our gov knows about money stuff like this. She is a way skillful accountant. Just ask her; she’ll tell you.

Also, she never makes mistakes. Ever. We are in such good hands…

And if you read further in that same story, you encounter this:

“I find it silly,” Haley said about talk of her joining a Republican presidential ticket in 2012.

Right again, governor! Nothing sillier… Told you she was awesome.

Of course, there is a downside to this good news:

Haley said she is committed to serving out her term as governor.

“The people of South Carolina took a chance on electing me,” she said. “It is my job and my family’s job to prove to them that they made a good decision.”

Another great opportunity to help Harvest Hope

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Did you see the Steven Mungo op-ed in The State Sunday? In it, he explains why he and his family are such staunch supporters of Harvest Hope Food Bank and its vital mission of feeding the increasing numbers of hungry folks in the Midlands and beyond. And they don’t just do it as a feel-good thing:

We all do this not just because it sounds like a worthwhile cause, but because we believe Harvest Hope gets the job done. It’s efficient and effective.

Harvest Hope is a very lean organization, as I have learned from closely observing it. It actually does better than give a dollar’s worth of aid for a dollar’s donation. If everybody ran their business the way Harvest Hope does, a lot fewer of us would have gotten in trouble when the recession hit.

Don’t know if you heard (even though I was Tweeting it out every day), but the $150,000 match offered by the Mungos was double-matched as of April 1. And that’s a tremendous response by the community. Of course, it gets Harvest Hope less than a fourth of the way to the $2 million it needs.

So it’s great to see that another prominent local business has stepped to the fore to make an offer identical to that of the Mungos:

Harvest Hope Announces New Matching

Campaign by Southeastern Freight Lines

(Columbia) Harvest Hope Food Bank announces the beginning of a new matching campaign sponsored by Southeastern Freight Lines. The generosity of Southeastern Freight Lines will result in a $150,000 contribution to Harvest Hope once the food bank reaches $300,000 in donations.

Southeastern Freight Lines is headquartered in Lexington and has more than 6,600 employees. “Our commitment to employees has enabled the company to build a culture of customer service excellence over our 60-year history, and we are just as committed to the communities we serve,” said Tobin Cassels, president of Southeastern Freight Lines. “We recognize the enormity of Harvest Hope’s mission and want to do our part in making sure hungry families in our community have a safety net to give them hope. We are proud to work with Harvest Hope in an effort to put food on the tables across 20 counties.”

In March Harvest Hope announced that the combination of an increase in service demand and operating costs combined with a decrease in donations had resulted in a financial crisis and they issued an appeal to the public for funding help to raise $2 million.  Almost immediately, Mungo Homes staked a $150,000 matching campaign if Harvest Hope could double that amount in donations.

On Friday, April 1 Harvest Hope’s donations reached $306,293.67 which qualified them for Mungo Home’s $150,000 matching donation. With over $450,000 in donations, Harvest Hope is now almost ¼ of the way toward their $2 million goal.

Harvest Hope wishes to thank Mungo Homes for their continued generosity, and is pleased to announce that Southeastern Freight Lines has stepped up to help them achieve their funding goal. With the completion of Southeastern Freight’s generous matching campaign Harvest Hope will have achieved half of its $2 million dollar funding goal.

About Southeastern Freight Lines

Southeastern Freight Lines, a privately-owned regional less-than-truckload transportation services provider founded in 1950, specializes in next-day service in the Southeast and Southwest and operates 76 service centers in 12 states and Puerto Rico. Southeastern has a network of service partners to ensure transportation services in the remaining 38 states, Canada, the U.S. Virgin Islands and Mexico. Southeastern Freight Lines provides more than 99.35% on-time service in next day lanes. A dedication to service quality and a continuous quality improvement process that began in 1985 has been recognized by more than 300 quality awards received from customers and associations. Southeastern Freight Lines subsidiary, Southeastern Logistics Solutions, provides expedited service and multi-modal transportation services across the nation through strategic capacity partnerships. For more information, please visit www.sefl.com.

For more information about Harvest Hope’s mission to feed the hungry in 20 South Carolina counties, visit www.harvesthope.org.

That was announced last week, and since then $42,405 has been contributed toward the $300,000 needed to match. This is good progress, but we as a community have a long way to go to meet the huge need.

For more background on Harvest Hope’s critical need, read my former post on the subject. And going forward, watch my Twitter feed for updates…

DeMint: Do my will or the U.S. economy gets it!

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Meant to call Robert Ariail today and suggest a cartoon idea to him. It would be based on the classic National Lampoon cover seen at right. Only it would have Jim DeMint holding the pistol to the head of the U.S. economy (some variation on Uncle Sam, perhaps), saying, “If you don’t do my will, the old guy gets it!”

I don’t know if Robert would have done it or not, but it’s the kind of thing I would have been eager to suggest to him in the morning when we worked together. Not that he necessarily would have listened. He probably would have come up with a better idea. But we’d enjoy the brainstorming process…

What brought this on? Oh, this story in the paper this morning:

DeMint to fight debt limit hike

Senator vows to block measure unless future federal deficits banned

WASHINGTON — Sen. Jim DeMint, who has wrought chaos in Congress over earmarks, immigration and health care, is preparing to launch a crusade that would make those fights look tame.

DeMint, a Republican from South Carolina early in his second term, is vowing to block any vote on raising the U.S. debt ceiling unless Congress moves to amend the Constitution by banning future federal deficits.

“I will oppose any attempt to vote to raise the limit on our $14 trillion debt until Congress passes the balanced-budget amendment,” DeMint told McClatchy.

DeMint’s stance puts him on a collision course with Treasury Secretary Timothy Geithner, who is warning congressional leaders of cataclysmic consequences if Congress fails to authorize a higher debt limit by mid-May, when he predicts the current $14.3 trillion ceiling will be reached.

“Defaulting on legal obligations of the United States would lead to sharply higher interest rates and borrowing costs, declining home values and reduced retirement savings for Americans,” Geithner wrote last week in a letter to Senate Majority Leader Harry Reid.

“Default would cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover,” Geithner wrote….

Our junior senator is really something, isn’t he?

I wonder what he’s really thinking. Does he really believe that he WOULD do it, and destroy the U.S. credit rating, pulling the world down with us?

Does he think everybody ELSE believes he would, and will therefore do his will?

Does power mean this much to him?

Hey, Jim, I’m really disturbed about the towering U.S. debt, too. I have been for as long as I can remember, and never more than now. To be racking up this kind of debt when we aren’t in an existential war (and folks, the proportion of GNP going to military activities in Afghanistan, Iraq and Libya is pretty small compared, say, to the kind of national effort required in WWII — or at the height of the Cold War) is pretty scary, and a testament to a lack of political will, courage and wisdom.

But the reason it’s a concern is what it could do to our economy, how it could substantially and materially affect our futures and those of our children and grandchildren. It’s not that it offends us ideologically or something.

And yet, in service of his ideology, he wants to threaten to do something potentially every bit as damaging as out-of-control debt.

Pretty scary.

Welcome to the Energy Party, Mr. Obama (I hope)

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Hope. Change. Energy Party... /2008 file photo

Heard an encouraging report on the radio this morning that I can’t seem to find now online, but there’s this from the WSJ:

WASHINGTON—President Barack Obama, under pressure to respond to rising gas prices, will outline Wednesday a series of initiatives to cut the nation’s reliance on foreign oil, including new initiatives to expand oil production, increase the use of natural gas to power vehicles and increase production of ethanol….

The political heat over energy policy is rising in tandem with the price of gasoline and diesel fuels at filling stations, in a ritual that has become familiar in Washington since the oil price shocks of the mid-1970s. “We’ve been having this conversation for nearly four decades now,” Mr. Obama said during a March 11 news conference. “Every few years, gas prices go up; politicians pull out the same old political playbook, and then nothing changes.”

The White House will cast the new effort, a combination of new ideas and previously announced initiatives, as an effort to deal with the nation’s long-term energy challenge, not just the high gas prices of the moment.

Mr. Obama will put forward an overall goal of reducing oil imports by one third over a decade, with half the reduction from decreasing consumption and half from increasing domestic supply, according to two people briefed by the White House…

And this from the NYT:

WASHINGTON — With gasoline prices rising, oil supplies from the Middle East pinched by political upheaval and growing calls in Congress for expanded domestic oil and gas production, President Obama on Wednesday will set a goal of a one-third reduction in oil imports over the next decade, aides said Tuesday.

The president, in a speech to be delivered at Georgetown University, will say that the United States needs, for geopolitical and economic reasons, to reduce its reliance on imported oil, according to White House officials who provided a preview of the speech on the condition that they not be identified. More than half of the oil burned in the United States today comes from overseas and from Mexico and Canada.

Mr. Obama will propose a mix of measures, none of them new, to help the nation cut down on its thirst for oil. He will point out the nation’s tendency, since the first Arab oil embargo in 1973, to panic when gas prices rise and then fall back into old gas-guzzling habits when they recede.

He will call for a consistent long-term fuel-savings strategy of producing more electric cars, converting trucks to run on natural gas, building new refineries to brew billions of gallons of biofuels and setting new fuel-efficiency standards for vehicles. Congress has been debating these measures for years.

The president will also repeat his assertion that despite the frightening situation at the Fukushima Daiichi reactor complex in Japan, nuclear power will remain an important source of electricity in the United States for decades to come, aides said.

He will respond to members of Congress and oil industry executives who have complained that the administration has choked off domestic oil and gas production by imposing costly new regulations and by blocking exploration on millions of acres of potentially oil-rich tracts both on shore and off.

The administration is not prepared to open new public lands and waters to drilling, officials said, but will use a new set of incentives and penalties to prod industry to develop resources on the lands they already have access to…

Wish I could find the radio report, because it pretty much painted what the president will have to say as being VERY Energy Party. As you may recall I took both Mr. Obama and John McCain to task in 2008 for being unworthy of Energy Party support, however many other virtues the two may have possessed (and as you know, I liked them both — it was the first time ever that both parties nominated my first choices in their respective fields).

But increasingly, Mr. Obama seems to GET IT — that it’s not about keeping gas prices low; it’s not about pleasing the left or the right. It’s about freeing this country from its dependence from foreign oil, for all sorts of economic and geopolitical reasons. Nothing we could do would be more likely to make the nation stronger and healthier.

It’s about being a grownup, and taking the long view.

You pays your money and you takes your choice

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Sorta kinda conservative blogger Andrew Sullivan says “You don’t have to be a flaming Marxist to see that there’s something askew here.” He apparently got the chart from The Daily Kos, which cited “The Christian Left.” (Which I’m guessing is a reference to this group.) The Kos context apparently had something to do with defending public unions in Wisconsin, although the connection makes no sense to me — I guess you have to be a class warrior to get it. The Kos post was later updated to point to the Center for American Progress as the original source. That link, at any rate, cites sources for the numbers.

It was Sullivan’s “Chart of the Day II” on Friday.

Anyway, interesting comparisons. After The Christian Left, Kos, and Sullivan, the link in the chain that brought it to my attention was alert reader Laura Hart, who observed:

“We” chose to enact a bunch of tax breaks, so now “we” have to tighten our belts and make shared sacrifices.  Not that all tax breaks are bad, but can’t we be honest about what is happening?  A similar chart could be compiled for South Carolina.

Sounds like an interesting experiment. Anyone want to take that on — someone, that is, more skilled with spreadsheets and such than I am?

Harvest Hope off to a good start, with a long way to go

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Just an update on Harvest Hope Food Bank’s urgent appeal for operating funds, which I told you about back here.

Since that Tuesday press conference, which ADCO was honored to help with, the media reaction has been gratifying. All four local commercial TV stations showed up and reported — some of them doing followups. As for print — Harvest Hope’s appeal got the lede position on the front page of The State Wednesday, and on Thursday The Greenville News (Harvest Hope also has a significant presence in Greenville) played the story as its front-page centerpiece.

There will be follow-up coverage. But going forward, the ball is in the court of potential donors — some of whom have responded already to the initial repeal to double-match the generous $150,000 match pledge from Mungo Homes.

As of today, the cash raised since Tuesday was $37,477. And I was gratified to hear from Harvest Hope staffer Bryan Rurey that:

We also had an online gift that directly referenced Brad’s Blog!

Cool. Now which one a you crazy lugs did that? Whoever it was, good on you.

Now 37 grand is a great start, but just a start toward the $2 million that’s needed by June. In fact, it’s just a start toward double-matching the Mungo grant. So tell everyone you know, we need this thing to start snowballing.

To recap the salient points:

Each year since the economic crisis began, the need has been greater than the year before. Harvest Hope is now feeding 91 percent more families than it did in 2008.

Fixed costs, aside from food and capital needs, have risen dramatically. It now costs $3,100 a DAY to fuel the vehicles that distribute the food, and that’s only going to go up.

As the need and costs have risen, cash donation have dropped over the last few months. Some regular donors, people who used to give monthly, have even told Harvest Hope that they are just a step away from having to avail themselves of the charity’s services.

For the first time ever, the “giving season” donations that tend to flow in from September to December were not enough to pay off the line of credit that carries HH through the lean spring and summer. Always in the past, that operating debt was paid off by Jan. 1. At the start of this year, the organization was a million dollars in the hole — this despite operational expense cutbacks.

All of that adds up to an urgent need for $2 million to fill that hole, and to cover the expected increase in operating expenses for the next few months.

This is not just Harvest Hope’s problem; it’s a significant challenge to the 22 counties it serves. Because other entities that feed the hungry in those communities — churches, secular nonprofits, what have you, 450 member agencies in all — depend on Harvest Hope to supply the food. This, folks, is South Carolina’s version of an organization that is “too big to fail.”

Finally, I’ll reiterate the political angle. We hear a lot of talk from the dominant political faction in South Carolina about relying on government less and the private sector more when it comes to providing a safety net for the “deserving poor.” Well, folks, in this  part of South Carolina, Harvest Hope IS the private sector’s means of feeding the hungry.

Oh, and at Harvest Hope you don’t find the “culture of dependency” problem that certain politicians like to go on about. Typically, if Harvest Hope is able to take care of a family’s emergency food needs for three months running, it gets them through the crisis so they can get back on their feet. And only 1 percent of clients are on TANF (what remains of “welfare as we knew it”) benefits.

So what are you waiting for? Time to step up, and give. Here’s how:

  • Visit the donor page at www.harvesthope.org.
  • If you have received a mailing from Harvest Hope, please use the convenient reply envelope that came with it.
  • Send a check to Harvest Hope, 2220 Shop Road, Columbia, SC  29201.