Stirling Newberry's blog

This reminds me

Mon, 17 Nov 2008 17:06:49 -0800

It's still a man's world out there in sports.

Huckabee advocates criminal acitivity for Chambliss

Mon, 17 Nov 2008 05:31:49 -0800

Republican election tactics:

Huckabee urged the crowd to take friends and relatives to the polls. Turnout will be key in the Dec. 2 race, which occurs just after the Thanksgiving holiday.

“If they’re voting for Saxby, get them to the polls,” Huckabee said. “If they’re not, let the air out of their tires.”

Of course, he was joking.

Right?

Watchmen Watch

Sun, 16 Nov 2008 10:01:06 -0800

The hype wave on this film is growing quickly, with posters being released. For anyone who came of age reading comic books in the 1980's this is the one that has to be done right or not at all. The original screenplay draft that was circulating 15 years ago rewrote the ending, and changed so many elements as to be disowned by fans even before it got going. Alan Moore hates Hollywood for what they've done with his graphic novels. There's a law suit over the rights to the film.

It's certainly not going to have reached the screen without drama.

Video after the jump

How Keynesian Stimulus Works

Sat, 15 Nov 2008 07:38:09 -0800

One of the most important ideas of 20th century economics was Keynes demonstration that Say's Law does not hold for whole economies. Say's law argued that economies will right themselves - tend to equilibrium - at full production. Keynes showed that will economies tend to equilibrium, they don't tend to equilibrium at what is called a "Pareto Optimal" state. That is the point where there are no "win-win" situations left, in specific terms no one's utility can be increased without an exactly equal decrease in someone else's utility. Sometimes the ship of an economy rights itself, by sinking to the bottom.

This conclusion, that economies can stabilize after a shock at a lower level of production was his reason for calling for "priming the pump" stimulus: spending which would encourage people not to defer purchases, or businesses not to defer investment based on fears about the economy. This later leads to General Equilibrium Theory of Kenneth Arrow. The idea is this: the market depends on people making decisions based on obvious and present information, and transmitting the results of that decision by purchasing or not purchasing. This will be reflected in price, and since price information travels, if not immediately, then faster than anything else, the whole of production and consumption will move to a point where everything that people can produce, will be sold, and everything people want to buy can be obtained. However, if people worry about inflation, they will buy earlier than they want, and if they worry about deflation they will buy later. This means the job of government is to make it so that people balance the risks to growth and inflation, and, on net, buy when they want to buy, and save when they want to save.

A deflationary spiral begins with the expectation of future earnings drops, and people both defer buying and businesses defer investing. In Keynesian terms the economy's liquidity preference rises, and becomes a vicious circle. People want to be liquid, because they see everyone else wanting to be liquid. Money disappears under the mattress of the economy, the velocity of money drops. Keynes observed that "one man's expenditure is another man's income." That means if everyone stops buying, businesses don't expand capacity, but wait for capacity to fall in price so they can buy it cheaply, and that means fewer jobs, which means less income, which means less buying, which means even more incentive for businesses to wait for cheaper labor and production. Prices never fall enough to get buying going again.

Malthus hypothesized that eventually holders of rent would begin spending. Keynesians countered that holders of rent will not buy production, but will instead buy rents, or buy unproductive labor. That is, they will buy things like paintings and art objects and land, because these things are rents, or buy, and put out of production, competitors. Or they will buy servants and other forms of labor which do not increase the wealth of the society. Thus, sayeth the Keynesians, government, as the ultimate rent holder, is a better "buyer of last resort" than the wealthy holders of rents. Not to put too fine a point on it, the Malthusian solution was tried in the 1930's - by Nazi Germany, Fascist Italy, and Militarist Japan. The holders of rent in those societies got together and began spending when labor got cheap enough. On weapons.

So how does this work? How can you "just print money?" Well you can't. But there's a reason why you can run the printing presses and it works here. Let me explain.

Obama wants Joe to stay in the Democratic Caucus

Mon, 10 Nov 2008 14:57:36 -0800

I hope he got his money's worth.

Bigger, probably. Better?

Mon, 10 Nov 2008 10:10:41 -0800

Free spending doesn't mean liberal. In the last 8 years we have had a free spending administration, with record growth in the size of real federal expenditures, both foreign and domestic. Liberality doesn't make a liberal. Conservatives run back to small government and fiscal responsibility when out of power, but when in power, they have opened the taps. George W. Bush is poised to leave the debt to GDP ratio at the highest level in the US since Harry S. Truman was dealing with the debt overhang from the Second World War.

Peter Bernstein: Make the poor pay

Sun, 09 Nov 2008 09:31:45 -0800

Make the buggers pay back every cent. One of the most important driving factors of bad policy into the Great Depression, was the drive to force people to pay back loans taken with cheap money, in the new much more expensive deflated money. Perhaps people would get additional time, but in the end, Hoover's mantra was "they hired the money, didn't they?" Hooverism is alive and well.

Home prices as consumption must fall to a sustainable fraction of GDP, this means after shifting approximately 5% of GDP from internal consumption to exports. Or, roughly, a further 35% fall in the value of rent of equivalent structure. The only way to hold home prices up, is to increase their value as capital. To this end Freddie and Fannie should change mortgage regulations such that communities that have ordinances that prevent home based businesses be listed as "non-conforming." One of the largest projects that we face is turning homes from consumption to capital. That means universal fibre with unlimited bandwidth, that means people working from home 2 days a week, and that means more and more home based work.

Without this, home prices can be propped up artificially, but this only creates a transfer of wealth from the young, who must either pay higher home prices, or higher rents. It also doesn't work because artificially high home prices mean that there is still a huge incentive by developers to build new homes. The government ends up holding homes that can't sell, while developers build new ones. Localities will want the "jobs" and tax base.

Incentives matter, and the market for homes has to settle to the level where it clears. This of course is exactly what the current situation fears, because of all the paper money pegged to fake home values.
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Mankiw: Do as I say, not as I did

Sun, 09 Nov 2008 09:26:09 -0800

The economist who presided over the most disastrous series of policy decisions in the post-war era, worse even than Nixon's, is now telling Obama to be Bush-lite. After generating an ocean of red ink on the budget, Mankiw has the gall to say:

PAY ATTENTION TO BUDGET CONSTRAINTS The nation faces a long-term imbalance between government spending and tax revenue. The fundamental problem is that the federal government has promised the elderly more benefits than the tax system can support.

Just like you did, eh Prof. Mankiw?

Business Week: Another No Strings Bail out coming

Sat, 08 Nov 2008 22:51:05 -0800

Big three to get no hearings, no strings bail out.

Looks like the Bush Administration and the Harry Met Nancy Congress have agreed that the people who need to be saved, are the ones who led us into this mess. Clearly the operative economic theory is that poor people should be punished severely for buying what people sold at the prices that they were offered.

Michael Lind Plagiarizes my work.

Fri, 07 Nov 2008 07:04:41 -0800

The 72 year cycle of American politics was identified by many, including Karl Rove. It was Bruce Ackerman, in the late 1980's who gave it a legal and politically substantive argument. A fact I've pointed out to many people many times. My own contribution came in 2001, when I penned a long essay entitled "The Fourth Republic," which is not presently on the web, but was for years one of the top links on the search term "Fourth Republic." In 2005 I penned a piece on how Karl Rove was trying to establish a reactionary republic and specifically cited how it was being done, and pointed to Social Security. This was not an obscure diary that faded, but one of the most cited and linked post from the Daily Kos that year. It predicted that beginning in 2006 at the latest we would slide into a hard landing, and that at the moment of full blown recession, the Republicans would attempt to enforce their preferred financial arrangements permanently. That is to say, something like the bail out bill was predicted by my Fourth Republic thesis, specifically, in 2005, and there was a prediction of currency crisis as the culminating shifting point, in 2001. The complete absence of this in Lind's piece is inexcusable.

He has lifted my work, or had a negligent ignorance of it that shows a willful inattention to detail. It is either that he knew, which is possible, or that he did not care to research, which is likely. In either case it would be regarded as plagiarism in the academic sense.

Fed Cracks Down on Mortgage Lenders

Thu, 06 Nov 2008 12:09:50 -0800

Mortgage Lion in Alabama is told to clean up it's act. This cease and desist is just about a catalog of mismanagement. Basically, the Fed is saying that CapitalSouth Bancorp needs to write off all bad loans, not loan any more money to people who have bad loans, review everyone in management at Mortgage Lion, get into compliance with how they make loans, get sufficient capital, report which assets are dead, and puts the board of directors on the hook for reporting back to the Fed. Some of the time tables, like 10 days to dump the bad loans, are more or less a death sentence, because it is highly likely that this bank won't be able to meet FDIC minimums given their balance sheet.

For Equal Marriage

Thu, 06 Nov 2008 04:07:39 -0800

We all have our personal narratives. And almost all of us come to a choking day, a day when we identify ourselves by a word that is not acceptable to those around us. One friend of mine realized she was an artist, in a family that wanted her to have a professional career. Another friend of mine realized that he was a soldier, in a family that did not approve of violence of any kind. One very common moment surrounds sexual identity. There are many sexual identities that do not get approval from parents, and one of these is being homosexual. Orientation towards members of the same gender is part of the human condition. It does not damage others, it is not like bloodlust, or revenge, or even jealous rage, which are also part of the human condition.

When a person reaches this moment of self-identity, they need to repeat the word over and over again. This is because they need to remove the sting from it, and make it normal in their minds. The personal narrative requires it. The inner balance requires that the shock, strangeness, and incommensurability of it be worn down, until the word is as smooth as a polished stone. The process ends when a person can say, to themselves, alone, or with any others, who they are. When saying "I am gay" is a statement of neutral fact, like ones address.

However, politics is not personal narrative. We are not going to get equal rights by saying "Gay Marriage" as often as possible. Quite the reverse: each time we say that this is about "gay marriage" we lose more support. This is about equal marriage. This is a campaign to equalize marriage laws for a fraction of the human population, who have, because of fear, superstition, and foolish tradition, been excluded from it. This means that while many activists need to say for their inner narrative the word "gay" over and over again, because they, and the people around them, need to hear it, for the law, as is often the case with the law, we must use neutral words which convey the facts and the legal frame. There are no gay marriages, only marriages. Marriage in most of America, is unequal, it must be made equal. Within this civil framework, the longer and slower work of culture can be done. As people see men who are married to each other, and women who are married to each other, as couples, the strangeness and shock of what this means will wear away.

We don't need Americans to come to terms with their inner homophobia first, but to remove the legal barriers to full participation. Civil rights were finally extended to African-Americans starting in the 1950's. It took court cases, a constitutional amendment, and a landmark law. Then it took more fighting still. America still has not come to terms with its inner demons on race, and could not until the laws were passed.
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It's nice to be right sometimes

Wed, 05 Nov 2008 12:18:20 -0800

My numbers? I haven't been doing them closely, but a run through the spreadsheets shows Obama at 364: Gore plus VA, NC, OH, IN, NH, NV - and McCain therefore at 174. I think there is more upside for Obama, and that Florida is the weakest link in that list. I would not be surprised if Obama carries AZ. I would be surprised if he carries MO.

Still waiting for NC to be official official, which would be 364 exactly.

Sachs lays it on the line

Wed, 05 Nov 2008 10:25:28 -0800

It doesn't get any clearer than this.

While he is nice to Obama, he is basically saying that any attempt to continue the Reaganite sprawlconomy leads to catastrophe.

He's right.

Minnesota is recounting, Al Franken needs your help.

Wed, 05 Nov 2008 07:20:35 -0800

Statement from Franken on the recount.

This race is still live.

AP Retracts calling race for Coleman margin is only a few hundred votes.

he Secretary of State's office reports that all but nine of Minnesota's 4,130 precincts have reported in. And this race is too close to call, with a margin of just about 1100 votes out of 2.9 million cast. That's four one-hundredths of one percent of the vote. And we expect that when those final nine precincts are counted this morning, that 1100-vote margin will shrink into the hundreds.