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Pelosi is preparing a $500 billion stimulus package. Krugman recommends $600 billion. "Too much of a good thing is only prudent.".
NOTE Heh. Thought that was a Mae West allusion.
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Per capita health care spending (2007):
United States: $7290
Switzerland: $4417
France: $3601
United Kingdom: $2992
Average of OECD developed nations: $2964
Italy: $2686
Japan: $2581
-- Bob Somerby
The text of HR676 (Medicare For All) as PDF (30 pages). The FAQ. Compare HR3200 with HR676.
Medicare for All would save $350 billion a year (study in New England Journal of Medicine).
In 2003, a young Illinois state senator named Barack Obama told an AFL-CIO meeting, "I am a proponent of a single-payer universal healthcare program*." -- Bill Moyers.
* Medicare For All.
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Noun. A Free Republic zealot, often distinguished by an unnatural obsession with the Clenis (q.v.).Usage example: Gosh, that comments section is really infested by freepers.Thanks to alert readers Doug Gillet and Xan.
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Krugman and yet Stiglitz:
Stiglitz and Krugman.
The guys who have been right since forever: Krugman, Roubini, Stiglitz, Galbraith: are in substantial agreement over this.
Does being right mean nothing? Is this science truly dismal beyond recovery?
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We can't afford not to have single-payer!
How much time do we have?
I keep asking myself, "How much of a window of opportunity do we have?" I mean, the Congress fucked up the first bailout and undermined the bailouts afterward so when are they going to do it right? Do we even have the luxury of them heading in the right direction but not doing enough? I sure as hell don't think so, but I hope I'm just a horrible pessimist.
I read Stiglitz and Krugman (in addition to this great piece at RGE) and I'm just wondering: how much time we've got (if at all) and do we even have the right people in place?
Davidson voices my concern. If a stimulus is necessary
we should have been doing this yesterday. Waiting for the Obama administration to take the reins may cause too much damage.
Also, not to be a negative Nancy, but where the heck are we on the use of bailout monies? Are the credit markets still frozen? I'll try to find something on this for those that are interested.
I love this job!
Bailout progress
Paulson spent $350b of the $700b, and said yesterday he's going to put the remainder to work soon (including on mortgage workouts).
The credit markets are still extremely cold but not completely frozen as they were in mid-October. The next step is probably the Fed coming in and buying treasuries to drive their yield down closer to around 2% (2.7% now) which will hopefully lower other interest rates (like on mortgages) and spur more lending.
Doesn't Keynesian econ theory only work...
if there are excesses of both labor and capital? I read Keynes's work way back when---well, cuneiform was the hot new alphabet back then---and I just can't remember. Yes, yes, google is my friend, but why would I want to share an informed opinion when I can share an uninformed one? There's fame and fortune to be made in being publicly ignorant. Just ask Chris Matthews.
Anyway, isn't the problem here that excess capital is going to cover the CDS that _no one_ knows how to value? And if someone were to make a wild-ass guess at the massive debt covered by these instruments, the number is so large that it sucks up all excess capital, making Keynes idea half-broke to begin with?
Also, we may end up with excess of unemployed, but is that an excess of labor as Keynes meant it? I ask because there may be a fundamental difference in the diversity of Keynes's theoretical excess labor population and our real one regarding skills, ages, geographical locations, and willingness to do certain jobs, and I just don't know.
The window may or may not be closing fast---depends on whether the Big Three remain on their feet, I think. I read that the automakers vendors have had their insurance messed with, which signals to me, anyway, that some of the finance people who underwrite those companies are betting on a failure, or at least a Big Three survival that doesn't have much of a payoff to make the risk worth it. This is not good unless you want to see the UAW destroyed once and for all and don't give a damn for what that means to the rest of us.
I think amberglow wrote fairly recently that even if GM, for example, goes TU, the factories and raw materials will still be there and some US company will start making cars again in the GM plants. But I wonder if it isn't more likely that the physical facilities will be flogged off to companies like Toyota and that will be the end of US car makers and parts manufacturers. FTR, I haven't checked Toyota's cash position or anything, so I don't know if the company is in a position to make a play. Though the tooling problems from imperial to metric will be such a financial nightmare, it may not be worth trying to get any of these factories running again.
As far as timelines---gah. We need to tread carefully the next six to twenty-four months IMHO, a longer span than a lot of people think. And January-June 2009 will have much bad news. A European bank, probably a French one, will stop all of its CDS-related payments (three big Euro banks have massive expose with regard to CDS and by massive, read both ass cheeks and other parts are in danger of sunburn) after the first of the year. A second round of foreclosures in the US may occur in February. More banks may fail, even those with solid balance sheets because banks (Goldman Sachs) and other entities (AIG) with political connections need those assets like zombies need brains, so there will be massive consolidation at the top with the help of the Fed. Get used to the phrase, "The Money Trust."
It doesn't matter if interest rates drop to spur borrowing because banks don't want to lend to each other for fear of a zombie attack on the borrower bank. And because the longer you can hold your money and make the other banks sweat and squirm, the more money you can make---greed never goes away. This greater squirming also puts pressure on the gov't to continue shoveling money, meaning certain people will see opportunities to heap up greater wealth while the rest of us scramble.
Other than letting the zombie institutions go bankrupt---hell, they're already insolvent and a bank that is insolvent is no longer a bank---I don't see much of a solution. I suppose just evreyone counting to three and saying each and every CDS isn't worth the electrons it's made up of, but I doubt that will happen. I'd like to see UHC for a variety of reasons including the easing of the financial burden on small businesses and regular people, but find it more unlikely to happen in the next 4-8 years than ever.
HOLC or its equivalent remains a good idea because it doesn't matter who you make your mortgage payment to---your debt will be picked up even if your lender goes TU. This has always struck me as a useful idea simply because it eases pain where the greatest pain exists (at the bottom), has real property as collateral (unlike those CDS, which are almost as real as unicorns), and spurs cash flow, which is the key problem here. Seriously, haven't you ever re-negotiated a loan as a lender? It ain't fun, but getting some instead of none at least means you'll get some money back and maybe even all of it plus the return should your deadbeat nephew ever get a job. Or something like that.
Some public works and infrastructure projects should help in the short term, but I don't know what form this should take, I remain leery of deficit spending when public money is either going to war or going to zombies (money always costs money), the projects won't happen quickly, and there is a dearth of skilled people to actually do the jobs.
Regardless of those problems, what form should the management of these projects take? I read an econ article studying the effects of public works as relief versus public works as infrastructure investment during the Depression that was pretty interesting. Basically, it said if the gov't pays workers directly to dig ditches or lay tar, the wages were subsistence level, but if the gov't handed money to private contractors with which to build infrastructure, wages skyrocketed. Sort of like U.S. Army wages versus mercenary wages right now.
Can I find the link? Noooo. I never thought I'd re-visit it. But if contracting the work means greater wages, it also means that the usual suspects will see greater gain for themselves by acting as the middlemen. And then those same people sitting on all that cash will seek another industry in which to blow another bubble* to roil the economy and bring about the same cycle, only now we'll have less money because the zombies have eaten it and crapped it out into other economies, like China's, because they're borrowing from them and have to service that debt. Eroding wages, no credit, and less security regarding healthcare and retirement may also mean regular folks invest in speculative bubbles to rebuild lost wealth (and quite possibly in a panic to do so), only to be caught, again, getting the shitty end of the stick.
Thank the flying spaghetti monster it's cocktail hour somewhere.
*Probaby a green-tinged bubble. herbie and I really ought to fight this out on a separate thread but I have basic questions regarding the real value of a green bubble: Did the housing bubble bring us better houses? No. What evidence do we have that a green bubble, whose sole purpose is to use the efforts of the industry to make obscene profit, will bring us better energy, products, food, etc.? None. So how can a green bubble be a good thing? And saying "Because we have to do something!" is not a responsible answer.
And jeebus crispy I can go on and on. Obviously I've been thinking about this a lot. I even tried a separate post but I am having difficulty keeping all these thoughts on track---one big reason why I am responding at such length. I apologze for being unable to stop typing.
Check Krugman's blog
here.
I'm afraid that after reading bringiton's post about America's Investment deficit, I cannot summon up the energy to read your comment - sorry - so I don't know if he specifically addresses any of your questions, but he's been writing a lot recently about Keynes and why his thinking applies now, and therefore Krugman's had to spell out what Keynes actually said vs. what people said he said/didn't say.
I hope this helps, and I apologize for being lazy (i.e. overworked :>)
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We can't afford not to have single-payer!
The Krug on deficit spending
in his NY Times column. (which for some reason I didn't read until now)
I believe he addresses your questions succinctly: why deficit spending of certain types is called for in the economic situation we have before us now, when the Fed has cut interest rates as low as possible and
He goes on to detail what effect scaling back the proposed stimulus, excuse me, recovery plan, might have on interest rates and consequently on private investment - namely, no effect or, worse, even a depression of private investment.
then:
This is exactly what Roubini is talking about when he talks about "increasing aggregate demand". (We're demand-siders!)
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We can't afford not to have single-payer!
Stupid double-post
Sorry.
My concern is about surplus labor and capital, not deficits
My two big questions are in regards to Keynes, not Krugman, and surplus capital and surplus labor, not deficit spending. As I recall from reading his General Theory (and the commentaries) is that Keynes's theories would require both for stimulus to work.
My recollection may be wrong (most likely). The commentaries I read could be wrong. Or Keynes could be wrong. Or maybe we're in a different situation that Keynes's theories just don't cover.
I agree with the idea that when interest rates are next to zero but the economy still isn't moving, you've got problems with demand---no one wants to buy. They say that during Japan's last econ turmoil, the only thing selling was safes. Ha ha---not so funny right now. No one wanted to buy anything because they were uncertain about what would happen to their economy and remaining liquid was paramount.
I also agree that counterintuitively, lower wages does not mean more people get jobs---higher wages mean more customers, which means more demand, which means the engine finally starts running. Hell, Henry Ford believed that and he was right.
My issues are with surplus capital---if we spend it all to service debt that has no end (the CDS black hole), then how do we get more? You can say that we'll just print more, but then we risk the kind of inflation that requires a wheelbarrow to carry your wallet. You can say we'll raise productivity, but on what? The US has a problem in that we don't actually make many things that bring in hard currency to our economy. Yes, we can build up our infrastructure and develop energy solutions to replace petroleum, but in what ways do those efforts bring in cash from other than here?
The question of surplus labor is a real issue for me. The 190,000 people laid off from the financial sector---can they do anything else? And more importantly, will they? Will a 52-year-old MBA with a heart condition be able to work building roads? Oh, we'll put him in management---to manage what, exactly? To manage finance? Well, he's already shown he sucks at that, so why would you?
Do (and will) we actually have a surplus of labor as Keynes meant it or will we have unemployed and unemployable people without the skills necessary to first, work jobs on the stimulus side of the economy and work in fields to bring in hard currency by goods and services we can export?
And Krugman may be completely right about deficit spending---that it's better to spend now and once everything is going economically, we'll pay down the deficit. But he may also be wrong. We're looking at extreme debt, so much money we'll be borrowing at maximum rates, perhaps so high we can only service the debt and nothing else. The only solution is to inflate our way out of it. Or default. Or it may not be worth worrying about---we become monthly payment nation. Only that makes us more vulnerable to crises we should be able to weather, things like Katrina, only even competent politicians simply can't ask to borrow emergency funds because we're tapped out.
Does this much debt also make us vulnerable even the next bubble? I'd say, yes, of course. We become less resilient and more dependent on those willing to lend us money. It may also mean that even without crises or economic turmoil, we may act against our own interests or all-too-shredded national ideals because we owe.
Conversely, if we get a nation like China to wrap it's economy and economic future with ours by lending us so much, they may not be willing to see our economy fail because we'll take them down with us. J.P. Morgan and Great Britain during WW I. Morgan lent the Brits the equivalent of 7% of their GDP, so much money that we had to go to war or face another disaster in our own economy.
But I have yet to see any kind of solution.
Ooops, I'm late for a meeting. Thanks for the exchange. I appreciate your expense of energy and patience.
Not Everyone Thinks Keynes Would Want a Stimulus
So I think you are asking good questions, ohio. I'd like to see more debate about whether a stimulus package would work and what kind it would take (not all stimulus packages are good, see the tax cut).
Yves Smith has been critical about whether a stimulus package will solve the problems this time round given that we're now a consumer society and not a production one. She thinks it may be China that needs the stimulus because it's basically where the US was in the 1930s.
I don't know and am out of my depth on this, but I do think any policy debate has to include whether or not a stimulus is right for these economic times, as opposed to the Great Depression and I tend to agree with Smith that so much policy consensus (without debate) can be dangerous.
Anyway, for those interested, here's her latest post, which discusses concerns about whether a stimulus will work, including a lengthy discussion about the concerns raised by Martin Wolf.
The main concern I have about all of it - bailout, TARP, proposed stimulus - is that there doesn't seem to be any coherent plan and we seem to lurch from one thing to the next. Smith makes this point in a must read take down of Paulson's suggestion that he may ask for the other $350 billion. But more importantly, this issue has been raised by Elizabeth Warren in her role on the oversight board.
Both of the links in the last paragraph - on Paulson and Warren - deserve posts of their own, but I don't have the time to do it.
NOTE - I'm not saying a stimulus is a bad idea, just that I'd like to see some actual debate this time instead of NOW! NOW! NOW! because that hasn't led to good results. Moreover, even if a stimulus isn't what we need to solve the current economic difficulties, I'd like to see the U.S. - both the government and its people - commit to an investment in its people through refocusing its spending to promote better education (vocational as well as other kinds), infrastructure (particularly renewable energy), healthcare, and an expansion of our productions base (rather than just expanding our credit consumption base).
"Do what you feel in your heart to be right -- for you'll be criticized anyway. You'll be damned if you do, and damned if you don't. " - Eleanor Roosevelt
Stirling's Takedown of Bernanke & Buiter on Fed's Secretiveness
While I'm linking to things I don't have time to post on, here's one more - Stirling Newberry's takedown of Bernanke's speech. Here's a quote for flavor:
Okay, two more, here's also a guest post at naked capitalism on Buiter's takedown of Bernanke's lack of transparency in te Fed process. Sample quote:
"Do what you feel in your heart to be right -- for you'll be criticized anyway. You'll be damned if you do, and damned if you don't. " - Eleanor Roosevelt
Linky goodness is yummy, BDB
I will check the links. And thanks.
(What they link to won't make me running screaming out the door, will they? I mean, I read bruce dixon's latest and had to grab my chair, so I'm right on the edge already.)
No Use Running Screaming Out the Door, ohio
the news does not get better when you go outside.
But I don't think most of it will make you scream. A debate about whether a stimulus (and what kind of stimulus) will help is a good thing. Similarly, it's helpful to have an explanation of why Bernanke and the Fed's secretiveness is not only bad government, it's bad economics.
"Do what you feel in your heart to be right -- for you'll be criticized anyway. You'll be damned if you do, and damned if you don't. " - Eleanor Roosevelt
Lack of transparency is terrible business
Good for thieving and fraud, though.
The stabbing pain in my right eye is getting worse now. I get that when I am agitated by truthfulness. It started when I read bruce dixon's latest---and BTW, thanks a lot, bruce. Do you really think I want honesty and clarity? Jeebus Crispy! No! I want ponies and chocolate frosted pop tarts, or at least a link to a youtube showing someone's pants on fire.* But no. All I get is reasoned rage, quality writing, sourcing, and intelligence. What a rook.
Agree, BD, that honest discussion about all of this is necessary and very difficult. I'm learning new vocabulary words like "rentier," which does not mean a domicile that appears to ne an apporpiate place to rent, as in "That apartmernt is rentier than that refrigerator box." And "maximum seigniorage," which is not the limit on the amount of signs in Spanish you can have outside of your place of business.
I am a lifelong learner. Or a long-eared leaner. I forget.
*Wouldn't it be cool if liars' pantses really did catch on fire? It would make things so much easier.
Jon Corzine on local TV today said Lincoln Tunnel was FDR PWA
stimulus program project. Which I had not known. Something that vital to the transportation flow in the Tri-State area and there's no huge plaque mentioning this?
Per Wiki:
Damn!
Anyone remember Bob Dole telling the nation that government spending never did anything important for the economy? I remember yelling at the TV that Milwaukee city and county was filled with beautiful parks, all there through the work programs of the New Deal.