Marvel character Revanche
Hmmmm...guess not.

rdan

A reader was wondering about our loyal following of "conservative" commenters. That neo-conservatism was not conservativism was suggested in comments to a post on PNAC (Bruce Webb) by a reader objecting to the perceived characterization.

Link to interview on NPR with author Sam Tanenhaus. In his latest book, The Death of Conservatism, an expansion on his January article in The New Republic.... (changed to link as embed was slowing things down by report)
This is an interesting interview. It is not tongue in cheek. Ultimately I am not either, but...

1. So the role of government as a positive force is old fashioned conservatism, but government is carefully watched and to be kept small.

2. Concern for the ordinary citizens' welfare is allowed and actually encouraged. (Is this in opposition to corporate welfare?).

For comments, remember we need names to call each other that accurately reflect thoughtful consideration, which exclude gross generalities.. (PS. Comments still slightly moderated.)  Links encouraged before posting.

Ken Houghton notes that the first thing anyone learns from Pietra Rivoli's The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade is how pernicious the U.S. subsidy of its cotton industry is.* Now the WTO has discovered the obvious:

American goods will face [$294.7] million in annual sanctions as a result of the United States’ failure to eliminate illegal subsidies to domestic cotton growers, the World Trade Organization ruled Monday.

The NYT attempts to spin this as a loss for the complainants:

The result was disappointing for Brazil, which has won a series of rulings against the United States over the last seven years. The Latin American country had sought to target American goods and drug patents for $2.5 billion worth of economic retaliation.

But gets to the order-of-magnitude-other-way-part a few paragraphs later:

Washington had argued that the award should not exceed $30 million.

So no one is happy, but it's a start:

“The subsidies paid by the United States to its 25,000 cotton farmers exceed the entire gross national income of virtually every cotton-exporting country in West and Central Africa,” Mr. McGivern said. “Despite several rounds of litigation and ministerial-level negotiations, this issue remains unresolved.”

...

The cotton case was the first agricultural case started by a developing country in the group’s history.

The issue of generic drugs and trade is dealt with in this Health Affairs piece (of which maybe more later).

Meanwhile, those interested in a certain absurd claim previous dealt with by Susan of Texas (see here and here, for instance) and others, check out this press release from Health Affairs from last week. Good thing those countries don't have a system that supports pharmaceutical innovation and investment better than the U.S. one.

Robert Waldmann

Joe Strawman argues that the solution to global warming is clean coal technology and in particular sequestering C02 from exhaust from coal fired power plants. Therefore cap and trade is a bad policy, because technology will solve anything soon.

In fact, if "clean coal" is not a contradiction in terms, the case for cap and trade (or a carbon tax) starting right now, is vastly strengthened as I argue after the jump.



A small tax on carbon or cap and trade with caps so high that rights to emit carbon are cheap will have a large quick effect on C02 emissions. Electric power companies have coal fired plants and natural gas fired plants, because natural gas fired plants are cheaper and coal is cheaper. The plants working all the time are coal fired. The natural gas fired plants work only during hours of peak demand.

A modest tax on carbon or fairly cheap carbon emission rights will cause power companies to switch this order of use so natural gas fired plants work all the time and coal fired plants work only during hours of peak demand.

The question is whether this will reduce C02 emissions or just delay them a few years. Natural gas supplies are limited. I guess that a few years of burning natural gas for electricity with reduce them to the point that the price will rise to whatever level required to make burning natural gas for electricity not competitive (even given cap and trade). My belief is that, since natural gas is very useful for home heating and making plastic and fertilizer, it won't be used to make electricity for very long.

However, if clean coal technology is possible, delaying coal burning is almost as good as preventing it forever. Clean coal technology is definitely not installed now. If, indeed, it will be installed in a few years, it is critically important to discourage the burning of coal now -- to encourage the use of stop gap measures to put off the burning until coal can be burned cleanly.

Thus if one believes that clean coal technology is feasible and just around the corner then one should rationally be more enthusiastic about cap and trade than if one doesn't.

by Bruce Webb

Big Banks Repay: 15% interest earned

The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.

These early returns are by no means a full accounting of the huge financial rescue undertaken by the federal government last year to stabilize teetering banks and other companies.

The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.

But the mere hint of bailout profits for the nearly year-old Troubled Asset Relief Program has been received as a welcome surprise. It has also spurred hopes that the government could soon get out of the banking business

People who are wringing their hands at Barovksy's $37 trillion dollar in guarantees outstanding figure need to get a grip. Much of that money has not been extended and at this stage probably won't be, and much that has is backed by assets with real if undeterminable value. (The notion that something has exactly the value of its current price in the market is just a byproduct of EMH magical thinking). More:

American taxpayers could still collect additional profits on their investments in two other big banks that have repaid their preferred stock but not their warrants: JPMorgan Chase and Capital One. They are expected to yield over $3.1 billion in gains for the Treasury in the next month or so, although the full tally will depend on how much they will pay to buy back their warrants.

And the government is owed about $6.2 billion in interest payments from banks that have not yet repaid their federal money.

But all the profits taxpayers have won could still be wiped out by two deeply troubled institutions. Both Citigroup and Bank of America are still holding mortgages and other loans that were once worth billions of dollars but whose revised values are uncertain. If they prove “toxic” because they cannot attract buyers, they could leave large holes in the banks’ balance sheets.

Neither bank is ready to repay its bailout money anytime soon, even though the banks’ stock prices have surged in the last month, leaving the government sitting on paper profits of about $18 billion between them.

Given that just about a third of our record budget deficit is the direct result of outlays from TARP, the fact that we are getting much of that money back with double digit interest should, but probably won't, give some of those bailout/stimulus/Obama haters a little pause.

by reader Aunt Deb

On Friday, Aug. 28, the Washington Post printed two op-ed pieces on healthcare reform; “Obamacare: The Only Exit Strategy, by Charles Krauthammer and “Change We’d Rather Do Without” by Michael Kinsley. Neither piece discussed real details of either the existing funding and delivery system for health care or the possible ways this system might be changed to achieve better coverage and cost control. Mr. Krauthammer’s piece continued to promote himself as the neocon Cassandra, foreseeing no good end no matter what is done; seemingly, any reform undertaken will lead to “the liberals” givng “you end-of-life counseling.” This is silly stuff. The Post should be as ashamed of having printed it as Krauthammer should be of having written it.

As the presumably liberal or leftist counterpart to Mr. Krauthammer’s rightist neoconservative paranoia about all things Obama, Michael Kinsley lays the blame for resistance to health care reform on immature voters. Even as he points out that the rightwing claque (of which Mr. K is a proud member) will inevitably generate and promote falsehoods about any Democratic health care legislation, saying “there will always be a Betsy McCaughy”, he fails to describe these players’ role in killing the previous reform efforts. McCaughey lied then and she’s lying now. Kinsley does note that Republicans suffered no political repercussions from their successful smearing of the Clinton-Magaziner effort to reform health care, even though we find ourselves now in worse straits in terms of ever-increasing costs and decreasing coverage.


Mr. Kinsley is bemused by “the voters’ true feelings – misinformed, perhaps but sincere”; he’s puzzled that they voted for change but now they don’t want it. I’ve attended several healthcare forums in the past two months and I’m quite certain that those people who were there to oppose healthcare reform did not vote for Mr. Obama. I sat near the woman who stood up at Mike Castle’s town meeting and screamed “Obama is a Kenyon and I want my country back” while waving her birth certificate and American flag. This woman and the 150 or so teaparty coalition members who filled that meeting never wanted anything to do with the sort of change those who voted for Obama hoped for. And contrary to Mr. Kinsley’s claim, these are not people who feel patriotism is synonymous with pooh-poohing their country’s institutions. The people I’ve listened to and met at these events are intensely patriotic; they voice their pride in their flag, their military, their Constitution, their history, and the values they believe underwrote those institutions and should continue to sustain them.

By treating today’s attacks on healthcare reform as something new and unexpected, Mr. Kinsley shows how deeply he refuses to understand American political reality. Republican resistance to Democratic-initiated health care reform is a feature, not a bug. Limbaugh, Dobbs, Beck, the Fox News stable, oldies but never outies like Gingrich, Liddy, Rove, McCaughey, are always attacking “the liberals”, “lefties”, “feminazis”, “peaceniks”. How hard is it to fashion an attack on health care reform when the basic premise is that Democrats aka “the liberals” are elitists who sneer at the immature and misinformed voters who believe in the family values that made America great?

Republicans are now ostensibly out of power within the political structure. This gives their calls for bipartisan legislation the force of the underdog asking for fairness. Rightwing media magnifies the polarization between decent patriotic Americans—those who want to protect and sustain the status quo--and the indecent, unpatriotic Americans: those people who can see nothing wrong with ‘socialized medicine’ and ‘government control’. The premise of rightwing talkshows and media is simple: Everything that is wrong with the country is the fault of liberalism and liberals. Republican politicians can position themselves as the voices of moderation and they do so, over and over again, even while rightwing megaphones like McCaughey and Krauthammer pitch phony stories to their constituents about the details of the Democrats’ proposals for reform.

Mr. Kinsley says “we all thought that Hillary Clinton’s big mistake in the 1990’s was too much detail.” No, we all did not think that then, nor do we all now feel an abstract discontent with our healthcare system that quickly changes to acceptance of the status quo when asked to approve of even moderate but geniune change, as Kinsley tries to claim. The effects of our malfuntioning healthcare system are not abstract and, as Kinsley himself acknowledges, more and more Americans are suffering from them as a consequence of the previous failures to enact reform. Rising costs are a major danger to the system’s continuation, yet Kinsley gives no detail about total health care expenditures and the differences in rate of premium and out-of-pocket increases between private, employer-sponsored insurance and the federal Medicare system. There are huge problems facing all of us and the anguish and anger people are expressing at these problems and the proposals to fix them are not explained by caricature and dismissal.

In an essay ostensibly pondering why healthcare reform never seems to happen here, Mr. Kinsley presents no real reasons why it should. Indeed, although he raises the spectre of Betsy McCaughey’s objections to “promising sub-clauses”, he never bothers to refute them. Is it because these attacks were and are silly and misinformed, like the voters who believe them? Spending time and type describing voters as ignorant and in thrall to one-sided presentations without providing supporting details of that one-sidedness only perpetuates ignorance and hardens counterproductive stereotypes.

We may indeed by unable to enact much-needed healthcare reform once again. This will be, in my opinon, due in large part to the willful failure of public voices such as Mr. Kinsley’s who, while blithely admonishing voters for showing a distressing tendency to voice “their opinions on subjects they haven’t bothered to learn anything about” apparently feel no compunction about doing the same thing themselves.
________________________________
by reader Aunt Deb

Robert Waldmann

Polling results are absolutely clear. Now and for the decades a clear majority of US residents support taking from the rich and ... well it doesn't much matter what. Republicans often argue that this or that would be "class warfare" leading to the guess that they might have some reason to believe that class warfare is unpopular. There is no evidence to support that view.

The data which prove my claims come after the jump.


First look at polling report on taxes.

http://www.pollingreport.com/budget.htm

Search for taxes and look at people for and or against soaking the rich. Only one listed poll -- the Gallup poll -- has asked directly about this.

Gallup Poll. April 6-9, 2009. N=1,027 adults nationwide. MoE ± 3.

[skip]


"As I read off some different groups, please tell me if you think they are paying their fair share in federal taxes, paying too much, or paying too little. How about [see below]?"


Fair Share Too Much Too Little Unsure
% % % %

[skip]

"Upper-income people"
4/6-9/09 23 13 60 3
4/6-9/08 24 9 63 4
4/2-5/07 21 9 66 4
4/10-13/06 21 8 67 4
4/4-7/05 22 7 68 3
4/5-8/04 24 9 63 4
4/03 24 10 63 3
4/99 19 10 66 5
4/96 19 9 68 4
4/94 20 10 68 2
3/93 16 5 77 2
3/92 16 4 77 3


"Corporations"
4/6-9/09 18 8 67 6
4/6-9/08 15 6 73 6
4/2-5/07 19 5 71 5
4/10-13/06 18 5 70 7
4/4-7/05 21 4 69 6
4/5-8/04 19 5 69 7

OK now soaking the rich to pay for health care reform. Here there is lots of polling

http://www.pollingreport.com/health.htm
and search for "tax". I'm trying to get everything relevant.

NBC News Poll conducted by the polling organizations of Peter Hart (D) and Bill McInturff (R). Aug. 15-17, 2009. N=805 adults nationwide. MoE ± 3.5 (for all adults).

[skip]

"Now I am going to tell you more about the health care plan that President Obama supports and please tell me whether you would favor or oppose it. The plan requires that health insurance companies cover people with pre-existing medical conditions. It also requires all but the smallest employers to provide health coverage for their employees, or pay a percentage of their payroll to help fund coverage for the uninsured. Families and individuals with lower- and middle-incomes would receive tax credits to help them afford insurance coverage. Some of the funding for this plan would come from raising taxes on wealthier Americans. Do you favor or oppose this plan?"
.
Favor Oppose Depends
(vol.) Unsure
% % % %


8/15-17/09
53 43 2 2


7/24-27/09
56 38 3 3


Quinnipiac University Poll. July 27-Aug. 3, 2009. N=2,409 registered voters nationwide. MoE ± 2 (for all adults).

[skip]

"To extend health insurance coverage to most Americans over the next decade, would you support or oppose imposing an extra tax on individuals who earn more than 350,000 dollars and couples who earn more than 1 million dollars a year?"


.

Support Oppose Unsure
% % %


7/27 - 8/3/09
61 36 2


Time Poll conducted by Abt SRBI. July 27-28, 2009. N=1,002 adults nationwide. MoE ± 3 (for all adults).

[skip]

"Raises income taxes on people earning more than 280 thousand dollars a year to help pay for providing health care to most Americans, even those who cannot afford it now."


7/27-28/09
57 40 4

CBS News/New York Times Poll. July 24-28, 2009. N=1,050 adults nationwide. MoE ± 3 (for all adults).

[skip]

"In order to help pay for health care reform, would you favor or oppose increasing taxes on Americans with high incomes?"


Favor Oppose Unsure
% % %
7/24-28/09 65 32 3

NBC News/Wall Street Journal Poll conducted by the polling organizations of Peter Hart (D) and Bill McInturff (R). July 24-27, 2009. N=1,011 adults nationwide. MoE ± 3.1 (for all adults).


.

"Let me read you a couple of proposals made by President Obama. For each one, please tell me whether you approve or disapprove of this action. ... Using government funds to expand health insurance coverage, and raising taxes on wealthier Americans to pay for it."


.
Approve Disapprove Unsure
% % %


7/24-27/09
50 44 6


4/23-26/09
56 37 7


[skip]

"Experts currently estimate that this proposed health care plan will cost one trillion dollars over the next decade. I am going to read you some proposals for how the plan could be funded. After I read each statement, please tell me whether that proposal is acceptable or not acceptable. . . ." Half sample (Form B), MoE ± 4.4


.
Acceptable Not
Acceptable Unsure
% % %


.


"Raise taxes for families with incomes more than one million dollars per year."


7/24-27/09
68 29 3


"Raise taxes for families with incomes more than three hundred and fifty thousand dollars a year."


7/24-27/09
56 39 5

Pew Research Center poll. July 22-26, 2009. N=1,506 adults nationwide. MoE ± 3.

[skip]

"And thinking about some ways to pay for changes to the health care system: Would you favor or oppose [see below]?"


.
Favor Oppose Unsure
% % %


[skip]


"Raising taxes on families with incomes of more than $350,000 and individuals earning more than $280,000"


7/22-26/09
63 32 5



off topic but very relevant to attitudes towards class war. Most Americans can chose to fight the classes above them or the classes below them (Bill Gates and the homeless have fewer options). Polls consistently always and invariably show strong support for soaking the rich. How about the poor ? Do most Americans think we are already giving to poor too much ? Look at this

Kaiser Family Foundation Kaiser Health Tracking Poll. Aug. 4-11, 2009. N=1,203 adults nationwide. MoE ± 3 (for all adults).

[skip]

"Now I'm going to read you some different ways to increase the number of Americans covered by health insurance. As I read each one, please tell me whether you would favor it or oppose it. Here's the (first/next) one: [See below.] Do you favor or oppose this?"

[skip]

"Expanding state government programs for low-income people, such as Medicaid and the State Children's Health Insurance Program" N=603 (Form B)


8/4-11/09
80 17 4


7/7-14/09
74 23 3

6/1-8/09
75 22 3

4/2-8/09
77 20 2


I don't see how the people of the USA could make it clearer. Concerning health care they want to take more from the rich and give more to the poor.

Now reforming social security. Generally, there was overwhelming opposition to any change in social security. There was one exception to this rule. A majority wanted to raise or eliminate the FICA ceiling. Once again (as always) most Americans wanted to soak the rich.

CBS News/New York Times Poll. June 10-15, 2005. N=1,111 adults nationwide. MoE ± 3 (for all adults).

[skip]

"Currently, people pay Social Security taxes only on the first $90,000 of their annual income. If it were necessary to keep the Social Security program paying benefits as it does now, would you favor or oppose increasing the amount of income that is subject to Social Security taxes?"

.

Favor Oppose Unsure
% % %
6/10-15/05 63 30 7


CBS News Poll. May 20-24, 2005. N=1,150 adults nationwide. MoE ± 3 (for all adults).


.


"How should the Social Security system pay its benefits? Should it pay out money to retired people based only on how much they contributed, or should it take some of the contributions of better-off people and give them to poorer people?"


.

Contribu-
tions Only Give More
To Poor Both (vol.) Unsure
% % % %
5/20-24/05 46 43 3 8
2/24-28/05 47 43 2 8


.


"Currently, people pay Social Security taxes only on the first $90,000 of their income. Would you favor or oppose raising the amount of income that is subject to Social Security taxes?"


.

Favor Oppose Unsure
% % %
5/20-24/05 62 31 7
2/24-28/05 61 31 8


.


"Would you favor or oppose limiting the rate of growth of future Social Security benefits for people with incomes of $100,000 or more?"


.

Favor Oppose Unsure
% % %
5/20-24/05 50 40 10


.


"Would you favor or oppose limiting the rate of growth of future Social Security benefits for people with incomes of $50,000 to $100,000?"


.

Favor Oppose Unsure
% % %
5/20-24/05 35 55 10


NBC News/Wall Street Journal Poll conducted by the polling organizations of Peter Hart (D) and Bill McInturff (R). May 12-16, 2005. N=1,005 adults nationwide. MoE ± 3.1 (for all adults).


[skip]


"If there is a time in the future when Social Security benefits must be reduced, which approach would you favor? Approach A: Reduce benefits by an equal percentage across the board for all workers to maintain Social Security as a program where your benefits depend on what you paid in the system. Approach B: Reduce benefits by a higher percentage for workers earning more than twenty-five thousand dollars, while making no change for workers who make less than this so that those with the most need receive the most benefits."


.
Approach A Approach B Unsure
% % %
5/12-16/05 40 50 10



"I'm going to mention changes some leaders have proposed for Social Security. Please tell me if you support or oppose each one. . . ."


.
Support Oppose Unsure
% % %


.


"Increasing the Social Security tax rate"


ABC News/Washington Post Poll. March 10-13, 2005. N=1,001 adults nationwide. MoE ± 3 (for all adults). Fieldwork by TNS.

[skip]

"Collecting Social Security taxes on all the money a worker earns, rather than taxing only up to the first $90,000 of annual income"


3/10-13/05
56 40 4


As always a majority of US residents support raising taxes on the rich.


*terminology: when I write "most" I mean more than half. The word is often used equivocally to mean more than half when one must prove the claim and then to mean "approximately all" when one draws implications.

Robert Waldmann

is a bit irritated with [many] US senior citizens. They want to keep the hands of the government off their medicare.* I don't want to think what would happen if the government meddled with their social security pensions. Most US senior citizens are acting as egoistical hypocrites.

I would like to offer them a deal -- let's not change the laws governing US federal government financing of health care at all. Just say no to any change in the law.

I'll explain the deal and why selfish seniors citizens would prefer ambitious health care reform after the jump.

update: the word "many" was added in response to a comment by Coberly. The unqualified assertion that senior citizens want to keep government hands off their medicare was an attempt at humor. I am sure that the vast majority of US senior citizens accept the fact that the medicare administration is part of the federal government (the few exceptions are authentic, not an urban myth, and a cause for reflection).

My actual thoughts on US senior citizens begin with the word "most". The qualifier "acting as" is important. I did not speculate as to whether most are selfish or hypocritical, I just noted that they would act as they are acting if they were.

Thanks to Coberly for pointing out my error of omission (the word many) and the failure of my attempt at humor. I apologize to Coberly for the tone of my replies to his comments. I didn't reread my post but assumed I remembered what I wrote.



Congress, being another bunch of hypocrites, forces the CBO to believe its promises of huge tax increases and spending cuts next year. This means that every year they need to pass a bill that says "no not this year next year." One such bill is the annual alternative minimum tax fix. The other is the annual adjustment to medicare compensation rates.

Under current law, medicare compensation scales would be cut by very roughly IIRC 20%. The cuts hit next year and are relevant to deficit forecasts. Every year the cuts are put off one year so they don't bother anyone. Those who don't consider medicare a government program certainly don't know that congress re-meddles with it every year. Now it is standard practice to adjust the compensation every year so no one notices the issue. It would be totally unreasonably and unlike Democrats to hold the standard yearly change in the law hostage.

Democrats in congress (I think Pelosi plus a majority of the conference committee) can present our nations senior citizens with a choice. Health care reform or nothing. With health care reform, the only thing that will change for senior citizens is they lose their beloved prescription drug doughnut hole. With no change, their doctor will suddenly be paid much less to care for them, unless he or she refuses to let the federal government take advantage of him or her.

The slogan "you can keep everything you have if health care is reformed" is good the slogan "you can keep everything you have if and only if health care is reformed" is better.

by Bruce Webb

That is the subtitle of the new Center for Budget and Policy Priorities (CBPP) analysis of the Aug 25th CBO and OMB Reports on projected budget deficits that is being injected into the health care debate as a reason for non-action. The CBPP analysis can be read here: New OMB and CBO Reports Show Continuing Current Policies Would Produce Large Deficits. The authors' introduction:

On August 25, both the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) released updated budget projections. Some observers, comparing OMB’s estimate of the deficit over the next ten years under the President’s proposed policies ($9.1 trillion) to CBO’s “baseline” estimate of the deficit under current law ($7.1 trillion), jumped to the conclusion that the President proposes to increase the deficit dramatically. In fact, the opposite is true. The President’s proposals would produce significantly lower deficits over the next ten years than continuing current policies.
This and other confusions have occurred because both the OMB and CBO reports are chock-full of numbers that are hard for even seasoned budget-watchers — and almost impossible for ordinary citizens — to interpret. This brief analysis explains what some of the numbers mean, how CBO’s official baseline must be adjusted to show what CBO’s estimate of deficits would be if it assumed current policies are continued, and why even that adjusted baseline should not be compared with OMB’s estimate of deficits under the President’s policies.

The whole document is five pages long and should be read in full. But one lesson to take away is that you cannot directly compare CBO and OMB numbers, the former being bound by current law and the latter by current and proposed policy, two different things. To see the explanations from CBO and OMB try these links:
Orszag Press Release Mid-Session Review
OMB Mid-Session Review Mid-Session Review Web-Page with link to PDF of full report.
CBO Director's Blog Comparing CBO's and OMB's Projections of the Federal Budget Deficit with link to PDF.
A table below the fold .


Kevin Drum who pointed me to this has an annotated version of this table at MJ: http://www.motherjones.com/kevin-drum/2009/08/chart-day-0 where he totals the bottom line to get $10.556 trillion which is actually $574 billion below the figure CBPP comes up for an adjusted CBO number.

So before people jump to conclusions about how these new OMB and CBO numbers show Obama is breaking the bank be sure you know whether you are dealing with apples and oranges both with the initial and revised numbers.

                                                              Sure is hot today!

It’s not my fault if nature never felt like evolving a system that obeys a simple little first order equation.

Source here

by cactus

Megan McArdle has a series of posts (this appears to be the last of them) about the folks bringing guns to protests or the president's appearances. Her view - its idiotic, folks who do it are acting like jerks, but there's nothing wrong with it.

I have a few guns. I can't see any particular reason to take them out and about, making a public display of carrying them around. The only reason to take them to some sort of a protest situation where there are two sides arguing with each other is to intimidate other people. As Megan herself points out, "other people aren't going to pick fights with the guy with the gun. " In fact, people are going to be less likely to even argue with him or make eye contact. After all, he just might be a lunatic.

Now, when you point something like this out, invariably someone responds that the Swiss and the Israelis are always walking around armed to the teeth, and those tend to be societies where you don't see folks shooting each other in the streets. I can't speak for the Swiss - I know nothing about them other than that they make pretty good chocolate. I do tend to have an impression that their neutrality policy amounts to a "I got mine, the rest of you can get beaten to a pulp for all I care" philosophy, but whether that's accurate or not, I can't say.

As to the Israelis, I do know something about them. The reason Israelis don't think twice about their fellow citizens walking around with assault rifles is because the alternative is worse. The likelihood of getting blown to bits by a suicide bomber in Israel is higher than the likelihood of being shot by a deranged fellow Israeli. Furthermore, the more armed Israelis there are, the lower the probability that you will be the victim of a suicide-bomber.

Over here, it seems the dynamic is a bit different. The likelihood that some Joe Citizen walking down the street heavily armed is going to stop the next Timothy McVeigh is much lower than the odds that some Joe Citizen walking down the street heavily armed is on his way to lighting up a McDonalds or ventilating some nursing students. And let's be realistic- if given a chance, that Joe Citizen walking down the street heavily armed is more likely to be the kind of guy who would sympathize with or help the next Timothy McVeigh if given a chance rather than shoot him.

Now, I'd hate for someone to think that I'm a Timothy McVeigh sympathizer. I'll be leaving my guns at home.

by Rebecca Wilder

Thrill. The Conference Board reported that the August consumer confidence index (CCI) jumped 14% in August to 54.06. In contrast, the August University of Michigan Consumer Sentiment index (CSI) fell; but the two generally trend together, and the CSI is subject to revisions reported tomorrow.

Confidence can be swayed by current political agenda or asset prices, but nevertheless, it is a coincident measure of the business cycle. And broken down into its two components – the present economic situation index and expectations index – the August report was quite positive (as positive as can be coming off of record lows).

The expectations index surged almost 16% in August to 73.48, its highest level since December 2007 and 2.7% over its previous high in May 2009. The current conditions index grew around 7%, but is hovering at low levels with no strong sign of improvement.

Clearly, the expectations index is making much more headway than the present situation index. And this is why that information is important: historically, the expectations index, rather than the current conditions index, is a good indicator of consumer spending growth.



The chart illustrates annual personal consumer spending growth and the two components of the CCI, with associated simple correlation coefficients. The correlation between the overall CCI and annual PCE spending growth spanning June 1977- June 2009 is 0.63. However, the biggest weight is coming off of the expectations component of the CCI, correlation = 0.69, rather than the present situation component of the CCI, correlation = 0.45.

On the other hand, the present-situation component of the CCI is a decent indicator of current labor market conditions.



The chart illustrates annual employment growth (measured by the nonfarm payroll), and the two components of the CCI. The simple correlation between the overall CCI and employment growth is 0.59 (noticeably smaller than the PCE correlation), which according to its correlation, is more heavily weighted by the present situation component of the CCI.

Based on this simple analysis, the CCI reading is consistent with an oncoming surge in spending growth over the next six months. Even in the recovery after the 1991 recession, when the expectations index improved quickly while spending growth was sluggish to rise, spending growth jumped from essentially 0% annual growth to almost 3.6% in just four months - after the surge in expectations index and before the bottom in the current conditions index.

Yes, there are plenty of credit-related issues why this might not happen. And there is an obvious economic link between employment, income, and spending. However, for those indicators that are critical to recovery, i.e., consumer spending (housing and inventories are important, too - see the second chart on this post), the expectations index is certainly a positive signal for spending events to come.

by Bruce Webb

Yeah well Marc Antony was not quite telling the truth, either. You could see this particular re-write of history coming a mile away and it is time to stop this one in its tracks. Both Parties Mourn Loss of Kennedy in Health-Care Debate

Three GOP senators suggested in their remembrances of Kennedy that Democrats will need more than respectful conversation to gain bipartisan support for a health-care bill. Sens. John McCain (Ariz.), Orrin Hatch (Utah) and Judd Gregg (N.H.) lamented Kennedy's absence in the negotiations.

"I think we may have made progress on this health-care issue if he had been there," McCain told CNN. "He had this unique capability to sit people down at a table together -- and I've been there on numerous occasions -- and really negotiate, which means concessions. And so, he not only will be missed, but he has been missed."

"I believe if he had been active the last few months, we would have some sort of consensus agreement," said Gregg, a passionate advocate of Medicare reform who has sat out Senate deliberations on perhaps the most extensive revisions ever to that program.

"We would have worked it out. We would have worked it out on a bipartisan basis," Hatch, who co-authored numerous health-care bills with Kennedy over the years, said on CNN. "I'll be happy to work in a bipartisan basis any day, any time . . . but it's got to be on something that's good and not just some partisan hack job."

This is complete and utter bullshit, and a blatant attempt to rewrite the history of the last eight weeks. To see why follow me under the fold.


Kennedy did his part on health care, his Committee, Senate Health, Education, Labor and Pensions or HELP, passed its bill out of Committee on July 1st. My blog post on this was here: Kennedy-Dodd HELP Bill w/CBO Scoring For convenience lets throw the CBO tables in here:



The response to the HELP bill was almost immediate. Max Baucus declared it DOA and announced that Senate Finance would re-write the ENTIRE bill including the parts not normally under the jurisdiction of his Committee. Moreover in doing so he formed what was originally a Gang of Seven that included four Republicans but froze out Kennedy ally Rockefeller who was actually was and is the Chairman of the Finance Sub-Committee on Health. The whole process was a big ol' F-U to Kennedy and everybody knew it.

Now Republicans are trying to claim that if only Kennedy had been around he would have been able to work out a compromise, apparently in the form of throwing away ever principle it had ever held by making "concessions" which in the context of how Senate Finance has been handling things means complete and total surrender to the Republicans and the Insurance Companies.

It is Bullshit. Full Stop. Kennedy already made tremendous concessions in the course of issuing the HELP Bill. It cost were scored out at a third less than the preliminary version sent for scoring to CBO, a severe trimming that was accomplished by covering a much smaller proportion of the population than that of the House Tri-Committee Bill. Whereas the latter bill is projected to cover 97% of the total LEGAL NON-ELDERLY population, Kennedy's HELP Bill only scored as covering 90% of that same population and leaving 34 million uninsured. If anything Kennedy-Dodd bent over backwards to accomodate the fiscal concerns of the Blue Dogs and Republicans and STILL got spat in the face by Baucus for their trouble.

Republicans are already, and predictably trying to re-write history to suggest that Kennedy 'obviously' would of given up even more than he did. Well too bad, that was never going to happen, and certainly shouldn't happen now. The answer for Democrats is to take the HELP Bill off the table, replace it with the much stronger Tri-Committee Bill and tell these hypocritical, crocodile tear crying Republicans to piss up a rope while Dems pass a real Kennedy-Dingel Bill.
______________________
By the way you will see reporting that Kennedy's bill covered 97% of the population while costing $350 billion less than the Tri-Committee. This is apples and oranges reporting. If you examine the table above the Kennedy bill leaves 10% of legal American residents uninsured and 34 million people total, about twice what the House bill does as seen below.

rdan

Visit msnbc.com for Breaking News, World News, and News about the Economy

REMARKS BY THE VICE PRESIDENT
ON THE PASSING OF SENATOR EDWARD M. KENNEDY
The Department of Energy
Washington, DC

THE VICE PRESIDENT: Well, Mr. Secretary, thank you and your staff for the privilege of being with you today on what, as I prepared last night, was to be a joyous occasion, announcing another step in the direction of energy independence. And you said the President made a wise choice. The wisest choice the President made was asking you to be -- I mean that sincerely -- to be the Secretary to the Department of Energy. You've assembled a first-rate staff, and you've taken on a role that is going to be a -- is going to, in large part, determine the success of these next three-and-a-half years, whether or not we make a genuine dent, genuine progress in moving toward an energy policy that can help America lead the world in the 21st century as it did in the 20th century.

Some suggest we're trying to do too much. But my response is, is there any possibility of America leading the world in the 21st century without a radically altered energy policy? It is not possible. And that charge has been given to one of the most remarkable men to serve in a President's Cabinet, a Nobel laureate who is as articulate as he is obviously bright, and a man who has assembled a staff that can corral the bureaucracy -- and we're all -- deal with bureaucracy, we're all part of it -- in a way that I haven't seen in awhile.

And I had planned on speaking to the Clean Cities Program as one of the several initiatives we have to begin to reshape our energy policy. But as if Teddy were here, as we would say in the Senate, if you'd excuse a point of personal privilege, I quite frankly think it's -- would be inappropriate for me to dwell too much on the initiative that we're announcing today and not speak to my friend.

My wife Jill, and my sons Beau and Hunter, and my daughter Ashley -- and I don't say that lightly, because they all knew Teddy, he did something personal and special for each one of them in their lives -- truly, truly are distressed by his passing. And our hearts go out to Teddy Jr., and Patrick and Kara, and Vicki, with whom I spoke this morning, and the whole Kennedy family.

Teddy spent a lifetime working for a fair and more just America. And for 36 years, I had the privilege of going to work every day and literally, not figuratively sitting next to him, and being witness to history. Every single day the Senate was in session, I sat with him on the Senate floor in the same aisle. I sat with him on the Judiciary Committee next -- physically next to him. And I sat with him in the caucuses. And it was in that process, every day I was with him -- and this is going to sound strange -- but he restored my sense of idealism and my faith in the possibilities of what this country could do.

He and I were talking after his diagnosis. And I said, I think you're the only other person I've met, who like me, is more optimistic, more enthusiastic, more idealistic, sees greater possibilities after 36 years than when we were elected. He was 30 years-old when he was elected; I was 29 years-old. And you'd think that would be the peak of our idealism. But I genuinely feel more optimistic about the prospect for my country today than I did -- I have been any time in my life.

And it was infectious when you were with him. You could see it, those of you who knew him and those of you who didn't know him. You could just see it in the nature of his debate, in the nature of his embrace, in the nature of how he every single day attacked these problems. And, you know, he was never defeatist. He never was petty -- never was petty. He was never small. And in the process of his doing, he made everybody he worked with bigger -- both his adversaries as well as his allies.

Don't you find it remarkable that one of the most partisan, liberal men in the last century serving in the Senate had so many of his -- so many of his foes embracing him, because they know he made them bigger, he made them more graceful by the way in which he conducted himself.

You know, he changed the circumstances of tens of millions of Americans -- in the literal sense, literally -- literally changed the circumstances. He changed also another aspect of it as I observed about him -- he changed not only the physical circumstance, he changed how they looked at themselves and how they looked at one another. That's a remarkable, remarkable contribution for any man or woman to make. And for the hundreds, if not thousands, of us who got to know him personally, he actually -- how can I say it -- he altered our lives as well.

Through the grace of God and accident of history I was privileged to be one of those people and every important event in my adult life -- as I look back this morning and talking to Vicki -- every single one, he was there. He was there to encourage, to counsel, to be empathetic, to lift up. In 1972 I was a 29 year old kid with three weeks left to go in a campaign, him showing up at the Delaware Armory in the middle of what we called Little Italy -- who had never voted nationally by a Democrat -- I won by 3,100 votes and got 85 percent of the vote in that district, or something to that effect. I literally would not be standing here were it not for Teddy Kennedy -- not figuratively, this is not hyperbole -- literally.

He was there -- he stood with me when my wife and daughter were killed in an accident. He was on the phone with me literally every day in the hospital, my two children were attempting, and, God willing, thankfully survived very serious injuries. I'd turn around and there would be some specialist from Massachusetts, a doc I never even asked for, literally sitting in the room with me.

You know, it's not just me that he affected like that -- it's hundreds upon hundreds of people. I was talking to Vicki this morning and she said -- she said, "He was ready to go, Joe, but we were not ready to let him go."

He's left a great void in our public life and a hole in the hearts of millions of Americans and hundreds of us who were affected by his personal touch throughout our lives. People like me, who came to rely on him. He was kind of like an anchor. And unlike many important people in my 38 years I've had the privilege of knowing, the unique thing about Teddy was it was never about him. It was always about you. It was never about him. It was people I admire, great women and men, at the end of the day gets down to being about them. With Teddy it was never about him.

Well, today we lost a truly remarkable man. To paraphrase Shakespeare: I don't think we shall ever see his like again. I think the legacy he left is not just in the landmark legislation he passed, but in how he helped people look at themselves and look at one another.

I apologize for us not being able to go into more detail about the energy bill, but I just think for me, at least, it was inappropriate today. And I'm sure there will be much more that will be said about my friend and your friend, but -- he changed the political landscape for almost half a century. I just hope -- we say blithely, you know, we'll remember what we did. I just hope we'll remember how he treated other people and how he made other people look at themselves and look at one another. That will be the truly fundamental, unifying legacy of Teddy Kennedy's life if that happens -- and it will for a while, at least in the Senate.

Mr. Secretary, you and your staff are doing an incredible job. I look forward to coming back at a happier moment when you are announcing even more consequential progress toward putting us back in a position where once again can control our own economic destiny.

Thank you all very, very much. (Applause.)

By Spencer;

The new data that durable goods orders jumped 4.9% from June to July is a nice indicator that the economy is bottoming and it clearly beat expectations. Yes, a large part of the jump was civilian aircraft orders that tend to be lumpy, but even excluding civilian aircraft orders jumped
1.9% month to month.

On a smoothed basis non-defense capital goods orders -- a good leading indicator of capital spending in the GDP accounts is also showing nice gains. The compound three month growth rate for the total is 41%, and excluding aircraft it is 15.5%.

With all the news on the deficit, health care, etc., etc., the normal sources seem to be overlooking this report.

Statement of Principles

June 3, 1997

American foreign and defense policy is adrift. Conservatives have criticized the incoherent policies of the Clinton Administration. They have also resisted isolationist impulses from within their own ranks. But conservatives have not confidently advanced a strategic vision of America's role in the world. They have not set forth guiding principles for American foreign policy. They have allowed differences over tactics to obscure potential agreement on strategic objectives. And they have not fought for a defense budget that would maintain American security and advance American interests in the new century.

We aim to change this. We aim to make the case and rally support for American global leadership.

As the 20th century draws to a close, the United States stands as the world's preeminent power. Having led the West to victory in the Cold War, America faces an opportunity and a challenge: Does the United States have the vision to build upon the achievements of past decades? Does the United States have the resolve to shape a new century favorable to American principles and interests?

We are in danger of squandering the opportunity and failing the challenge. We are living off the capital -- both the military investments and the foreign policy achievements -- built up by past administrations. Cuts in foreign affairs and defense spending, inattention to the tools of statecraft, and inconstant leadership are making it increasingly difficult to sustain American influence around the world. And the promise of short-term commercial benefits threatens to override strategic considerations. As a consequence, we are jeopardizing the nation's ability to meet present threats and to deal with potentially greater challenges that lie ahead.

We seem to have forgotten the essential elements of the Reagan Administration's success: a military that is strong and ready to meet both present and future challenges; a foreign policy that boldly and purposefully promotes American principles abroad; and national leadership that accepts the United States' global responsibilities.

Of course, the United States must be prudent in how it exercises its power. But we cannot safely avoid the responsibilities of global leadership or the costs that are associated with its exercise. America has a vital role in maintaining peace and security in Europe, Asia, and the Middle East. If we shirk our responsibilities, we invite challenges to our fundamental interests. The history of the 20th century should have taught us that it is important to shape circumstances before crises emerge, and to meet threats before they become dire. The history of this century should have taught us to embrace the cause of American leadership.

Our aim is to remind Americans of these lessons and to draw their consequences for today. Here are four consequences:

• we need to increase defense spending significantly if we are to carry out our global
responsibilities today and modernize our armed forces for the future;

• we need to strengthen our ties to democratic allies and to challenge regimes hostile to our interests and values;

• we need to promote the cause of political and economic freedom abroad;

• we need to accept responsibility for America's unique role in preserving and extending an international order friendly to our security, our prosperity, and our principles.

Such a Reaganite policy of military strength and moral clarity may not be fashionable today. But it is necessary if the United States is to build on the successes of this past century and to ensure our security and our greatness in the next.

This is your Bush foreign policy program in a nutshell. As developed and endorsed by the following team already in place back in 1997. Lots of familiar names, in fact you have pretty much the whole Bush national security team. Less Condi and Powell, which is instructive in itself.

Elliott Abrams Gary Bauer William J. Bennett Jeb Bush

Dick Cheney Eliot A. Cohen Midge Decter Paula Dobriansky Steve Forbes

Aaron Friedberg Francis Fukuyama Frank Gaffney Fred C. Ikle

Donald Kagan Zalmay Khalilzad I. Lewis Libby Norman Podhoretz

Dan Quayle Peter W. Rodman Stephen P. Rosen Henry S. Rowen

Donald Rumsfeld Vin Weber George Weigel Paul Wolfowitz

Never heard of the Kagans before the drumbeat to war picked up? Think Zalmay Khalilzad just happened to be available when the time came? The events of 2001 on just didn't happen, they were shaped. By people with a program. This one.

Step one in the program below the fold.

Letter to President Clinton on Iraq Jan 26, 1998

Dear Mr. President:

We are writing you because we are convinced that current American policy toward Iraq is not succeeding, and that we may soon face a threat in the Middle East more serious than any we have known since the end of the Cold War. In your upcoming State of the Union Address, you have an opportunity to chart a clear and determined course for meeting this threat. We urge you to seize that opportunity, and to enunciate a new strategy that would secure the interests of the U.S. and our friends and allies around the world. That strategy should aim, above all, at the removal of Saddam Hussein’s regime from power. We stand ready to offer our full support in this difficult but necessary endeavor.

The policy of “containment” of Saddam Hussein has been steadily eroding over the past several months. As recent events have demonstrated, we can no longer depend on our partners in the Gulf War coalition to continue to uphold the sanctions or to punish Saddam when he blocks or evades UN inspections. Our ability to ensure that Saddam Hussein is not producing weapons of mass destruction, therefore, has substantially diminished. Even if full inspections were eventually to resume, which now seems highly unlikely, experience has shown that it is difficult if not impossible to monitor Iraq’s chemical and biological weapons production. The lengthy period during which the inspectors will have been unable to enter many Iraqi facilities has made it even less likely that they will be able to uncover all of Saddam’s secrets. As a result, in the not-too-distant future we will be unable to determine with any reasonable level of confidence whether Iraq does or does not possess such weapons.

Such uncertainty will, by itself, have a seriously destabilizing effect on the entire Middle East. It hardly needs to be added that if Saddam does acquire the capability to deliver weapons of mass destruction, as he is almost certain to do if we continue along the present course, the safety of American troops in the region, of our friends and allies like Israel and the moderate Arab states, and a significant portion of the world’s supply of oil will all be put at hazard. As you have rightly declared, Mr. President, the security of the world in the first part of the 21st century will be determined largely by how we handle this threat.

Given the magnitude of the threat, the current policy, which depends for its success upon the steadfastness of our coalition partners and upon the cooperation of Saddam Hussein, is dangerously inadequate. The only acceptable strategy is one that eliminates the possibility that Iraq will be able to use or threaten to use weapons of mass destruction. In the near term, this means a willingness to undertake military action as diplomacy is clearly failing. In the long term, it means removing Saddam Hussein and his regime from power. That now needs to become the aim of American foreign policy.

We urge you to articulate this aim, and to turn your Administration's attention to implementing a strategy for removing Saddam's regime from power. This will require a full complement of diplomatic, political and military efforts. Although we are fully aware of the dangers and difficulties in implementing this policy, we believe the dangers of failing to do so are far greater. We believe the U.S. has the authority under existing UN resolutions to take the necessary steps, including military steps, to protect our vital interests in the Gulf. In any case, American policy cannot continue to be crippled by a misguided insistence on unanimity in the UN Security Council.

We urge you to act decisively. If you act now to end the threat of weapons of mass destruction against the U.S. or its allies, you will be acting in the most fundamental national security interests of the country. If we accept a course of weakness and drift, we put our interests and our future at risk.

Sincerely,

. Still imagine that we went to war with Iraq based on 9/11? That the decision to go to war was really made by the Decider sometime in February 2003? That if Saddam had just been a little more cooperative this unpleasantness would have been avoided? Sorry, no way. This decision was made by the people who signed this letter along with those who signed the Statement of Principles above. And note the one name that is glaringly absent, though his brother made the cut. Looks like they had to settle for the second choice when it came time for a figurehead.

Elliott Abrams Richard L. Armitage William J. Bennett

Jeffrey Bergner John Bolton Paula Dobriansky

Francis Fukuyama Robert Kagan Zalmay Khalilzad

William Kristol Richard Perle Peter W. Rodman

Donald Rumsfeld William Schneider, Jr. Vin Weber

Paul Wolfowitz R. James Woolsey Robert B. Zoellick

(In reading the Statement did you get the odd feeling like something was missing, that a couple of future team members weren't there? Say like Bolton, Perle and the other Kagan? Well have no fear, they were on board all along.)

rdan

Boston.com carries a lot of material on Senator Kennedy's life and politics, including comments from President Obama and Governor Schwarzenegger.

The man had a huge impact on American government.

rdan

Lots of comments did not "stick" yesterday, although there has been a problem intermittently in the last two weeks especially. Please wait for all "reply" "delete" links to appear at the bottom of your comment to confirm the servers keep it. I believe that a delay in processing is part of the problem.

When the issue appears resolved I will delete this post.

Robert Waldmann

Via Ezra Klein I read

Collender thinks this is wrong for two reasons. First, the Democrats with the most difficult reelection battles are the freshmen elected in Republican-leaning, fiscally conservative districts. They'll need something to show for their time in Washington, and along with the Blue Dogs, they may well be able to get it.

Is there any evidence for this claim ? Is there any evidence that people in Republican leaning districts care more about the deficit than people in Democratic leaning districts ? The past decade didn't provide much evidence that Republicans are, in fact, fiscally conservative.

Note that the Blue Dogs addition to health care reform -- increasing the power of the medicare advisory panel -- has become a favorite topic for opponents of health care reform.

I think that Collender is mislead by the absurd theory that the political actions of blue dogs have something to do with the wishes of their constituents. I think it has been conclusively proven that this hypothesis is false.

On economics (hey we are supposed to be economists) Collander and, it seems, Klein also worries that deficits will reduce GNP "Second, and arguably more importantly, the markets are increasingly nervous about the size of our long-term deficits, and without credible action to reduce them, interest rates could rise, choking off the recovery." Guys we are in a liquidity trap. If interest rates increase, the FED can drive them down. Deficits cause lower GNP when the FED refuses to do that, because they are fighting inflation and or punishing congress. It's not relevant to next year. You might want to look at a blog by this guy named Paul Krugman.

by Bruce Webb

I ask people to examine the following labels and concepts:
Arbitrary Executive
Permanent Majority
Homeland Security
New American Century

Did any of these labels or the concepts behind them come from the Left? Well no and we could easily assign names to people associated with each, for example we could name in the same order Addington/Yoo, Norquist/Rove, Bush, Cheney/Rumsfeld. Each man or pair of men openly and publicly associated themselves with one or more or generally all of these concepts.

Lets add some more terms:
American Exceptionalism
Christian Nation
Traditional Family

Are these in origin from the Left? Are there very many American Conservatives out there that wouldn't endorse all three concepts? I think not.

If we examined only post-war history what country would (with its own changes on the tune) this combination best resemble? If you said 'Spain under Franco' you would have a winner. To which some would add 'Chile under Pinochet'. There is a word for regimes that combine their version of all seven concepts. A word that by convention we cannot use because it is attached to a great deal of other historical baggage. Which doesn't make it less historically correct.

Conservatism has always been wary of democracy, in fact 19th century conservatism in Britain and the United States was in large part by a determined effort to control democracy by retaining strict control over the franchise to vote. This effort went hand in hand with an attempt to retain control over the acceptable shape of the family and especially over the sexual conduct of family members.

While Conservatives by and large are fully aware of what they see as the dangers of too much license in speech, conduct and their expressions in things like art and music, they seem less aware of the dangers of slipping back into something that resembles Franco's Spain. If it helps to reduce the temperature we can simply say that from the Left Bush/Cheneyism could not easily be distinguished from Falangism. (http://en.wikipedia.org/wiki/Falange)

by Rebecca Wilder

Actually, murky is something of a good thing when referring to business cycle dynamics. It usually means that a bottom is forming.

In some sense, the key to recovery is the stabilization of home values. If home values would just “stop” declining – I understand that there is a market mechanism going on here that is pushing home values to (or even below) an equilibrium – then the banking system can get on with its solvency issues. (Naked Capitalism has a nice piece today on banks not foreclosing in order to avoid further writedowns.) Let’s see what’s going on in the US from the perspective of several indicators.

The S&P/Case-Shiller and the Federal Housing Finance Agency (FHFA) reported their quarterly house price indexes today. Interestingly enough, the two (Q2 2009)reports diverge.

The S&P/Case-Shiller marked a quarterly gain of about 1.4%, while the FHFA reported a quarterly loss of about 0.7%. Is this the start of an interesting story on the downside? On the upside, the Case-Shiller index showed a much larger bubble in home values relative to imputed rents. Will the FHFA show a deeper trough than the Case-Shiller?



The chart illustrates the price to imputed rent ratio for the two measures of national real estate values. This can be thought as the tangible asset equivalent to a corporate stock price to earnings, or price to dividend, ratio. It measures the value relative to the flow of ownership gains, as represented by the imputed rent series measured by the BLS (owner occupied rent in the CPI table).

It is unlikely that the quarterly FHFA index will depart from the positive trend for too much longer (if indeed, it has stabilized), as the monthly index is showing more consistent gains over the last three months.

This is kind of interesting - the Case-Shiller, which includes foreclosures, is likely catching the upswing in foreclosure demand, while the FHFA is grabbing more of the downward trend in the "average" mortgage. But the LoanPerformance home price index likewise includes subprime loans and foreclosures, and it is showing some life (see chart below). Below is the 3-month annualized growth rate over the last two years for a cross-section of home value indicators. (In most cases, the monthly indexes are a subset of the national index.)



One indicator to note is the LoanPerformance house price index (LPHPI), which is used by the Fed to estimate the value of real estate in the flow of funds accounts, and is growing at a 9.1% annualized rate. States seeing at least a 4% 3-month gain include Ohio, Wisconsin, New York, Virginia, South Carolina, Georgia.

Likewise, the median existing home price and new home values are reported. These series are not seasonally adjusted; and therefore, are not extremely helpful in this context. But the 3-month existing home values remain in positive territory, although at a slowing rate of improvement. It should be noted that the median home prices is a cruder measure of home values – the Case Shiller and FHFA were developed in order to overcome the limitations of thinking in terms of the “median”.

So it looks like there is a chance that home values stabilize before 2010. We will see, as a 1 quarter increase by the Case Shiller index, although positive, is far from a trend.

Rebecca Wilder

(Edited slightly for readability....rdan)

rdan

Mudflats has the story of her dad to tell. My own father was navy, in the Pacific, and had a different story to tell. I have nothing to add.

...When he was 20 years old, he’d been taken prisoner by the Germans at the Battle of the Bulge, was marched for miles, imprisoned, and starved. Like many men of his generation, veterans of World War II, he didn’t talk about it much. He held his memories close to his chest. If he talked to anyone about them, I didn’t know. It was only many years after his service and just before his death that he shared some of those memories with me.

Starvation does strange things to people. He told me that after a while in the camp, he had the same recurring dream, every night – a stack of pancakes topped with two fried eggs, sunny-side up. He’d dream that dream over and over, a still frame, a picture of a breakfast that never came. He told me that his fellow prisoners got so hungry that once they had killed and eaten a cat that had strayed into the camp. You don’t forget a story like that.

(The rest of the story is below the fold)

Or the story of the man in the camp, who snapped. In peace time, we’d have called him a boy. Suddenly and without warning in the middle of the day, out in the yard, his mind went. He ran for the fence in a desperate effort to escape. There was nowhere to go, and in broad daylight with armed guards everywhere, he didn’t stand a chance. My father, who was quick to pick up languages, had learned some German. “Don’t shoot! He’s crazy! He’s lost his mind! He doesn’t know what he’s doing!” my father called out to the guards as he ran out in the yard waving his arms. The man kept running for the fence, and he climbed, and the guards didn’t shoot. They waited until he reached the top. And then they shot him. They left him there for three days as a warning to anyone else who might have been thinking about escape.

Any survivor of World War II has stories. Millions were never able to tell them. Their lives ended on battlefields, and in gas chambers, at the hands of the Nazis. My dad was able to tell me some of his experiences, but most of those memories died with him, like they died with many vets and victims of the war. I didn’t even know he’d received a Purple Heart until after his death. But he survived. He survived to marry the girl he left at home, to buy a house, to get a college degree, to start his own company, and to raise a family of five children.

I asked my dad if he ever got his stack of pancakes with the fried eggs on top. I imagined it being his first meal after the Russians had liberated the camp. The Germans had heard that the Russians were coming, and they left quickly in the night. The prisoners hadn’t known what was happening until two days later when the Russian army came and let them out, confused and near death. No, he told me, he never did have the pancakes and eggs. It took months in the hospital to build his system back up to where he could eat normally. He began at 5′11″ weighing less than 100 pounds, and started with an IV, then a liquid diet, then cream of wheat, and finally solids. A fellow prisoner, he said, on his way from the camp to the hospital in France had managed to get a hold of a box of donuts and had gorged himself. He died a free man, but still a victim. By the time my dad was able to eat that stack of pancakes and eggs, the desire had passed.

I remember as a child I was not allowed to watch Hogan’s Heroes. It wasn’t a joke in my house. There was nothing funny about prisoner of war camps. There were no handsome well-fed prisoners with secret tunnels under their bunks, and pirate radio equipment who always managed to play their captors for the fool. There were frightened, emaciated young men whose minds and bodies were broken an ocean away from home, who were shot on fences , and who ate cats, and watched their friends die. There was nothing to laugh about. Those were Nazis.

I am tired of people comparing Obama to Hitler. I am tired of seeing signs with swastikas and nazi symbols at health care rallies. I am tired of people saying that a health care plan designed to uplift millions of Americans to give them dignity, and choice and the ability to care for their families, is like Naziism. I am tired of Rush Limbaugh.

As time passes, and as the greatest generation becomes a memory, passing into history one soul at a time, it is up to the generations that follow them to keep “Hitler” and “Nazi” out of the clutches of those who would make them political buzzwords for people they don’t like, or policies they don’t understand. Those words remind us of the worst that people can be. There is nothing horrible about Germans in particular that caused them to do these things. This is humanity’s dark potential, and something that we all need to remember, whether we were there or not, or whether our family was affected or not, because this is what people can do to each other. To strip those words of their power and meaning in order to create political fear for self-gain is inexcusable and needs to be confronted and refuted whenever it arises, by all of us, whether we support the current health care bill and the current president or not.

by Bruce Webb

People who follow the issues around what is known as the Entitlements Crisis are more than familiar with Peter G. Peterson a co-founder and financial sponsor of the Concord Coalition and a man who has devoted a billion dollars of his own money to endow the Peter G Peterson Foundation. The PGP Foundations's main goal is to roll back not just the Great Society but also the New Deal by convincing America that even in the short run programs like Social Security and Medicare are bankrupting future generations. A good introduction to Pete G P and his works can be found in this cover story in the Nation from last February Looting Social Security

PGP is alive and as far as I know well for a man of his age (83) which is a good thing because if he was in his grave he would be spinning fast enough to be an energy source for a medium sized city. The Republican Party which has been since its inception firmly on message against Medicare and with the PGP agenda has suddenly become Gramma's biggest defender. This started first with Sarah Palin's introduction of 'death panels' into the discussion. Her partner in clownery, RNC Head Michael Steele decided to double down with this WaPo OpEd Protecting Our Seniors: GOP Principles for Health Care that reads in part:

Republicans want reform that should, first, do no harm, especially to our seniors. That is why Republicans support a Seniors' Health Care Bill of Rights, which we are introducing today, to ensure that our greatest generation will receive access to quality health care. We also believe that any health-care reform should be fully paid for, but not funded on the backs of our nation's senior citizens.

The Republican Party's contract with seniors includes tenets that Americans, regardless of political party, should support. First, we need to protect Medicare and not cut it in the name of "health-insurance reform." As the president frequently, and correctly, points out, Medicare will go deep into the red in less than a decade. But he and congressional Democrats are planning to raid, not aid, Medicare by cutting $500 billion from the program to fund his health-care experiment. The president also plans to cut hospital payments and Medicare Advantage, all of which will mean fewer treatment options for seniors. These types of "reforms" don't make sense for the future of an already troubled federal program or for the services it provides that millions of Americans count on.

Somewhere Peterson's minions Robert Bixby of Concord and former GAO Controller David Walker (now CEO of the PGP Foundation) are sitting pole-axed. Their message was pretty simple, in large part because it is mostly correct, this country cannot afford for Medicare and Medicaid costs to accelerate as they have. Their solution which involves slashing Medicare while not doing much for the rest of health care is not in my view correct, the solution has to be more broad-based. But that portion of Steele's op-ed bolded by me is in effect the anti-Peterson message. He and his have spent decades trying to drain the juice out of the Third Rail of American Politics and now Steele with his Don't Tread on Senior Citizens flag is serving to amp up the current in that Rail.

Heck of a job Mikey! Don't expect your stipend check from the PGP Foundation this week. Because you went WAY off message here. But Gramma sends hugs and kisses.

rdan

Rebecca Wilder will begin writing as a Bear soon. Meanwhile, she maintains her own blog NEWSNECONOMICS. Here is an example of an Aug. 19,2009 post, which I am cross posting today, and a follow up post here. There were several questions raised, but I think it an interesting notion. I own an old Malibu and not a Porsche, and have watched my premiums and out of pocket health expenses skyrocket this decade. I knew the money went somewhere! Here is the cross post:

Today I plan to rant just a bit about consumption because I was reading Yves Smith’s article today, and she referred to “debt-fueled consumption” – the now pejorative phrase that just rolls off the tongue. She says:

“no where does the article [referenced WSJ article in her post on the consumption share] acknowledge that the consumption level was unsustainable and debt fueled.”
And this is where I get just slightly irked, because it seems to me that the phrase “debt-fueled consumption” strikes the following chord: every American household was loading up on home equity debt just to buy big ticket items like Hummers and large sofa sets with cup-holders galore from Jordan’s Furniture (a discount furniture shop in the Boston area – generically, every city has one)."

I am sure that Yves Smith knows this, but the debt-fueled consumption was more likely paying surging health care bills than buying cute kitchenettes.
(charts are fixed...update rdan)

Myth 1: The years of debt-fueled consumption went into goods spending, jumping the consumption share of GDP to an excess of 70%.


Update: large edition of graph here.
Reality: The goods share of total consumption has been falling quite dramatically, while the service component surged. Therefore, it is more likely that the debt fueled consumption was going predominantly into the service component (paying service bills).

In Q2 2009, 25% of service spending went to health care – outpatient services (physician, drugs, dentist) or hospital and nursing home services - and 29% of service spending went to housing and utilities – rent, water, electricity, and trash. As such, over 50% of service consumption is more likely to remain stable, even rise faster, with the Boomers out there.

And as for the speculation that workers are postponing retirement due the drop-off in wealth, and consumption will be meager into the medium term, I simply don’t buy it. If anything, the aging population is going to fuel recovery – no matter when they choose to retire. Service sector consumption growth – much of it based on health care consumption - will simply become a larger share of GDP growth (cutting out autos, perhaps), and pick up some of the slack.

And here’s another thing. Myth 2: durables consumption – i.e., autos and furniture – are important contributors to the initial stages of the recovery. It helps, but service consumption is the biggie.



Update: enlarged chart is here

The chart lists the average contribution each GDP component during the initial year of recovery spanning the 1950-2007 (nine recoveries in total).


Reality: The average growth accumulated during the initial stages of recovery (1-yr following the recession’s end) following the last nine recessions is a remarkable 6.43% (consensus forecast for growth in 2010 is currently 2.3%). Only 0.47% of that came from durable goods. A huge 1.67% of that stemmed from the service component of consumption (again, health care and housing).

And as long as service spending rebounds, so too will the economy – even without a big pickup in autos. Inventories are almost a foregone conclusion, the residential construction sector is bound to pick up – 500-600k units is simply unsustainable for a US population that is growing at roughly 1% a year, and growth rates on such a small base can be large.

And here’s another link to jobs that has not been incorporated to many forecasts – growth in jobs means new health care insurance, means added spending on health care.

I could go on, but I won’t.

Rebecca Wilder

Chart from follow up here.

rdan

5 myths about health care round the world by By T.R. Reid, Commentary, Washington Post (hat tip Mark Thoma)

...I've traveled the world ... to see how other developed democracies provide health care. Instead of dismissing these models as "socialist," we could adapt their solutions to fix our problems. To do that, we first have to dispel a few myths about health care abroad:

1. It's all socialized medicine out there. Not so. ... In some ways, health care is less "socialized" overseas than in the United States. Almost all Americans sign up for government insurance (Medicare) at age 65. In Germany, Switzerland and the Netherlands, seniors stick with private insurance plans for life. Meanwhile, the U.S. Department of Veterans Affairs is one of the planet's purest examples of government-run health care....
(the rest of the article is below the fold)

2. Overseas, care is rationed through limited choices or long lines. Generally, no. Germans can sign up for any of the nation's 200 private health insurance plans -- a broader choice than any American has. ... The Swiss, too, can choose any insurance plan in the country.

In France and Japan, you ... can go to any doctor, any hospital, any traditional healer. There are no U.S.-style limits such as "in-network" lists of doctors or "pre-authorization" for surgery. You pick any doctor, you get treatment -- and insurance has to pay. ...

As for those notorious waiting lists, some countries are indeed plagued by them. Canada makes patients wait weeks or months for nonemergency care, as a way to keep costs down. But ... many nations -- Germany, Britain, Austria -- outperform the United States on measures such as waiting times for appointments and for elective surgeries. In Japan, waiting times are so short that most patients don't bother to make an appointment. ...

3. Foreign health-care systems are inefficient, bloated bureaucracies. Much less so than here. ...

4. Cost controls stifle innovation. False. The United States is home to groundbreaking medical research, but so are other countries... Any American who's had a hip or knee replacement is standing on French innovation. ... Many of the wonder drugs promoted endlessly on American television, including Viagra, come from British, Swiss or Japanese labs. Overseas, strict cost controls actually drive innovation. ...

5. Health insurance has to be cruel. Not really. American health insurance companies routinely reject applicants with a "preexisting condition"... They employ armies of adjusters to deny claims. If a customer ... faces big medical bills, the insurer's "rescission department" digs through the records looking for grounds to cancel the policy... Foreign health insurance companies, in contrast, must accept all applicants, and they can't cancel as long as you pay your premiums. ...

In many ways, foreign health-care models are not really "foreign" to America, because our ... system uses elements of all of them. For Native Americans or veterans, we're Britain: The government provides health care, funding it through general taxes, and patients get no bills. For people who get insurance through their jobs, we're Germany: Premiums are split between workers and employers, and private insurance plans pay private doctors and hospitals. For people over 65, we're Canada: Everyone pays premiums for an insurance plan run by the government, and the public plan pays private doctors and hospitals according to a set fee schedule. And for the tens of millions without insurance coverage, we're Burundi or Burma: In the world's poor nations, sick people pay out of pocket for medical care...

This fragmentation is another reason that we spend more than anybody else and still leave millions without coverage. All the other developed countries have settled on one model for health-care delivery and finance; we've blended them all into a costly, confusing bureaucratic mess.

Which, in turn, punctures the most persistent myth of all: that America has "the finest health care" in the world. We don't. In terms of results, almost all advanced countries have better national health statistics than the United States... In terms of finance, we force 700,000 Americans into bankruptcy each year because of medical bills. In France, the number of medical bankruptcies is zero. Britain: zero. Japan: zero. Germany: zero.

Given our remarkable medical assets -- the best-educated doctors and nurses, the most advanced hospitals, world-class research -- the United States ... should be the best in the world. To get there, though, we have to be willing to learn some lessons about health-care ... from the other industrialized democracies.

There are, of course, groups that have a strong interest in perpetuating these myths as part of their attempt to block health care reform.