Joseph Stiglitz - Five Errors

Joseph Stiglitz identifies "five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion."

The Five Errors are:

1. Firing the sensible pro-regulation Paul Volcker and hiring the Ayn Rand disciple Alan Greenspan.

2. Repealing the Glass-Steagall Act in 1999.

3. The (younger) Bush tax cuts.

4. Screwing up accountability for corporations.

5. Bungling the response to the belated realization that the economy was in "deep doo-doo."

Major, overall problem: Too much faith in free markets.

Concise explanation of energy policy

Dean Baker explains how it works.

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Note: I deleted people's ability to log on freely, as spammers were getting in and leaving all sorts of junk on the blog.

Rich Gardner

The utter waste of “Star Wars”

Since I wrote a paper on Star Wars/SDI/Missile Defense/etc. back in the late 1980s, it has been my belief that President Reagan merely restarted in 1983 what had been shut down by the 1972 Anti-Ballistic Missile Treaty. Essentially, the defense contractors who had been working on ABM technology in 1972 continued to work "on spec" until what was roughly the same program was started up again in 1983. So when we speak of Missile Defense, we're really talking about a program that began during the Eisenhower Administration, i.e., about a 50+ year-old program.
Would the program ever have produce worthwhile results? I think so. During the October 1986 Reykjavík, Iceland Summit, Reagan and the General Secretary of the CPSU, Mikhail Gorbachev appeared about to make a deal to eliminate nuclear weapons entirely. The sticking point apparently, was that the US had to surrender Missile Defense. Unfortunately, as with G.W. Bush in 2003 with Iran, Reagan proved unable to recognize when the deal was as good as it was ever going to get and to cash in his chips while the cashing in was good.
The Center for Arms Control and Non-Proliferation estimates that the US has spent about $60 billion on this worthless boondoggle since the Bush Administration took office. The program has failed test after test and shows no signs of ever passing those tests within the next few decades. Remember, this is a 50+ year-old program!!!! If there's no apparent success after all this time, we're not just talking about a few wrinkles left to be ironed out, we're talking about major, fundamental flaws. My paper in the late 1980s compared the 1943 bombing of Schweinfurt, Germany with the Missile Defense program of the time. The media was in the habit of speaking of a 99% success rate in being able to shoot missiles down. My example and comparisons showed that a 5% or 10% success rate was far more likely.
Also, the program has produced completely unnecessary tensions with Russia.
It's time to shut this program down. Permanently.

Update: The Weekly Standard composed a plea to our President-Elect to keep "Star Wars" going. I considered that to be a silly thing to do and wrote a lengthy piece in response.

The Housing Crisis

Fannie Mae & Freddie Mac are to blame for the housing crisis, say Republican conservatives. Not true, says McClatchey Newspapers:

...federal housing data reveal that the charges [against Fannie and Freddie] aren’t true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.
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Dean Baker, the co-director of the Center for Economic and Policy Research, noted that “while Fannie and Freddie, as huge actors in the mortgage market, certainly contributed to the bubble, it is absurd to point to them as principle culprits.” He pointed out that “their market share actually fell as the bubble grew to ever more dangerous levels, dropping from 50.1 percent in 2002 to just 34.8 percent at the peak of the bubble in 2006.”

A Republican Senator, desperate to avoid blame for the economy, claims that the President doesn't control anything. Bush is just a helpless victim of the economy, which is completely independent of anything Bush does.

An examination of a number of myths about the housing crisis.

Bush’s economy - a success story?

Dan Froomkin of the WaPo's White House Watch presents:

AFP reports: "Fears of a global financial collapse have cast a dark cloud over US President George W. Bush's final months in office, after years in which he claimed the US economy as a major success story."

Paul Krugman of the NY Times comments on Bush's alleged "major success story":

Looking at [the included chart], which presidents, exactly, would the Bush economic climate be the envy of? Even at its best, the Bush economy failed to deliver employment growth comparable to that under earlier presidents. And the Bush economy spent very little time at its best. Only Gerald Ford and Bush the elder failed to deliver performance better than the current occupant of the White House.

And just where has Our Glorious Leader (Bush) been during:

"What we are witnessing may be the greatest destruction of financial wealth that the world has ever seen -- paper losses measured in the trillions of dollars. Corporate wealth. Oil wealth. Real estate wealth. Bank wealth. Private-equity wealth. Hedge fund wealth. Pension wealth. . . .

"What is really going on, at the most fundamental level, is that the United States is in the process of being forced by its foreign creditors to begin living within its means."

And as our buddy Joseph Stiglitz says in the Guardian:

"Houses of cards, chickens coming home to roost - pick your cliche. The new low in the financial crisis, which has prompted comparisons with the 1929 Wall Street crash, is the fruit of a pattern of dishonesty on the part of financial institutions, and incompetence on the part of policymakers."

Well, just as during Hurricane Katrina (and 9-11, for that matter) and its aftermath, Bush has been AWOL:

Ezra Klein blogs for the American Prospect: "According to The Wall Street Journal, Bush was briefed on the rescue after it was in play. And even then, he was only 'briefed.' There's been no effort on the part of the White House to even advance the idea that Bush is an engaged participant who's actively signing off on these actions, possibly because suggesting his involvement in a crisis of this complexity would cause the stock market to run and hide in a corner."

At thinkprogress.org, Ali Frick watched MSNBC host Chris Matthews take on Rep. Eric Cantor (R-VA) last night:

"Noting that a 'normal president' would be more visible during such a crisis, Matthews compared Bush's response to the current financial turmoil to his handling of Hurricane Katrina:

"MATTHEWS: 'I'm just asking you where's the President of the United States tonight? You got Paulson out there. Where's the President? He's pulling one of these Katrinas again. Where is he? The country's worried like hell when you lose this amount of value in the wealth of this country in a matter of days. You'd think the President would come on television and explain the situation to the American people. I'm just asking where he is. That's all I'm asking.'

"CANTOR: 'Chris, you'll have to ask -- I don't know where he is. I assume he's in the White House.'"

And this was just one of those comments that make you go "Wha-a-a-a?!?!?!":

Olivier Knox writes for AFP: "The vastly unpopular president, who has not held a formal press conference since July 15th or taken questions on the economy since a September 7 television interview, worries that anything he says could become fodder in the race to the November 4 elections, explained spokeswoman Dana Perino."

Whoa! Whoa! Hold on here! In the midst of financial crisis that rivals 1929, the President is concerned about the upcoming election? The election is even a factor!?!?!

And for anybody who thought that the Iraq War had something to do with oil and other economic factors, Fred Kagan suggests that's correct and explains why Democrats are to blame:

Democratic senators intervened in Iraqi domestic politics earlier this year to prevent Iraq from signing short-term agreements with Exxon Mobil, Shell, Total, Chevron, and BP.

The Iraqi government was poised to sign no-bid contracts with those firms this summer to help make immediate and needed improvements in Iraq's oil infrastructure...

...Instead, Senators Chuck Schumer, John Kerry, and Claire McCaskill wrote a letter to Secretary of State Rice asking her "to persuade the GOI [Government of Iraq] to refrain from signing contracts with multinational oil companies until a hydrocarbon law is in effect in Iraq."

As Booman puts it:

I'd like to point out one more time for the record, that the Iraqis are not grateful for what coalition troops did to their country and that they want us to get the hell out of their country.
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All of this disrespect is what led Fred Kagan (panties all in a bunch) to break out his laptop and type nasties about Sens. Kerry, Schumer, and McCaskill. Why does Kagan give one rat's ass who gets the contracts in Iraq? You tell me. To blame it on the Democrats, per chance? Or maybe as a direct quid pro quo from his paymasters? [emphasis added]
Fred Kagan has been a major theoretician behind the Iraq War (no, we won't credit him with the title of "thinker").

Bush says “I told you so,” but…

Energy policy - Bush says "I told you so," but what are the two conditions for being able to say that? 1. You have to put out a set of recommendations. Check, Bush put out an energy policy very early in his first term.  2. You have to be able to say that your advice was not followed. D'oh!

Energy Secretary Samuel Bodman said, as part of an online interactive forum on March 9, 2005, “During his second week in office, the President put together a task force to address America’s energy challenges… And over the past four years, we have implemented 95 percent of those recommendations.” [emphasis added]

Bill O'Reilly is (gulp!) correct! Karl Rove claimed on O'Reilly's program that:

"This president and this administration put more into alternative energy research than any administration in history by a significant factor."

...

O’Reilly [correctly] questioned Rove’s assertion, saying “maybe that’s true and maybe it isn’t.”

No, Rove's assertion is not correct.

Since 1980, federal spending on energy research has declined, and since the mid-1990s, “R&D spending has been stagnant for renewable energy and energy efficiency.”

Bush correctly asserted in his 2006 State of the Union Address that America was addicted to oil. Unfortunately, he never followed that up by doing anything effective about it. According to the White House, the best energy policy was simply to trust the market (PDF). BTW, John McCain agrees with that idea.

Poll - Los Angeles Times/Bloomberg Poll. June 19-23, 2008. N=1,233 adults nationwide. MoE ± 3.

"Has the recent rise in gas and oil prices caused you or your family any financial hardship, or not?"
		Yes	No	Unsure
		%	%	%
	6/19-23/08	70	29	1
"Who do you think, if anyone, is to blame for the rising fuel prices: the oil companies that are making large profits, or commodities speculators, or turmoil in the Middle East, or OPEC and other foreign producers of oil, or the Bush administration, or the demand for more oil from countries such as China, or is there some other person or group that you blame for the rising fuel prices?" Up to two responses accepted.
			%
	Bush administration		29
	Oil companies		25
	Commodities speculators		13
	Countries such as China		11
	Foreign producers		9
	Middle East turmoil		8
	Other		4
	No one (vol.)		1
	Unsure		21
"Do you think the Bush administration has taken sufficient steps to control rising oil and gas prices and ease its affect on American families, or has the Bush administration not done enough?"
		Taken Sufficient Steps	Not Done Enough	Unsure
		%	%	%
	6/19-23/08	10	81	9

Iraq War vs Climate Change

Is our president careless about all money? Does he regard all money the way Mrs Howell of Gilligan's Island did ("Oh deah, it's only money")?  Ha, ha, ha! No, don't be silly!  President Bush is very concerned that the bill for fixing Climate Change might run the US as much as $6 Trillion! Oh, and get this:

"As you can imagine, our opposition to this will be quite strong and we'll be making these points throughout the week," said Keith Hennessey, director of Bush's National Economic Council.

U.S. gross domestic product could be reduced by as much as 7 percent in the year 2050 and gasoline prices -- already at record highs in the United States -- could soar by as much as 53 cents a gallon by 2030, he said. [emphases added]

Gas was an average of $1.91 a gallon between 2000 & 2006, but went to $2.80 in 2007. Price for crude oil went from $50 a barrel in 2005 to $68 in 2007. Now oil is about $140 a barrel and around $4.00 a gallon.

Of course, one of the really major problems with the economy today are the "bubbles" that arise and burst. First there was the "dot-com bubble," then the "housing market" bubble, now it looks as though we've got a "hydrocarbon bubble" in the making. Major problem that this article identifies, of course, is the extremely unequal distribution of wealth, with those at the top of the income ladder making all kinds of money and with those in the middle and bottom making much less. Wealthy people with "money to burn" are much more wasteful than are people who spend to survive and to live decent lives. Our current president, with his tax policies, is very much in favor of giving the wealthy ever more money. The Republican scuttling of the "windfall profits" tax has everything to do with Ronald Reagan's old "Reverse Robin Hood" policies of taking from the non-wealthy and giving to the wealthy.  America then gets an increasingly top-heavy economy that becomes ever more unsteady.

Price of gas - why it's going up by OPEC President Chakib Khelil. [emphases added]

OPEC president says weak dollar, Iran crisis will drive oil prices to US$170

ALGERIA. OPEC President Chakib Khelil predicted that the price of oil will climb to US$170 a barrel before the end of the year, citing the dollar's decline and political conflicts.

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The rising cost of crude is not linked to supply, Khelil told Bloomberg today. "There is more than enough oil in the market to meet the international demand," added the OPEC president.

Video - Ron Paul agrees. Price of oil linked to Iran saber-rattling.