222222222222222222
-
phillyrich
-
Comparative Destructiveness
Jonathan Chait gets angry at the way Republicans, who claim to care about the deficit, propose saving money by cutting back on expenditures that are needed to control health costs. Indeed. But there’s a larger dynamic at work here than mere stupid...
"How Fares the Dream?
By PAUL KRUGMAN
Published: January 15, 2012
“I have a dream,” declared Martin Luther King, in a speech that has lost none of its power to inspire. And some of that dream has come true. When King spoke in the summer of 1963, America was a nation that denied basic rights to millions of its citizens, simply because their skin was the wrong color. Today racism is no longer embedded in law. And while it has by no means been banished from the hearts of men, its grip is far weaker than once it was.
Fred R. Conrad/The New York Times
Paul Krugman
To say the obvious: to look at a photo of President Obama with his cabinet is to see a degree of racial openness — and openness to women, too — that would have seemed almost inconceivable in 1963. When we observe Martin Luther King’s Birthday, we have something very real to celebrate: the civil rights movement was one of America’s finest hours, and it made us a nation truer to its own ideals.
Yet if King could see America now, I believe that he would be disappointed, and feel that his work was nowhere near done. He dreamed of a nation in which his children “will not be judged by the color of their skin but by the content of their character.” But what we actually became is a nation that judges people not by the color of their skin — or at least not as much as in the past — but by the size of their paychecks. And in America, more than in most other wealthy nations, the size of your paycheck is strongly correlated with the size of your father’s paycheck.
Goodbye Jim Crow, hello class system.
Economic inequality isn’t inherently a racial issue, and rising inequality would be disturbing even if there weren’t a racial dimension. But American society being what it is, there are racial implications to the way our incomes have been pulling apart. And in any case, King — who was campaigning for higher wages when he was assassinated — would surely have considered soaring inequality an evil to be opposed.
So, about that racial dimension: In the 1960s it was widely assumed that ending overt discrimination would improve the economic as well as legal status of minority groups. And at first this seemed to be happening. Over the course of the 1960s and 1970s substantial numbers of black families moved into the middle class, and even into the upper middle class; the percentage of black households in the top 20 percent of the income distribution nearly doubled.
But around 1980 the relative economic position of blacks in America stopped improving. Why? An important part of the answer, surely, is that circa 1980 income disparities in the United States began to widen dramatically, turning us into a society more unequal than at any time since the 1920s.
Think of the income distribution as a ladder, with different people on different rungs. Starting around 1980, the rungs began moving ever farther apart, adversely affecting black economic progress in two ways. First, because many blacks were still on the lower rungs, they were left behind as income at the top of the ladder soared while income near the bottom stagnated. Second, as the rungs moved farther apart, the ladder became harder to climb.
The Times recently reported on a well-established finding that still surprises many Americans when they hear about it: although we still see ourselves as the land of opportunity, we actually have less intergenerational economic mobility than other advanced nations. That is, the chances that someone born into a low-income family will end up with high income, or vice versa, are significantly lower here than in Canada or Europe.
And there’s every reason to believe that our low economic mobility has a lot to do with our high level of income inequality.
Last week Alan Krueger, chairman of the president’s Council of Economic Advisers, gave an important speech about income inequality, presenting a relationship he dubbed the “Great Gatsby Curve.” Highly unequal countries, he showed, have low mobility: the more unequal a society is, the greater the extent to which an individual’s economic status is determined by his or her parents’ status. And as Mr. Krueger pointed out, this relationship suggests that America in the year 2035 will have even less mobility than it has now, that it will be a place in which the economic prospects of children largely reflect the class into which they were born.
That is not a development we should meekly accept.
Mitt Romney says that we should discuss income inequality, if at all, only in “quiet rooms.” There was a time when people said the same thing about racial inequality. Luckily, however, there were people like Martin Luther King who refused to stay quiet. And we should follow their example today. For the fact is that rising inequality threatens to make America a different and worse place — and we need to reverse that trend to preserve both our values and our dreams."
http://tpmdc.talkingpointsmemo.com/
"TPMDC
CHART: A Hidden Source Of Budget Deficits
-
Does IMF Stand for Impressive Macroeconomic Flexibility?
So the IMF is holding a meeting on rethinking macroeconomic policy (I was invited but couldn’t make the timing work.) And the Fund’s chief economist has already made it clear that he’s open to some serious revision of the prevailing paradigm.
http://hat4uk.wordpress.com/
Lots of satisfying vituperation.
http://www.calculatedriskblog.com/2012/01/growing-doubts-about-greece.html
"Growing Doubts about Greece
by CalculatedRisk on 1/15/2012 09:26:00 PM
From the NY Times: As Reforms Flag in Greece, Europe Aims to Limit Damage
As Greece and its lenders prepare for another week of tense negotiations, European officials now say that the task is less to help the country through its troubles than to avoid the sort of uncontrolled default that many experts fear could threaten the global financial system.
And more from Tim Duy at FedWatch: How's That Austerity Working?
Officials from the so-called troika of foreign lenders to Greece — the European CentralBank , European Union and International Monetary Fund — have come to believe that the country has neither the ability nor the will to carry out the broad economic reforms it has promised in exchange for aid, people familiar with the talks say, and they say they are even prepared to withhold the next installment of aid in March.
...
As recently as November, Greece and its lenders were optimistic that the country’s newly installed prime minister, Lucas Papademos ... would stabilize Greece’s soaring debt and help nurse the country back to health.
But since then, his interim government ... has been paralyzed.Bottom Line: The actions of the European Central Bank greatly eased the immediate financial pressures in the Eurozone. But the underlying problem of internal imbalances remain, and the European response is still not addressing those imbalances. Instead, the commitment to the fixed exchange rate combined with Germany's failure to recognize that their current account surplus must turn to deficit if they ever hope to be repaid promises to lock the Eurozone on the path of ongoing recession.
We should know about the Greek debt deal over the next week or two. I suspect a deal will be reached, and thatGreece will receive the March aid. But at some point the "pretending" will have to stop."
http://www.nytimes.com/2012/01/16/world/europe/europe-now-doubts-that-greece-can-embrace-reform.html
"Fanning those fears is a growing conviction among the Greek political establishment and the country’s lenders that the old dynamic — with Greece pretending to make structural changes and its lenders pretending to save it from default — has become untenable, people close to the talks say.
As recently as November, Greece and its lenders were optimistic that the country’s newly installed prime minister, Lucas Papademos, a well-respected financial technocrat, would stabilize Greece’s soaring debt and help nurse the country back to health.
But since then, his interim government — stocked not with technocrats but with politicians gunning for national elections as soon as March — has been paralyzed. Although it passed the 2012 national budget, it has failed to put into effect most of the unpopular changes mandated by the loan agreement that the previous government made back in 2010, when the country first admitted it was broke.
“The prime minister is a fine personality — he’s educated, he’s honest, he’s the best you can get around. But no one is helping him,” said George Kirtsos, the owner of a weekly newspaper, The Athens City Press. “Those that take the decisions at a national level believe that Greece will not make it.”
There is considerable posturing in these sorts of negotiations, and the troika has threatened to withdraw aid in the past, only to approve the next loan installment. It may do so again despite its misgivings, because the alternative of an uncontrolled default is too risky. But it will do so only if negotiations with private bondholders can be completed successfully.
But, amid a stream of gloomy news from Europe, including the downgrade of the debt of France and eight other countries, the sense that default is inevitable is growing. “When you simply go over the bare figures I can’t really imagine another scenario,” said Michael Fuchs, a leading member of Chancellor Angela Merkel’s Christian Democratic Union in the German Parliament.
“Mathematics is mathematics, and one plus one has to equal two and not five,” he said, describing how, even with a significant restructuring of its debt, the Greek government’s deficit would still be too large and its economy not competitive enough to put the country back on a sound footing.
That sense can be self-reinforcing as well, making it even harder for Mr. Papademos to push through the changes Greece needs to survive the current crisis.
Greece’s dire economic condition can hardly be overstated. After two years of tax increases and wage cuts, Greek civil servants have seen their income shrink by 40 percent since 2010, and private-sector workers have suffered as well. More than $75 billion has left the country as people move their savings abroad. Some 68,000 businesses closed in 2010, and another 53,000 — out of 300,000 still active — are said to be close to bankruptcy, according to a report issued in the fall by the Greek Co-Federation of Chambers of Commerce."
Just color and worry.
-
This is from the business pages. They channel Andrew Mellon.
"PARIS — As France and other European nations grapple with the downgrade of their sovereign debt by Standard & Poor’s on Friday, a longer-term test looms over whether those nations will now turn toward improving Europe’s economic competitiveness.
Most European countries have embraced the austerity prescribed by Chancellor Angela Merkel of Germany to resolve what markets have identified as the big problems: high debts and budget deficits.
But in their zeal to mend balance sheets, European leaders have rarely been heard talking about how to take advantage of the crisis — as Germany has with past crises — to rebuild their economies by investing in new technologies or making their labor markets more flexible.
“In one sense, the resources — human, natural — of Europe are not much different than before the crisis, so our potential is not that different,” Joseph E. Stiglitz, the Nobel laureate, said in an interview before S.& P. announced its downgrades on Friday. “But what’s clear is that misguided policies and market failures are leading Europe not to use its resources well, by not investing in people and capital, or improving technology, in a way that will help them be more competitive with what’s going on in Asia.”
In addition to France, S.&. P. downgraded the ratings of Austria, Italy, Spain, Cyprus, Portugal, Malta, Slovakia and Slovenia."
http://www.nytimes.com/2012/01/16/world/europe/frances-gloomy-economic-outlook-haunts-presidential-race.html?ref=europe
"As President Nicolas Sarkozy contemplates his race for re-election, with the first round of voting 100 days away, he is confronted with an economy reeling from the euro crisis and nearly zero growth. France has just lost its AAA credit rating and must cut government spending. The unemployment rate is 9.9 percent, a 12-year high, and rising."
Sarkozy must pay the interest on his loans. He could raise taxes. He could default. He could leave the Euro. Cutting is not required.
.
No comments:
Post a Comment