We do not need to import ambition.
We do need to protect manufacturing.
We must end fossil carbon use as quickly as possible.
http://www.forbes.com/sites/jamesmarshallcrotty/2011/12/21/m-i-t-game-changer-free-online-education-for-all/
http://krugman.blogs.nytimes.com/
"The Soft Bigotry of Low Employment Expectations
A brief note while in transit, about today’s jobs report.
Obviously it’s better than we’ve been seeing. But we need much faster job growth; it says something about how beaten down we are that this is considered good news.
Let me give two back-of-the-envelope ways to think about how inadequate 200,000 jobs a month is.
First, note that there are still about 6 million fewer jobs than there were at the end of 2007 — and that we would normally have expected to have added around 5 million jobs over a four-year period. So we’re 11 million jobs down — and we need at least 100,000 jobs a month just to keep up with working-age population growth. Do the math, and you’ll see that it would take 9 or 10 years of growth at this rate to restore full employment.
Alternatively, note that during the Clinton years — all 8 of them — the economy added around 230,000 jobs a month. As it did that, the unemployment rate fell about 3 1/2 percentage points — which is about what we’d need from here to get back to something that felt like full employment. Again, this suggests that we’re looking at something like a decade-long haul to have full recovery.
So yes, this is better news than we’ve been having. But it’s still vastly inadequate."
Obviously it’s better than we’ve been seeing. But we need much faster job growth; it says something about how beaten down we are that this is considered good news.
Let me give two back-of-the-envelope ways to think about how inadequate 200,000 jobs a month is.
First, note that there are still about 6 million fewer jobs than there were at the end of 2007 — and that we would normally have expected to have added around 5 million jobs over a four-year period. So we’re 11 million jobs down — and we need at least 100,000 jobs a month just to keep up with working-age population growth. Do the math, and you’ll see that it would take 9 or 10 years of growth at this rate to restore full employment.
Alternatively, note that during the Clinton years — all 8 of them — the economy added around 230,000 jobs a month. As it did that, the unemployment rate fell about 3 1/2 percentage points — which is about what we’d need from here to get back to something that felt like full employment. Again, this suggests that we’re looking at something like a decade-long haul to have full recovery.
So yes, this is better news than we’ve been having. But it’s still vastly inadequate."
http://www.guardian.co.uk/business/economics-blog/2012/jan/08/eurozone-crisis-angela-merkel-whip-hand
Angela Merkel has the whip hand in an orgy of austerity
The notion that economic pain is the only route to pleasure was once the preserve of the British public school-educated elite, now it's European economic policy
Angela Merkel's letter to president of the European Council stressed 'fiscal discipline' and the need to 'correct departures from sound fiscal policies'. Photograph Tobias Schwarz/Reuters
The novelist and polymath Anthony Burgess published a selection of book reviews and essays in the 1980s called Homage to QWERT YUIOP. One of the pieces was called The Whip and in it Burgess discussed le vice Anglais, the derisory term given by the French to the masochistic sexual preferences of upper-class Brits.
Burgess was in no doubt that the taste for the whip had affected the way Britain had been run, and he was probably right about that. In the 1970s, the Bank of England had an instrument for controlling the amount of credit in the economy, which its practitioners lovingly called the corset. Enough said. When Denis Healey accused the Thatcher administration of sado-monetarism everybody got the reference. With its references to fiscal restraint and the tightness of monetary policy, economic management at the time was coloured by the language of the dominatrix – and still is, of course.
Why was this? Burgess thought it had quite a lot to do with the British public school system in which there existed "a kind of bond of shameful-shameless intimacy between the members of the ruling class those schools were concerned with turning out. To have beaten, been beaten, witnessed the same beatings is a red badge of something."
If he was writing today, Burgess would probably not be surprised by the alacrity and relish with which David Cameron (Eton), George Osborne (St Paul's Boys) and Nick Clegg (Westminster) accepted the need for painful austerity on their arrival in power in May 2010. What might exercise his brain would be the way in which – in economic terms, at least – le vice Anglais is no longer confined to these shores but has become the fetish du jour across the whole of Europe.
Take the report in Saturday's Guardian which said retail sales and economic confidence were down, Italian bond yields were well above the crisis threshold of 7% and Spanish unemployment had risen to 22.9%. The response from Europe's policy elite? "Italy's prime minister, Mario Monti, met [Nicolas] Sarkozy in Paris to discuss a pact between eurozone countries to be signed in March, giving Brussels oversight on debt levels and allowing it to punish countries that breach the rules." Yes, that's right. Countries are expected to suck demand out of their economies through tax increases and spending cuts and when the slower growth that results in means the target for deficit reduction is not met, they will be punished for it.
The language of S&M is also now part of the eurozone discourse. The joint letter sent last month by Sarkozy and Angela Merkel to Herman van Rompuy, president of the European Council, explaining the Franco-German plans for future governance of the single currency stressed "fiscal discipline" and the need to "detect and correct departures from sound economic and fiscal policies long before they become a threat to the stability of the euro area as a whole".
There's plenty of raw material here, given a tweak or two, for a modern version of Leopold von Sacher-Masoch's Venus in Furs. "Mario, you have allowed the Italian budget deficit to rise above 3% of gross domestic product." "Yes, mistress Angela, I deserve to be punished for my lack of fiscal discipline. Please do not spare me."
Spain is perhaps the best current example of the predilection for pain. The new conservative government of Mariano Rajoy has inherited a budget deficit running at 8.7% of GDP in the first nine months of 2011 and has set a target of reducing it to 4.4% of GDP in 2012 and 3% in 2013. This involves taking €40bn (£33bn) out of the economy this year by a combination of tax hikes and spending cuts.
The Spanish economy came to a standstill in the third quarter of last year and the crisis in the eurozone means it will almost certainly shrink in the fourth quarter. The fiscal policy planned by the new government will make that recession worse, and a contraction of at least 1.5% looks likely in 2012.
The rationale for this plan is that budgetary retrenchment is the only way to keep the financial markets happy, thus leading to a fall in long-term borrowing costs. This notion that pain is the way to pleasure is now the orthodoxy across Europe (including the UK).
Yet as Jamie Dannhauser of Lombard Street Research notes, Spain's real problem is the overhang of private sector debt from the housing bubble, which has left the banks in a precarious state. To the extent that there are concerns about the solvency of the state, they are due to fears that lenders will go belly-up leaving Madrid to pick up the pieces. Spain is uncompetitive internationally and has a dysfunctional labour market, but compared to Greece, Italy and Portugal it has a relatively low level of public debt.
Opinions might differ on what the right remedy for Spain's economic ills should be. Some might argue that the solution is a cheaper currency, others that there needs to be root-and-branch supply side reform to sort out the labour market. Still others might suggest that for Spain to survive inside the single currency there needs to be the immediate launch of common eurobonds to fund large-scale infrastructure projects.
Any one of these approaches makes more sense than the strategy being pursued by Rajoy, which has not the slightest hope of working. As Dannhauser notes in a piece titled "Spain's new year resolution – more fiscal masochism", the government is seeking to halve its budget deficit in two years. But the only way it can do this without causing a deep recession is if there is offsetting action by the private sector to boost activity. Specifically, this means either an improvement in the current account, consumers running down their savings to spend more, or businesses stepping up investment (or a combination of all three).
None of these is remotely likely. High unemployment means consumers are saving rather than spending; companies are uncertain about the future and want to sit on whatever cash they have; Spain has high unit labour costs that make its exports expensive even in the best of times, which these are assuredly not.
"Since the other sectors of the economy do not appear willing to (fully) offset the reduction in the government deficit, the result is likely to be an even deeper and more prolonged recession," Dannhauser concludes. "This is pain for pain's sake because it will further damage market confidence in the long-term health of the Spanish economy and the banking system in particular."
Absolutely right – and not confined to Spain either. This sort of aberrant behaviour is now commonplace across the eurozone where, unlike in Britain, it cannot be blamed on the peculiarities of the educational system. Perhaps a Freud or a Jung could explain what is happening: it certainly defies rational economic analysis.
larry.elliott@guardian.co.uk guardian.co.uk/business/economics
Burgess was in no doubt that the taste for the whip had affected the way Britain had been run, and he was probably right about that. In the 1970s, the Bank of England had an instrument for controlling the amount of credit in the economy, which its practitioners lovingly called the corset. Enough said. When Denis Healey accused the Thatcher administration of sado-monetarism everybody got the reference. With its references to fiscal restraint and the tightness of monetary policy, economic management at the time was coloured by the language of the dominatrix – and still is, of course.
Why was this? Burgess thought it had quite a lot to do with the British public school system in which there existed "a kind of bond of shameful-shameless intimacy between the members of the ruling class those schools were concerned with turning out. To have beaten, been beaten, witnessed the same beatings is a red badge of something."
If he was writing today, Burgess would probably not be surprised by the alacrity and relish with which David Cameron (Eton), George Osborne (St Paul's Boys) and Nick Clegg (Westminster) accepted the need for painful austerity on their arrival in power in May 2010. What might exercise his brain would be the way in which – in economic terms, at least – le vice Anglais is no longer confined to these shores but has become the fetish du jour across the whole of Europe.
Take the report in Saturday's Guardian which said retail sales and economic confidence were down, Italian bond yields were well above the crisis threshold of 7% and Spanish unemployment had risen to 22.9%. The response from Europe's policy elite? "Italy's prime minister, Mario Monti, met [Nicolas] Sarkozy in Paris to discuss a pact between eurozone countries to be signed in March, giving Brussels oversight on debt levels and allowing it to punish countries that breach the rules." Yes, that's right. Countries are expected to suck demand out of their economies through tax increases and spending cuts and when the slower growth that results in means the target for deficit reduction is not met, they will be punished for it.
The language of S&M is also now part of the eurozone discourse. The joint letter sent last month by Sarkozy and Angela Merkel to Herman van Rompuy, president of the European Council, explaining the Franco-German plans for future governance of the single currency stressed "fiscal discipline" and the need to "detect and correct departures from sound economic and fiscal policies long before they become a threat to the stability of the euro area as a whole".
There's plenty of raw material here, given a tweak or two, for a modern version of Leopold von Sacher-Masoch's Venus in Furs. "Mario, you have allowed the Italian budget deficit to rise above 3% of gross domestic product." "Yes, mistress Angela, I deserve to be punished for my lack of fiscal discipline. Please do not spare me."
Spain is perhaps the best current example of the predilection for pain. The new conservative government of Mariano Rajoy has inherited a budget deficit running at 8.7% of GDP in the first nine months of 2011 and has set a target of reducing it to 4.4% of GDP in 2012 and 3% in 2013. This involves taking €40bn (£33bn) out of the economy this year by a combination of tax hikes and spending cuts.
The Spanish economy came to a standstill in the third quarter of last year and the crisis in the eurozone means it will almost certainly shrink in the fourth quarter. The fiscal policy planned by the new government will make that recession worse, and a contraction of at least 1.5% looks likely in 2012.
The rationale for this plan is that budgetary retrenchment is the only way to keep the financial markets happy, thus leading to a fall in long-term borrowing costs. This notion that pain is the way to pleasure is now the orthodoxy across Europe (including the UK).
Yet as Jamie Dannhauser of Lombard Street Research notes, Spain's real problem is the overhang of private sector debt from the housing bubble, which has left the banks in a precarious state. To the extent that there are concerns about the solvency of the state, they are due to fears that lenders will go belly-up leaving Madrid to pick up the pieces. Spain is uncompetitive internationally and has a dysfunctional labour market, but compared to Greece, Italy and Portugal it has a relatively low level of public debt.
Opinions might differ on what the right remedy for Spain's economic ills should be. Some might argue that the solution is a cheaper currency, others that there needs to be root-and-branch supply side reform to sort out the labour market. Still others might suggest that for Spain to survive inside the single currency there needs to be the immediate launch of common eurobonds to fund large-scale infrastructure projects.
Any one of these approaches makes more sense than the strategy being pursued by Rajoy, which has not the slightest hope of working. As Dannhauser notes in a piece titled "Spain's new year resolution – more fiscal masochism", the government is seeking to halve its budget deficit in two years. But the only way it can do this without causing a deep recession is if there is offsetting action by the private sector to boost activity. Specifically, this means either an improvement in the current account, consumers running down their savings to spend more, or businesses stepping up investment (or a combination of all three).
None of these is remotely likely. High unemployment means consumers are saving rather than spending; companies are uncertain about the future and want to sit on whatever cash they have; Spain has high unit labour costs that make its exports expensive even in the best of times, which these are assuredly not.
"Since the other sectors of the economy do not appear willing to (fully) offset the reduction in the government deficit, the result is likely to be an even deeper and more prolonged recession," Dannhauser concludes. "This is pain for pain's sake because it will further damage market confidence in the long-term health of the Spanish economy and the banking system in particular."
Absolutely right – and not confined to Spain either. This sort of aberrant behaviour is now commonplace across the eurozone where, unlike in Britain, it cannot be blamed on the peculiarities of the educational system. Perhaps a Freud or a Jung could explain what is happening: it certainly defies rational economic analysis.
larry.elliott@guardian.co.uk guardian.co.uk/business/economics
This man does not like our politics.
I agree with him on the employment numbers.
http://hat4uk.wordpress.com/2012/01/07/global-crisis-exclusive-us-labour-statistics-offer-no-sign-of-a-real-recovery-at-all/
"There are a number of reasons why this bollocks is being spewed out. A purely political one is that it’s an election year, and Obama needs to be sure he’s going to get re-elected. Those very clearly on his side (the New York Times, Huffington Post and Reuters) are thus laying the ‘recovery data’ on with a trowel at the moment.
Yesterday we had the latest round of US Labor statistics to get excited about.
‘Unemployment near to 3-year low’ trumpets the main business page Reuters headline this morning GMT. But all things are relative: the rate is still 8.5% of all working age Americans. 1 in 12. In pure numbers, that’s 13.1 million. Go the the official Labor Statistics website, and you’ll read this:
‘The jobless rates for adult women (7.9 percent), teenagers (23.1 percent), whites (7.5 percent), blacks (15.8 percent), and Hispanics (11.0 percent) showed little change…..The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 5.6 million and accounted for 42.5 percent of the unemployed.’
What we’re looking at here is a powder-keg short of the right fuse: 2 in 5 US workers are LTUs, 1 in 4 kids is unemployed, 1 in 6 blacks….and using Washington’s key definition of ‘real participation in the economy’ we read that ‘The civilian labor force participation rate (64.0 percent) and the employment- population ratio (58.5 percent) were both unchanged over the month’.
‘US economy gains steam as 200,000 jobs are added’ headlined the New York Times business page today. But in tiny, light-blue print underneath, an associated story reads ‘Market Response Tepid To U.S. Labor Report’. I’m beginning to understand why: what are the folks in those 200,000 jobs doing exactly?
This is where it gets really interesting. We just had Thanksgiving and Christmas, right? The US Mail for one usually takes on temporary workers during December. So do most communities. So despite the fact that there are now (allegedly) 280,000 fewer people working in government than there were at the start of 2011, the numbers would briefly surge in December.
What else do people do at Christmas? Well, they buy stuff in shops, and they send the presents. Drill down to the next level at the Labor website, and you find this:‘The retail trade continued to add jobs in December, with a gain of 28,000….Employment in transportation and warehousing rose sharply in December (+50,000)….’
Now compare the scale of these gains to those in truly (potentially) currency-export earning jobs: mining, 7000, machinery 5000, fabricated metals, 6,000. Hardly a one even gets into five figures.
The picture that emerges is one of seasonal gains in employment, and very little more. But there is also an undercurrent of fiddling too. Not mentioned in the headline figures, for example, is a whopping group (2.5 million) described as ‘marginally attached to the economy’. Actually, they too are unemployed folks, but kind of off-balance sheet to use the common spin vernacular. They are defined thus: (my italics)
’2.5 million persons were marginally attached to the labor force in December, little different from a year earlier. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.’"
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