2/22/10

Nobelist economist Paul Krugman devotes his column this rainy (in Arizona) Monday to the Republican strategy for dealing with what they find most obnoxious. Dr. Krugman lingers on the strategy and the inevitable consequences, but you did not hear it first from him ... or me ... several years ago, this so-called strategy has been party of a generation's view of the world, and like the animus that motivated the Wallace group from the deep south, the reason for the GOP strategy is pure Social Darwinist selfishness.

Social Darwinism says that society is like an organism and that individuals within that society are like individual animals in a state of nature, that is, these individuals survive OR NOT depending on whether or not they are fit for the situation into which they are born. That is about as succinct a statement as you will find on this subject, and it is packed with associated meanings. First the idea that societies are organisms dates back at least to Hegel and his dialectic, which (as you will recall) tells us that human progress is the result of antagonistic forces (thesis and antithesis) struggling for survival and emerging as a new synthesis. If you read Hegal deeply you will discover that "antitheses" are not like anti-matter, something that will cause annihilation when one becomes involved with it. Anti-theses are "problems" and mental constructs, the emergence of which into one's life is accomplished by chance, design, devine intervention, and several other ultimate causes. Hegel is murky and so are his "syntheses" which are supposed to be new things or ideas in the world. Suffice it to say, though, that everything in Hegel remains, but gets reshuffled and mixed up together, much like organisms eating their way across a petri dish, a savannah, a city-scape, or a epoch.

Also the GOP idea of Social Darwinism then assumes that the chance of birth is one of the problems of the individual, not of the society. You can deconstruct Social Darwinism along this axis: is responsibility for chance happenings the dialectic problem of society or individuals. They put it on individuals and completely turn their societal back on the unfortunates that come to bat with two strikes on them. Liberals take precisely the opposite point of view.

So, after a lot of philosophizing and word-smithing you come to the idea that "starving the beast" so you can drown it in the bathtub is just a metaphor for drowning the unfortunate and misfortunate in society because they are just too much trouble ... and by the way ... helping them is a burden to folks who were to the manor born or scraped and grappled their way to wherever they think they are above the rest.

Krugman's essay leaves the idea that a socially intolerable situation is going to develop and that's what the GOP wants to happen ... their version of the drowning event. But, think about it. If the people who are closest to the fan finally realize that their butts are the next to be sacrificed, will they protect the fan or their own butts, or will they simply turn off the fan. Will they see government as the problem or not? The fact is that no one really knows, except you and I. We know that the history of revolutions ends with individuals watching all remnants of civilization and security and the good things of life disappear, and so they institute strong government to make things better. This happens always. It means that the social and political revolution the GOP thinks it wants will (if history and human nature are any guide at all) turn out to be more government not less, achieved through bloodshed, needless destruction of the civil infrastructure, and awful excesses directed at minority groups, women, and children.

JB

2/11/10

Last week we discussed the problem that Greece is posing to the EU, the probability of a prolonged default on its debt, its inability to square productivity with the benefits the Greeks want, and a subset of that, the disparities and antagonistic aims of the economic sectors within Greece, especially the agricultural sector. Greece is—and has been—a poor country by in large, despite the occasional Onassis. It's middle class is narrow and politically besieged by cultural values that no longer represent the aspirations of most Greeks.

But, the truth is that Greece is broke and a failure of the Greek government to come to grips with its budget has forced Germany of the "deep pockets" to take up the slack ... and perhaps the cudgel ... and certainly the fate of the EU.

One seeks perspective on something like this. Why all of a sudden are Greece, Portugal, Spain, and Italy (the southern tier) all hanging by a thread? The answer is not the climate. Southern Europe does, however, share a cultural value that does not predominate in the north. If you have spent a good deal of time in the Mediterrean area you know that "industriousness" is not the main feature of these cultures. This is not to say that Italians do not make great, fast, and beautiful cars, or the Greeks wonderful vacation experiences, or Spain, or Portugal, but they do not register on the "industry" scale like Sweden, Germany, the UK, the Netherlands, or France. The difference goes way back and is set in a concrete of nostalgia and choices made about what is important in life ... and it is not back-breaking, pencil sharpening, money-grubbing industriousness.

So, the meltdown of the New York financial system had immediate repercussions around the world. Smaller economies depended on the U.S. and others to maintain the momentum and flow of credit. When that ended and froze, the countries that were subsisting on the eddies of the global economy began to drown in their own profligacy, their mismatch between resources and expectations. The White House understood this and has done what it could to put the top back on the house of Finance. But as with Main Street in America, the wobbly condition of the lesser economies threatens the entire structure again. Germany cannot do it alone.

Germany, I can guarantee you, is talking to Washington right now. The disquiet is being masked by deliberate silence. EU wants (and needs) to believe that it is a self-sustaining and organic entity. Maastricht is less than twenty years old, however, and the ties that bind the EU together are threads, not burly cables. EU could fail for lack of confidence as easily as for lack of economic solvency. Both are on Obama's plate ... and you will not hear much about it, but keep it in mind.

JB

1/17/10

This morning's Sunday New York Times has an article about the distractions we encounter with new technology, like the cell phone, and how dangerous it can be just walking across the street with your cell on your ear listening to a list of grocery items you need to remember to pick up on the way home this evening. Drivers, too, of course. They have much more mass in their hands and their inattentiveness will cause grievous damage when they lose their focus. We used to laugh at people who tripped over their own shadows when chewing gum, but are any of us so different about much bigger things—like the alarms about our prostrate economy.

No. We are not better. Hardly anyone is talking about the continued increase in unemployment. Sixty-five thousand more jobs were lost in December! That amounts to about a quarter million people directly affected in their families. What about this? Should we be worried, angst-ridden, taking to the streets, pulling up the cobblestones and erecting barriers behind which we can stage our revolution? Perhaps not, but we should not be letting Congress and the White House off the hook either. There are things that the federal government can do and is currently not doing to ameliorate the hardship and pain and disaster that visits on the unemployed.

So the latest warning in the news ... also no one talking about it ... is that inflation is not moving up, not moving down, but just sitting there, sort of waiting for something else to happen. Something did ... something negative. Did you read in the news the other day that December retail sales were DOWN? Yep! Down and this is the season when many retailers make or break their year.

Here in the southwest where I am currently living the malls are eerily quiet and many stores are just gone, leaving empty spaces between those hanging on for dear life. Of course this leads to fewer shoppers and the survivors soon enough find they cannot survive. It is like the effect of CO2 in the atmosphere setting of thaws in the permafrost which releases methane with its quadrupling effect on greenhousing our atmosphere. One thing leads to another ... yet we choose to remain oblivious, distracted, in harm's way.

JB

12/13/09

Frank Rich's column this Sunday is a departure. It reads like a NYr movie review, but it is deadly serious about the fatal distortion in American economics, particularly the problem with finance holding the throat of all the rest. Rich is absolutely correct that we must fix this before it kills us. No other issue is half as important. The mid-terms will hang on whether the Democrats in Congress have the courage to tell the lobbyists to go to hell!

JB

11/25/09

Statistics can be deceiving. Statistics can mask truth and disguise falsehoods. Presenting statistics is an art form, for the manner of presentation, down to the color palette used can imply much that the numbers cannot.

Take for instance this "unemployment map" provided by The American Observer. Look at it now; play it through to the end.

Did you notice that 8.5% and 10+% unemployment are represented in the most somber dark purple and black? Did you follow your own county and miss what was happening elsewhere? Did you wonder about the wide open spaces shown out west? Did you remember that we now have an average national unemployment of 10.2%? Do you still think the map was biased or slanted one way or another?

Of course it is biased. Its colors are intended to give you a "worst case" impression of the relentless loss of jobs across America. It is as if darkness falls across the face of the land. But has it? What about the real statistics that indicate pockets and regions of 17% unemployment and 30% unemployment among Black American males? What color is left to show the despair in these precincts? And what do these statistics mean? Do they show a two pound roast chicken on the Thanksgiving table instead of a twenty pound golden brown turkey? Do they show what will happen at Christmas?

The sad fact is that unemployment, however unpleasant it is to conceive and behold, is increasing and Obama's government is doing precious little at the bully pulpit or through Congress to turn this around. Yes, I know the economic stimulus package has brought about new optimism in housing and automobile sales, but you cannot eat optimism or wrap it up and put it under the Christmas tree.

Paul Krugman and a host of others are quite clear that we are not only headed in the wrong policy direction, but that it is already too late to prevent agonizing years of continued unemployment. It seems that Advisor Summers and Secretary Geithner believe that the market will produce the needed jobs and that their duties as stimulus wielders are over. They are obviously wrong.

But, disaffection with Obama and his crew is beginning to get down close to the bone. Maureen Dowd is beginning to call it like she has been seeing it for the past few months. There seems to be a serious problem at the very top. Yes, of course, Larry Summers is an arrogant person, and Tim Geithner a conspicuously opportunistic parasite, and Rahm Emanuel a profane, cynical, arrogant martinet and bully, but Barack Obama is beginning to be discerned among the shadows of this cave, and the apparition is not pleasant.

Both Dowd and Frank Rich let loose this past Sunday with columns about the tone-deafness of the Obama administration and indeed the Washington punditocracy. Palin and by extension Beck, Limbaugh, O'Reilly and the rest of the Fox propaganda machine represent a reality in American life, a reality not far removed from the unemployment map you saw. Dowd and Rich wrote about Sarah, and truthfully, Sarah is the graceful side of a pure seething anger right now. She appeals to every wound—real and imagined—suffered since the Great Society, since Rowe v. Wade, since Vietnam, since 9/11, since Affirimative Action, ... you name it. Change came and people were jostled, hurt, maimed, and soldiers killed ... and the anger about this is very, very real.

Obama will soon present his "plan" for Afghanistan and we all know that 30,000 more troops will be sent into that country to ... what? ... defeat the Taliban for once and for all? Is that possible? Where are these troops going to come from without a draft? How many deployments and how long can we and our troops stand this? These are not the jobs we want and need. Main Street jobs is the key, but Obama and his crew have done virtually nothing directly to create jobs. I am telling you now that this will back up on him and us, and the devil take the hindmost!

JB

11/21/09

Nearly eight months ago I wrote an essay entitled "End of the Marshall Plan" in which I noticed that President Obama had deftly and fairly quietly defined an end to several generations worth of American economic policy. He, in effect, said that the Marshall Plan was over. Europe—and by extension the rest of the world—is on its own from now on. The world's largest economy, the world's largest base of planetary consumerism is done. The cost is too great, the penalties too steep. We are finished.

I remembered that essay vividly as I read the Boston Globe Saturday morning noticed that of the country's major newspapers only the Globe has the courage to tell its readers what the prognosis is for the holiday economy. It is bleak. In a way, if you read the last statement made in the article, it ties right in with the whole concept of change in America, the long overdue realization that consumerism does not produce jobs in America. It makes producers greedy for "more" and they ship their factories out to low-income economies where they also can avoid environmental regulations.

Who knows whether the Great Recession of 2008-2010 will turn the trick or not. Consumerism is very addicting and the panoply of goods, especially high-tech "toys," is likely to enthrall the society again and again. Still, though, there is a palpable sense abroad that enough is enough. We have seen the country sink deeper into debt with China, and yet China does not liberalize. The dominos do not fall. The ideology of free-market consumerism does not convert foes into friends.

Of course, the prospect of another poor performing winter holiday sales season implies much more than broad brush "end of an era" pronouncements from retired historians. It is sure to set off another cascade of bankruptcies in both retail and manufacturing and consumer banking. This will mean even higher unemployment statistics for 2010, stats that are already locally at 15% in some areas. For historians dismal economic stats like these are, in fact, the engine of significant change. The worse it gets the stronger the pressure to change our "wicked" ways.

The Obama administration would be astute to see the political fallout from this. Clearly they are not responsible for the crash or for the underfunding of the stimulus package, but they are inexorably being seen as responsible for the lack of recovery on main street. Dumping Obama in 2012 might seem like the right thing to do, given the (widely seen as) ineffective activities of the White House during all of this, but the mid-term elections a year from now may obviate the 2012 issue. If Republicans turn the Senate and chop the Democrat's lead in the House in half, the message will be clear enough.

Personally, I think it is the beginning of a new era, and I am thankful for it, but I am cautious as well, because the changes necessary to move us off the addiction of consumerism are going to have repercussions throughout the culture and, indeed, across the planet.

JB

11/15/09

If you have been paying attention, you will have noticed that the economy is not in very good shape, despite professions of confidence from Washington and Wall Street and particularly the stock exchanges. If small businesses are the key to employment, and you did not hear this from me—you heard it from Washington endlessly this past year—we are not out of the Great Recession by a long shot. Unemployment continues to spiral downward. This means that small businesses are not healthy or confident or hiring. Unemployment reached 10.2% as a national average in October, while "underemployment" (a clear sign that the government can read minds and intentions) is pegged at 17.5%. Some areas are very hard hit, Michigan for instance.

Small and medium-sized banks—not big enough to be kept from failure—continue to close their doors over ugly weekends as FDIC accountants march in and decide whether there is any good timber in the structure. Most depositors are covered, of course, but there's nothing like a hiccup in the midst of swallowing whole the administration's scheme to spread oil on the trouble waters of our national economy.

In Sunday's Washington Post there is finally a leak in the conspiracy of silence about the true situation. The leak is important in and of itself—as a leak. It is true that Paul Krugman and others have been writing for months about the inadequacy of the federal response to the crash last Fall. It is also true that the administration has not denied or countered the Krugman thesis, except to ignore it and to continue on the path of propping up Wall Street (sans Lehman Brothers) for the world to see.

The Post article is eerie in several ways and asks questions I have been asking since the stock market began to "recover." Who is buying? Why are they buying? The answer is that the Dow-Jones is a Potemkin Village, manipulated by four banks (!) to give the impression of confidence to a nation of investors that just had been thrashed in the crash. Part B of this is that the four banks are now beginning to see that they cannot hold up the ruse indefinitely, so with the aplomb of a arborist out on a limb, they are trying to scramble back to safety with a chainsaw whining away on their only visible means of support. The invisible means of support, Geithner, Summers, and Bernanke will soon be asked to get under the emerging debacle and hold the safety net (again)!

The Post article cannot possibly contribute to confidence. The truth is that "confidence" as a racket cannot be sustained. Confidence as an emotion of exuberance and courage will dwindle away, even as President Obama tries to explain to the Chinese this week that their holdings of US debt instruments will drop like lead balloons from the winter sky if China does not cooperate in trying to salvage the world economy.

The most annoying things about the administration policy at this point are that Krugman's first principles were thought to be too draconian and too bitter a pill for the American psyche to metabolize. How much better it would have been for someone in authority to just tell the damned truth about how much was lost and what damage had been done. Clearly George W. Bush understood (in his own fratboy way) what a dangerous situation Wall Street had created. Why else would a GOP conservative even consider a $772 billion dollar bailout? It was 180 degrees from his brand of orthodoxy ... and that was our first clue. The second clue was that John McCain who actually believes in the free market mythos did not have a clue what to do. Letting Lehman go is another clue that the situation would soon engulf the U.S. Treasury and lead to yet untold implosions, so it was sacrificed to save a moment in time and a few bucks to support the rest.

The Post article can be viewed optimistically, you know. It will be seen as a sign that Americans can now "handle the truth" (to evoke Jack Nicholson in Gitmo). I am not so sure, but I am willing to lean that direction on the principle that Americans are far more ready to hear than governments across the planet were in November 2008.

JB

11/14/09

You may have seen a fleeting reference a week or so ago to a new proposal in the Senate to break up the big banks—those which were deemed too big to fail. Senator Bernie Sanders for Vermont is the activist behind this effort. Please take a look at commentary on this issue and sign the petition.

JB

11/11/09

Senator and one-time Presidential nomination hopeful Christopher Dodd of Connecticut, sitting in the Senate Banking Committee has come up with a regulatory plan that is worth studying ... even if it does not have a chance in hell of getting into law. As reported this morning in the Washington Post. Dodd's plan is to relieve the Federal Reserve Board and Banks of their responsibilities for regulating the operations of the nation's commercial banks, leaving them with the conduct of "monetary policy" only. I like this idea of the face of it, since the current situation has the Fed regulating the immediate and direct outcomes of the Board's decisions. In effect the Fed is regulating itself ... and good luck with that!

Although it is buried at the bottom of the article, the regulation of bank operations and decision making will probably fall to FDIC, which under its leadership has stood up to both Bernanke and Geither and which has garnered quite a bit of preliminary support in Congress ... if not the White House.

I believe that if Dodd and Frank (in the House) can wade through all the lobbying and threatening from Wall St., Obama will come around. Summers and Geithner will be entrenched, but a good hew and cry from the vox populi ... as with Health Care Reform ... should make this possible. The alternative, of course, is to put your marbles into gold and store it in the Caymans!

JB

11/6/09

Both the NYT and the Washington Post ran articles today "explaining" the resurgence of the Dow-Jones Average over 10,000. Later on, however, the Post revealed the net loss of jobs in October to be 190,000. This is a medium-sized city worth of people who will be having a very glum holiday this year ... at a minumum.

If you look at the graph of the recent market activity at the top of the linked article you will see a classical left shoulder, neck, and the beginnings of a right shoulder traced out in the ending values of the DowJones. I am no expert on stock market numerology or grapholalia, but the econopundits say that a two shouldered apparition is not good. We are headed shortly for a right "elbow," which is anatomically much lower than a right shoulder.

If you look at the histogram on the righthand side of the article near the top you will see portrayed the number of jobs lost by month over the past year ... and hopefully you will notice that these are all negative numbers, hanging from the line that would represent economic health. The decrement of job losses for October is what set the market above 10,000, so wildly avid are the traders for some good news ... even if it is negative good news ... and even if it is "seasonally adjusted," cooked, and presented AS IF things were getting better. You ask the nearly 200,000 laid off this past month how much better things are!

As Paul Krugman wisely comments today in the NYT, Obama is facing not his Rubicon, but his Anzio beachhead. True to his long-standing belief that the Administration is doing too little ... and in fact may be foreclosed from doing anything much more ... Krugman is aptly suggesting that the forces are in place to make the xmas retail and first quarter 2010 into that slippery slope that nearly brought our country to its knees 75 years ago.

JB

11/5/09

The Recovery is Beginning to Fail also published as Talking Our Way Out of the Recession

There is a tendency to seek ... and to find ... simple answers to complex questions and situations. We like to be able to wrap our heads around a couple or a very few pithy comments and pretend that they are the summation of truth on a subject, the nub of explanation, the enlightenment that we were desperately short of just before. The economic situation is very much like that, and the ranting you hear about how it's going has major components grounded in simplism.

One of the truly exasperating explanations and commentaries is that Obama and his crew are deer in Wall Street headlights and have caved in completely to the moguls and their kin. As I reported to friends a little while ago, most of that kind of rant are little more than snapshots taken in the middle of a movie, pictures of ravenous beasts munching on the remains of some poor unfortunate impala, proving only that the movie has scenes set on the savannah in Africa, but not one thing about the plot or the main characters.

Here's an explanation that is not simple and not very palatable, so I think it has some merit. The Bush Administration began bailing out the defaulting banks. Secretary of the Treasury Hank Paulson, no less (and quite a bit more) grounded and nurtured in the culture of Wall Street got Bear Stearns covered by JPMorgan Chase when it toppled of its own bad business acumen. Then when Lehman Bros. toppled, a much larger institution, with Merrill Lynch in the background clawing for resources and Citicorp (not to mention Wachovia and Bank of America and several others) also gasping for capital the decision was made to let Lehman go. When this happened the crash came ... just before the election.

What ensued before, during, and after the election, but before the Obama Administration was inaugurated was a rapid deflation of the economy, a virtually total freeze on credit for any purpose, a major contraction of production, sales, all led by the housing industry, which was thought to have a momentum and safety all its own ... a sort of flywheel effect ... but now damaged, out of balance, and spinning out of control, values plummeting.

Some of the credit default swaps and other forms of "derivatives" designed to spread natural credit risk around and thereby attenuate the risk were purchased and traded abroad, particularly in Europe. Soon European banks, including all the banks of Iceland, the Bank of Scotland, and major institutions all over the Continent were gasping for air. The derivatives were just the fuse to ignite panic about other forms of mischief that banks and investment corporations had become accustomed to (and rich beyond their wildest imaginations). The crash in New York spread world wide and soon countries like Russia were seeing two decades of capitalism kick them in the teeth.

Enter Barack Hussein Obama, inheritor of the worse financial ... and monetary ... situations ever, two wars, and several hot spots threatening to boil into Third World War proportions: Iran and Israel. The question begging for answers was "what should be done first?" The simple answer is that Obama and his advisors recognized that if the situation in the U.S. were allowed to deteriorate much further, the consequences (several) abroad would insure that a world wide depression would occur, bringing with it untold political consequences abroad ... and domestically if it really got bad.

So, job #1 was to stabilize the world financial markets by taking a posture and doing at least the minimum necessary to stabilize Wall Street, the very center and heart of world finance. One should mention at this point something not quite so simple, but just as important. The U.S. dollar is and has been the "reserve currency" of the world since the Breton Woods Agreements during WWII. This means that the U.S. dollar is the denomination of all (significant) financial dealings, with value cross-referenced to the US$. The Breton Woods Agreement called on the U.S. to maintain a trustworthy currency and in exchange all the rest of the world would grant to the U.S. the benefits that accrue to being the financial hub.

Two generations of Americans, and in particular two generations of U.S. corporate and Congressional geniuses, forgot the first part of the Agreement—that the U.S. has the responsibility to maintain a stable currency. The U.S. clearly indicated to the world that this had been forgotten when we inflated our currency after the Vietnam War and in effect shipped a major part of our national debt for that adventure to foreign holders of Treasury bills. They were annoyed, of course, but saw that thirty or forty years downstream they were locked in. This provides them incentive, by the way, to get as rich as possible as fast as possible, richer and faster than U.S. players hopefully, so as to have some kind of leverage over U.S. fiscal policy.

In the November 5th edition of the New York Review of Books there is an article by Jeff Madrick about Obama's failure to implement timely and sufficient regulations over Wall Street. And, true enough, there are articles all over the place about how Goldman Sachs and others are back to their old business of creating derivatives, making obscene profits, and paying themselves even more obscene salaries and bonuses.

I am sure that Obama does not like this, and he has gone to Wall Street himself and said so. Still, there should be more than just me thinking that Wall Street is playing into the hand of Obama's more vital game abroad. It is essential to the U.S. that we remain for the foreseeable future (ten to twenty years at least) the owner of the planetary reserve currency and all that brings to our vastly over mortgaged domestic economy. The natural excesses of the arbitrageurs of Wall Street are a clear sign to the world that Wall Street is back on its feet ... and also that Wall Street is not the puppet of Washington (to anyone familiar with Plato's Allegory of the Cave).

And, if the explanation of Bernanke's, and Summers's, and Geithner's activities and supposedly weak response to regulation is not convincing, you need only look everywhere else to get a context for "recovery." California is sliding into the Pacific financially, unable to control by line-item-veto or any other means a ruined economy and governance process. 2009's deficit of $7 billion promises to be $15-21 billion in 2010. Next door, Arizona with a trifling economy is $3 billion down the tube with no relief in sight.

Michigan has double digit unemployment matched by several other heavily industrialized states. Unemployment is driving retail sales into the ditch and early signs of the Xmas buying period promise to be not only dismal, but as contagious as swine flu, also having its effect on the nation's economy.

Meanwhile banks in Florida (and elsewhere) are closing (or on Friday evenings being closed by FDIC). The total number of small and medium sized banks topped one hundred a month or two ago, and the rate is accelerating with several hundred banks expected to fail next year.

Foreclosures are up, despite valiant if inadequate efforts to get banks to renegotiate mortgages. It seems that bank officials just do not know where to begin trimming their profit-motivated sails, so they hope they can sail over the reefs and shoals, ... but of course they cannot.

Then there is the stock market, which took a 2.5% tumble on last Friday from the opening bell. This was not a sell off set off by some bad news somewhere. It was a sell off over due from bad news everywhere, including Pakistan and Afghanistan and Iraq and Somalia and Iran and Main Street. Yet Thursday this week it surged ahead again on erroneously reported unemployment news which was 190,000 not 165,000 as first reported. Which is to say, btw, a medium sized city just went down the tubes.

The 2009 TARP funded at mid-low level by the Congress, a mere $772 billion bail out, seems to have averted a steady plummet into the darkness of a national and worldwide depression, although there are those who are not yet satisfied that this is the case. At least Paul Krugman, an earnest critic of the TARP's low funding and the Administration's weak-kneed application, thinks it probably has been avoided for now although in a more recent article he says that Obama's soft, timid landing on the hostile shore will bite him bad and soon.

The great party game of the day is predicting whether the recovery will be V-shaped, that is down quickly and up quickly ... and highly unlikely ... or L-shaped, that is down quickly and staggering out and up over a long indeterminate period, or W-shaped, with a double dip into the wilds near depression, or some other branding iron shape with multiple recoveries each less satisfying than the last.

Ultimately, the current recovery is at least partly a matter of propaganda from Wall Street and Washington. That much is clear ... and as much as it is propaganda, it is a dangerous finagling with the truth of where we are. To be sure we never know exactly where an economy is, but we do have some confidence in predicting trends ... and believe me the current crisis was predicted years before it happened and even predicted by me months and months before the crash. Obama and his advisors would do well to make a clean break with the "attaboy" propaganda designed to keep people from absolute panic.

They should begin to bail out states that have shown evidence of fiscal maturity, but are hanging by threads over the precipice, out of control through no real fault of their own. This may not include California, alas, but clearly California, the world' 8th largest economy cannot be allowed to fail ... either.

JB