Oh, this is hilarious.
On Monday’s broadcast of “Morning Joe,” New York Times columnist and Nobel Prize-winning economist Paul Krugman argued that “deficit things” aren’t something to be worried about, at least for the time being. But according to Steve Rattner, the Obama administration’s former “car czar,” Krugman’s analysis is the economic equivalent of climate change denial.
On Tuesday’s “Morning Joe,” Rattner reacted to Krugman’s remarks by making the analogy between climate change and the government’s long-term fiscal challenges, and suggested that both are problems requiring immediate attention.
“[T]o me, being a debt denier is the same thing as being a climate change denier,” Rattner said. “We’re putting millions of tons of carbon in our atmosphere every day that we are going to have to deal with, and we’re incurring billions of debt every day we have to deal with.
But which one actually affects people’s lives today? Or, should we just let the grandkids deal with it? Heh. h/t to Chris Horner.
The big difference is the effects of debt are all bad and will start soon. I personally doubt we will get through 2013 without an implosion in world trade. Whereas, the effects of AGW are mostly good and won’t have significant effect for decades, if ever.
Wow… Although Rattner is right on two issues: 1) the debt and unfunded liabilities need immediate solutions, 2) Paul Krugman is an idiot, his claim that Krugman’s lunacy is on par with honest CAGW skepticism is non sequitur.
Krugman believes that the way to get out of debt is to first go deeper in debt and worry about the consequences later. CAGW skeptics believe CAGW theory is fatally flawed based on assumptions clearly not supported by existing empirical evidence.
Simple accounting, math and knowledge of history clearly show that countries taking on debt in excess of their GDP, all eventually collapse.
It’s obvious the Keynesians and CAGW aficionados are the ones not facing reality and are implementing policies that will eventually destroy many people’s lives and livelihoods. Ironically, many of the expensive CO2 policies governments have implemented have contributed substantially to the debt crisis.
Hayek>Keynes
“For once, Krugman is right in this. Jobs are what are important.”
So eliminate the 80% of government that gets in the way of companies trying to create jobs.
Currently we have Western governments taking money from companies who could use it to employ people to do something useful and instead using it to employ people to dig holes and fill them in again. Since those jobs do not contribute anything, no-one other than the government is going to pay for them, so that policy rapidly becomes impossible to change. Then the hole-digging programs expand until the entire economy collapses because there’s no money left for real jobs.
Paul “An Alien Invasion Would Help The Economy” Krugman?
IMHO after the Peace commission started giving prizes to terrorists, the entire Nobel brand became worthless. I care more if you won Employee of the Month at McDonalds than I do if you won a Nobel prize. I know some people still hold a lot of esteem for other commissions, but I think that, especially in more subjective areas as literature and economics, it’s all politics.
My rather simplistic understanding of US debt is that with the federal governments debt at over $16 trillion, every American owes over $51,000.
As of November 2012 the federal government had borrowed $4.8 trillion from itself:
$376 billion from Department of Defense Military Retirement Fund,
$819 billion from Civil Service Retirement and Disability Fund Office of Personnel Management
$228 billion from Federal Hospital Insurance Trust Fund
$2.6 trillion from Federal Old-Age and Survivors Insurance Trust Fund,
and over one hundred other accounts.
In addition to money the federal government owes to individuals and corporations it also owes over $5.5 trillion to foreign countries:
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
“Both President Obama and Professor Krugman are using very broad historical strokes to make the case that an activist federal government is essential to prosperity.
“In 1944, government spending at all levels accounted for 55 percent of gross domestic product (GDP). By 1947, government spending had dropped…to just over 16 percent of GDP.”
” Ironically, it seems that the postwar prosperity that America enjoyed after World War II was less the result of a carefully crafted political agenda than a by-product of what government stopped doing.”
http://mercatus.org/publication/economic-recovery-lessons-post-world-war-ii-period
The post world war II economic boom was essentially due to the US government reducing military spending. As far as I’m aware it didn’t have to spend money on Medicare, Social Security, the Department of Education, the Department of Housing and Urban Development, the Department of Energy and the Environmental Protection Agency.
The debt can’t be paid off by simply raising taxes or printing money and a major concern is the potential rise in interest rates. In 2012 the interest on the debt was about $359 billion.
http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm
If the annual interest rate was to rise to 8% as it was in the 1980’s the payment on the current debt would be $1.3 trillion which is around half the US government’s total revenue for 2012.
The US federal government and the EU and its member states could make no better start in reducing their debts than by cutting all funding to the Manns of this world.
D.J. Hawkins & More Soylent Green!,
“However, domestic businesses and their workers are harmed. Overall, it’s usually a net gain, as more consumers benefit than employers and workers are harmed by the unfair competition. You may also notice that these dumping complaints come from businesses or labor organizations with political connections.”
No, there is no evidence that this is ever not a net gain in practice.
“I’ll add one caveat — it’s possible China will subsidize and industry and dump its products below cost and then raise their prices once their domestic competitors are out of business.”
The same argument gets raised against monopolies and it’s invalid. That I am aware of there is not one single solitary case of this happening in real life. Cite some evidence if you think I’m wrong.
In real economic terms it can’t happen. They could raise prices in theory but only so far and not above a normal market rate for any significant amount of time. The problem is no matter how badly the old competition get’s crushed, once they raise prices they face two threats. One is market substitution. The other threat is that of entirely new competition rising up. That new competition will have newer and better plant, equipment and processes than the old competition and they face the real possibility that the new competition would have lower unit costs.
To put both of these threats in therms of the specific example of steel raised by by D.J. Hawkins:
On market substitution, composite materials like carbon fiber are fast reaching the point where they can replace steel in most structural application not only in terms of structural properties but in terms of energy needed, precision in complex shapes and material waist. China raises prices and global demand for steel tanks. China gains no profit from excess prices that exceeds our gains while they were dumping.
On new competition. China raises prices. Fred inventor comes forward and says he has a new design for a steel mill all new tech. It will produce steel for a fraction of the cost of China’s current steel mils in terms of labor, energy and material waste. “But such a design does not exist” you reply. To which I reply “Necessity is the mother of invention.”. More time, money and energy will get sunk in to inventing something we need now than in something we might need 10, 20 or 30 years from now.
Surely, the real and current debt problem is very largely BECAUSE of the unnecessary burdens on business imposed by responding to the conjectured and notional climate “problem”.
Concerning the debt I, for one, just don’t get it. After all “Reagan proved deficits don’t matter”:
http://crooksandliars.com/jon-perr/reagan-proved-deficits-dont-matter
and Greenspan convinced Congress and President Clinton that surpluses were a bad thing:
http://www.dailykos.com/story/2011/07/07/992184/-Greenspan-in-2001-We-re-paying-down-the-debt-too-fast-VIDEO
This in addition to wiping out the last vestiges of Glass-Steagall (which required that banks act like BANKS and not CASINOS) and other deregulation (actually getting rid of all OVERSIGHT) of the financial industry allowing the 2008 debacle to the rescue tune of approximately 16 trillion (THE DEBT):
http://4closurefraud.org/2011/10/10/a-history-lesson-we-should-never-forget-the-long-demise-of-glass-steagall/
http://www.forbes.com/sites/traceygreenstein/2011/09/20/the-feds-16-trillion-bailouts-under-reported/
Even when the CFTC tried to at least get a handle on the worst offenders trading derivatives, that agency was permanently prevented from doing so on Greenspan’s recommendation:
http://en.wikipedia.org/wiki/Brooksley_Born
And let’s not forget, Greenspan’s hardcore party of choice.
And then on top of all this, the only other party available wants to add to the misery by raising energy prices and regulating CO2. It appears that Lobbyists and Big Corporate money rule the people we vote for and my conclusion is that for anyone not wealthy it’s just going to get economically harder, especially with real inflation (per 1980 standards) at around 10% (and that’s not even considering “real unemployment”
http://www.shadowstats.com/alternate_data/inflation-charts
http://www.shadowstats.com/alternate_data/unemployment-charts
http://www.foxbusiness.com/government/2012/10/05/real-unemployment-rate/
http://www.forbes.com/sites/peterferrara/2012/10/11/obamas-real-unemployment-rate-is-14-7-and-a-recessions-on-the-way/
Well at least I’ve got my Big Screen (with lots of sports channels and cop shows)/ Face Book/ I-Phone/Video games (hey I’ll drive a really old car before I give THOSE up) to take my mind off the final days of doom, and Church to allow forgiveness/acceptance of the economic rape by the politicians, global corporations and the rich/powerful.
http://en.wikipedia.org/wiki/File:Chart_of_US_Top_1%25_Income_Share_%281913-2008%29.svg
http://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States
sarc off???
There is no Nobel prize for economics. “A prize was created by Sweden’s Central Bank in 1969, called … “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It was not established by Nobel, but supposedly in memory of Nobel. It’s a ruse and a PR trick, and I mean that literally. And it was done completely against the wishes of the Nobel family. Sweden’s Central Bank quietly snuck it in with all the other Nobel Prizes to give retrograde free-market economics credibility and the appearance of scientific rigor” (Yasha Levine)
It’s amazing to see the two wings of the same central banking bird in action. One is underplaying the reality of fake debt while the other is overplaying the reality of fake climate change.
“And let’s not forget, Greenspan’s hardcore party of choice.”
You’re assuming Greenspan wasn’t intending to destroy the existing financial system by feeding it fiat money until it exploded. Since he was a devout Randian in his younger days, that’s a poor assumption to make.
Nope that ain’t the quote of the week Anthony… Sorry.
THE quote of the week comes from Al Gore:
http://www.theglobeandmail.com/news/news-video/video-al-gore-believes-democracy-in-american-has-been-hacked-hopes-for-change/article7957537/
In this AP video he praises Al Jazeera and justifies his sale of Current TV to them… because of their climate change coverage!!!!
LOL
DoomedAnyway,
“Concerning the debt I, for one, just don’t get it. After all “Reagan proved deficits don’t matter”:”
Your confusing the national debt with deficits. The national debt is the LONG TERM debt of the US Government. Deficits are single year budget short falls. Individual Deficits don’t matter as long as you don’t let long term debt pile up out of control. In the long term, it’s the National Debt that matters.
The interest payments alone on the National Debt accounts for 12.5% of the annual federal budget and that number is growing. That’s just the interest on the Debt it contains no principle payments.
After Regan, Bush I attempted to balance the budget but failed miserably. He made a deal with a Democrat controlled Congress for spending cuts in exchange for tax increases that the Democrats wanted. The Democrats got their tax increases and then enacted token cuts coupled with enough new spending to out spend the tax increases 2 to 1. Note: For fairness sake not all of that new spending was actually voted on by the Democratic congresses during the Bush 1 Presidency. A significant portion was natural growth in entitlement programs. All this time under increasing budget deficits and growing National Debt.
Then came Clinton. He got immediately saddled with a Congress with both houses under Republican control. The Republicans in congress managed to push Clinton into a balanced budget. Clinton’s real genius was not the balanced budget itself but managing to convince the Democratic rank and file that it was all his idea while fighting the establishment in his own party tooth and nail to get the balanced budget enacted. (what balanced the budget under Clinton was real spending cuts + tax cuts)
Then Bush II happend. (Kind of the way Sht happens. I will confess to voting for him the first time around.) The Republicans now had the control of the Whitehouse and both houses of Congress. In a fit of apoplexy they threw fiscal responsibility, the best selling point they had with swing voters, out the window. Deficits abound and the National Debt continues to pile up.
Now we get to Obama who shows if anything even less fiscal responsibility than Bush II. Out of his first 4 year term in office only 2 annual budgets were passed as is required by law. For the first 2 years he had a congress with full Democrat control.
Social Security + Medicare + other federal entitlement programs + interest on the National Debt is somewhere between 50 and 55% of the total federal budget.
Defense spending is around 45% of whats left over for discretionary spending. So Social Security + Medicare + other federal entitlement programs + interest on the National Debt is somewhere around twice the size of the defense budget.
There will never be another balanced budget with out real meaningful entitlement reform that leads to real reductions in entitlement spending.
The problem is that Dem vs. Repub stopped being about Liberal vs. Conservative a long time ago. The candidates for both major parties are mostly Corporatists.
policycritic says:
January 29, 2013 at 2:43 pm
“For once, Krugman is right in this. Jobs are what are important. Peter Schiff and Steve Ratner are as bats**t crazy as Michael Mann and his merry band.
Ratner and Schiff, et al, can’t seem to wrap their heads around the idea that we’re not on the gold standard anymore. ”
Printing green pieces of paper makes you wealthy, you’re saying?
“I’m not up for arguing the case here, so I’ll leave some links”
That’s so sweet of you, admitting defeat before anyone even says a word.
MarkW says:
January 29, 2013 at 1:59 pm
Yes we owe China a lot of money, but what are they going to do about it. If they do anything to hurt our economy, we will never be able to pay them back. And if you don’t believe the loss of that money would be devastating to the Chinese economy, then you havent been paying attention to the CHinese economy lately.
You REALLY do not want to put that policy to the test!!
MattS says:
January 29, 2013 at 6:11 pm
……On new competition. China raises prices. Fred inventor comes forward and says he has a new design for a steel mill all new tech. It will produce steel for a fraction of the cost of China’s current steel mils in terms of labor, energy and material waste. “But such a design does not exist” you reply. To which I reply “Necessity is the mother of invention.”. More time, money and energy will get sunk in to inventing something we need now than in something we might need 10, 20 or 30 years from now.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
You are naive as heck. The Monopoly has the money, political clout and incentive to protect their position. Do you really think the invetor has a snowball’s chance in Hades of winning? Or do you think he will be ‘relieved’ of his invention or stonewalled?
In the USA we have raised the entrance bar very very high via red tape and regulations so an inventor has no real hope of competing. If you make a breakthrough on say a treatment on Arthritis do you thing the drug companies will ALLOW you to sell it? The answer is NO, my doctor worked for years with another doctor to get through the FDA a drug that arrests Rheumatoid Arthritis in the 1960’s. The FDA refused to allow testing. Stopping the inventor was as simple as that.
In another case my boyfriend (metallurgist) was part of a group that came up with a device that turned an off the street 1983 V8 gas guzzler into a car that got over 50MPG. Do you see that car on the market, HMMMmmm?
…..
Today, any new technology will be transfered to China or stolen by China. The US government will tell you that.
Oak Ridge National Laboratory Hacked…one of a group of national science laboratories run by the Department of Energy, was recently the subject of a targeted attack which resulted in a loss of data. Once again, there is reason to believe the attack comes from China.
Fact: Our debt to GDP is hovering on 106%. Europe is around 80%. We are in in worse shape overall with our government spending. When interest rates go up, inflation will be the only way out. We are screwed – unless magically, our GDP increases dramatically and for a sustained period of time. With Obama and the Democrats so powerful because they’ve learned how to pander to the average taker, we are headed for a disaster.
Mornin’ Joe reminds me of another Ratner (see: http://en.wikipedia.org/wiki/Gerald_Ratner ) – distantly related perchance(?), makes one wonder if such common sense runs in the family.
Yep. Enjoy! The effects are all good.
Mittal steel has done a pretty god job of underpricing competition, dumping and then raiding their depleted competition. After taking over regional players like ISKOR in South Africa (RSA) they jacked up prices to the point manufacturers decamped to China where they get subsidised steel sheets.
Further, products imported to RSA from China are even made from stainless steel produced in Middleburg, RSA. They land below the local price of the same raw material made locally. This is a combination of the two business models: dumping followed by jacking, and product dumping in the front yard of the country of raw material origin.
The fact that the can is being kicked down the road does not change the ultimate consequences: someone has to suffer, lose, or be exploited.
The irony is rich, but not surprising. Krugman is an another spoiled academic/activist in a large group of like minded spoiled brats.
Actually, it was out of respect for the thread, since this is not an economics website. A reference would do, if anyone were interested.
Our monetary system since 1934 has operated domestically on fiat currency. It’s what permitted three government economists to determine in 1939 that we, as a country, could produce the armaments and materiel for WWII, and put everyone back to work (since we also had the physical resources). GDP increased 400% over the next five years to meet that need. From “Keep From All Thoughtful Men” by military historian Jim Lacey, 2011, using misfiled documents form the National Archives.
In 1971, Nixon took us off the gold standard internationally to stop the French from draining the US gold supply at $35/oz. It was supposed to be a temporary announcement, but the financial value to the country showed itself. (The oil crisis of 1973 and Volker’s mishandling of the Fed led to inflation, but were separate and apart from the 1971 currency adjustment. Inflation was alleviated when natural gas prices came down in 1978 and its use as energy ballooned. Oil was down to $10/barrel by 1990.)
Only the federal government has the power to be counter-cyclical in a downturn, as in our cold economy today. By this I mean, only the federal government, as the issuer of the currency, has the power to spend into the economy–with those pieces of green paper you mock–to provision itself and buy the goods and services that the private sector produces: research, infrastructure (a $2T to $4T need at the moment), education, communication, health care (not a handout to insurance companies), etc.
The federal government is not doing it. It is letting the private sector suffer, because Obama and people like Geithner, and probably incoming Lew, have no idea how the monetary system actually works. The private sector is deleveraging (paying off debt). It has no extra income to spend on goods and services. Businesses have no reason to hire, as a result. Therefore, there are no jobs. Consequently, no income. Repeat the cycle. (Disclaimer: I think Geithner should be disgraced for his behavior as Sec Treas, and I think he should be charged with gross malfeasance for his behavior as Chairman of the NY Fed in failing to stop mortgage fraud–the Fed is the only entity in this country with the requirement and authority to regulate mortgage banks, specifically–which Geithner was warned about by the FBI in open testimony in Sept, 2004. He did nothing. He did zip.) Political appointees to the Fed do not understand how the Fed and our monetary system works. But the worker bees do. Read their papers.
Allow me to upset your day: the deficit is far too small. It needs to be a lot bigger to fix this economy right now. When the economy is at full employment and we have a smoking hot economy nearing inflation, then we can tax people and cut federal government spending to cool it down. Not now. The notion that we are leaving debt for our grandchildren is nonsense, and is obviated by the fact that we have a fiat currency. We’re not paying off the debt for WWII, are we, because we denominate our debt, as a country, in our own currency. Yeah, we print it internally. By decree. Fiat. The Congress authorizes it. It’s part of our Constitution. Germany 1923, not so lucky; it bankrupted itself by having to pay for its WWI debt in other nations’ currencies. And therein lies the problem of the Euro. Spain, Portugal, Greece and Italy, all 17 members of the EU gave up their sovereign currencies to take on a foreign currency, the Euro, controlled by a bunch of unelected guys, and now they’re [snip . . mod].
Gail,
“In another case my boyfriend (metallurgist) was part of a group that came up with a device that turned an off the street 1983 V8 gas guzzler into a car that got over 50MPG. Do you see that car on the market, HMMMmmm?”
There are a lot of inventions out there that claim to do something like this. All have failed to produce the claimed results when independently tested.
@Gail
Yup. You’re right, but it started a long time ago when no one was paying attention. In late 1979, early 1980.
At minute 2:50 in Part 6 of the 2011 INET Interview, Australian economist Steve Keen says that China announced its plans to relocate production from America to China. I contacted Steve Keen to verify this. He said he was there as part of an Australia-China press conference, and heard it.
Were we paying attention? Do we have foreign desks to investigate this stuff? Does anyone read anything more than local and possibly national news? No.
So what happened? After we destroyed the Mexican peso and Mexican mom-and-pop companies with NAFTA (well, Goldman Sachs did that, which the US fed govt reimbursed them for in 1996) and thumbed our noses at the NAFTA labor price of $2.22/hour because China beckoned with $0.60/hr labor (courtesy of Rubin, Rahm Emanuel, and others ramming the WTO, or GATT, through in 1998), American companies ran to China.
We, in our profound ignorance and arrogance, thought we were ‘opening the markets’ and ‘the Chinese would be buying from us’. That idiotic head of Clinton’s economic council, Laura Tyson, actually said so. Charlie Rose propagated the idea. “They’re going to be buying from us.” So our pompous greedy business owners rushed to China, made them sign non-disclosure agreements, taught them quality-control, where we got our supplies and resources, thought they were saving on shipping by giving them the names of their customers for direct-ship, and more importantly, we gave them our proprietary secrets and processes . . . because they signed a damn piece of paper.
These contracts were for five years. So do the math. 1998. 1999. 2000. Plus five years. Time came to renew the contracts. Did the Chinese re-up? No. They refused to sign, closed the factory, walked across the street with five years worth of info and engineering prowess, opened up a new factory, and beat us in every market we introduced them to.
This is why every American citizen has to drop whatever they think they know about how the US economy, and learn how the US monetary system actually works. Today. The US economy is run on a fiat currency–stop bioching about ‘printing money’–and is not here to serve a financial index or enrich the banks. The US economy exists for a public purpose, and the sooner we learn the A-B-C of that the better off we will all be. Screeching about the deficit is the first thing you drop. Second, is thinking that Social Security and Medicare are going to bankrupt us. Impossible.
Good Stuff @ur momisugly RockyRoad,
January 29, 2013 at 11:38 am
“[T]o me, being a debt denier is the same thing as being a climate change denier,” Rattner said. “We’re putting millions of tons of carbon in our atmosphere every day that we are going to have to deal with, and we’re incurring billions of debt every day we have to deal with.
Grow more plants; quit spending!
Two completely effective solutions to these “problems” they’re complaining about–and from a Climate Realist, no less.
But do you think they’d ever consider either solution? Of course not! They’d then have nothing to complain about.
They will never quit spending our Money because they’re addicted to it!! All the investment in “clean” energy will just be a total waste of time. They spent nearly as much on the clean tech’s as on dirty coal fired and for what? A measly 10% of the total! And it’s intermittent to boot. At least in Australia we have a federal election on september the 14th and we can kick’em out Hard.
I do fear the damage has already been done though because of “poison pill” effects of our wonderful (/sarc) Carbon Tax and the mining Tax and just the sheer size of the Debt they have created (260 Billion and climbing).
By way of comparison, that is a gigantic amount of Debt 4 us. I know, through reading things like Anthony’s blog, how much they have screwed with us and the never ending plethora of speeches, headlines and pronouncements designed to keep them in power at our expense (literally and actually). Oh yes and they will never quit whingeing and complaining as away of wearing us down!! As we say in Aus, we’re all rooted. At least I have some skills I can sell off to the highest bidder. HFTC All.