Victory March

To kick off college football season:

Why Europe Wanted Gaddafi Out

From The Big Picture:

The Butter Cow Goes Hollywood

Des Moines Register:

Butter sculpture has been a blockbuster in Iowa for a century. Hollywood has finally decided to cash in.
“Butter” is an upcoming comedy starring Jennifer Garner and Ty Burrell that draws direct inspiration from the beloved Iowa State Fair butter cow, its longtime creator, the late Norma “Duffy” Lyon, and Iowa’s other noted pastime, our first-in-the-nation political caucuses.
Iowa State Fair officials consulted on the movie, which makes its debut Tuesday at the Toronto International Film Festival. They shipped filmmakers dozens of photos, brochures, banners, booklets and even measurements of the cooler where current sculptor Sarah Pratt assembles the annual butter cow.
“They were very concerned with authenticity,” said Lori Chappell, State Fair spokeswoman, who started getting calls from producers in March 2010.
“They wanted to know what people who attended the fair looked like so they would have people dress appropriately,” she said. “They were especially interested in the cooler where the cow is made. They wanted all kinds of measurements.”

The Banker's Heart

David Cay Johnson on banks booking tax losses in nations with high corporate taxes, and profits in tax havens (via Mark Thoma):

People saved from bleeding out usually are filled with gratitude. The world is full of hospital wings and operating rooms paid for by people with resources who gave back to the institutions that saved them in a moment of crisis.
Not so banks, which are as vital to money circulating through the economy as hearts are to circulating blood in humans. This newest information on how banks game the system indicates it is not without reason that the giant black rock in front of Bank of America's old San Francisco headquarters is known as the banker's heart.
From the point of view of banks and other companies that bled buckets of red ink in 2007 through 2009, manipulating the rules to shift losses back home makes perfect sense so long as all you care about is financial accounting.
But banks, especially mismanaged banks with bad assets that cannot maintain a flow of payments to sustain themselves, also are part of a society, a global society.

If there is justice in the world, Bank of America's heart will quit pumping at some point in the not-too-distant future.  I wouldn't count on it.  Looks like Warren Buffett is pretty confident that they are still too big to fail.

It's Friday

for Cubs Dad:

World War II Ends

September 2, 1945:

World War II: Combat ends in the Pacific Theater: the Instrument of Surrender of Japan is signed by Japanese Foreign Minister Mamoru Shigemitsu and accepted aboard the battleship USS Missouri in Tokyo Bay.

Note that World War II ended 6 years and 1 day after it started (not figuring in Japanese and German aggression prior to the invasion of Poland).  The United States participated fully for 4 and 3/4 years.  Compare that to Afghanistan, where U.S. forces will have been involved for 10 years, as of October 7.  Our involvement has been completely different in the two wars, I just wanted to note the fact that we've been in Afghanistan for almost 10 years.  Why?  I'm not exactly sure.

Ohio's Best Professional Sports Team

Mark Titus on Ohio professional sports teams and Ohio State football:

It’s no secret that pro teams in Ohio have historically had the same amount of success as Antonio Cromartie’s condoms. Sure, Cleveland gets all the publicity and sympathy because of things like The Drive, the Browns’ move to Baltimore, the 1997 World Series, and LeBron fleeing to Miami so he could fulfill his lifelong dream of finishing in second place with his friends. But Cincinnati’s pro teams aren’t exactly all that great either, as evidenced by the fact that — with the exception of winning the division last year and getting promptly swept from the playoffs — the Reds haven’t done much of anything for 15 years, and the Bengals have never won a title and appear as though they’ll be in serious contention all season to land Andrew Luck in next year’s draft. Throw in the Columbus Blue Jackets’ irrelevance for their first 11 years of existence and there’s no denying that the collective pro sports scene in Ohio is shoddy at best and shitty at worst.
This is where Ohio State football comes in. It’s a big reason why the people of Ohio love their Buckeyes so much. When every other team in the state either sucks to begin with or chokes in the playoffs, Ohioans know at least they’ve always got Buckeyes football to fall back on. Really, being a sports fan in Ohio is like being lost at sea with nothing but a worn-out life jacket and the overwhelming feeling that you’re not going to make it out alive. And just when you think you should just give up and let yourself drown, a lifeboat comes along to save the day in the form of Ohio State football. Only it’s better than an average lifeboat because — surprise! — it’s actually a party yacht full of hookers and blow. After being surrounded by nothing but water and despair for so long, you’re now suddenly surrounded by luxury and a bounty of women who are ready to party. In other words, in a state where pro sports teams are a perpetual letdown, the beginning of the college football season all but guarantees the people of Ohio a chance to cheer on a contender.

The man sums up Ohio professional sports exceedingly well.  It's hard to imagine a football team paying players less than Mike Brown does, and yet still winning.  But I give you the Ohio State Buckeyes, whose players are paid, just not as much as players at USC or Miami.  As and Ohioan with a passionate hatred of Ohio State, I hope they play as badly as the Bengals will this year.  I know they won't, but a man can dream.

Hoover And Obama

Edward Harrison:

First, it is clear that depressionary credit crises lead to political dysfunction and a worsening fiscal picture that results from the conflicting priorities which emanate from that dysfunction. This was true during the Great Depression. We have witnessed it in Japan in the last twenty years and we are certainly witnessing it again in the US and Western Europe.

The middle path that Hoover ploughed and that Obama is ploughing owes to this dysfunction and conflicting priorities. Remember that Roosevelt ran against Hoover in 1932 on a fiscal responsibility platform, much as I anticipate Republicans will against Obama.

Second, no amount of government spending is going to allow this credit system to grow its way out of debt. The problem isn’t ‘fixable’ without significant deleveraging.

I have said it before, but it bears repeating here:

There are four ways to reduce real debt burdens:

1. by paying down debts via accumulated savings.
2. by inflating away the value of money.
3. by reneging in part or full on the promise to repay by defaulting
4. by reneging in part on the promise to repay through debt forgiveness

Right now, everyone is fixated on the first path to reducing (both public and private sector) debt. I do not believe this private sector balance sheet recession can be successfully tackled via collective public sector deficit spending balanced by a private sector deleveraging. The sovereign debt crisis in Greece tells you that. More likely, the western world’s collective public sectors will attempt to pull this off. But, at some point debt revulsion will force a public sector deleveraging as well.

He's right.  He goes on to discuss #4 some more.  One thing I want to focus on in the comparison between Obama and Hoover is this:

Remember that Roosevelt ran against Hoover in 1932 on a fiscal responsibility platform, much as I anticipate Republicans will against Obama.

The thing to remember is that Roosevelt got elected, then put the New Deal in place, and waited until 1937 to try the deficit reduction thing.  It caused the 1937-38 recession and left the Great Depression to linger on until WWII drug the country out of it.  Does anyone in their right mind expect the Republicans to make a 180 degree turn after the election in 2012 and propose some programs to benefit average folks?  I only imagine more tax cuts for the wealthy and greater cuts in government spending.  That would gut the middle class while making the downturn even worse.  We'll see what happens, but don't expect anything constructive from Republicans anytime in the next five years.

Corporate Profits Versus Wages

Robert Reich says that the ratio of corporate profits to wages is the highest since the Great Depression.  Politifact checks it out, and it's true (h/t Ritholtz):

One of the statistics Reich offered was this: "The ratio of corporate profits to wages is now higher than at any time since just before the Great Depression."

A reader asked us to check this out, so we did.

We turned to statistics compiled by the Bureau of Economic Analysis, the federal office that calculates official statistics about the economy. We found numbers for corporate profits as well as for two measures of worker income -- wage and salary disbursements, and total employee compensation received. We then divided corporate profits by both of the income measurements, all the way back to 1929. (Here are the full statistics from 1929 to 2011 as we calculated them.)

For wages, we found that Reich was essentially correct. The ratio in 2010 -- the last full year in the statistics -- was .281, which was higher than any year back to at least 1929, the earliest year in the BEA database. The next highest ratio was in 2006, at .265. (We didn’t find pre-1929 data, so the one part of Reich’s statement that we can’t prove is that the ratio was higher "just before the Great Depression.")

We also looked at total compensation, since the portion of worker compensation delivered outside of wages has grown significantly since 1929. The numbers were slightly different, but the general pattern still held. The ratio in 2010 was .226, which was matched or exceeded in only four years -- 1941, 1942, 1943 and 1950.

To capture the most up-to-date trends, we also looked at the ratios for the last six quarters. For both wages and compensation, the ratio has risen steadily over that year-and-a-half period. For wages, the ratio has climbed from .274 in the first quarter of 2010 to .290 in the second quarter of 2011. For compensation, the ratio has risen from .220 in the first quarter of 2010 to .234 in the second quarter of 2011.

So numerically, there’s little question that Reich is essentially right. (Or, at least for now he is. Economists note that statistics about corporate profits and wages are often revised after the fact.) A more interesting question is what this trendline actually means.

Correlation is not causation, but I get a funny feeling that very large contractions will last a long time if income inequality is very high.  Again, income inequality is higher than it has been since...wait for it.....before the Great Depression.  In the timeframe after the Great Crash, we saw executive pay limited by extremely high marginal rates on very high incomes.  After the marginal rates were cut, we saw executive pay skyrocket.  Hmmm.......Now all the talk is about tax reform, where deductions are cut, but marginal rates are lowered.  Why is this?  Why can't we increase marginal rates on very high incomes?   It seems to work in decreasing income inequality, which may be one of the factors for why the recovery is so weak.  I think we ought to give it a whirl.

Chart of the Day

Calculated Risk:



This month's report looked a little worse than it is, with the 40,000+ Verizon workers on strike last month.  But honestly, we're approaching almost 4 years since the recession kicked in (Dec. 2007), and I would expect at least another three or four years minimum to get back to where we were when it began, and that's without a double dip.  Obviously, barring another terrorist attack, jobs will be the only topic we'll hear about from now until November 2012.  Obama will lay out his jobs plan next week, and I'm guessing it will be an infrastructure bank and some targeted stimulus, maybe some green energy tax credits.  The Republicans plans are all tax cuts and reduced regulation.  So really, neither party will present anything resembling a plan, but yet we'll have them yapping about it for the next 16 months.  Just shoot me now.

Wake Up The Echoes

John Brandon, with the cynic's preview of the Notre Dame football season:

Earlier this summer I saw Urban Meyer on College Football Live, fresh off a visit to South Bend, reporting that Notre Dame was getting its football program into the 21st century. The proof he offered was that the Fighting Irish had finally dragged all their old Heisman trophies down from the attic and had dusted off various national championship booty and had improved their training facilities and, in short, were giving recruits the kind of razzle-dazzle all the other schools were giving them. (Nothing to be done about the weather, but be patient — in 30 or 40 years South Bend could be the new South Beach.) I was glad to hear all that, because my view on Notre Dame is if we have to hear about the Irish incessantly even if they suck (proven out over the past two decades), they may as well not suck. That way we can hear incessantly about a decent team.
So recruiting has picked up for the Golden Domers. That's good, but that's only half of it. The other ingredient necessary to make the Brian Kelly Incarnation of Hope turn out fulfilled (unlike the Weis Hope and the Willingham Hope and the Davie Hope) is to give star players plenty of leeway. Anyone who's run a business will tell you, retaining quality employees is every bit as important as attracting them in the first place. A lot of pressure comes with stardom — sometimes a guy needs a drink. And sometimes a guy needs a drink and then remembers he has to run some errands.
Another measure of the high ground has been surrendered in South Bend. Tragedy? Probably not. I'm not convinced many Notre Dame alum were all that attached to it anymore. There's a distance above sea level at which trees can't be found, and a distance above the malleable morals of modern sport at which crystal footballs are nowhere to be seen. The high ground, at least several acres of it, has been traded in this case for a dozen or more red zone touchdowns in a year when the Irish face a down-enough schedule that anything is possible. I suspect most ND fans are OK with that bargain.

I would guess he's right.  I think the pablum about Notre Dame academic standards causing them to be uncompetitive was always a joke.  Lots of players, few of them coming to Notre Dame because of their Roman Catholic faith, have gotten in trouble over the years.  It is probably notable that the coach best known for disciplining star players was Mr. NCAA probation himself, Lou Holtz.  The myth of the Gipper centered around a great athlete who really couldn't be bothered to leave the pool halls and attend school. 

Big Butter Jesus Returns

Via Balloon Juice (link to Derfcity here):

Since I live in the vicinity of the cracker Church, I found this extremely funny.  Not as funny as when Big Butter Jesus burned, but still pretty funny.

Sounds Like Fun

Scott Adams remembers when he lived in San Francisco:

I have many memories of San Francisco. There was the time I got mugged by a bum wielding a butcher knife and I used my hypnosis training to get away. And there was the time I got mugged by a guy with a handgun and I used hypnosis to convince him to take only two dollars. And there was the time a guy put a gun to my head and pulled the trigger just to see my reaction. (It wasn't loaded. My reaction was "priceless.") There was the time I came home to find my apartment door unlocked and everything valuable missing. There was the time I got robbed at gunpoint at my job in the city as a bank teller, and the other time I got robbed the same way. There was the time my car stereo got stolen, and the other time it was stolen, and the other time it was stolen. And so on.

Eventually I got a job in the beautiful East Bay town of San Ramon, at the phone company's headquarters. I drove there before sunrise each weekday morning and spent the entire day in a grey, fabric-covered box. The only visual stimulation, if you can call it that, was middle-aged employees who weren't entirely sure if they were alive or already in Hell. Then I'd drive home to San Francisco in bumper-to-bumper traffic.

Wow, those are pretty depressing memories.  Can't say that I have any similar experiences.  I consider that a good thing.

Toroidal Bubbles

From Forbidden Knowledge, via nc links:



That's a really cool video.

Covered Bridges Wrecked By Irene

NYT, via Yglesias:

Covered-bridge enthusiasts and others shuddered as they watched an amateur video, on the Internet, of the Bartonsville bridge in Vermont sliding almost intact into the Williams River on Sunday.
Vermont officials have found several other covered bridges, among the 100 or so statewide, that have been seriously damaged, but the loss of the Bartonsville bridge, built in 1871, with a wooden lattice spanning 158 feet, was considered the greatest historical blow. (Another badly damaged bridge, in Quechee, was covered but built of concrete in the 1970s.)
Preservationists were also upset to learn that the Blenheim bridge on Schoharie Creek in upstate New York was totaled on Sunday. The bridge, built in 1855, was said to have the longest span of any covered bridge in the world — an astounding 210 feet — and was one of only six in the world to have two separated lanes.
“New York lost a very prestigious covered bridge,” said Trish Kane, who is collections curator of the Theodore Burr Covered Bridge Resource Center in Oxford, N.Y. “It was an engineering marvel.”

That's kind of depressing.  Locally, a covered bridge was restored with over a half million dollars of local and federal funding.  Then somebody drove a truck onto the bridge, causing approximately $75,000 damage.  All of that is fixed now, but the county is looking at installing security cameras, which really takes the fun out of the bridge.  One time as a kid, I crawled underneath the bridge, onto the pier in the middle of the river.  While I was down there, my friend told me not to come up yet.  A sheriff deputy was driving through.  I managed to avoid any trouble, but I wouldn't have been doing such fun things with cameras up. The Man is always working to take the enjoyment out of life.

Dick Cheney Should Be On Trial

Dahlia Lithwick:

So look elsewhere for another round of the debate about the virtues of abusing prisoners in the hopes that 10 years later they will fail to divulge important information that leads only in the most circular possible routes to the eventual capture of Osama Bin Laden. My focus is what Cheney's books tells us about the rule of law in America. As Glenn Greenwald puts it:

Less than three years ago, Dick Cheney was presiding over policies that left hundreds of thousands of innocent people dead from a war of aggression, constructed a worldwide torture regime, and spied on thousands of Americans without the warrants required by law, all of which resulted in his leaving office as one of the most reviled political figures in decades. But thanks to the decision to block all legal investigations into his chronic criminality, those matters have been relegated to mere pedestrian partisan disputes, and Cheney is thus now preparing to be feted—and further enriched—as a Wise and Serious Statesman ...

Implicit in Greenwald's commentary is that the Obama administration is responsible for Cheney's continued legitimacy in the debate about torture, as well as the legitimacy of the debate itself. By deciding to repudiate torture while doing everything in its power to protect the torturers, the Obama administration has succeeded in elevating not only Cheney but the idea that, in America, some torturers are too important to be punished.

The fact that Dick Cheney brags about breaking U.S. and international law is just stunning.  This coward and his henchmen should be tried for torturing detainees, among other gross violations of U.S. law.  The only reasons I can figure that the Obama administration doesn't prosecute are:

#1  They don't want the divisive partisan battle (which makes them cowards) and/or
#2  They are afraid that they will also be prosecuted for violations of U.S. law (which makes them criminals).

Any other suggestions?  Meanwhile, it becomes apparent that people in power can willfully ignore the law whenever they want to, which is tyranny.

Ethanol Consumption Gains On Saudi Oil In U.S.

Bloomberg Government (h/t the Big Picture):

This Bloomberg Government Chart of the Day compares, in logarithmic scale, consumption of U.S. fuel-based ethanol, derived largely from corn, with U.S. imports of crude oil from Saudi Arabia, based on data from the Energy Department’s Energy Information Administration.  The gap between fuel-ethanol use and crude oil imports from Saudi Arabia totaled 45 million barrels in January of 2000.  That gap has narrowed to 8.4 million barrels in April.
The U.S. government has supported the ethanol industry through a series of tax credits and tariffs.  In addition President George W. Bush signed legislation in 2005 mandating how much ethanol should be in gasoline consumed in the U.S.  The volume under this Renewable Fuel Standard was 9 billion gallons in 2008.

The mandated volume will reach 15 billion gallons by 2015, the same amount of crude oil the U.S. imported from Saudi Arabia in 2009.   Saudi Arabia dropped from being the top single source of crude oil for the U.S. in 2000 to the third-biggest in 2010, behind Canada and Mexico, according to the Energy Information Administration.

What a terrible program.  It may be putting money in my pocket, but next year, the corn market is going to be a mess.  The madness must stop.

Philosophy And Happiness

University of Notre Dame professor Gary Gutting (via Mark Thoma):

Even if empirical investigation could discover the full range of possible conceptions of happiness, there would still remain the question of which conception we ought to try to achieve.  Here we have a question of values that empirical inquiry alone is unable to decide without appeal to philosophical thinking.
This is not to say that, as Plato thought, we can simply appeal to expert philosophical opinion to tells us how we ought to live. We all need to answer this question for ourselves.  But if philosophy does not have the answers, it does provide tools we need to arrive at answers. If, for example, we are inclined to think that pleasure is the key to happiness, John Stuart Mill shows us how to distinguish between the more sensory and the more intellectual pleasures.  Robert Nozick asks us to consider whether we would choose to attach ourselves to a device that would produce a constant state of intense pleasure, even if we never achieved anything in our lives other than experiencing this pleasure.
On another level, Immanuel Kant asks whether happiness should even be a goal of a good human life, which, he suggests, is rather directed toward choosing to do the right thing even if it destroys our happiness.  Nietzsche and Sartre help us consider whether even morality itself is a worthy goal of human existence. These essential questions are not empirical.

Just a little existential thought to liven up the day.

Fashion At The State Fair

A New York fashion writer visits the Iowa State Fair:

I’ve been going around the United States researching a new book, doing fashion reports on the “belt” regions (corn, gun, Bible, rust, etc.)—trying to see ways in which the regional economy and culture—politics, religion, industry, landscapes, etc.—have influenced the local closets. Fashion is a language; regions have style dialects just like they have weird food specialties.

Iowa is in the corn belt, so to see as many tractors, towheads, farm animals, and 4H Club agricultural things as possible, I went to the Iowa State Fair, which has been happening annually for more than 100 years, replete with a cow carved out of butter and a veritable apocalypse of deep-fried things on sticks—including sticks of butter.

There’s a pervasive kindness and wholesomeness to Iowans that makes it difficult to take a picture of a couple or a family and have it not look like a corporate stock photo. Literally every senior couple I spoke to had been married more than 40 years. On the unphotogenic side, there are way too many people driving Rascals and surly women around 30 who had been savaged by love and taken to expressing their rage through softball and tattoos. But even these chicks seemed to get nice after singing a few pro-redneck karaoke anthems.

Clothingwise, Iowans seem to be a largely modest, fancy-averse people, not unlike Canadians. Clothing is often representative of a subservience to land and beasts of the field and punctuated by cowboy accouterments. There are, however, many group activities and contests that involve wildly spangled garments and tiaras. The point seems to be that if you want to draw attention to yourself, you don’t want to be caught doing it alone.

I like the comparison of Iowans and Canadians.  I think New Yorkers are just taken aback by polite, friendly, warm people, and the example they are most familiar with are Canadians.  It's always entertaining to hear city folk come and make anthropological studies of their rural countrymen.  My sister is very fond of taking back a few hick stories so she can entertain her sophisticated friends.  I'm glad we can entertain our urban relatives with our friendly people and simple ways.  It is good that the politicians flock to the Iowa State Fair, so the reporters can come and report on deep-fried butter all the time.

Farm Land Prices Are Even Crazier

Progressive Farmer:

Farmer-investor Howard Myers of Princeton, N.J., has been itching to buy another Midwest farm. Last month, he thought he had a lead: Heirs contacted him about an estate sale with the land adjoining the Taylorville, Ill., farm he's owned since 1985.

But within days of the owner's funeral, one of the state's juggernaut farm families scooped up all 123 acres at $11,000 each. Myers had been willing only to buy a portion of the farm, given the steep asking price.

The article goes on to highlight farms selling at $11,000 to $13,500 an acre in Iowa and Illinois.  That is just crazy.  If you buyers are listening, I've got some slightly less productive ground I might part with for $8500 an acre.  Just give me a call.

We Could Use A Laser

Via Yglesias, the Guardian tells about Swiss scientists trying to use lasers to cause rain:

Ever since ancient farmers called on the gods to send rain to save their harvests, humans have longed to have the weather at their command.

That dream has now received a boost after researchers used a powerful laser to produce water droplets in the air, a step that could ultimately help trigger rainfall.
While nothing can produce a downpour from dry air, the technique, called laser-assisted water condensation, might allow some control over where and when rain falls if the atmosphere is sufficiently humid.

Researchers demonstrated the technique in field tests after hauling a mobile laser laboratory the size of a small garage to the banks of the Rhône near lake Geneva in Switzerland.

Records from 133 hours of firings revealed that intense pulses of laser light created nitric acid particles in the air that behaved like atmospheric glue, binding water molecules together into droplets and preventing them from re-evaporating.
Within seconds, these grew into stable drops a few thousandths of a millimetre in diameter: too small to fall as rain, but large enough to encourage the scientists to press on with the work.

"We have not yet generated raindrops – they are too small and too light to fall as rain. To get rain, we will need particles a hundred times the size, so they are heavy enough to fall," said Jérôme Kasparian, a physicist at the University of Geneva. A report on the tests appears in the journal Nature Communications.

With improvements, shooting lasers into the sky could either help trigger or prevent showers. One possibility might be to create water droplets in air masses drifting towards mountains. The air would cool as it rose over these, causing the water droplets to grow and eventually fall.

I'm not for toying with the weather, but as dry as it's been, this does sound intriguing right now.  I would imagine folks in Texas would be all over this.  Of course, these experiments have been going on for years, and we are still at the mercy of Mother Nature. 

College Football Preview

The Atlantic features 10 Stories To Watch This College Football Season.  My favorite:

Keeping track of conference names and their number of teams

This season Colorado and Utah are becoming the 11th and 12th members of the conference previously known as the Pac-10, and the conference has consequently renamed itself as the Pac-12. The Big 10, which has had 11 teams since Penn State joined in 1990, adds Nebraska this year, but has no intentions of referring to itself as the Big 12—which is helpful in one regard, because the conference that Nebraska just left is still called the Big 12, even though it now only has 10 teams. So for cheat sheet purposes, the Pac-12 has 12 teams, the Big 10 has 12 teams, and the Big 12 has 10 teams. And the habit of calling a conference “big” has nothing to do with Freud; sometimes a conference is just a conference.

This just makes me laugh.  What a bunch of stupidity.  Of course, the Big Ten was known back in the day as the Western Conference, so they've had a tradition of fairly inaccurate names. 

Moral Concepts Of The Individual And Society

Dan Little looks at conservative and progressive views of society, and emphasis of individuals versus the common good (via Mark Thoma).  He emphasizes a progressive philosophy for the organization of society.  It is worth the read.  It might not be everybody's cup of tea, but it lays out a counterargument to the tea party view of society.  I think the answer is in between the two poles, but probably closer to the progressive side than the conservative side.  Partially, that is because the conservative argument has gotten so extreme that it is crazy to consider.

The Crock of Corporate Cash

Marketwatch (via Ritholtz):

You may have heard recently that U.S. companies have emerged from the financial crisis in robust health, that they've paid down their debts, rebuilt their balance sheets and are sitting on growing piles of cash they are ready to invest in the economy.
You could hear this great news pretty much anywhere — maybe from Bloomberg, which this spring hailed the "surprising strength" of corporate balance sheets. Or perhaps in the Washington Post, where Fareed Zakaria reported that top companies "have accumulated an astonishing $1.8 trillion of cash," leaving them in the best shape, by some measures, "in almost half a century."
Or you heard it from Dallas Federal Reserve President Richard Fisher, who recently said companies were "hoarding cash" but were afraid to start investing. Or on CNBC, where experts have been debating what these corporations are going to do with all their surplus loot. Will they raise dividends? Buy back shares? Launch a new wave of mergers and acquisitions?
It all sounds wonderful for investors and the U.S. economy. There's just one problem: It's a crock.
American companies are not in robust financial shape. Federal Reserve data show that their debts have been rising, not falling. By some measures, they are now more leveraged than at any time since the Great Depression.
You'd think someone might have noticed something amiss. After all, we were simultaneously being told that companies (a) had more money than they know what to do with; (b) had even more money coming in due to a surge in profits; yet (c) they have been out in the bond market borrowing as fast as they can.

As I've claimed before, I think they are sitting on piles of cash so that they can roll debt if it were to come due during a credit crisis.  Lots of companies got burned in 2008-2009, none moreso than GM and Chrysler.  Ford had been in the worst shape of the Big 3, and had gone out and borrowed all they could before the financial crisis.  They survived without filing bankruptcy, GM and Chrysler didn't.  As interest rates have gone down, companies have borrowed to have cash on-hand.  Likewise corporate profits are banked to provide a cushion for tight financial markets.  We are not at the cusp of large investment by corporations, we are witnessing businesses hunkering down until the storm passes.

Population Growth And Economic Growth

Yglesias makes that point about the Texas economy:

Lower taxes for rich people is, indeed, the standard GOP prescription for growth. Bob Dole promised it in 1996. Texas Gov. George W Bush promised it in 2000. In 2001 and 2003, he delivered it. We got the weakest economic expansion in American history, followed by a plunge into the worst recession since World War II. Then John McCain campaigned on lower taxes for rich people. Then in December of 2010, Senate Republicans insisted on lower taxes for rich people as the price for avoiding tax hikes on the middle class. Maybe you think the only problem with this strategy is we haven’t tried it forcefully enough. But what does it have to do with Texas?
In the actual Texas, as we’ve seen over and over again, there’s been plenty of increases in government spending and plenty of public sector job creation. There’s been plenty of federal spending, and plenty of stimulus money. And that’s all because Texas’ population is growing very rapidly. More people equal more private investment to provide the goods and services those people want, and it also means more public sector spending and the employment that comes with it. But is President Perry going to engineer a national population boom by cutting marginal income tax rates on high-income individuals? It’s difficult to see how that would work. The American government really could engineer a population boom by adopting a more liberal attitude toward international migration, but that’s not on Perry’s agenda or anyone else’s as far as I can see. So beyond that, it’s just the case that a governor and a president are faced with different situations. “Let’s get a lot of people to move here” is a totally viable economic growth strategy for a governor to pursue. But it doesn’t work as a national policy agenda. So you’re left with the same old same old tax cuts for the rich.

I don't think that Texas is any better than the Midwest in the early 20th century or California at mid-century.  The Sunbelt will grow until it doesn't, then people will move to someplace else, maybe a place with ample water supply, such as the Great Lakes region, or upstate New York.  The idea that Texas has figured out the right way to grow is just as wrong as the idea that California figured out the right way to grow in the fifties and sixties. 

A Reminder That Dick Cheney Was Horrible

Conor Friedersdorf reviews all of the terrible things about Dick Cheney which made him so reviled:

When Vice President Dick Cheney left office, his approval rating stood at a staggeringly low 13 percent. Few political figures in history have been so reviled. As his memoir, In My Time, hits bookstores today, and he does a series of friendly interviews in the press, some Americans with short memories might wonder, "Why is it that so few were willing to endorse his performance in office?"

This is a reminder.

He goes on to remind us of Cheney's role in every terrible part of the Bush administration-Iraq, torture, warrantless surveillance, detention without trial and everything else he touched and made dirtier.  What a terrible person.  And now he releases a book in which he revels in his actions and claims to be right.  He should be in jail.

Can Karl Marx Save Capitalism From Itself?

George Magnus thinks we need to note a few of Marx's critiques of capitalism (via nc links):

The spirit of Marx, who is buried in a cemetery close to where I live in north London, has risen from the grave amid the financial crisis and subsequent economic slump. The wily philosopher’s analysis of capitalism had a lot of flaws, but today’s global economy bears some uncanny resemblances to the conditions he foresaw.
Consider, for example, Marx’s prediction of how the inherent conflict between capital and labor would manifest itself. As he wrote in “Das Kapital,” companies’ pursuit of profits and productivity would naturally lead them to need fewer and fewer workers, creating an “industrial reserve army” of the poor and unemployed: “Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery.”
The process he describes is visible throughout the developed world, particularly in the U.S. Companies’ efforts to cut costs and avoid hiring have boosted U.S. corporate profits as a share of total economic output to the highest level in more than six decades, while the unemployment rate stands at 9.1 percent and real wages are stagnant.
U.S. income inequality, meanwhile, is by some measures close to its highest level since the 1920s. Before 2008, the income disparity was obscured by factors such as easy credit, which allowed poor households to enjoy a more affluent lifestyle. Now the problem is coming home to roost.

Note that corporate profits are high even as sales are flat.  Productivity gains equals fewer workers producing the same number or more goods.  In the current political situation, we have zero chance of listening to Marx's critiques of capitalism.  I'm afraid the misguided proponents of uncontained capitalism may allow it to destroy itself.

Good News For The U.S.?

Michael Pettis thinks the U.S. will restrict trade and push adjustments in unemployment on China and Germany (h/t Yglesias):

As unemployment persists, and as the political pressure to address unemployment rises, the US will, like Britain in 1930-31, lose its ideological commitment to free trade and become increasingly protectionist. Also like Britain in 1930-31, once it does so the US economy will begin growing more rapidly – thus putting the burden of adjustment on China, Germany (which will already be suffering from the European adjustment) and Japan.

Trade policy in the next few years will be about deciding who will bear the brunt of the global contraction in demand growth. The surplus countries, because they are so reliant on surpluses, will be very reluctant to eliminate their trade intervention policies. Because they are making the same mistake the US made in the late 1920s and Japan in the late 1980s – thinking they are in a strong enough position to dictate terms – they will refuse to take the necessary steps to adjust.

But in fact in this fight over global demand it is the deficit countries that have all the best cards. They control demand, which is the world’s scarcest and most valuable commodity. Once they begin intervening in trade and regaining the full use of their domestic demand, they will push the adjustment onto the surplus countries. Unemployment in deficit countries will drop, while it will rise in surplus countries.

That is an interesting angle.  I can see where he's coming from, but I think big business makes too much by taking advantage of cheap labor in China.  I doubt the U.S. will limit free trade.  Too many people will say it was the limitation of trade which made the Great Depression so bad, even though then the U.S. was in China's position.  I think he is right that things will be pretty bad for the next decade.

Dickey Finally Gets Sixth Win

R.A. Dickey held the Marlins scoreless over seven innings, scattering 7 hits and a walk, with 6 strikeouts.  He earned his sixth win, after 5 straight quality starts in which he went 0-3 with two no-decisions.

Another King Of LEED

Seattle Times (h/t Yglesias):

Workers are digging a hole on Seattle's Capitol Hill for a new office building unlike any commercial structure the planet's ever seen before.
You want green? There's never been anything greener.
The Bullitt Center, which celebrates its official groundbreaking Monday, has been designed to produce as much energy as it consumes.
Provide all its own water.
Process all its own sewage.
It aims to move green building forward a quantum leap. Maybe two.
Timbers for the six-story building's frame will come only from forests certified as sustainable by the world's toughest review body. To reduce the project's carbon footprint, the steel, concrete, wood and other heavy materials all will come from within 300 miles.
The center, at 15th Avenue and East Madison Street, will use less than one-third as much energy as the average building its size. Parking will be provided for bikes — but not for cars.
Common building materials that contain PVC plastics, mercury, cadmium and about 360 other substances considered hazardous won't be used.
"We set out to build the greenest office building — by far — in the world," says Denis Hayes, president and CEO of Seattle's environment-oriented Bullitt Foundation, the center's owner.

Pretty impressive goals.  I am curious how much they will end up saving long-term versus the upfront cost increase.

Does The Sun Revolve Around the Earth?

No, but that doesn't prevent a few right-wing Catholic nutters from arguing the Church was right and Galileo was wrong:

But by challenging modern science, proponents of a geocentric universe are challenging the very church they seek to serve and protect.

"I have no idea who these people are," said Brother Guy Consolmagno, curator of meteorites and spokesman for the Vatican Observatory. "Are they sincere, or is this a clever bit of theater?"

Those promoting geocentrism argue that heliocentrism, or the centuries-old consensus among scientists that Earth revolves around the sun, is a conspiracy to squelch the church's influence.

"Heliocentrism becomes dangerous if it is being propped up as the true system when, in fact, it is a false system," said Robert Sungenis, leader of a budding movement to get scientists to reconsider. "False information leads to false ideas, and false ideas lead to illicit and immoral actions — thus the state of the world today.… Prior to Galileo, the church was in full command of the world, and governments and academia were subservient to her."

Sungenis is no Don Quixote. Hundreds of curiosity seekers, skeptics and supporters attended a conference last fall titled "Galileo Was Wrong. The Church Was Right" near the University of Notre Dame campus inSouth Bend, Ind.

Astrophysicists at Notre Dame didn't appreciate the group hitching its wagon to America's flagship Catholic university and resurrecting a concept that's extinct for a reason.

"It's an idea whose time has come and gone," astrophysics professor Peter Garnavich said. "There are some people who want to move the world back to the 1950s when it seemed like a better time. These are people who want to move the world back to the 1250s."

You can find crazy people who believe all kinds of crazy stuff.  But the geocentric universe?  Oh boy.

Beetle Resistant to BT Corn

Des Moines Register:

Researchers have confirmed that the virgifera beetle has developed a resistance to some of Monsanto’s genetically-engineered corn seed.
A report by Iowa State University researcher Aaron Gassman confirmed the resistance. It is described on the Care2 website.
Resistance developed in fields where the same genetically-engineered corn had been grown three yeras in a row, a relatively rare occurrence. Farmers have tended to switch fields annually between corn and soybeans to reduce nitrogen use and maximize both corn and soybean yields.
However, with record corn prices and increasing demand for corn, more corn acres, especially “corn on corn” repeated plantings, have occurred this year.
Scientists have warned that a danger in the use of genetically-engineered corn and soybeans comes with resistance by both pests and herbicides.

Another bad sign for GMO products.

Update: That's Western Corn Rootworm Beetle.

Accepting Debt Writedowns

Hussman Funds, via Ritholtz:

Once the housing bubble collapsed, the Fed again responded with policies aimed primarily at distorting the set of investment opportunities through zero interest rates, preserving the misallocation of capital toward speculative investments (on Bernanke's misguided and empirically unsupported belief that consumers spend out of speculative gains). Yet the underlying debt burdens have not been restructured, so consumers - particularly homeowners - continue to pare back spending in order to reduce those debt burdens. As a result, there is little expectation of significant growth in demand, and companies therefore have little reason to hire new employees - all of which reinforces a "low level equilibrium" in the economy.

The way to get out of this is to abandon the misguided belief that economic prosperity can be obtained by encouraging speculation and distorting the set of investment opportunities. Rather, we will eventually find, as was eventually also discovered in the post-Depression stagnation of the 1930's, that the way to get the economy moving again is to restructure hopelessly burdensome debt obligations.

Of course, this same story is playing out on a global scale. It is worth noting that the yield on 1-year Greek government debt surged to 55% last week. At present, the global bond market is expressing a 100% expectation that this debt will default. The only question now is what the recovery rate will be.

Over the past three years, Wall Street and the banking system have enjoyed enormous fiscal and monetary concessions on the self-serving assertion that the global financial system will "implode" if anyone who made a bad loan might actually experience a loss. Because reversing this mantra is so difficult, policy makers are likely to continue fitful efforts to "rescue" this debt for the sake of bondholders, through mechanisms that are increasingly distasteful to the broader population. The justification for those policies will therefore have to be coupled with rhetoric that institutions holding these securities are too "systemically important" to suffer losses.

Good luck with that.  The shareholders and bondholders in the big banks have been protected by taxpayers.  It is doubtful that they will ever face the losses that need to come to kill the zombie banks and writedown some of the debt which will never get paid back.  It needs to happen, but the power brokers want to be made whole at the common man's expense.

Double Dip Watch

From Calculated Risk:

Based on the current trend, we may be adding another shaded blue area in the next couple of months.  This is disconcerting, especially considering that manufacturing has been one of the bright spots in the current "recovery."  I guess we'll see what comes.  The so-called experts are forecasting greater odds that there will be a double dip.  As much as the economic numbers have been getting revised down, I wouldn't be surprised if they determine we have entered or soon will enter a double dip recession.  In any case, it will take a long time for the job market to recover.

Shay's Rebellion

August 29, 1786:

Shays' Rebellion, an armed uprising of Massachusetts farmers, begins in response to high debt and tax burdens.

Shays' Rebellion was an armed uprising in central and western Massachusetts (mainly Springfield) from 1786 to 1787. The rebellion is named after Daniel Shays, a veteran of the American Revolutionary War.  It started over financial difficulties and by January 1787, over one thousand Shaysites had been arrested. A militia that had been raised as a private army defeated an attack on the federal Springfield Armory by the main Shaysite force on February 3, 1787, and four rebels were killed in the action. There was a lack of an institutional response to the uprising, which energized calls to reevaluate the Articles of Confederation and gave strong impetus to the Philadelphia Convention which began on May 17, 1787. Shays' Rebellion produced fears that the Revolution's democratic impulse had gotten out of hand.

Thomas Jefferson, who was serving as an ambassador to France at the time, refused to be alarmed by Shays' Rebellion. In a letter to a friend, he argued that a little rebellion now and then is a good thing. "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure." In contrast to Jefferson's sentiments George Washington, who at the time was urging many through letters about forming a better and more energetic national government through the union of the states, in a letter to Henry Lee wrote in regards to the rebellion, "You talk, my good sir, of employing influence to appease the present tumults in Massachusetts. I know not where that influence is to be found, or, if attainable, that it would be a proper remedy for the disorders. Influence is not government. Let us have a government by which our lives, liberties, and properties will be secured, or let us know the worst at once."
Ultimately, however, the uprising was the climax of a series of events of the 1780s that convinced a powerful group of Americans that the national government needed to be stronger so that it could create uniform economic policies and protect property owners from infringements on their rights by local majorities. Men like Charles Harding helped to spread concepts created during Shays' Rebellion. These ideas stemmed from the fear that a private liberty, such as the secure enjoyment of property rights, could be threatened by public liberty - unrestrained power in the hands of the people. James Madison addressed this concept by stating that "Liberty may be endangered by the abuses of liberty as well as the abuses of power."

The first manifestation of the soveriegn citizen movement.  It is amazing how often Tea Partiers use the Thomas Jefferson quote above. 

Samuel Morse-Painter, Then Inventor

David McCulloch traces Morse's career (h/t the Dish).  An interesting part:

That same year, 1834, to the dismay of many, Morse had joined in the Nativist movement, the anti-immigrant, anti-Catholic outcry sharply on the rise in New York and in much of the country. Like others, he saw the American way of life threatened with ruination by the hordes of immigrant poor from Ireland, Germany and Italy, bringing with them their ignorance and their “Romish” religion. In Morse’s own birthplace, Charlestown, Massachusetts, an angry mob had sacked and burned an Ursuline convent.

Writing under a pen name, “Brutus,” Morse began a series of articles for his brothers’ newspaper, the New York Observer. “The serpent has already commenced his coil about our limbs, and the lethargy of his poison is creeping over us,” he warned darkly. The articles, published as a book, carried the title Foreign Conspiracy against the Liberties of the United States. Monarchy and Catholicism were inseparable and unacceptable, if democracy was to survive, Morse argued. Asked to run as the Nativist candidate for mayor of New York in 1836, Morse accepted. To friends and admirers he seemed to have departed his senses. An editorial in the New York Commercial Advertiser expressed what many felt:
“Mr. Morse is a scholar and a gentleman—an able man—an accomplished artist—and we should like on ninety-nine accounts to support him. But the hundredth forbids it. Somehow or other he has got warped in his politics.”
On Election Day, he went down to a crushing defeat, last in a field of four.

Xenophobia, it's always around.

A Broken System?

This is interesting (h/t the Big Picture):

Stay Thirsty Wins Travers

ESPN:

Owner Mike Repole and trainer Todd Pletcher ended an emotionally draining 34-minute period on a high Saturday afternoon as Stay Thirsty vaulted to the top of the 3-year-old division with a determined 1 1/4-length victory over Rattlesnake Bridge in Saturday's $1 million Travers Stakes before a crowd of 43,050 at Saratoga.
Stay Thirsty's victory came one race after Uncle Mo  last year's 2-year-old champion  fell a nose short to Caleb's Posse in the Grade 1 King's Bishop in his first start in four months. Both Stay Thirsty and Uncle Mo are owned by Repole and trained by Pletcher.

Today is a big day at Del Mar, with the Del Mar Handicap, the Pat O'Brien Stakes and the Pacific Classic.