How To Win Rock, Paper, Scissors

Here, via Ezra Klein. as he says, don't use the Bart Simpson strategy:

I can't remember the quote one of my co-workers had from his friend about the game, but it involved hitting you in the head with a rock if you tried to tell him that paper beat rock.

Here's Bart:

Dealing With Deleveraging

The Economist, via Ritholtz:

What can be learnt from these various approaches? It is still early days, but four lessons stand out. The first is that in some extreme cases, when a large debt reduction is needed, orderly write-downs are necessary. The foreclosures on American mortgages have been severe, but they mean that household debt is likely to shrink to manageable levels faster than in, say, Britain, where low interest rates on variable mortgages and a lot of “forbearance” by banks have kept defaults artificially low. At the sovereign level the same logic should apply to hopelessly bankrupt Greece: it needs a debt write-down.

Second, nominal growth is essential to bring down the weight of debt. It is hard to ease the debt burden in a stagnant economy with low inflation. That suggests the pace of public-sector austerity, where possible, needs to be calibrated to the scale of private deleveraging. America’s government, for instance, needs a medium-term plan for deficit reduction, but cutting back spending viciously in the short term at a time of private-sector retrenchment would be a mistake.

Third, the best way to ease the pain of deleveraging is with an export-led boom. Here, progress has been painfully slow. The external deficits of ex-bubble economies have shrunk since 2007, but not by enough—and some now seem to be rising again. There has been too little rebalancing of global demand towards big emerging economies. That will require stronger currencies in emerging Asia and weaker ones in the rich world.

Trying to balance loan writedowns along with deficit reduction will be very challenging.  Money interests don't want loan writedowns and want to slash government spending.  Everyday people want jobs, and can't wait years to get them.  Political interests want to win the next election, and some of them are helped by a struggling economy.  How the sacrifices are spread will determine the future of the U.S. and the world, and it is hard to be optimistic on that front.

Naked Capitalism Link of the Day

Today's link: This Time Really Is Different, at Decline of the Empire.  This post summarizes well the deep-seated problems we face, in a more efficient way than I can express them:

  I've got some news for people like John Mauldin, Barry Ritholtz, Carmen Reinhart and Ken Rogoff—this time is different, but not in the sense you intend. To understand what is happening in the United States, it is necessary to go far beyond an historical survey of financial crises. You must consider the specific historical circumstances that led to the current crisis. Such a review would include but not be limited to the following observations—

• The United States has been hemorrhaging manufacturing jobs for 30 years.
• Almost all of the income gains made during that time went to the top 10% of wage-earners, with most of them going to the top 1%. Wealth inequality grew accordingly.
• Health care costs have been soaring all that time.
• College tuition costs skyrocketed at a pace far beyond the rate of inflation.
• Households took on more and more debt to replace lost income.
• We had not one, but two, substantial economic bubbles during the last 15 years. Without those bubbles, how much would the U.S. economy have grown?
• The private debt to GDP ratio grew and grew, clearly indicating that more and more debt was required to add an additional point of GDP.
• The Federal Government more and more became the tool of monied special interests.

And so forth. When people endorse Reinhart and Rogoff, we are supposed to understand that the Tough Times we're experiencing now have a well-defined beginning—the financial crisis after the fall of Lehman—and will have a well-defined end—however many years it takes to work through the credit problems. This is utter nonsense. The "historical obversations" I listed above are in fact the root causes of our current predicament.
And in each case, the historical trend has not changed, or has gotten worse. Households now have only slightly less debt than they did before the crisis, but trillions of dollars of housing wealth has disappeared. Health care costs continue to soar, as do college tuitions. Income gains still go to the wealthiest Americans. In short, nothing has changed.

My first steps to address these issues:

1.  Let all of the Bush tax cuts expire, including on dividends and capital gains.  Reintroduce and modify some of the tax cuts or credits targeted to the lower half of the income spectrum.  Bring back a 40% marginal rate on incomes over $1 million, with 45% at $3 million and 50% at $5 million.  Limit deductions on incomes over $1 million.  This will chip away at the income inequality while helping to increase revenues.

2.  Establish a land bank and governmental finance arm to deal with foreclosed properties belonging to Fannie Mae, Freddie Mac and the FHA.  Target low interest loans or rents to the lower and middle classes to provide affordable housing and utilization of existing housing stock.

3. Address immigration reform.  Offer penalties and incentives to encourage illegal immigrants to come out of the shadows and begin the path to legal status.  Some workers may want permanent residency, some may want visas to come in and work seasonally, let's find out what would work.

4.  Analyze the existing freight railroads for traffic congestion and potential for passenger traffic improvements in regional travel.  Investigate commuter public transportation options and improvements in the 50 largest metro areas.  Identify and begin replacement of needed infrastructure, focusing on the central cities in the 50 metro areas.  Provide additional incentives for redevelopment and repopulation in central cities.

5.  Wrap up the Iraq and Afghanistan wars, and wind up U.S. support for Libyan rebels.  Cut defense spending, starting with personnel working overseas hired as contractors, they will not be the shadow army we deploy around the world.

That's just a start, and I haven't gotten to overhauling health care and moving to single-payer, or overhauling our energy system.  I should also note that there is a good editorial in Al-Jazeera (yes, I just wrote that) about the myths surrounding Ronald Reagan, which also goes into detail about some of the giant mistakes made in the last 30 years which have gotten us in this mess, and which must be unwound to get us out.

While Republicans Look To Cut Basic Science Research....

....and Obama goes along with them, there's this (Via Mark Thoma):

Fusion energy is created by fusing two atomic nuclei, in the process converting mass to energy, which appears as heat. The heat, as in conventional nuclear fission reactors, turns water into steam, which drives turbines to generate electricity, or is used to produce fuels for transportation or other uses.
Fusion energy generates zero greenhouse gases. It offers no chance of a catastrophic accident. It can be available to all nations, relying only on the Earth’s oceans. When commercialized, it will transform the world’s energy supply.
There’s a catch. The development of fusion energy is one of the most difficult science and engineering challenges ever undertaken. Among other challenges, it requires production and confinement of a hot gas — a plasma — with a temperature around 100 million degrees Celsius.
But potential solutions to these daunting technical challenges are emerging. In one approach, known as magnetic fusion, hot plasma is confined by powerful magnets. A second approach uses large, intense lasers to bombard a frozen pellet of fusion fuel (deuterium and tritium nuclei) to heat the pellet and cause fusion to occur in a billionth of a second. Whereas magnetic fusion holds a hot plasma indefinitely, like a sun, the second approach resembles an internal combustion engine, with multiple mini-explosions (about five per second).
Once a poorly understood area of research, plasma physics has become highly developed. Scientists not only produce 100 million-degree plasmas routinely, but they control and manipulate such “small suns” with remarkable finesse. Since 1970 the power produced by magnetic fusion in the lab has grown from one-tenth of a watt, produced for a fraction of a second, to 16 million watts produced for one second — a billionfold increase in fusion energy.

The editorial goes on to say that other developed nations are moving toward further research while we twiddle our thumbs.  I know, this is still rather unlikely, and the writer is engaged in said research, but it seems like setting aside the same amount of money over 20 years that we spend every three months blowing up Iraq and Afghanistan would be a worthwhile investment.  I would even venture to say that spending, say, 4 times that amount would likely be a good investment.  But Republicans don't seem to like basic science, they like corporate welfare and tax cuts for the super wealthy. 

An Act for the establishing and organizing a Marine Corps

July 11, 1798:

An Act for the establishing and organizing a Marine Corps.

Section 1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That in addition to the present military establishment, there shall be raised and organized a corps of marines, which shall consist of one major, four captains, sixteen first lieutenants, twelve second lieutenants, forty-eight sergeants, forty-eight corporals, thirty-two drums and fifes, and seven hundred and twenty privates, including the marines who have been enlisted, or are authorized to be raised for the naval armament; and the said corps may be formed into as many companies or detachments, as the President of the United States shall direct, with a proper distribution of the commissioned and non-commissioned officers and musicians to each company or detachment.

Sec. 2. And be it further enacted, That the pay and subsisteuce of the said officers, privates and musicians, shall be as follows, to wit: To a major, fifty dollars per month, and four rations per day; to a captain, forty dollars per mouth, aud three rations per day; to a first lieutenant, thirty dollars per mouth, and three rations per day; to a second lieutenant, twenty-five dollars per month, and two rations per day; and to the nom-commissioned officers, privates and musicians, conformably to the act, intituled "An act providing a naval armament," as shall be fixed by the President of the United States: And the President of the United States shall be, and is hereby authorized to continue the enlistment of marines, until the said corps shall be complete; and of himself, to Appoint the commissioned officers, whenever, in the recess of the Senate, an appointment shall be necessary. And the enlistments, which shall be made by virtue hereof, may be for the term of three years, subject to be discharged by the President of the United States, or by the ceasing or repeal of the laws providing for the naval armament. And if the marine corps, or any part of it, shall be ordered by the President to do duty on shore, aud it shall become necessary to appoint an adjutant, paymaster, quartermaster, sergeant-major, quartermaster-sergeant, and drum and fife-major, or any of them, the major or commandant of the corps, is hereby authorized to appoint such staff officer or officers, from the line of subalterns, sergeants and music, respectively, who shall be entitled, during the time they shall dosuch duty, to the same extra pay and emoluments, which are allowed by law, to officers acting in the same capacities in the infantry.

Sec. 3. And be it further enacted, That the detachments of the corps of marines hereby authorized, shall be made in lieu of the respective quotas of marines, which have been established or authorized for the frigates, and other armed vessels and gallies, which shall be employed in the service of the United States: And the President of the United States may detach and appoint such of the officers of this marine corps, to act on board the frigates, and any of the armed vessels of the United States, respectively, as he shall, from time to time, judge necessary; any thing in the act "providing a naval armament" to the contrary hereof notwithstanding.
Sec. 4. And be it further enacted, That the officers, non-commissioned officers, privates and musicians aforesaid, shall take the same oath, and shall be governed by the same rules and articles of war, as are prescribed for the military establishment of the United States, and by the rules for the regulation of the navy, heretofore, or which shall be established by law, according to the nature of the service in which they shall be employed, and shall be entitled to the same allowance, in case of wounds or disabilities, according to their respective ranks, as are granted by the act "to ascertain and fix the military establishment of the United States."
Sec. 5. And be it further enacted, That the non-commissioned officers, musicians, seamen and marines, who are or shall be enlisted into the service of the United States; and the non-commissioned officers and musicians, who are or shall be enlisted into the army of the United States, shall be, and they are hereby exempted, during their term of service, from all personal
arrests for any debt or contract.

Sec. 6. And be it further enacted, That the marine corps, established by this act, shall, at any time, be liable to do duty in the forts and garrisons of the United States, on the sea-coast, or any other duty on shore, as the President, at his discretion, shall direct.
Approved, July 11, 1798.

A little historical explanation:

A Joke For Sunday

Four old retired guys are walking down a street in Mesa , Arizona . They turn a corner and see a sign that says, 'Old Timers Bar - all drinks 10 cents'. They look at each other, and then go in, thinking this is too good to be true.

The old bartender says in a voice that carries across the room, 'Come on in and let me pour one for you!

'What'll it be, Gentlemen?'
There seemed to be a fully-stocked bar, so each of the men ask for a martini. In short order, the bartender Serves up four iced martinis. Shaken, not stirred, and says, 'That'll be 10 cents each, please.'

The four men stare at the bartender for a moment. Then look at each other they can't believe their good luck.

They pay the 40 cents, finish their martinis, and order another round. Again, four excellent martinis are produced with the bartender again saying, 'That's 40 cents, please.' They pay the 40 cents, but their curiosity is more than they can stand.

They have each had two martinis and so far they've spent less than a dollar.

Finally one of the men says, 'How can you afford to serve martinis as good as these for a dime a piece?'

'I'm a retired tailor from Boston ,' the bartender said, 'and I always wanted to own a bar. Last year I hit the Lottery for $25 million and decided to open this place. Every drink costs a dime - wine, liquor, beer, it's all the same.'

Wow!!!! That's quite a story,' says one of the men.

The four of them sipped at their martinis and couldn't help but notice seven other people at the end of the bar who didn't have drinks in front of them, and hadn't ordered anything the whole time they were there.

One man gestures at the seven at the end of the bar without drinks and asks the bartender, 'What's with them?'

The bartender says, 'Oh, they're all old retired farmers from Ohio , waiting for happy hour when drinks are half price.'

NASA Photo of the Day

Here:



A Milky Way Band
Credit & Copyright: John P. Gleason, Celestial Images Explanation: Most bright stars in our Milky Way Galaxy reside in a disk. Since our Sun also resides in this disk, these stars appear to us as a diffuse band that circles the sky. The above panorama of a northern band of the Milky Way's disk covers 90 degrees and is a digitally created mosaic of several independent exposures. Scrolling right will display the rest of this spectacular picture. Visible are many bright stars, dark dust lanes, red emission nebulae, blue reflection nebulae, and clusters of stars. In addition to all this matter that we can see, astronomers suspect there exists even more dark matter that we cannot see.



Naked Capitalism Link of the Day

Today's link: Australia plans to impose carbon tax on worst polluters, at the BBC:

Prime Minister Julia Gillard said carbon dioxide emissions would be taxed at A$23 ($25; £15) per tonne from 2012.
The country's biggest economic reform in a generation will cover some 500 companies. In 2015, a market-based trading scheme will be introduced.
Households are expected to see consumer prices rise by nearly 1%, and the move has been criticised by the opposition.
Critics argue the levy would damage economic competitiveness.

Australia is one of the world's worst emitters of greenhouse gases per head of population.

The country relies on coal for 80% of its electricity generation, and is a major coal exporter.
Under the new scheme set to begin on 1 July 2012, the government plans to include any company that produces at least 25,000 tonnes of carbon dioxide per year.
However, agriculture, forestry and land will be excluded from the levy. Motorists are also to be exempt, except for heavy lorries.
Steelmakers, coal mines and electricity generators will receive compensation to ensure they stay in business. Other tax cuts are planned for consumers.

Interesting.  One more policy taken on by another developed economy, which will be blocked by Republicans in the United States.  It is unfortunate that religious fundamentalists (of which we have plenty) are so convinced that God gave us the Earth to trash, and any attempt to lessen our impact on the environment should be thwarted. 

World War II in Pictures-The Battle of Britain

The Atlantic features the Battle of Britain in Part 4 of a 20 Part feature:

Undaunted by a night of German air raids in which his store front was blasted, a shopkeeper opens up the morning after for "business as usual" in London. (AP Photo) #

Bengal Bouts Alum Mike Lee Wins Fight Saturday Night

From BoxingScene:

Home Depot Center, Carson, California - Lightweight Mercito Gesta (22-0-1, 12KOs) was on fire in his Top Rank debut, dropping Jorge Pimentel (23-12, 17KOs) multiple times before referee Raul Caiz Jr. had seen enough and stopped the fight in the third round.
Former Notre Dame football played Mike Lee displayed some of the qualities that were obvious in his last few fights, some promise but a lot of work needed.  In the first, Lee drops Michael Birthmark with a nice right hand but then regresses in to wild swinging in trying to get Birthmark out of there.  The second he shows decent handspeed and poise but then lets Birthmark back into the fight. The third he finally keeps the pressure on dropping Birthmark with an accumulation of punches.  Birthmark tires from the onslaught as Lee finally finishes him off in the third round. Lee now stands at 6-0 (4KOs) while Birthmark drops to 2-6

Congratulations to Mike Lee.  I'll keep an eye on his progress.  Here is more information on the Bengal Bouts.