Sunday, December 21, 2008

The Terrible Journalism of Alessandra Stanley

Alessandra Stanley should go back to writing about television. I gather she wasn’t very good at that, either, but her pieces – and I shudder to call them pieces – on politics and the economy that have appeared over the last month in the New York Time have been wretched. The first piece she wrote that caught my attention covered President-elect Obama’s press conference unveiling Sen. Clinton as Secretary of State-designate. It was a horrible, hack-job of a piece, widely reviled for Ms. Stanley projecting – and projecting enough to generate a thousand almost wholly fictional words. Now, she’s written a piece bemoaning the loss of the sex scandal due to the recession.

Most of us spent the last decade or more wishing that the news would begin covering, you know, news again. The endless drumbeat of non-stories and scandals pushed people away from politics and the political process. They also served as cover for perhaps the most disastrous Presidency this country has ever seen. Rather than covering the many, many sins of this administration, the media was, until late in 2006, mostly cowed by the administration. It seemed that no sin-not the bungling of an unnecessary war, not a war of choice, not the bungling of an arguable necessary war, not violating the principles that gave us our nation, not torture, not abuses of power, not intimidation, not politization of every facet of government-was sufficient to shine real scrutiny on this administration because at least there was no sex.

What a farce. Go away, Ms. Stanley. And take your nonsense journalism with you.

Wednesday, December 17, 2008

Can We Call It a Depression yet?

As the resident economist (a title my qualifications are dubious for at best) on this and other blogs Ben and I have been a part of I thought I’d answer a question Ben has posed to me and is being bandied about by the pundit class. Are we in a depression now or just another recession?

My short answer is we won’t know until we’re on the other side of this. Truth be told there isn’t a commonly accepted definition of what a depression is. This stands in marked contrast to the commonly accepted definition of a recession used by economists. The “textbook” definition of a recession is at least two consecutive quarters of negative economic growth, which is to say from a strictly definitional standpoint we weren’t in a recession until after the Commerce Dept revamped numbers for the past few quarters.

This is in no way intended to imply people out there aren’t hurting, just that the until such time as we string together two quarters of negative growth (an oxymoron, but stay with me) we weren’t technically in a recession. We are now and evidently have been for a little while now, but does that mean we’re in a depression?

Again, my answer revolves around the definitions of economic phenomena and in that regard we won’t know. Back in 1929 everyone knew something bad was coming and in 1933, the statistical height of what is now known as The Great Depression, there wasn’t a household in America unaffected but the dismal economic conditions. My reading of history is to sparse to know if people referred to the period from 1929 to approximately 1935 as a depression at the time, but if they had it would have probably been towards the back end of the period when the full extent of the economic wreckage was coming into focus. Also, that was six years of economic contraction or stagnation with the rate of unemployed reaching over 30%, if memory serves. From where we sit it seems far to soon to think that after 12 months or even 18 months of an economic downturn we could justifiably declare our current economic state a depression. Our unemployment rate is on November 6th sat at 6.5% and analysts at that time expected it to increase to 8% by the middle of next year. As awful as that is, it not even in the double digits yet. We could get there, but that would seem to be a long ways off. Also so far during our current recession the economic contraction rate has not exceed 1%,which puts us in comparatively better shape then those that lived through The Great Depression.

The bottom line is that we could find ourselves in a depression in a couple years, but we’re not there yet and we’ve for a long way to fall before we get there. I don’t think we’ll look back at this time and ever consider it a depression. I do think there will be a revolution in economic and business cycle thought because of our current experience and I’ll explain why.

The U.S. economy by and large no longer “makes” things. The percentage of GDP that is comprised of manufactures has continued to decline over the past decade. We are a service economy propelled forward by financial vehicles and the multiplier effect those profits send into the marketplace. Now this is unsupported by any one source and more my summation of the economy as I perceive it today, so slam me for being wrong if you can prove I am.

Because we don’t make things anymore the old Keynesian remedies will have a limited affect. There are droves of disaffected workers out there, but how many of them are blue collar? We should absolutely invest in infrastructure improvements, but how many people will there be to fill these jobs? And perhaps the most perplexing problem is what to do with all those laid off white collar workers? There are 30,000 people that used to work for Lehman Brothers and I would venture to say few would be inclined, or even qualified to lay brick or pave a road. This creates the real challenge for President-elect Obama. You can’t send them all back to school, and if you did what profession would they learn? No doubt a number of the folks who used to work in the financial sector are far better positioned to deal with a period of unemployment then many blue collar workers, but where will they find work?

I haven’t heard any good answers to this problem and I don’t have any to share.

So what does it all mean? Quite honestly the nature of our current recession is something wholly new to our economic experience and some time back the complexity of the finance involved transcended my ability to understand. That said there are two things I am fairly certain of:
1) It’s going to get worse before it gets better
2) It will get better

Obviously not comforting thoughts, but we are in uncharted waters here. The bottom could be a long way off or could be today. Time will tell if we are living in a severe recession or in a depression. What’s clear in the present is that we can’t call this a depression yet. Someday in a distant future (or near future) and call me an idiot, but for my thoughts on this day I’m unprepared to accept we are in a depression.

Crude in Brief

For two days Brent Crude has been trading above its sister figure on the New York Mercantile Exchange. Should it persist, it represents a return to the historical norm the two benchmarks have deviated from for months. This could indicate that crude has finally bottomed out and will begin trending upward for the first time since July. While some will attribute Brent’s new found strength to today’s announcement of an OPEC production cut, wise investors will recognize that the Cartel has demonstrated poor quota discipline – a trend whose reversal is unlikely.

Tuesday, December 16, 2008

Man Throws Shoe, Fails as Journalist

At a press conference in Baghdad on Sunday, President Bush nearly got knocked upside the head by a pair of size 10 dress shoes.
Journalist Muntadar Al-Zaidi was no more than 20 feet from the president when he shouted “This is a gift from the Iraqis; this is the farewell kiss, you dog!” He then hurled his shoes towards the podium. President Bush narrowly avoided getting hit and al-Zaidi was detained and carried off by security personnel. But rather than discuss the moral implications of hurling footwear at a visiting head of state, I’d like to examine how Al-Zaidi has failed as a journalist.

Officials at the Cairo based Al-Baghdadiya are calling for the immediate release of their colleague, citing that any actions taken against him would be a throwback to the oppression of Saddam Hussein. Clearly, the higher-ups at Al-Baghdadiya missed the memo about their duties as members of the Fourth Estate. The job of a journalist is not to engage in combat, but in discourse. Democracy means that the press has the right to criticize the government, not to commit assault. Furthermore, I believe that al-Zaidi has damaged the reputation of his news organization. What government official will grant a press pass to a news agency that hires such volatile reporters? What if they’re never allowed to enter Iraq? Has anybody really thought about the implications of this action?

I don’t care if he’s being feted by a hero by the Arab street. Even if he’s released without being charged, I would argue for his immediate suspension or termination from Al-Baghdadiya.

Sunday, December 7, 2008

re: Russia

The Economist’s editorial cartoon this week pretty well sums up NATO’s response to Russia – this pretty well describes the EU’s response to Russia during the war in Georgia, as well.

It jibes nicely with my bit from a few weeks ago, too.

Invasion of Zimbabwe?

A cholera epidemic in Zimbabwe’s capitol Harare that has killed at least 575 people is inspiring more paranoia from the insular Mugabe regime. Increasingly strident rhetoric from world leaders about the need for Mr. Mugabe to part-way s with the leadership of Zimbabwe has resulted in accusations coming from that government that Britain and other Western nations are plotting to invade Zimbabwe, according to a state-run newspaper via Reuters.

A British invasion seems unlikely, though, if a suitable replacement exists within the Zimbabwe general staff and has expressed an interest in taking over Zimbabwe, a coup might be forthcoming. Such a move would certainly be welcomed by the West and likely the long suffering people of Zimbabwe.

Thursday, December 4, 2008

Improve Our Image Abroad, While Working Off That Pesky Student Debt!

During the time of the British Empire, it was quite common for students from Oxford and Cambridge to go abroad for several years to do national service. Across Africa, Asia and the Middle East, it was quite common to find graduates with first class degrees teaching English, digging ditches or training the civil service. "For God and Country," these men and women left the comforts of Britain for the uncertainty.

For the better part of the decade, the United States has maintained an occupation of Afghanistan and Iraq. Unfortunately most young Americans are not serving alongside soldiers, contractors and federal employees in South and Central Asia. Despite all the continuing talk of patriotism, and serving ones country, there seem to be few easily accessible options for Americans to help efforts in Afghanistan and Iraq.

I propose the creation of an American equivalent to National Service, one that could probably attract a large number of graduates. In exchange for 2-5 years of service, students would receive some sort of federal relief towards their student debt as well as a living stipend. Not only would the cumbersome burden of student loans be lifted, young men and women would gain to the opportunity to see countries make the transition towards democracy. Furthermore, this would free up soldiers to do, you know, soldier stuff. (Not to say that it isn’t cute to see photos of GIs handing out bubble gum and chocolate to the little boys and girls).

While I’m not the biggest fan of British colonialism, I will admit that the National Service program had its merits. Some of those men and women helped people like my parents learned English. Others imported influential pieces of Western Culture, such as rock and roll and blue jeans. (Karl Bartos of the German electronic group Kraftwerk recently noted that because his sister dated an English serviceman, he came under the spell of British and American pop music). Besides, with the economy being in such a miserable state, something tells me that a lot of poly-sci and international affairs graduates would be happy to leave for Kabul, Baghdad or Mosul.

Tuesday, December 2, 2008

When there’s no story, why not just make up some Clinton-Obama drama?

This piece in the New York Times yesterday really perturbed me but I didn’t feel that I would be able to articulate clearly what’s so desperately wrong with it. Fortunately, Matt Browner Hamlin manages to do a bang up job.