» Posted by Martin Weil on August 11, 2010

What we had was a government-prescribed course of amphetamines (to keep it up), antibiotics (to prevent infection) and antidepressants (to make it feel better). It endured regular steroid injections from both monetary and fiscal authorities. And it still has no real muscle.

Caroline Baum on Bloomberg

» Posted by Martin Weil on August 04, 2010

Bill Gates and Warren Buffett have spearheaded a successful effort to get America's billionaires to commit to leaving at least 1/2 their fortunes to charitable ends at their deaths. 40 of 80 individuals they contacted, with a combined net worth of $230 billion, agreed. Michael Bloomberg, Larry Ellison, George Lucas and Ted Turner were among those who signed on.

Let's hope the persuasive Buffett & Gates duo are able to reel in the other 40 on their lists, and the estimated 320 more US billionaires with additional assets of some $1 trillion. They can certainly use the "Quote of the Day" posted just below.

» Posted by Martin Weil on August 03, 2010

According to a report released last week by Alan Blinder and Mark Zandi, advisers to President Bill Clinton and Senator John McCain, respectively, the combined actions since the fall of 2007 of the Federal Reserve, the White House and Congress helped save 8.5 million jobs and increased gross domestic product by 6.5 percent relative to what would have happened had we done nothing. The study showed that government action delivered a powerful bang for the buck, and that the bank rescue on its own will turn a profit for taxpayers.

This from Timothy Geithner's NYT OpEd. For all the criticisms of the economic policies of President Obama and Treasury Secretary Geithner (and their predecessors who bear much more of the blame), I have always held that they were operating under an extreme economic emergency and with inadequate information. They took unbelievably bold actions, many of which were imperfect at best. But, per two very respected economists, the decisive actions by the folks in Washington seem to have successfully averted second Great Depression.

» Posted by Martin Weil on August 02, 2010

And he is not pleased with what he sees. Stockman, former Director of the Office of Management and Budget under Ronald Reagan, decries what he deems as the wanton recklessness of the Republican Party's fiscal policies.

...But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance... This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy...

The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing ... it's a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach - balanced budgets, sound money and financial discipline - is needed more than ever.

From Stockman's OpEd in the Sunday NYT.

» Posted by Martin Weil on July 27, 2010

Nice infographic from Information Is Beautiful.

» Posted by Martin Weil on July 14, 2010

...of every dollar of real income growth that was generated between 1976 and 2007, 58 cents went to the top 1 per cent of households.

This somewhat startling fact is from Raghuram Rajan's recent book, Fault Lines. Rajan is a former chief economist for the IMF and currently a professor of economics at the University of Chicago. In contrast to many of the commentators on the recent financial crisis, Rajan says it was politics, and not structural defect, that encouraged Americans to borrow their way to maintain a standard of living that we could no longer afford. Yves Smith (one of my favorite economics bloggers) comments and is not hopeful as to the resolution.

» Posted by Martin Weil on June 15, 2010

It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half of the wars of the world.

Thomas Jefferson

» Posted by Martin Weil on June 09, 2010

The United States currently incarcerates a higher percentage of its population than any other country in the world.

The next closest are Poland and Mexico with an incarceration rate less than 1/3 the US', according to this recent report by the Center for Economic and Policy Research. The astonishing increase in incarceration shown above has not been accompanied by a rise, or a decline, in violent crime in the US. The report concludes it is costing cash-strapped states at least $16 Billion per year in unnecessary expenditure.

» Posted by Martin Weil on April 29, 2010

Seems to me that the new controversial immigration law in Arizona is not much different from the protectionist trade tariffs that were enacted in the 1930s and are credited with being a major factor in bringing on the Great Depression.

» Posted by Martin Weil on April 05, 2010

That statement is not going to win me many fans these days.

But if statistical data is any guide, the chart below from dshort.com suggests that one of the real culprits in our present fiscal dilemma may be under-taxation. Today's accepted-wisdom that "all taxes are bad" took root in the early 1980s under President Ronald Reagan and the banner of "supply side economics." Like many of the other economic assumptions underpinning our economy of the last 20-plus years ("unregulated markets work best" comes to mind), it may be time for a reappraisal.

Similar studies have shown an even greater explosion of private debt - personal and corporate - far exceeding anything in our prior history, with the same date of origin.

As with individuals, to save money, you either have to save more (raise taxes) or spend less (cut spending). According to the recent work of Reinhart and Rogoff, the current political stalemate between "no new taxes" and "cut spending, just not mine" cannot continue without dire economic consequences.