Friday, November 04, 2011

How Cutting Pentagon Spending Will Fix U.S. Defense Strategy
The Pentagon's boosters are right that big cuts will limit military capabilities. But that would actually be a good thing for the United States. Shrinking the U.S. military would not only save a fortune but also encourage policymakers to employ the armed services less promiscuously, keeping American troops -- and the country at large -- out of needless trouble. Especially for the last two decades, the United States' considerable wealth and fortunate geography have made global adventurism seem largely costless. The 2011 U.S. military budget of nearly $700 billion is higher in real terms than at any point during the Cold War.

Thursday, November 03, 2011

People who are still hung up on the "liberal media" angle are totally missing the point. First, we need to establish what we mean by "the media". While someone on the police beat for the Sacramento Bee or writing movie reviews for the Dayton Daily News is technically just as much of "the media" as is Anderson Cooper or Shepard Smith, they're not who we're talking about. We're talking about the fairly limited number of people, almost all of them working for big media conglomerates, who actually have power to drive the narrative or frame the national debate.

These opinion makers are, at the core, financially well off people working for corporations in big cities. Guess the opinion of a well off corporate city dweller on an issue and that's likely what the media consensus will be. It's basically liberal on social issues and corporate conservative on fiscal ones, but with some twists.

The media tends to be reflexively patriotic and pro-troops; not because they've ever served in the military but because they haven't. They're afraid enough of being seen against the troops (as the media was seen during Vietnam) that they'd rather just abdicate the power to hold nuanced positions on any military issues. They're not very religious, but feel kinda guilty about it. So extremely religious people make them uncomfortable but so does openly making fun of people who are. They're pro choice, pro gay rights, and think guns are bad things (these things make them look liberal). Sexual harassment or discrimination is a big deal to them, but employees getting screwed out of overtime or getting their jobs outsourced overseas really isn't.

They work for big corporations, have generous healthcare packages, have no real financial problems, and likely have big investment portfolios. The unemployment rate could shoot to 20% and it would only affect them indirectly. They pay lip service to things that don't affect them like public education (their kids all go to private schools) and universal healthcare, but they won't lose sleep over them.  So for them the health of the economy is based on how the stock market is doing and maybe the price of gas. If the market is booming while everything else stagnates, they'd see the economy as doing nicely. If the market cratered while real wages went up and unemployment went down, they'd think everything was going to hell.

 So when you see the talking heads going on about something (or ignoring something else), think about where they're coming from.

Wednesday, November 02, 2011

Like most people, I assumed the big runup in oil prices in the middle of last decade was due to increased worldwide demand and the ongoing instability in the middle east. Only recently have I learned that those causes which can actually be attributed to cause and effect were secondary to one which was entirely not. As it turns out, a huge part of the increase in commodity prices during those years had nothing to do with supply and demand. If it did, then it's not likely that every single major traded commodity would have a big price runup during those years; but that's what happened.

What caused a massive price runup in all the big traded commodities (including oil) was the influx into the market of truly massive amount of money from speculators. Since speculators in commodities are almost always taking the "long" position, this influx of money caused a massive spike in commodity prices as the money poured in. Since, unfortunately, we as consumers are at the mercy of those same commodity prices; we ended up paying massively more for energy and for everything else. Of course, the oil companies and various dictatorships selling the oil ended up with way way more money than they should have gotten.

Tuesday, November 01, 2011

When talking about the bailouts, it's often mentioned that almost everyone involved had a banking background; but it's not mentioned how that really changed things. The authors of  Bailout Nation, with New Post-Crisis Update: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy mentioned that the problem was that they focused on saving the individual banks rather than saving the banking system.

To save the banking system, you need certain things:
1) Guarantees to deposits and enough depositor confidence to stop runs on the banks
2) Enough liquidity to make sure the short term loans that so many businesses rely on keep getting made
3) Some mechanism for making the long term loans like mortgages and business expansion loans

We really just needed to prevent a run on the banks and to make sure enough lending still took place to keep the economy from grinding to a halt. We didn't actually need any of the troubled banks to survive. Every single one of those banks could have gone under while the "banking system" itself kept going. The surviving banks would have expanded to fill the void in retail services.

Once the banks' assets and outstanding loans had been sold off (at their discounted actual value, not at the amounts they'd originally been booked for), there likely would have been enough to keep the FDIC from shelling out too much to guarantee deposits. The bondholders would've ended up with pennies on the dollar and the owners of stock would've gotten nothing at all, but those are the risks of the free market. If you invest money in companies with shaky business practices, you're likely to lose out. The government would have been on the hook for some cash through the FDIC, but it wouldn't have needed to guarantee hundreds of billions of dollars in crappy loans.

But to a banker, the idea of letting Bank of America, Citibank, and so many others just go under is just intolerable. They lost sight of the goal of saving the banking system and made the goal the saving of the banks themselves. Thus we end up with our current system of "capitalism" when things are going good and "socialism" the minute things go to hell. If you want the big rewards that come with risk, you need to pay the price of those risks if they blow up in your face. Otherwise, there's never an incentive not to take crazier and crazier risks.
Stumbled across a book that almost read as a parody of the melding of Islamophobia and Obamaphobia, which then lead me to some googling and searching to see what else was out there. Apparently, there are people legitimately worried about Sharia law being imposed in the US. Like, so worried that they're willing to write books on the subject or read books written by others. Of course, there are some that are written as straight up propaganda with a political bent (like How Obama Embraces Islam's Sharia Agenda (Encounter Broadsides) ); but some appear to be written by people who are really really worried about something that will so clearly never happen.

America is completely dominated by Christianity, yet it's illegal to use state funds for a Nativity Scene. Do people legitimately think a small minority religion with almost no power is somehow going to impose Sharia on the rest of us? Or do people not even think about it deeply enough to realize how ridiculous their fears are?