Benign Brodwicz

Benign Brodwicz
Contributor since: 2009
Current forecast is for confidence to fail in "several quarters." Did not forecast recession in 2011, just depression.
Sean,
I like your observation that an upward acceleration of unemployment signifies a recession and collapse of confidence. This is consistent with adaptation level theory and convexity of the utility function: losses are discounted more heavily than gains. Hence, negative skewness in the distributions of asset prices as well.
The main idea, that we gauge our wellness relative to recent adaptation levels, is essentially beyond dispute. My unemployment based moving average inverts generally with a month or two of the onset of recession (as defined by NBER--questionable). But similar measures based on income or product behave similarly.
When things begin to slip below what we're used to, confidence fails, and there is a follow-on effect that accelerates the negative spiral.
I agree that MMT describes the basically nonsensical but totally pliable fiat money system currently in place around the world.
what MMT proponents miss (or just don't like to talk about) is that the fiat money system is manipulated by a financial ruling class to its own benefit. what prevails makes no more sense than the reasonable proposals of Jamie Galbraith et al. to use government money to put people back to work.
having the Fed forgive the debt would work for me, so long as the Social Security bonds are paid.
I don't consider WWII, which was the ultimate solution to the Great Depression-era debt crisis, a good solution. a much quicker one would have been to write down the bad debt as good accounting used to require, and start over again without a world war. recall that it was the heinous reparations requirements on the Germans after WWI that sent them down the war path.
you are blind to history, dividend_growth, like every sucker who believes the mythology of neoclassical economics
Stanley,
Don't mistake my "animal spirits" analysis: we are in a depression, but our habitual reliance on the unemployment rate as an indicator of general economic wellness suggests that survey measures of confidence will improve, and that the acceleration downward of real incomes and output that characterize a recession and collapse of confidence will not happen for several quarters.
cheers,
benign
Mikesss,
The recession prediction (as regular readers know) is based on a logistic model that has predicted the last two cycles (2001 and 2007-?) well ahead of the consensus.
Benign
Thank you all for your comments. I would like to point out that you can't have it both ways, that the government is either already redistributing income toward rough equality, or it's not, and in spite of the redistribution that is taking place, the distribution is way more unequal than most people consider fair. The latter is the reality. The "paradox" is that marginal tax rates on the rich have declined while their share of total income taxes paid has gone up. I assume everyone reading this blog can work that one out. (The distribution has become much, much more unequal.)
We should all give as much as we can to those who are hurting. I spent the night last night at a homeless shelter, helping out. I urge everyone to do what they can.
And yes, this government won't solve the problem, it's broken. I like the comment that it's always darkest before the dawn, and the one that suggested that social evolution will take us into a better world.
Also recommended reading on intention is Dean Radin's, "The Conscious Universe."
Imagine social justice!
Actually, I have a fairly significant typo in this. I really would like to leave all the lower middle income tax cuts in place, and simply raise top marginal tax rates a bunch.
Of course we always have an industrial policy through our tax and tariff laws. I am suggesting that fiscal "stimulus" should be targeted at supporting the welfare of the people directly, not in more pork for the well-connected, or more war.
Disclosure: I have been an independent for a long, long time.
PastTense gets it right. The American government provides trillions of dollars of welfare to the rich, and very little to the poor. Anyone who denies this truth after the events of the past year is ignorant indeed.
The solution is to reverse that pattern. Also, to quit stupid wars and "nation-building" (destroying) efforts abroad while our own nation is falling apart.
It is my hope that the "screw thy neighbor" attitudes expressed here will become so socially unacceptable within a few years that people mouthing them will be shunned as if they had the plague.
see also:
animalspiritspage.blog...
come on, seeking alpha, when I ask you to link to something as a reference, please do so
logical: you have a valid debating point but not much more, I would suggest. by the time the deflation is done, before an inflation or hyperinflation gets going, the worst debtors have lost their assets if their loans were secured, and have lost their credit rating and any ability to borrow for seven years if they defaulted on unsecured debts.
look around you, bro, at what's happening now. the time for the inflation option came and went, it failed to materialize when we needed it.
it's a fool's bargain. what they want now is for the investment banks to be able to pull off another round of mass expropriation of the American people with their carry-trade free money from the Fed and tons of unregulated leverage in another commodity or other bubble.
Remember, it is manufacturing employment that has been declining, not manufacturing output, much like the situation with agriculture.
Thanks for the many comments. The best clarification I can give to the many issues raised is to say that the "social contract" in American appears to be broken--the ability to share in rewards and sacrifice in a way that most people perceive as fair is gone.
So either we come together democratically, with good old solidarity and a share-and-share-alike attitude, or we fall into an authoritarian "state socialism" and probable police state, a dark age that preserves the current distribution and perceived unfairness. Barring these, if we fall apart we become a collapsed state like Mexico apparently is, where day to day life is ruled by street criminals, and there is no law.
I am hoping we can come together democratically. But as long as Big Money owns our government, that will be difficult. Barack beat the system by raising his money on the Internet. Now it's time to take Congress away from the Big Money interests.
Tony, my man,
I may be angry occasionally (but I practice deep-breathing exercises to control) but I am not mad.
And if you can't see that America is an empire, you need glasses, my friend.
Benign
I don't think providing health insurance for all Americans is "socialized medicine," which is usually defined as government-run medicine.
My solution is to provide all unemployed Americans with a livable poverty-level dole and health insurance (for all uninsured) and let the private economy self organize. This would probably involve some redistribution of income in the national interest.
User373887: Agreed. Neocons come from both sides of aisle. They are members of the only meaningful party in DC today, the Money Party. Bubba Clinton was a neocon, for example.
1rulenorules: Reagan rasied taxes, that's why revenues went up:
"The only problem with this analysis is that it is historically inaccurate. Reagan may have resisted calls for tax increases, but he ultimately supported them. In 1982 alone, he signed into law not one but two major tax increases. The Tax Equity and Fiscal Responsibility Act (TEFRA) raised taxes by $37.5 billion per year and the Highway Revenue Act raised the gasoline tax by another $3.3 billion.
"According to a recent Treasury Department study, TEFRA alone raised taxes by almost 1 percent of the gross domestic product, making it the largest peacetime tax increase in American history. An increase of similar magnitude today would raise more than $100 billion per year.
"In 1983, Reagan signed legislation raising the Social Security tax rate. This is a tax increase that lives with us still, since it initiated automatic increases in the taxable wage base. As a consequence, those with moderately high earnings see their payroll taxes rise every single year.
"In 1984, Reagan signed another big tax increase in the Deficit Reduction Act. This raised taxes by $18 billion per year or 0.4 percent of GDP. A similar-sized tax increase today would be about $44 billion.
"The Consolidated Omnibus Budget Reconciliation Act of 1985 raised taxes yet again. Even the Tax Reform Act of 1986, which was designed to be revenue-neutral, contained a net tax increase in its first 2 years. And the Omnibus Budget Reconciliation Act of 1987 raised taxes still more.
"The year 1988 appears to be the only year of the Reagan presidency, other than the first, in which taxes were not raised legislatively. Of course, previous tax increases remained in effect. According to a table in the 1990 budget, the net effect of all these tax increases was to raise taxes by $164 billion in 1992, or 2.6 percent of GDP. This is equivalent to almost $300 billion in today's economy.
source: www.nationalreview.com...
The most cursory examination of U.S. Bank's financials relative to its peers shows how well run it is. This is not one of the banks that will be nationalized, unless the oligarchs in New York decide to retaliate for Richard's speaking the truth. This is not a zombie bank. It's a bank that has aggressively reserved against future losses, taking the hit to net income, and still coming out profitable.