Angry Bear

Angry Bear: "In summary, a likely scenario for when the boom ends: prices will probably deflate slowly over several years, but transaction volumes will drop precipitously. Housing related employment will fall in relation to the drop-off in transactions and, if interest rates remain steady or increase, mortgage equity withdrawal will decrease significantly leading to less consumer spending and most likely (my own opinion, not necessarily Angry Bear) a recession."

It all sounds fairly routine, in summary. What's not routine is the possibility that interest rates will rise as the recession gets under way -- the opposite of what usually happens. The Federal government, already reeling under huge deficits, will not have a lot of room to spend the country out of the recession, either. The big risk is that either (or both) Fannie Mae and Freddie Mac get into trouble, as interest rates and foreclosures rise.

Krugman explains why Bush & Co. seem so serene. Things are good in the U.S.A., if you are very wealthy or a giant corporation.

The Coming Perfect Storm, however, "predicts" that running record deficits is probably not, overall, a good policy.

Whiskey Bar: Down Time

Whiskey Bar: Down Time: "a slowdown now could conceivably buy us another year or two before the bubble bursts -- allowing the upper 10% to keep on partying even as the bottom 90% increasingly feels the bite of a slumping economy.



Not great, but not doomsday, either. As I told a friend the other day, the supply side hag may be aging rapidly, but she may still have a few more, um, carnal moments left in her yet. And at this late date, that may be about the best we can expect."



For the true, long-term pessimist, the greatest fear is that George W. Bush manages to get thru his whole term, without reaping the whirlwind, without having to face the consequences of his arrogance, ignorance and foolishness. Many Bush policies, like Social Security privatization, are cast with timetables that leave the painful parts hanging out there in '09.



The worst nightmare for the United States would be for the Democrats to win office in 2008, just in time to see the economy collapse around themselves. Instead of hooverizing himself, Bush will hooverize the Democrats. The Democrats will get blamed for all the horrors Bush brought on the country; Republicans will remain in power until roughly 2040 -- probably the year that China will finally establish its unquestioned hegemony.

Crooked Timber � � Closing The Scientific Hack Gap

Crooked Timber � � Closing The Scientific Hack Gap: "Much of the dumbing down of political debate in the last decade was indeed an intended consequence of the Gingrich revolution. Congressional institutions which provided impartial information were axed, and replaced by spin from handpicked “experts” and right wing think-tanks. The prime example was the closing of the Office of Technology Assessment (which had peeved Gingrich by exploding some of the bogus science underpinning the Star Wars initiative). "



This is one of those issues, where I wish Democrats would be more assertive.



Prof. DeLong, in particular, annoys me, by repeatedly criticizing the Bushies for lack of policy process, while ignoring the larger point, which is that they are evil.



I am not trying to be ironic, here. Obviously, saying that they are evil, is going to alienate some people. So, you have to be more specific. Like saying, that they want to redistribute wealth, income and power from the middle class to the super-rich. Which is true. (And, imho, evil.)



My larger point is that the Republicans are not aiming at the same political objectives as Democrats. They are not aiming at any common-sense idea of the good of the country. So, criticizing them for being incompetent misses the point. The Bushies are hitting the targets they are aiming at. They are not incompetent or unskilled.



If they take apart a policy process, it is because that process would not help them hit the target they are interested in aiming at.



The important thing to communicate to the world is that Republicans are aiming at targets, and the choice of those targets marks them down as evil. Say it with me, e-v-i-l.



Evil as in torture, national bankruptcy, overthrow of the non-authoritarian rule of law, subjugation of foreign peoples, impoverishment and oppression of the common people, etc.

Billmon: The Grand Delusion

Billmon: "As I’ve said before, the American constitutional edifice reminds me of a house riddled by termites – it looks solid enough from the outside, but lean too hard against a wall and big pieces might start toppling over. And right now, the neocons and their Bible Belt allies are leaning pretty damned hard. There are days (like “Justice Sunday”) when the Weimar analogy no longer seems so far fetched.

If we’re fortunate – as fortunate as America has been through most of its history – the center will hold. Things won’t fall apart. The neocons, having overreached, will be thrown for a big loss and forced to punt. But I’m not as confident as I used to be that the game still works that way."

Here's the always wonderful Billmon pondering whether the "Coming Perfect Storm" will actually come, and sweep the neocon Republicans from power, or whether their new American Empire will usher in some kind of weird American religio-fascism.

The Unholy Alliance Against the Filibuster

The Unholy Alliance Against the Filibuster: "Today, the United States faces an unprecedented Bush administration effort to use religion to bring about one-party rule in the United States, and once again U.S. Catholics may provide the margin of victory. The Republicans seek to eliminate effective Democratic opposition, beginning with what they call — all too unmistakably — the 'nuclear option,' a move to prevent Senate filibusters against judicial nominations. Once filibusters against judicial nominees can be eliminated, they can be easily eliminated for any other matter before the Senate. "



Are Republicans trying to build a "permanent majority" (to quote Tom DeLay)? Duh.



For game theorists, the Republican willingness to do away with the filibuster implies a gamble that they will not lose their Senate majority any time soon. And, beyond that, they clear the way for a bare majority to approve two or three extreme right Supreme Court appointments. Changing the Supreme Court from a merely conservative body to a hard-right reactionary institution would "write" conservative policy into the Constitution, quite literally. That prospect is scarier to me than the prospect of pure "majority rules" in the U.S. Senate; anyone, who knows legislative bodies, knows that pure "majority rules" is never possible, anyway.



In American history, the great political sea changes have happened at regular 72 year intervals.



1788 -- Federal government established under Washington

1824 -- JQ Adams fails to hold back the Age of Jackson

1860 -- Lincoln brings on civil war, Republican majority

1896 -- Republican re-establish conservative majority

1932 -- Roosevelt and the New Deal

1968 -- Nixon poisons the high tide of post WWII liberalism

2004 -- Bush elected



Republicans are clearly intent on pouring concrete, whereever they can, as long as the pouring is good. Some kind of liberal/progressive/populist revival is inevitable, but it may find itself up against a Supreme Court, immune to its influence. And, it may not be able to overcome Republican gerrymanders and electoral fudging, even to achieve bare majorities in both houses of Congress.



Republicans and Democrats were evenly matched in the period, 1876-1894, before the election of 1896 brought the Republicans the reliable majority, which they held until 1932. Republicans and Democrats were evenly matched 1976-2002, as well.



The thesis of the Coming Perfect Storm is the hope, possibly vain, that a deus ex machina of bad policy consequences or bad luck, will interrupt Republican machinations. It is the hope that George W. Bush will be more of a Herbert Hoover than a William McKinley. It is hoping that catastrophe will head off a destructive evolution.



As catastrophe seems increasingly less likely, the danger of destructive evolution becomes more real.



So when Kevin Drum summarizes the current political situation as a stalemate between an exhausted liberalism supported by an indolent majority and an impulsive reactionary authoritarianism supported by an aroused minority, he asks, What will happen?



"In the end, then, we have a stalemate. The left in America has limited energy because its goals are fairly modest and its story is disjointed. The right has energy and vision to spare but its goals aren't widely supported. Someone — or something — is likely to come along in the near future and smash this stalemate, but what? Or who?"



And, some liberals are led to speculate on the rise of National Socialism!



"The National Government will preserve and defend those basic principles on which our nation has been built up. They regard Christianity as the foundation of our national morality and the family as the basis of national life."



Sound familiar?, Hullabaloo asks. Its the voice of authoritarianism, of course.

The Rule of Law

Talking Points Memo: by Joshua Micah Marshall: April 24, 2005 - April 30, 2005 Archives: "the Republican party is becoming an anti-constitutional party. They're not comfortable with the rule of law"



Part of the Coming Perfect Storm zeitgeist is the expectation that the Party/People in power will, sooner or later, jump the shark, as they say in Hollywood, that they will overstep their boundaries.



There is a certain contingency at work, here, though, which should put a sick feeling into the pit of your stomach. One interpretation of the Bush et Alia contempt for the rules could be the expectation that they will be in power indefinitely, so it is no longer necessary to respect rules, which don't serve the interests of those in power. If Democracy is over in the U.S., their arrogance is rational. We've had one or two Presidential elections, which have been, arguably, rigged. The Republican majorities in Congress depend on some, mostly mild forms of gerrymander, which give a minority control. The Democratic Party is weak, and growing weaker -- financially at least.

Angry Bear

Angry Bear: "Japan has certainly provided macroeconomists with an excellent demonstration of just how difficult it is to get out of a deflationary cycle once you're in one.



This also reminds those of us who worry about the sustainability of BWII just how different the situations of Japan and China are. Unlike China, Japan is unambiguously in the position where the inflationary effects of propping up the dollar are not just tolerable, but to be positively welcomed. But at the same time, it is China that has been forced to continue buying dollar reserves, while the yen's peg against the dollar has been sustained with relatively little intervention from the Japanese authorities in recent months. This type of data makes one think that they'd almost welcome the chance to start intervening again..."



This is a long-winded way of saying that common wisdom analysis of the international macro situation is not well-informed, and the U.S. may be in a firmer situation that it is readily apparent.



Yesterday, I happened to listen to some far Left nutcase talk about the progress of "dollarization" -- the tendency of many small countries in the world to peg their countries to the dollar, as a way of escaping the inflation, which results from their government's inability to credibly impose discipline on the printing press. She reminded me that a large number of countries in the world do this.

Myers wants media to cover positives in Iraq, Afghanistan

Myers wants media to cover positives in Iraq, Afghanistan: "Myers told the editors he reads far more about the problems of servicemembers’ equipment and the latest insurgent attack than about “the thousands of amazing things our troops are accomplishing.” This concerns him, he said, because American resolve is key to success.



The chairman said that part of the problem lies with the military. He said commanders must be more responsive and give more access to reporters. “We’re working on that,” he told the editors.



But still, “a bomb blast is seen as more newsworthy than the steady progress of rebuilding communities and lives, remodeling schools and running vaccination programs and water purification plants.” "



Ah, yes, American "resolve". "Resolve" is one of those key words, which indicate that narrative is being pushed in place of substantive analysis. Myers is, to use the technical term, a worthless piece of sh't. He has dishonored himself and his uniform and my country. I would really like to spit in his face, for putting out this crap. "Resolve"



The Republicans are going to lose Iraq, along with $200 billion, and at least two or three thousand American lives, and many tens of thousands of Iraqi lives. They are going to lose it because they are allowing incompetence and corruption prevent us from achieving worthy goals. The President is a moron, in case you haven't noticed. I don't mean that he is natively stupid, but he is ignorant and lazy in his thinking. He has never learned how to be a leader or an executive. He does not anticipate consequences, does not encourage competent planning, does not push hard to achieve what would be in the country's interest. Richard Myers has the job of Chairman of the Joint Chiefs because he doesn't confront the President, on behalf of the necessities of the job. That's why there haven't been enough boots on the ground from day one. It is why we did not do anything to prevent the looting, which supplied the insurgency with a seemingly infinite supply of high explosive. It is why we did not do anything to prevent the high unemployment in Iraq, which has provided the seemingly infinite supply of suicide bombers.



Resolve does not win wars. Competent planning, resources and vigorous achievement of well-chosen objectives win wars and build nations. We have made slow progress in training and equipping Iraqi security forces. We have made little or no progress with electricity or water purification or building local government institutions. We have made lots of progress wasting money with Halliburton.

So how ARE things in Iraq?

Return of the Metric System � Unqualified Offerings: "So how ARE things in Iraq? We turn, as we used to, to the Brookings Institution’s Iraq Index (pdf). In crucial ways, the answer turns out to be “not so good.”"



Narrative vs. analysis is a theme here at Coming Perfect Storm. The Bush people and the military will continually churn out a narrative about the light at the end of the tunnel, or some such silliness, whether there is any narrative detail to support it or not.



The underlying reality, accessible by analysis and attention to fact, is that whatever the Bush policy and goal may be in Iraq, it does include strengthening the Iraqi State and economy.



Things will not turn out well in Iraq; they have not turned out well, narratively speaking. You can hit people over the head with "the world is better off without Saddam" just so many times before someone asks, "would we be better off without Bush and the Americans in our country/would we be better off without Bush and the Republicans in charge of our country?" and concludes, yes.



Will the situation in Iraq culminate in a dramatic demand that the U.S. leave? Very possibly.

Bruce Bartlett: Steering clear of a recession

Bruce Bartlett: Steering clear of a recession: "the financial sector of the economy is under growing strain that could burst and spill over into the real economy suddenly and without warning"



He's trying to sound optimistic, but he's not. Fannie Mae, China and the collapse of the housing bubble could lead the collapse of everything.

The New York Times > Opinion > Op-Ed Contributor: War Isn't Fought in the Headlines

The New York Times > Opinion > Op-Ed Contributor: War Isn't Fought in the Headlines: "The bottom line is that counterinsurgencies take time. And like all political processes, they are complex and often ugly."



A Marine Colonel gives his opinion in a N.Y. Times Op-Ed, today, on a critical question, regarding the Coming Perfect Storm: Are we making progress and how can we tell?



The Right Wing is pushing the narrative that we are making progress, or rather, the Iraqis are making progress -- its their country to lose, now.



The Right Wing is full of crap. The U.S. has lost Iraq. Iraq is, as far as the U.S. is concerned, a dead man walking. The Colonel is paying obeisance to the Right Wing, when he says counterinsurgencies take time. Time is an excuse, a defense against the bullying of the guilty Right, which created this unnecessary mess in Iraq.



But, the Colonel is a professional and says a lot of other perfectly true stuff. He notes that the U.S. has not provided sufficient resources. Counterinsurgencies require resources, and the U.S., as a matter of policy, has failed to provide the necessary resources. That's the truth. And, that is why Iraq will end badly for the U.S., even as Iraq goes on badly for the Iraqis.

Haloscan commenting and trackback have been added to this blog.

Whiskey Bar: Playing for Keeps

Whiskey Bar: Playing for Keeps: Billmon considers the implications of Senate Republican willingness to do away with the filibuster.



"The unwritten rules exist because both political parties accept the possibility they may one day be in the minority, and thus have a vested interest in preserving rights or privileges they themselves may need to exercise.



But if one of the parties has no intention of ever losing again -- or at least, is willing to gamble on its ability to avoid ever losing again -- then it will no longer have an incentive to support minority rights, but will have every incentive to try to abolish them, if possible."



"But I overlooked another possibility, which is that the Republican elites are simply be following their own blind instincts for power -- and haven't given much thought to the future consequences, one way or the other.



"In other words, Frist and DeLay and the rest of the Rove gang may not have any kind of grand design for a GOP Thousand Year Reich, but rather may be acting like the Easter Islander I talked about in an earlier post -- the one who cut down the last remaining tree on the island."



Paranoia has a way of getting out of hand, just as cheerleading does. That's the dilemma in anticipating the Coming Perfect Storm.



On the one hand, how do you distinguish between predictably anticipating the disastrous consequences of bad policy and "wishing" for those consequences, because you anticipate partisan benefit (e.g., the Democrats winning in a landslide, because the American people wake up and realize that Iraq is a quagmire, and Bush is trying to steal their Social Security in order to shore up the fortunes of the super-mega-rich Mars and Mellon families).



On the other hand, how do you regulate your paranoia, when attributing even minimal competence to highly successful politicians suggest that they anticipate essentially overthrowing the democratic constitutional order?. DeLay really does talk of the "permanent" Republican majority, and works tirelessly for it (as in the gerrymandering of Texas). Bush really was elected in 2000 by the Supreme Court, and it is not clear to this day, that his victories in 2004 Ohio and Florida were entirely legitimate.



One potential trigger for a Perfect Storm in American politics would be solid evidence of vote count fraud in Ohio or Florida. I don't expect that to happen; given the innumeracy of the press corps and the American public, the kind of statistical "solid evidence" most likely to generated, no one would understand well enough to believe.



For the moment, I expect most Democrats will have trouble keeping themselves away from "wishing" ill to the country, but will continue to choose to regard the Republicans as fundamentally incompetent, despite Republican political success "because it's not nearly as scary as thinking the GOP high command actually does have a carefully conceived plan for total partisan domination -- of which breaking the filibuster is only the latest step."

The Washington Monthly

The Washington Monthly: "George Bush is an extremist who has no apparent intention of facing up to reality. He will continue to push taxes down, he will continue to spend heavily, and he will continue to ignore global imbalances. This is a recipe for disaster.



How long can this state of affairs last? It's possible that it can last more than four years, but I doubt it. My guess is more like two or three at the outside, and a serious shock — most likely an oil shock of some kind — might cause it to happen sooner.



There are no good solutions to this any longer, but there are still reasonable (if painful) actions that could be taken to soften the blow. Unfortunately, George Bush gives no sign of believing that he should take any of them. What's more, his economic team is far too weak to react to an economic crisis effectively if and when we have one.



So: that's why I think a Democrat will win in 2008. George Bush is a true believer who will keep a firm and confident hand on the wheel as he drives the United States off a cliff. And then we'll have an election."



The only part of the above, which I have any doubts about is the last. Will we have an election?



Bush won 2004, because the fix was in, in Ohio and Florida. Oh, maybe no one was actually stuffing the electronic ballot box (although no one can prove that the election was entirely honest, either), but the Republicans in charge at the State level clearly had their thumbs heavily on the scales. And, we know what happened in 2000.



Two elections in a row could well shape themselves into an ominous kind of precedent.

The Washington Monthly

The Washington Monthly: "here's the real reason I think a Democrat will win in 2008: the economy. I'm not sure what will happen with Iraq or the culture wars, but the economy looks to me to be headed for disaster. Four years after the 2001 recession, the labor market is still slack and economic growth is mediocre, despite massive amounts of conventional fiscal stimulus. The budget deficit is out of control, and Bush is plainly not serious about reining it in (the first priorities of his second term have been Social Security privatization, an energy bill, and estate tax elimination, all of which would make the deficit even worse). The housing bubble is likely to end soon and rising interest rates have already killed off the refi boom — which in turn will tighten the spigot on consumer spending. The current account deficit continues to skyrocket, and rising oil prices will likely make it even worse. As Paul Volcker wrote a week ago, current economic circumstances 'seem to me as dangerous and intractable as any I can remember, and I can remember quite a lot.'"



Nicely summarized there, Kevin. The Coming of the Perfect Storm

Brad DeLong's Semi-Daily Journal

Brad DeLong's Semi-Daily Journal



The hollowing out of corporate America has been going on for some time now. The hollywoodization of salaries in the Reagan era attracted the worst and the greediest to the corporate suites, and encouraged them to strip out the flesh of corporate staffs. The deep bench -- called organizational slack by sociologists -- which provided the resilient strength of American business was sacrificed long ago to pay multi-million compensation to ruthless bastards enjoying short, but lucrative tenure at the top.



The advent of the Bush administration was the signal to the Enrons and WorldComs that they could get away with much worse. But, that signal was given out to many companies, which did not cross the line into actual illegality, but nevertheless weakenened their franchises to pay ransom to their masters.



Collapse -- not mere scandal -- may provide Act 2, in a drama illustrating the unwisdom of Bush and the greedy class he represents.



The risk that General Motors, once the largest and one of the most profitable corporations in America, might actually liquidate, looms on the horizon.



Part of the Coming of the Perfect Storm

The New York Times > Opinion > Op-Ed Columnist: A Whiff of Stagflation

The New York Times > Opinion > Op-Ed Columnist: A Whiff of Stagflation: "We shouldn't overstate the case: we're not back to the economic misery of the 1970's. But the fact that we're already experiencing mild stagflation means that there will be no good options if something else goes wrong.



Suppose, for example, that the consumer pullback visible in recent data turns out to be bigger than we now think, and growth stalls. (Not that long ago many economists thought that an oil price in the 50's would cause a recession.) Can the Fed stop raising interest rates and go back to rate cuts without causing the dollar to plunge and inflation to soar?



Or suppose that there's some kind of oil supply disruption - or that warnings about declining production from Saudi oil fields turn out to be right. Suppose that Asian central banks decide that they already have too many dollars. Suppose that the housing bubble bursts. Any of these events could easily turn our mild case of stagflation into something much more serious."



Paul Krugman speculates about the lining up of the ol' dominoes.

Amazon.com: Books: The Long Emergency: Surviving the End of the Oil Age, Climate Change, and Other Converging Catastrophes of the Twenty-first Century

Amazon.com: Books: The Long Emergency: Surviving the End of the Oil Age, Climate Change, and Other Converging Catastrophes of the Twenty-first Century



This is NOT what I mean by the Coming Perfect Storm.



Kevin Drum has it right: this guy is a crank, abusing us with nonsense about some serious problems.

Matthew Yglesias: Premonitions of Doom

Matthew Yglesias: Premonitions of Doom

Matthew groks to the Coming of the Perfect Storm.

Check out his list:

1. Oil panic, as people realize that production has reached its all-time peak
2. Dollar crash, as the current account deficit/budget deficit finally persuade Japan and China to stop financing America's luv affair with Wal-Mart.
3. Chemical and Biological Weapons in the hands of Terrorists
4. Avian flu

(Since my thesis about the Coming Perfect Storm relates it to Bushphobia, you may wonder what I think the link to Avian Flu is. Remember last year, when Bush was criticized because the single factory producing flu vaccine was decertified? )
3.

First words

Narrative is how we make sense of the world. It is how we find "meaning" in events, by placing them in the context of some narrative. I'm sure it is built into our genes to think this way. It is more productive to think analytically, but that's science and hard work, and we slip back to narrative very quickly. Narrative is pretty much absent from the law of gravity, but we like the story of the apple falling on Newton's head.

That's the heart of the "debate" over Evolution in the Schools. Analysis and careful observation makes Darwin's Theory of Evolution very appealing and realistic; but, some people hate the implied narrative. They like the narrative with God creating the heavens and the earth, and plucking a rib from Adam, and all that. They assert that biologists have not "proven" the biological narrative. Of course, there really is no biological narrative, per se, just an analysis of observed facts. And, you cannot "prove" a narrative beyond dispute, in any case. Ask any lawyer.

Among the Christian Right, there's a very popular series of novels, the Left Behind series, which depict an imminent "End of Days", where the faithful are vindicated. In the novels, reality dramatically changes to conform to the ridiculous "faith" of true-believing, right-wing Christians. Liberals, of course, suffer torments and humiliation, as Christian fantasy becomes reality.

Well, I think that among Liberals, like myself, a similar kind of narrative is developing. We are watching for a tsunami -- a small ripple on the surface of a placid sea, which will become a tidal wave of destruction as it nears shore. We are looking for the consequences of the Bush Administration policies, of course, but looking for them in a particular dramatic form, which vindicates our judgement.

A more sober view would acknowledge that the predictable consequences of Bush policies are likely to be a slow and gradual transformation of the U.S. in undesirable ways. The slow boiling of a heedless lobster. Phase-out Social Security and the number of old people in poverty will rise gradually, for example. Modify environmental policy and the poisoning of air and water will proceed bit by bit. End the estate tax and it will require a generation or two to pass before conservatives are actually suggesting ennobling our landed aristocracy.

But, how much sweeter if the fools, who elected this moron (not really stupid, but not quite pure evil either) were to have their eyes opened by dramatic events. The Coming of the Perfect Storm, which will awaken America from her somnolence -- just as the Great Depression ushered in the New Deal or the Civil War brought about the end of slavery. One of those tops-turvy moments in American History, like Nixon going from landslide victory to resignation in disgrace in 21 months.

The Coming of the Perfect Storm is a theme in liberal political commentary and one which is likely to sound a crescendo in the coming months. It is motivated by a kind of perverse wishful thinking, a desire to have an opportunity to say, "I told you so" to some stupid and wicked people. But, remember that just because you are paranoid, doesn't mean they are not out to get you. Bush really is a bad President, and there really will be bad consequences, and it is just possible that some of those bad consequences will come about before his end of term, compounding into a truly catastrophic moment for this country.