Ignorance spreads

Steve Benen: "Ignorance seems to be spreading like a virus, which makes the discourse stupid and constructive debate nearly impossible."

Paul Krugman: "we’re having a crucial national policy debate in which the great bulk of the news coverage tells people nothing at all about the policy issues."

Poll, TPMDC:

"A new national survey from Public Policy Polling (D) illustrates the profound levels of ignorance that currently interfere with the debate over health care.

"One question asked: 'Do you think the government should stay out of Medicare?' . . . Among Republicans, 62% say the government should stay out of Medicare, compared to only 24% of Democrats and 31% of independents who agree."

John Cole, The Stupid Leading the Blind:

"the media in this country has really turned into a failed experiment. No matter what channel you turn to, you are exposed to outright liars, political hacks, or . . . just complete fools who are in so far over their head that they don’t even have any idea how much they don’t know."

Ignorance and stupidity is a strategy. Apparently, it works.

The Reaction

I want to write something on the Right-wing reaction -- the birthers, the "death panel" fanatics, etc. But, I'm not ready, and may never be ready. This pithy little remark is just too precious not to save, though.

JohnG commenting on Paul Krugman's NY Times blog: "Hopefully, the attempt to restore 1953 American will not turn into an attempt to impose 1933 Germany."

It is, after all, the inevitable result of the way the media do their jobs.

The great political storm came and went, but it failed to overthrow the corporate news Media, an institution, which has become increasingly pernicious, in fostering America's political dysfunction.

Jamison Foser | Media Matters for America:

"The most striking aspect of this summer's political insanity isn't the frothing at the mouth of a loud minority of Republicans that President Obama is a secret Kenyan bent on subjecting an unwitting American public to government death panels, or the mass confusion among the rest of the public about health care reform.

It's that any reporter who has been paying the slightest bit of attention is surprised by any of this. It is, after all, the inevitable result of the way the media do their jobs. . . .

The last time America had a Democratic president, right-wing activists, with the help of some in the media, said he was responsible for the murder of his close friend and aide, Vince Foster -- and dozens of other murders, too. Why would anyone think that people who are willing to baselessly and falsely accuse one president of murder, drug smuggling, and an assortment of other crimes be unwilling to claim that the current president was born in Kenya?

Conservatives buried the last serious effort at universal health care under an avalanche of (media-abetted) lies. And they won the 2000 election on the strength of (media-abetted ... and sometimes media-invented) lies. And they took us to war in Iraq based on (media-abetted) lies. And ... well, you get the point. When was the last time conservatives approached a big fight without relying heavily, if not exclusively, on misinformation and deception? Why would anyone have thought this time would be different?

Likewise, the increasingly obvious fact that conservatives aren't actually interested in working toward bipartisan reform -- this seems to have taken reporters by surprise. But when was the last time conservatives made significant concessions in order to win bipartisan support for anything?

What makes all this shock really amazing is that so much of political journalism consists of pontification by people who have supposedly been around and understand how things work -- and yet they're constantly stunned when history repeats itself in the most predictable of ways.

And the latest realization that has so many reporters flabbergasted: the misinformation has worked! People believe falsehoods about health care! Many people don't even know basic facts about the current system!

Gee, you don't say? Many people don't know the basic facts about anything. That's one of the basic facts of American democracy. And when people are repeatedly told things that aren't true by people they trust, they tend to believe those things. That's one of the basic facts of ... people.

Surely reporters -- whose jobs, after all, involve communicating with the public -- are aware of these basic facts of life? Surely they've heard the expression about a lie making it halfway around the world before the truth has time to get its boots on? So why are they so surprised? Particularly when they've spent the bulk of the health care debate talking about politics and polls and chattering endlessly about who is "winning the message war" rather than repeatedly and clearly explaining to viewers the facts about health care.

Just look at the way much of the media have reacted to the belated realization that the public is woefully misinformed: By speculating -- sorry, "analyzing" -- why this is the case, and guessing -- sorry, "analyzing" -- whether the White House can develop a "message" that "works." And what aren't they doing in reaction to this realization? Clearly and repeatedly explaining the facts. And they're surprised people don't know the truth. Unbelievable.

In fact, it is the media's behavior that has made this summer's madness inevitable. When they let the loudest yellers and most audacious liars drive the discourse, they guarantee that people who can't win on the merits will yell and lie. When they focus on politics rather than policy, they guarantee the public will remain in the dark about basic facts. When they repeat false claims, or treat them as he-said, she-said situations, they guarantee that those false claims will sway confused citizens. When they continue to give a platform to people who have a history of lying -- and assume those people are telling the truth this time -- they guarantee those people will continue to lie.

As long as the media approach their jobs this way, we're going to see the same thing play out over and over again. And each time, the media will be shocked -- shocked -- that some people lie, and other people believe lies.

Or they could do things differently: They could set aside the punditry and the "analysis" and the polls and the freak show and dedicate themselves to explaining the facts about health care. And explaining the facts means more than calling a lie a lie -- though that is hugely important. It also means proactively telling people how the health care system works, and what the proposed reforms are, how they would work, and what the likely effects would be.

If they won't do that, at least they could stop telling us how shocked they are at the inevitable results of their behavior. It's getting old. "

Stupid is as Stupid Does

The Hunting of the Snark: Tired:

"This nation is simply too stupid to survive and I can't deal with any more today. . . . reason and evidence don't matter any more--stupid will win the day.

"I believe that the economy is far worse off than people want to admit and that we will be permanently poorer; at least, some of us will. We will degenerate further into violence and ignorance until we are so badly off that at last the ignorant and stupid are marginalize, something I can't imagine ever happening at this point. I don't expect an apocalypse or a return to 1800s bucolic splendor; I think we'll just gradually get poorer and poorer, while telling ourselves that everyone else in the world has it much worse whether it is true or not."

Pretty much how I see the most likely outcome. I hope for better. But, that's how things are going.

The State of the Economy

Peter Boockvar at The Big Picture summarizes: "S&P 500 back to 1000 after a rally of 50%, the 10 yr bond yield at 3.70% versus its 47 year average of 6.90%, inflation expectations over the next 10 years below 2% according to the TIPS, an expected July CPI reading of -2.1%, the biggest drop since 1949 and a Federal Reserve that is made up mostly of those who think inflation is subdued and will be for the next few years."

Tim Duy's Fed Watch puts it into narrative context: Is a Jobless Recovery Your Best Friend?:

"Never underestimate the power of money. Especially lots of money coming on top of a cyclical recovery that is almost textbook at least as far as the timing is concerned. To be sure, you can question the sustainability of the recovery, the breadth or health of the recovery, the nature of job growth. I have questioned all repeatedly and fail to see that the conditions that have dominated the US economic story for the past 25 years - primarily, a continued reliance on consumer spending to propel growth - can continue in the face of massive household debt burdens and stiffer (or, more accurately, realistic underwriting conditions). But regardless of these concerns, evidence is clearly pointing to a shift in economic conditions for the better. . . it seems likely the appetite for risk will continue to climb, and all the liquidity - liquidity fueled by new guarantees that massive financial institutions are too big too fail - has to go somewhere.

"Which is to say that no matter how pessimistic you are in the medium and longer term, you need to recognize the potential for massive moves in markets as risk taking perpetuates more risk taking. And as long as that risk taking flows in directions that do not fundamentally change the US jobs and, by extension, wage picture, it is difficult to imagine the Federal Reserve will do anything but let the party role on. . . .

"Wages and salaries for private workers climbed a scant 0.2%. To be sure, this raises concerns about the durability of consumer spending going forward, especially when combined with fears of a jobless recovery. Indeed, I have argued that most if not all of the jobs in the manufacturing sector simply are not coming back. My suspicion is that firms will use the recession to expand overseas supply chains wherever possible. Moreover, firms will not be in a rush to hire back without a clear resurgence of growth, which seems unlikely to occur given precarious household debt burdens.

"Now comes the tricky part - what does the evolving economic dynamic imply for financial markets? I am increasingly of the mind that although a jobless recovery will be a dreary fate for the American people, it offers the best outcome for financial markets for one simple reason: The jobless recovery offers the greatest probability that the Fed remains on the sidelines. The jobless recovery is what keeps the Fed goose laying the golden eggs."

OK, so what's the punchline?

Tim Duy: "When will that bubble burst? Possibly 2012, . . . "

Or we could try democracy

I've been meaning to write some posts on the aftermath of the perfect storm that came and went, leaving too little changed. Benign Brodwicz, at Animal Spirits, summarized my pessimistic view of current trends.

The Animal Spirits Page: On the coming neo-feudalism:

"It does seem as if the vast majority of people in the United State of America are going to become like medieval serfs, living at what feels in the post-gilded-age new realities like subsistence, watching a small slice of society from a distance as they jet in and out of the country, monopolize the ski resorts, continue to live in big houses with two or three thousand square per person, and so on.

The Baby Boom doesn’t have enough money to retire (quaint notion) and will be working till they drop, which will actually extend their lives. The Gen X’ers will continue to live on scraps. The Millennials are idealistically waiting their turn to be heroes while trying to find a way to support themselves in a workforce that is top-heavy with whining Boomers and cagey Gen X’ers. Most of us will work for large or small corporations at a wage that is enough to support a modest lifestyle, but holidays will be spent close to home. We will worry that we may be next to join the ranks of the unemployed, many of whom and whose stories we know—stories of lost jobs, houses, children’s sense of security in forced moves to strange communities. The health consequences of the current crisis are no doubt predictable. In a PBS special on other countries’ health programs, a German was asked if unemployed people lose their health benefits there. Of course not, he said. They are under great stress and risk to their health. They need health benefits more than anyone.

For a developed nation, America is a barbaric place.

Demand will not recover. The Stimulus, piling upon preexisting terrifying trillions in deficits courtesy of Bush, will not work. Spending will be cut to satisfy our external creditors. The sheer weight of the debt will slow the economy. The narrow U3 unemployment rate will rise into the double digits and stay there through the president’s term. The “real” under- and unemployment rate U6 will hit twenty percent, and stay in the high teens.

The poor and disenfranchised may even take to the streets at some point. Americans are pretty timid now, worried that they’ll be called terrorists and disappear in the night or be put on the no-fly list. Habeas corpus is gone. Last September Hank Paulson said we may need martial law. The government has been preparing for it. There are empty prison camps standing ready, according to reliable reports. (Many were built by Halliburton, allegedly.) The Katrina experience showed us what to expect: mercenaries will disarm the public; impose martial law; tell you to stay in your house or get shot. FEMA’s National Level Exercise scheduled for late July is supposedly a counter-terrorism drill, but I would bet it involves practicing how to impose martial law. Some believe the true purpose of the exercise itself will be to disarm the public. Lots of luck with that. That might provoke the first shots of a revolution. But perhaps that is the intent, to show force and discourage any further dissent. Like Iran now. Like China twenty years ago.

Will President Obama be able to prevent this? I don’t think so. His government has thrown trillions at financial institutions, but we don’t even have workfare or income support for the long-term unemployed, and not everyone is even covered by unemployment insurance. There are 25 million people in the U6 category today. What happens when there are 50 million? Will the government help them, or try to lock them all up? We have a higher percentage of our population behind bars than any other developed country. Will the fortunate just sit in their houses and hope that the Xe guys (formerly Blackwater—great name for a mercenary outfit) will protect them and their property from roving gangs?

Americans have lost confidence in their government and themselves. Their elected representatives do not listen to them. The President is an agent of the status quo. He has enabled the largest wealth transfer to a privileged elite in American history during the financial crisis, at the expense of the American taxpayer for years to come. Does any American believe the new financial regulations will break the grip of the rich upon the resources of the nation? Will we all come together all can-do, gung-ho style and pitch in together and the income distribution suddenly become more equal as it did in World War II and pull ourselves out of this?

It ain’t happening.

These problems, of course, are replicated in many other countries, including our ostensible long-term rival and enemy, China. Which is why the next ten years are a breeding ground for fascism around the world, and for the seeds of war. We went into Iraq to build military bases to protect “our” oil, if push comes to shove. But our military policies are backward-looking to the last war, as John Robb and others point out. We will look pretty stupid when someone pulls off what Robb calls a systempunkt right here at home while we’re blowing billions in Afghanistan. We don’t require our kids to get educated well. Obama is backing off a single-payer health insurance plan, the one preferred by the American people and the one that makes the most sense from an insurance point of view. The American social contract is broken.

People say Europe will be a museum in a decade, a lot of pretty castles and tourist attractions and mamoni hanging around at cafes. America might be like a ski resort, with some beautiful neighborhoods in the cities and trailer parks outside where the workers and retired people live. The Chinese will buy up real estate and companies and immigrate in large numbers, as they did to Vancouver from Hong Kong, having bought enough members of Congress to get their way. They won the financial war, fair and square. They might even teach us how to make state capitalism work, as the Japanese taught us how to make quality automobiles.

Or we could try democracy, for a change."

Change we can believe in?

Yves Smith at naked capitalism asks the classic question, "Quis custōdiet ipsōs custōdēs?"

I love Obama, but his economic team are foxes, working for wolves, and we, the American Public, are the sheep and the chickens.

Yves Smith has a great example.

Quoting the foxes' PR: "The Financial Industry Regulatory Authority (FINRA), [formerly, National Association of Securities Dealers (NASD) -- clever name change, for one of "our SROs", don't you think?] is the largest non-governmental regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 5,000 brokerage firms, about 173,000 branch offices and approximately 653,000 registered securities representatives. . . . FINRA is a trusted advocate for investors, dedicated to keeping the markets fair, ensuring investor choice and proactively addressing emerging regulatory issues before they harm investors or the markets."

It seems the FINRA, with a $3 billion balance sheet, at one point held roughly $800 billion in Auction-rate securities. Trouble was on the horizon in the Auction-rate securities market. FINRA sold all its holdings. Six months later, in February 2008, the auction-rate securities market froze-up, making these previously high-rate liquid securities into low-rate illiquid, long-term bad investments on a death march. Turns out the auctions, in which auction-rates were set, were rigged, by the market-makers, who were making big underwriting profits. The market-makers are the giant brokerages that own and run FINRA.

FINRA, by the way, runs the arbitration process through which an individual investor must appeal the fraud, under which he was sold these bad investments.

But, here's the kicker.

Obama made the FINRA Chair and CEO, the lovely lady, who, as a well-informed institutional investor, sold her organization's holdings, without disclosure, chair of the SEC.

Wolves: Merrill Lynch and friends.

Foxes: Mary Schapiro, SEC and formerly, FINRA.

Chickens and Sheep: Us.