Category: Uncategorized

These charts are scarier

Derek Thompson of the Atlantic considered these four charts from Calculated Risk to the be scariest economic charts he’s seen all year. I can only conclude that he has not seen the following chart, which shows the “credit gap” between where the U.S. economy would be if credit growth had simply proceeded at its 50-year post-WWII average and where it actually stands after Q1-2011.  The chart shows, in no uncertain terms, how completely unprecedented the situation is, and also demonstrates that the scale of the problem is much, much larger than is presently indicated by the various employment, production and consumption statistics.

Nor, I presume, has he seen the chart that accompanied it in last week’s column, which shows how the composition of that stagnant debt has been shifting since 2008.

This chart explains the reason behind the determination of both political parties to raise the debt ceiling, as federal debt HAS to continue to increase, and increase significantly, in order to make up for the ongoing contractions in the private debt sectors, which so far has amounted to $600 billion in the Household sector and $3 trillion in the Financial sector.  The truly frightening thing is that it is perfectly possible for the Financial sector debt to contract much more severely; it grew from 0.85% of total debt in 1946 to 32.7% in 2008 and presently stands at 25.23%.  Considering what $3 trillion in debt-deleveraging has done to date, imagine how much more economic pain would be involved in an additional $13.8 trillion contraction.

As Steve Keen has chronicled since 2005, the mainstream economists are still paying absolutely no attention to these apocalyptic signs because they consider debt to be “exogenous” to their system models.  Paul Krugman’s words in his latest paper are straight out of Paul Samuelson’s 1948 textbook.

“Ignoring the foreign component, or looking at the world as a whole, the overall level of debt makes no difference to aggregate net worth — one person’s liability is another person’s asset.“
 – (Paul Krugman and Gauti B. Eggertsson, 2010, pp. 2-3)

Of course, this gives us a clear warning with regards to how The Masters of the Universe are going to try to fix the problem.  Big it up and centralize it.  Since the U.S. inability to pay back its foreign debt is becoming increasingly obvious, the answer will be to “look at the world as a whole”, or convert a national economy into a global one in which the national debt no longer counts because “one person’s liability is another person’s asset”.  As long as the macro accounting all balances, how could there possibly be any problem?  And since the European Union has shown that the stresses of monetary union cannot survive without political union to enforce austerity programs and forced transnational redistributions, this means global governance will be a necessary, indeed integral, part of the mainstream economic program.

Because, after all, forcibly installing a one-world government makes so much more sense than simply replacing your inoperative and outdated economic model with one that actually works!

A Metaphor for Vibrant America

VDH on a murder that is not only a snapshot of a sick society, but serves as a cogent metaphor for Vibrant America:

A woman found slain at a Hanford car wash this week was killed randomly when a 17-year-old gang member happened to see her while taking a walk, Hanford police said Thursday. Denise McVay was washing her car — something she did several times a week — early Tuesday morning before work.

The teen was wandering the streets after leaving a party when he saw McVay at the Royal Car Wash on Garner Avenue at about 5 a.m. and decided to kill her, police said. The teen “simply wanted to kill somebody that night” and McVay, 49, was “in the wrong place at the wrong time,” Capt. Parker Sever said. “It was a purely random act.”

The teen stabbed McVay several times and slit her throat.

The teen took McVay’s money and her car, Sever said, and drove to the home of a fellow gang member, Mauricio Ortiz, 18, of Hanford.

Consider the societal changes that have taken place in order for this incident to have taken place. McVay was likely unmarried, otherwise she wouldn’t have been washing her car, her husband probably would have done it for her. In pre-Vibrant America, there is a two-thirds chance she wouldn’t have been working at all, but would have been supported by her husband. In neither case would she have been at the car wash at 5 AM.

Prior to LBJ’s Great Society, the “teen” would likely have not been free to wander around at 5 AM, as he would have been sleeping or getting ready to go to his own job, as the various levels of government were far less likely to providing funds for unemployed youth to spend their days and nights in aimless partying.

And, of course, without the efforts of Senators Kennedy and Hart, and Rep. Celler, it is far less likely that either the murderous teen – who is almost certainly Hispanic – or his fellow gang member, Mr. Ortiz, would be in the country to commit the murders that Americans would not commit.

The picture of the future Vibrant America is becoming increasingly clear. It is shaping up to be a place where childless and unmarried white women will be expected to fend for their interests against the perceived interests of the growing third world underclasses. Somehow, I don’t think this was quite the gloriously liberated future that the feminists had in mind.

Tea Party team players

It is impressive how quickly the Republican Establishment – for whom you know I am said to be the Voice – managed to flip most of the Congressional class of 2010. Remember this when you’re urged to vote Republican in support of small government next fall. Remember this when the Tea Party stalwart tells you that he’s going to Washington to change how things are done there and represent the interests of those who elected him:

The House GOP freshmen were sent to Washington with a mandate from their constituents to rein in spending and put an end to the practice of the federal government borrowing far more than it takes in. But at the end of a furious spending battle that gripped Washington, most of the second coming of the Republican revolution voted for a bipartisan deal that increases the debt ceiling and cuts the deficit, raising the specter of disenchantment and possibly retribution from the activists who propelled them into office last fall.

Some of the tea-party driven supporters will undoubtedly conclude that their freshmen were bought out by the Republican establishment. All told, 59 freshmen voted for the debt bill – two-thirds of the rookie class – and 28 voted against it.

But the freshmen tell a different story of how they came to support the bill, one born out of listening sessions with leadership, an evolution in understanding the economic consequences of a default and opportunities to vote their priorities on the House floor. And, they say, their leadership was able to make them feel enough like valued members that when the time for tough votes came, they were ready to be team players in lending their support.

The Republican establishment has at least 30 years of experience in breaking the freshmen to heel. They did it en masse in 1994 and they’ve done it again now. This is why it is not merely stupid, but by Einstein’s metric, insane, to attempt to change anything by electing Republicans. The Tea Party has to break away and go third party if it is to have any chance at all at reducing government spending.

It probably won’t work that way either, given the changed demographics of the American electorate, but it should be obvious that it is mathematically impossible to effect any meaningful change over time if two-thirds of the “elected revolutionaries” can be successfully suborned within the first year of their taking office.

Bloomberg discovers debt/GDP

It’s the debt, not the debt ceiling. Moody’s announces a negative outlook for U.S. credit:

The U.S., rated Aaa since 1917, was placed on negative outlook, Moody’s said in a statement today as it confirmed the rating after President Barack Obama signed into law a plan to lift the nation’s borrowing limit and cut spending. A decision on the rating may be made within two years, or “considerably sooner,” according to Moody’s Steven Hess.

The debt-limit compromise “is a positive step toward reducing the future path of the deficit and the debt levels,” Hess, senior credit officer at Moody’s in New York, said in a telephone interview. “We do think more needs to be done to ensure a reduction in the debt to GDP ratio, for example, going forward.”

When I published RGD in 2009, I don’t remember anyone being concerned about debt levels except Credit Suisse and a few Austrian economists talking about Debt/GDP. It is a subject that few Neo-Keynesian or Monetarist economists are equipped to understand because it simply doesn’t factor into their models. Even those few prognosticators who are recognized for anticipating the 2008 crash, like Nouriel Roubini, didn’t start talking much about it, (except occasionally for the Japanese situation), until the middle of 2010. So, it’s interesting to see that it’s now being actively discussed in mainstream financial media outlets such as Bloomberg.

However, they’re still only looking at Federal debt to GDP rather than the more important figure of total debt to GDP. Keep in mind that it would be highly unusual for Moody’s to actually do any serious downgrading until it is already completely apparent in the credit markets. The ratings agencies are usually three days late and millions, if not billions, of dollars short.

PZ runned away again

This time, it’s from Scienceblogs and National Geographic. But at least he’ll have that noted scientist, Ed Brayton, to keep him company.

The scienceblogs “science blogs” gotten somewhat better over the years with some silly blockheads leaving, but one of the worst, PZ Meyers, known for tiny little snippets of vitriol of pseudo-progressive populism that panders to the stupid “skeptics” crowd (the self-righteous feel superior about bashing morons with silly non-arguments type), seemed to never want to go away, giving science blogging a very bad reputation.

Now finally, they are at least splitting the vitriol from the science they at times still throw in here and there. As you can read on Facebook:

Freethoughtblogs.com will be THE central gathering place for atheists, humanists, skeptics and freethinkers in the blogosphere.

This is of course ridiculous since the main blogs are more about republican bashing than about anything else and there is very little reasonable skepticism ever on those blogs, but it is nevertheless good news for science blogging generally if those that give science blogging a bad name finally go and blog under a different category. “Freethought” (free of what actually – reason?) sounds as kooky as any crackpottery and is a much better heading than “science”.

Wait a minute, you mean to say that posting about Matt Damon and one’s dislike of libertarians isn’t science? Bloody butterfly collectors, I should have known better than to major in biology at a community college!

What about Ben Affleck? Ben Affleck and Republican-hating is still science, isn’t it? And Pope-bashing and Biblethumper-thrashing and stimulus-defending, how can that possibly be considered anything but science? Science is what scientists do!

The scales fall from the eyes

Mr. Farah now recognizes the reality of the bi-factional ruling party:

[W]e don’t have two competing parties in Washington. We have one-party governance, totally unresponsive to the will of the people and the rule of law. Republicans and Democrats represent two wings of the same party – both of which, at the end of the day, don’t really covet a return to constitutionally limited government.

Disaster?

Catastrophe?

Outrage?

Yes, but none of these words even comes close to adequately characterizing the betrayal perpetrated by the Republican establishment in Washington over the last few days.

The era of big government is back with a vengeance – and apparently here to stay.

There are no limits. There are no restraints. There is no accountability. There is no end to red ink as far as the eye can see.

As I have been telling you for ten years, voting Republican will NEVER be a panacea for the cornucopia of ills that have rendered America a revenant. There probably is no panacea, as it is hard to envision any workable solution that does not involve the division of the country into at least three parts. There simply aren’t the votes to “take back America” because too many nominal Americans dislike historical America, disvalue its freedoms and despise its Constitutional values.

And, thanks to the post-1965 influx of third-world immigrants, there will never be the votes. No Hispanic nation, no African nation, no Arabic nation, and very few European nations have EVER placed any value on “the rights of Englishmen” that were asserted in the Declaration of Independence. One need only read the aberrant parodies of the Declaration in the various UN and EU versions or national constitutions to see this is the case. Mere change of geographic location has not sufficed to significantly modify the core philosophies or ideologies, or in many cases, even the national identities of those immigrants.

It is time to pull out of the Republican Party altogether. This may mean that Obama will win a second term if he is not put out to pasture by the Democratic Party elders during the nomination process. This will almost surely mean that there will be no meaningful opposition in Washington to the bi-factional ruling party in 2012 and possibly 2014.

But the complete inability of the Republican Party to do anything of substance, to cut so much as a single dollar from the current amount of spending, means that the “realistic” forty-year strategy of “elect more conservative Republicans” has completely failed. It failed when Reagan was elected. It failed in 1994. It failed when Republicans held the White House and both houses of Congress. It has failed after the 2010 success of the Tea Party. Because it is clear that it is no longer even possible to prevent the bi-factional swan dive from the economic Tarpeian Rock, it is time to shift focus and to begin preparing for the post-mortem rebuilding.

Mailvox: A poem by Little Dick

Every now and then, people ask me why I bother engaging with evangelical atheists. I trust this email, quoted verbatim and in its entirety, should suffice to answer that question. It would appear that Little Dick Harris is attempting to convert the world to atheism with poetry. His magnum opus is entitled “Woo”.

Woo

The Christian’s Jehovah, the Almighty God,
is a capricious and cantankerous sod;
he’s a jealous, vain, and incompetent fraud,
with the morals of a sadistic tribal war lord.

For homophobia, misogyny, and genocide too,
that old Bible Bogey is the god for you.
He’s his own father, and his son, and a ghost too,
but there’s even more ridiculous woo.

Christians claim their god, in his Empyrean lair,
is omniscient, omnipotent, beneficent and fair;
but, with the problem of theodicy,
that dogma is Christian idiocy.

The Jew’s Yahweh, a wrathful old jerk,
set Jews strict rules on when to work,
how to dress, and what to sup or sip,
and giving baby boys the snip.

Myths of Bronze Age, goat-herding nomads,
metaphorically have them, by the gonads.
The Moslem’s Allah, a fierce great djinn,
demands under ‘Islam’, literally, ‘Submission’.

Apostasy is treated just like a crime;
they’ll threaten to kill you, to keep you in line,
and if you dare draw Mohammad in a comic cartoon,
there’ll be riots and killings from here to Khartoum.

Hindu, Sikh, Jain, and Buddhist,
Zoroastrian, Baha’i, Mormon, and Scientologist,
Confucianist, Shintoist, and Taoist too,
Spiritualist, Wiccan, and the New Ager into woo.

Yea, verily, those of each and every religion,
are mired in the miasma of superstition.
So, why should yours be the one true faith,
in the magic of a phantasmagorical wraith?

Belief, without evidence, is just plain crazy,
ignorant, stupid, or thoughtlessly lazy.
Life derives no purpose, at a theistic god’s direction;
evolution really happens, due to Natural Selection.

I have sent you this poem in the hope that you will read it and realize that some people find your religious beliefs to be unwarranted and absurd. When I was a small boy, still in short pants, I understood that there was no supporting evidence for religious beliefs, and therefore, such beliefs had no basis in fact. Later, I realized that religion was a tool for controlling people. Religion should be a private matter, because when it gains political power, as with any ideology, it becomes a tool for oppression. Please consider the benefits of rational thought over superstition and wishful thinking.

Oh, I read it twice, as a matter of fact. The first time in disbelief, the second time in awe. My first coherent thought was that the poem doesn’t scan well, commits six rhyming infelicities, reveals the usual ignorance of actual Christian theology, repeats numerous talking points that have been repeatedly shown to be false, and consists of crude doggerel that is never going to be mistaken for Dante or Yeats. My second thought was that we have a real candidate for the 2012 Richard Dawkins Award on our hands! Science can inspire art after all!

My third thought, of course, was that the poet is not one who would recognize a “rational thought” if he spent the next ten years having Aristotle, Aquinas, and Descartes read to him before bedtime. And then, only then, I began to laugh….

One of the many amusing things about this email is the way that Little Dick openly admits his lack of faith is quite literally childish. “When I was a small boy, still in short pants, I understood that there was no supporting evidence for religious beliefs, and therefore, such beliefs had no basis in fact.” I don’t know about you, but I tend to find this assertion to be just a little less than credible. What are the chances that, “as a small boy still in short pants”, Little Dick Harris had been able to peruse all of the available evidence that tended to support religious beliefs, whether one uses the term “evidence” properly or not?

Of course, his poem is a colorful piece of evidence demonstrating, that like every other evangelical atheist, Little Dick is still an emotional and intellectual child throwing a non-stop temper tantrum because the adults simply will not pretend to believe in his imaginary world.

UPDATE – But wait, there’s more! A follow-up email has arrived:

Vox, you ask, “What are the chances that, “as a small boy still in short pants”, Little Dick Harris had been able to peruse all of the available evidence that tended to support religious beliefs, whether one uses the term “evidence” properly or not?”

Zero, of course. What a stupid question. It isn’t necessary to read all of it, or, as I’ve subsequently discovered, any of it. Other than, that is, to find out that it’s empty, eristic hermeneutics, & sciolistic casuistry.

Little Dick noticed that the sort of miracles documented by Bede, clearly, were no longer taking place. Occasional claims for somewhat more mundane miracles, usually involving apparitions or healing, were obviously without good supporting evidence. As Hume demanded, extraordinary claims require extraordinary evidence, & it was always lacking. By the age of twelve, it was plain to me that everything that I was aware of that happened in the world, & the universe, was potentially explicable in terms of natural processes.

Half a century later, I’ve never once doubted that, except for the realization that we may never be able to explain everything. Supernatural explanations add nothing of real value to our understanding. All that they can do is satisfy the wishful thinking of credulous individuals.

There you have it, from the mouth of the Poet Laureate of Rational Atheism. You don’t need to examine ANY evidence at all in order to reach a rational conclusion that satisfies the self-styled materialist. And thus the Worm Ourobos devours his own tail and we finally reach the glorious conclusion of rational materialist epistemology.

So doomed it isn’t funny

And you thought Greece, Spain, and Ireland were in desperate straits… consider poor Seattle:

“I think to make it the most competitive for our team, Tarvaris needs to be our starter right now. Tarvaris brings so much continuity to us.”
— Seattle coach Pete Carroll, after naming Tarvaris Jackson the team’s starting quarterback on Saturday.

Ye cats!

Overprepared

If I sounded a little less than fluid in the interview with CTV yesterday, the reason is, ironically enough, that the two Canadian producers prepared me extraordinarily well for it. I was very impressed with their thoroughness and the quality of their questions; I’ve been on a number of national news shows before and I’ve never seen anything like it. After a 30-minute pre-interview going over the debt ceiling debate and how it related to some of the concepts in RGD with one of the producers the day before, I produced two charts that we both thought would be useful as well as nicely visual, after which I was sent me the six questions I was to anticipate.

However, there was just a bit of a curve ball in the interview itself. Not only did they use a different picture than the one I provided, (understandably, since they must have wanted color), and they didn’t make use of the charts I made, (which was fine, I used them in today’s column), but some of the questions asked by the anchor were somewhat different than the ones I’d been provided. Her questions weren’t bad ones, by any means, but they were just far enough afield so I didn’t have the statistics on things like “historical tax revenue as a percentage of GDP” immediately to hand.

Note that I’m not complaining here, merely observing how the process was very different than my experience with American TV and radio.

Anyhow, I found that I was thinking “wait, what?” the entire time I was trying to answer the anchor’s questions. “Did I mishear that? Am I even answering the right question?” Anyhow, since I thought the producer’s questions were pretty good ones and I prepared for them, I thought I might as well post my notes for the interview here.

You recently wrote in an article that the issue is not so much the debt ceiling, but the debt itself. Can you explain exactly why?

The U.S. federal government has spent three years keeping the economy artificially propped up by substituting $4.1 trillion in new government debt for $3.6 trillion in household and financial sector debt-deleveraging.  Washington cannot keep playing ostrich without raising the debt ceiling.  The reason you’ve seen the number $2.4 trillion bandied about is because that buys them another six quarters at the current rate of $365 billion in new debt per quarter, enough to get them past the 2012 elections. But all this accomplishes is to delay the day of reckoning and increase the eventual cost.  Since the housing market and employment numbers have actually gotten worse during this period of extend-and-pretend, it should be clear that raising the debt ceiling isn’t even a potential fix for the problem.
 
In your book you look at the patterns that led to the Great Depression, and the Heisei boom In Japan that led to it’s famous ‘lost decade”- and you believe it will happen again, only this time it will be worse. What leads you to believe this?

First, the debt-to-GDP ratio is worse than it was in the Great Depression or Japan in 1999.  It was 2.6 in 1933, it peaked at 3.7 in 2008 and it is 3.5 now.  Second, in the 1930s, it was only the USA that attempted to fight the post-1929 economic contraction with Keynesian stimulus policies and only the USA suffered a Great Depression.  In England, the contraction stopped in 1932, France never saw double-digit unemployment, and the Japanese economy was actually enjoying significant growth.(1)  This time, Europe, China, and Japan all followed the US lead and applied their own stimulus plans in 2009, which we are already seeing is now in the process of backfiring on everyone.
 
In a chapter of your book entitled “No one knows anything” you explain that many of the governments calculations for GDP are misleading that they contain wide margins for error and cannot be trusted- why is that?
 
Because they’re verifiably wrong.  Look at the recent first quarter.  All three reports, from Advance to Final, had U.S. GDP growth at 1.8 to 1.9%.  Then, in the second quarter report, there is an inexplicable revision from 1.9% to 0.4%.  That’s a $225 billion mistake, which is almost five times more than the $60 billion growth now being reported.  These revisions are so out of control that if you bother to look back at the 2001 numbers, you’ll see that the 2001 recession has been revised out of existence.  It’s complete fiction.  On the employment side, the game is to not count people who don’t have jobs as unemployed.  That’s why they claim the unemployment rate is only 9.2% when it’s really closer to 20%.

You say that a boom fuelled by easy credit must be followed by a bust of equal size and duration. Instead, it has been FED policy to re-inflate bubbles and they collapse, which only creates bigger bubbles- You say we are currently in the biggest bubble yet- what could pop it?
 
What will pop it is a reduction in the rate of growth of government spending, an increase in interest rates, or a major sovereign investor’s refusal to continue buying Treasury bonds.  Any of the three will suffice to put the USA into a debt-deleveraging spiral.  The problem with depending upon debt-based economic growth is that eventually, you run out of people who are willing and able to borrow money. And that’s when the contraction starts.

There is a large backlog of home foreclosures in the United States- what would happen if that backlog were to suddenly be cleared? Are there other potential triggers out there?
 
Clearing the backlog would put the economy into the equivalent of heart failure because it would instantly kill a lot of banks.  The $600 billion decline in household sector debt is deceptively small because over 7.5% of all mortgages have been delinquent for more than 90 days.  The banks aren’t writing those bad loans off yet because to do so would bankrupt them.  Based on the FDIC statistics, I estimate that about $3 trillion of the $7.5 trillion in assets presently claimed by the big four, Bank of America, Citi, Wells Fargo, and JP Morgan Chase, are worthless.
 
What are the options for the global economy- what are the best and worst case scenarios?
 
Pay a high price now, or pay a higher price later.  Deflation, default, and economic contraction aren’t fun, but they are perfectly survivable.  The best case scenario is we go through the global equivalent of the Great Depression, what I’ve called Great Depression 2.0.  It will be very difficult for a lot of people, but the basic governmental structures will survive and there won’t be cannibalism in the streets or anything like that.  The worst case is that the politicians keep kicking the can down the road until the entire global financial system finally collapses overnight.  In that case, we’re probably going to see wars, civil wars, and fundamental change of the sort most of us find impossible to imagine.

(1)thanks to the invasion of Manchuria, of course, but the GDP statistics are what they are.

“When I’m wrong it proves I’m right”

Those who make ridiculous assertions that amount to this line of logic should not find it terribly hard to understand why those of us who actually possess working memories tend to be just a little bit skeptical about the reliability of whatever their current positions happen to be. I know you are probably as shocked as I am that the Fowl Atheist is claiming that the “reevaluation” of Archaeopteryx, the fossil that has been hailed as literally rock-solid proof of evolution since I was being subjected to evolutionary propaganda back in elementary school, doesn’t mean that the legitimacy of either archeological science or TE(p)NSBMGDaGF should be called into question:

We all knew this was coming. Xiaotingia, the newly described feathered dinosaur, suggests a reevaluation of the taxonomic status of Archaeopteryx, so the creationists are stumbling all over each other to crow about the failure of science…which doesn’t make any sense, since reconsidering hypotheses in the light of new evidence is exactly what science is supposed to do.

That’s an interesting claim. Precisely when has any evolutionist reconsidered either a) the basic hypothesis that species evolve into different species through natural selection or b) the corollary and requisite hypothesis that life evolved from non-life, as a result of the falsity of one, ten, or even a hundred predictions that relied upon one or both of them? If it weren’t for DNA, which was not discovered or developed with any assistance from evolutionary theory, evolutionary biology would already be openly recognized by every intelligent, rational, science-literate individual as being about as useful as phrenology and astrology.

Darwinian biologists are very much like Keynesian economists. It doesn’t matter how many times their predictions fail. It doesn’t matter how often their models are proven to be wildly wrong. It doesn’t matter how many times they have been wrong in the past even with the benefit of margins of error consisting of millions of years. They continue to insist that their position is based on evidence even when the evidence demonstrates precisely the opposite of what they have been claiming.

An evolutionist is one who is continually convinced, despite past experience, that adding just one more series of magic evolutionary epicycles will somehow make the whole system finally begin to function in a coherent and reliably predictive manner.

In other, somewhat tangential news, we have discovered that the New Atheist Circle Jerk continues unabated. Seriously, you can’t even parody these charlatans without them one-upping you.

The 2011 Richard Dawkins Award goes to…
Category: Godlessness

Who else but Christopher Hitchens?

What a beautiful, beautiful thing. If I had dared to invent the idea, no one would have believed me. Out of nearly seven billion people on the planet, Richard Dawkins chose to give out his eponymous award to the third-most amusing recipient. Second, you understand, would have been awarding it to himself. But to maximize our collective utility on the happiness-suffering metric, though, he would have had to present the award to Rebecca Watson.