Valance Weekly Report 9.28.2011
Posted by WARREN MOSLER on September 28th, 2011
(To download PDF, right click link and select save link as)
Highlights
US – Political battles on both sides of the Atlantic overshadowing data
EU – Markets slightly more optimistic resolution will be reached
JN – Light week of data
UK – The IMF lowered its 2011 growth projections
CA – Retail Sales worse than expected
NZ – Economy nearly stalled in Q2
September 28th, 2011 at 8:04 pm
US – Political battles on both sides of the Atlantic overshadowing data
this is like 80% of market movement over the last 18 months.
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September 28th, 2011 at 10:53 pm
see http://www.philstockworld.com/wp-content/uploads/Class%20War%20is%20Over.jpg
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September 29th, 2011 at 12:11 am
I think it is increasingly clear that political battles are more important than data. Political opinions are also formed not based on data or knowledge but about perceptions and emotions. Examples: Tea Party, and now growing opposition to bailouts in Europe. This will soon force politicians’ hands. Even though politicians desperately want to follow what financial leaders tell them – in Europe is much more difficult than in America – for it is more difficult to form public opinions. Abstract Tea-Party-like propaganda does not work that well in Europe. Also – it is just impossible to explain all technicalities that readers of this blog understand – to broad public. So neither knowledge nor propaganda will work in Europe – and it is much more difficult to ignore public in Europe. Public just sees worsening lives and reads daily about financial woes and political battles about bailing out some country or bank – and they are instinctively opposed to that (“why nobody is bailing out us”). So Europe will either have to rely on quiet ECB bailouts – or if they will try to follow their democratic ways – they will be forced to allow euro zone to crumble. Democracy does not work that well with neo-liberal monetary systems.
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Matt Franko Reply:
September 29th, 2011 at 7:25 am
@Gary, From Palin at a recent Tea Party event:
“She made three interlocking points. First, that the United States is now governed by a “permanent political class,” drawn from both parties, that is increasingly cut off from the concerns of regular people. Second, that these Republicans and Democrats have allied with big business to mutual advantage to create what she called “corporate crony capitalism.” Third, that the real political divide in the United States may no longer be between friends and foes of Big Government, but between friends and foes of vast, remote, unaccountable institutions (both public and private).”
http://www.nytimes.com/2011/09/10/us/10iht-currents10.html?_r=2
Let’s see if she is not invited back to these events by the Tea Party poobahs….
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Gary Reply:
September 29th, 2011 at 11:13 am
@Matt Franko,
That is very interesting. It seems like she read Noam Chomsky… ;) Unfortunately, these ideas are more fitting to thinking people: educated left. They do not stick with Tea Party. Too much thinking involved, too little emotion.
Also those ideas directly oppose the forces that feed the Tea Party, and – more importantly – they directly oppose forces that rule the world.
So she would be going against the wind using those ideas. I don’t see how she could politically survive if she follows that line. Left hates her, and right is fed by the forces that she spoke against…
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ESM Reply:
September 29th, 2011 at 1:50 pm
@Gary,
“… these ideas are more fitting to thinking people: educated left.”
LOL. Yeah, just keep telling yourself that Gary. Real deep thinkers there. Like Elizabeth Warren.
Matt Franko Reply:
September 29th, 2011 at 2:31 pm
@ESM, Warren: ‘Taxpayer on the hook’… many out of MMT paradigm on both sides.
Side bet: If you could get Palin and Obama to sit and take the exact same “IQ” test, Palin would outscore Obama by a wide margin…. Resp,
ESM Reply:
September 29th, 2011 at 3:57 pm
@Gary,
@Matt:
Warren (Elizabeth, that is) is definitely out of paradigm, but what struck me more is the infantile level of her argument for progressive taxation (to be precise, for even more progressive taxation than we already have). Despite the fact that she’s been a law professor at Hahvahd for decades (or maybe because of that), she appears never to have been exposed to any ideas that conflict with her worldview. It’s very similar to what I see as fundamental problems Obama has: zero’th order thinking, almost no knowledge of history, and a tendency towards strawman argumentation.
As for Palin vs Obama, I don’t agree with you there. I am deeply skeptical that Obama is anything more than a moderately intelligent person, but I think Palin is of average intelligence at best. She has shown herself incapable of learning anything about policy over the last three years, even though there’s a huge incentive for her to do so.
And there’s no question that Obama is better at writing autobiographies than Palin.
Gary Reply:
September 29th, 2011 at 4:20 pm
@ESM,
I did not mean that “the left” consist of educated thinking people; I meant that those particular ideas are nothing new to the educated people on the left. And not only educated.
However – on “the right” – those ideas don’t resonate. It is not the kind of “sound bytes” that “the right” is being fed on.
Robert Kelly Reply:
September 29th, 2011 at 4:39 pm
@Gary,
The Tea Party idea has been assigned or designated to a group of right wing nut jobs. This is a mistake. Warren Mosler was Tea Party for a while. I would characterize it more as those who think politicians lie every time they open their mouths. Our government is being held hostage by career glad-handers, working for their own self interest. Public purpose has taken a back seat to cronyism. Whether you are liberal or conservative or progressive, or libertarian, you have to be frustrated at what has been going on with government. Nancy Pelosi’s brother in law just got a Solyndra type loan from the Dept. of Energy. That’s got to raise eyebrows no matter where you sit on the political spectrum.
Gary Reply:
September 29th, 2011 at 5:07 pm
@Robert Kelly ,
Of course, I agree – government is held hostage. The way I see it – to the interests of the rich.
Yes, there are attempts to get government to help the poor – but those are in minority, and are decreasing.
Money controls government, and money are of course in the hands of the rich.
Democrats and Republicans are both owned by the rich interests. But Republicans to the extreme degree.
They say: “too many taxes”, but they don’t mind to increase taxes on the poor.
They say: “government wastes money”, but what they mean is: “government spends money on something that does not profit us”.
Well, it is all well known.
The point is that if Palin wants to confront big corporations – she will need the far left. And the far left is sparse and not influentian. And the left hates her.
Republicans will not confront big corporations. The ideology that is needed in order to accomlish that – is contrary to what they were and are being fed.
Mario Reply:
September 29th, 2011 at 5:55 pm
@Gary,
@Robert Kelly
I completely agree and in fact if you recall the Tea Party was started b/c of the bailouts. They were outraged. And Karl Denninger was on the front lines. THAT was gaining steam. I was in agreement with that.
Then all of a sudden…things changed. They got bought out and they’re rhetoric shifted to another focus….things like hyper-inflation, gold, mexicans, and obama’s birth certificate, etc. It was all over from there. I recall that one of the Tea Party candidates down in north carolina or something was an ex-Goldman Sachs employee!!!! haah!!! That’s ironic!!!!
I recall hearing on the news some guy say that well b/c this event was paid for by these donors the Tea Party event and focus was changed to suit their interests. The anchor even explained that this made sense “since they paid for the bus tickets and the donuts.” I wanted to write an op-ed entitled, “America’s free speech and right to assembly and representation SOLD for the price of donuts!!!!” Dear Lord wtf is going on in Chinatown!!!
Art Reply:
September 29th, 2011 at 7:07 pm
@ESM,
“Warren (Elizabeth, that is) is definitely out of paradigm, but what struck me more is the infantile level of her argument for progressive taxation”
Are you kidding me????
Yes, she’s absolutely out of paradigm. But let’s not pretend that because money is a public monopoly, its distribution no longer matters. Good grief.
What she said in that video about public investment and the social contract is right out of Adam Smith’s Theory of Moral Sentiments, for God’s sake. Hardly infantile.
Mario Reply:
September 29th, 2011 at 7:41 pm
@Gary,
@Art
@ESM
I Completely Agree with Art. +1. ;)
ESM Reply:
September 29th, 2011 at 11:18 pm
@Gary,
@Art:
“What she said in that video about public investment and the social contract is right out of Adam Smith’s Theory of Moral Sentiments, for God’s sake. Hardly infantile.”
Here’s an ok response to Elizabeth Warren. I think I could do a better (and in-paradigm) job, but I’m not really interested in spending the time.
Mario Reply:
September 30th, 2011 at 1:29 am
@Gary,
@ESM
this response is a joke man. seriously. come on.
ESM Reply:
September 30th, 2011 at 8:27 am
@Gary,
@Mario:
Touche Mario. Your cogent rebuttal has won this round. :^)
beowulf Reply:
September 30th, 2011 at 12:43 am
@Matt Franko,
Ralph Nader hearts Sarah Palin?
We decided to call the longtime left crusader about a speech Palin gave in Iowa earlier this month, one which seemed to mark the transformation of Palin from a standard-issue movement conservative to something more independent and more reformist. And Nader told us he liked what he heard.
“I think she’s a lot smarter than most people credit her,” says Nader. “Judging by her comments, she is squarely in the camp of conservative populism, opposed to corporatism and its corporate state.”
http://www.salon.com/news/politics/war_room/2011/09/19/nader_palin
Wonder how many votes THAT endorsement would win her in the GOP primaries? It is a very a good speech. But then I’ve always been a fan of her speechwriter Peter Schweitzer (who co-authored a couple books with Cap Weinberger and has ghost written books for other politicians).
The buzzword to describe where she’s coming from here is “free market populism”, which has been advocated by journalist Timothy Carney, Luigi Zingales of UChicago and perhaps Ed Glaeser of Harvard (he’d call it “small government egalitarianism”, though I’d wager he’s a Romney man).
She has until the end of the October to file for the Florida and SC primaries (with other state deadlines coming up right behind that), I guess her plan is to wait till all the other candidates are in the pool before deciding if she’ll jump in. I like what she has to say… But its like they say in the Army: amateurs study tactics, professional study logistics. If you’re serious about running for President you have to have all your ducks in a row before you start campaigning (financing, field operatives, campaign strategists, media team, etc). She’d be an instant frontrunner, but Romney is the guy who’s studied logistics.
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Matt Franko Reply:
September 30th, 2011 at 7:59 am
@beowulf, The main breakthru the GOP needs (both sides really) is to come to the realization that ‘big deficits’ are not ‘big government’. But you need a very special mathematical ability to easily ‘see’ this, and not many of us have it I’m afraid. (Out of the 7 billion earth population, how many of ‘us’ are there? I say only hundreds; think about THAT…)
I dont think Romney would choose Palin as a VP candidate and she might not even run, but at least someone of high profile in the GOP is talking about these issues… like Ive said I was down for Buchanon back in the 90′s, even tho I was not in MMT paradigm back then I knew something was very wrong with globalism/corporatism and “debt doomsday”. So I hope she still gets invited to events out there and keeps this line of rhetoric up… Resp,
September 29th, 2011 at 8:31 am
It is great that these reports provide the Sector Balances for various countries all in one spot. Very useful.
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Gary Reply:
September 29th, 2011 at 11:48 am
@Geoff,
something I don’t understand about them.
I thought:
Current Account Balance – Budget Balance = Private Savings Balance
But it does not add up. So what am I missing?
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Geoff Reply:
September 29th, 2011 at 1:23 pm
@Gary,
Don’t know! Some of the countries seem to add up. Some do not.
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Gary Reply:
September 29th, 2011 at 4:22 pm
@Geoff,
Yes – some almost add up, some do not. Europs is off. I thought maybe because of euro. But UK is also off.
I must be missing something…
Mario Reply:
September 29th, 2011 at 6:10 pm
@Geoff,
I don’t know why that is at all but perhaps they don’t all add up b/c there’s some type of international element at play that’s not being accounted for in the current account nor the private sector balance. Perhaps if the government gives money to something outside of either of those two categories? I have no idea what that might be though. Or perhaps there is some money purposefully not being accounted for?
September 29th, 2011 at 3:04 pm
hey all check this out:
http://www.buildabetterbudget.org/
you can build your own budget and send it to congress, blah, blah, blah.
I did it for fun and at the end you can make notes. So of course I wrote a small schpiel on no US bankruptcy, nominal deficits aren’t important, watch inflation and output gap, etc. And then I linked to this blog, billy blog, and new economic perspectives.
Perhaps if many of us do the same, it might be a good thing.
Cheers!
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September 29th, 2011 at 4:43 pm
Maybe someone should try and get in touch with Palin and try and point her in the direction of MMT. No one else in politics seems to be willing to put their neck on the line.
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Robert Kelly Reply:
September 29th, 2011 at 9:20 pm
That would certainly answer the question of whether she is intelligent or not. From a practical point, she would have nothing to lose by learning it. Calling all Alaska MMTers!
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September 29th, 2011 at 6:12 pm
these charts and figures look terrible to my eyes. But I still do suspect we might see a little bull run into the holidays…???
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September 29th, 2011 at 11:52 pm
Surprise, surprise!
http://wtim.es/qBEvBQ
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Mario Reply:
September 30th, 2011 at 1:13 am
@MamMoTh,
oh no!!! LOL
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