Category Archives: Economics

Another View On Detroit

Salon says don’t buy the conservative myths about Detroit, and calls out conservatives for being highly selective in the data they choose to look at.

Without particularly taking sides here, I will note that for years now I have bewailed much of the intellectual Left for a seemingly common inability to answer the most basic economic arguments brought forth by conservatives, which has frustrated me no end because I have long viewed conservative and libertarian arguments as having merits but also having weaknesses, and I truly believe in a process whereby through rational discussion we can arrive at optimal answers when parties from all perspectives join in the engagement of ideas and not just name-calling.

(And no, before you ask, I do not consider Paul Krugman worth reading, ever, because he is a partisan hack first and an economist second, Nobel prize be damned. You can’t trust one word he writes on anything.)

There’s still some name-calling there in the Salon piece, but it’s at least a to-the-point rebuttal to the claims of how we got here and what the solutions are that’s more than just generalities. To my eye anyway.

The truth of the matter is that I care less and less about left vs right pissing matches, as both sides annoy the crap out of me, and I increasingly pay less and less attention to anything other than concrete plans of action.

HSBC: Too Big To Jail?

Neil Barofsky has a must-read piece in The New Republic: Too Big to Jail?

Some perspective: HSBC sent more than $800 million in bulk cash from Mexico to the United States, a good chunk of which apparently represented proceeds from some of the most notorious Colombian drug cartels. As someone who tried the first narcotics money laundering case involving extradition from Colombia, let me assure you that this is a lot of money, the discovery of which usually generates vigorous prosecutions and lengthy prison sentences. And it wasn’t HSBC’s only dirty business: There were also hundreds of millions of more dollars of illegally disguised transactions with rogue nations such as Iran and Sudan.

Why no criminal charges?

But read the whole thing.

Disgraceful.

Anyone who thinks both the Democratic and Republican parties in America are not in the pockets of the banking industry and Wall Street is fooling themselves.

The bogus national debt crisis

This is an argument I first heard about from Jack Kemp, Republican vice-presidential candidate in 1996 – namely, that there’s no such thing as too much national debt.

The basic argument is simple: the United States has a fiat currency system, unlike say Greece which relies on external currency (the Euro). Plus, what about inflation? Well, the United States dollar is also the global currency reserve.

The more detailed argument is here by that famously leftwing extremist rag, Forbes Magazine. Quote:

another way to define inflation is to say that the supply of a currency gets out of whack with its demand: too much currency chasing too few people who want to hold it, and so its value drops. Well, when you have the reserve currency, the demand for your currency is always going to be extremely strong. There’s always going to be tons of people, all around the world, who want to use US dollars, because their transactions are conducted in US dollars. (And it’s highly unlikely that this will change soon–being the reserve currency has a network effect, meaning everyone uses the dollar as the reserve currency because everyone else uses it, creating a self-reinforcing cycle that’s extremely hard to break.)

and of course there’s the example of Japan, whose debt is 229% of GDP and yet will never, ever default. Ever. (and their currency isn’t a global reserve currency, either).. link courtesy of that socialist grinder, Business Insider Magazine.

SO, yeah let’s try to get the deficit under control, because after all we are wasting a few hndred billion a year on interest payments that we could be using for better things (like high speed rail, covering the uninsured, R&D for science, etc). But is there a debt crisis? Will we become Argentina or Greece? No. Will China own us? No. Will American civilization collapse? well, maybe, if the fanatics get their wish and enact austerity measures that shrink our GDP and obliterate teh social safety net for our most vulnerable citzens. But that’s got nothing to do with debt.

And will our children pay for the debt today? No. They will be paid – in the form of genuine opportunity for social mobility. Because thats what that debt is doing – paying an investment down, for a better future.

(cross-posted to Dean 2016)