Inauguration Day

First a little bit of fun: The out-going VP, the one and only Dick Cheney, threw his back out while "moving boxes" (one can only assume the rest of that description should properly read "towards the shredder") yesterday, and will be confined to a wheelchair today for the inauguration ceremony.

Chuck Shumer reassures the middle 60% that Obama's their guy.

Obama is “a moderate activist,” according to Schumer, who will push for changes in the short-term to both the economy and the war in Iraq.

And what does being "a moderate activist" mean? Acceptance of responsibility, and the willingness to make sacrifices if the NYT's preview of Obama's speech is accurate.

So what does this all mean? According to the Washington Post, it means that the governing starts at 12:01, and that soon-to-be-President Obama, through a unique confluence of personal gifts and national/international crises, has a chance to be the most powerful and important president since FDR.

No pressure, Barack. And good luck.

Crooks and Liars does the work so I don't have to

The great thing about FoxNews and the like is the veritable cottage industry of snarky blogs it's created that are devoted to debunking just about everything they say. Crooks and Liars (you'll see it linked in the left panel) is the best of them. They started as a rebut to FoxNews and O'Reilly in particular, though they've branched out in the four or five years since their start to become one of the more legitimate blog commentators out there, producing in-depth and expert commentary on everything from Gaza to the economy.

But it's nice when Pappa Bear gives you a chance to go home again.

O'Reilly really owes Paul Krugman -- and the public -- an apology

It's a pretty funny read. Enjoy.

Stocks Tumble as Retail Sales Report Shows Sharp Decline - NY Times
Geithner Questioned on Tax Returns - NY Times (keep an eye on this one)
Clinton to Engage Iran and Syria Soon - WSJ

New FCC Head

Obama gets this one absolutely right:

During the campaign, Mr. Genachowski shaped many of Mr. Obama’s telecom policies. He advocated an open Internet in the debate over so-called “net neutrality,’’ and media-ownership rules that promote a diversity of voices on the airwaves.

My Brain Hurts

I just plowed through this paper by Christina and David Romer, noted Cal-Berkeley economists. Christina, in fact, is the recently named chair of Obama's Council of Economic Advisers.

I don't suggest reading the paper. It hurts the think-box, so I will do my best to sum it up for you:

1. Tax cuts in a healthy economy (one that shows sustained growth, strong manufacturing and economic balance) can end up seeing a threefold return on investment. In other words, for every dollar you cut taxes, your economy sees $3.00 of gain.
2. Tax cuts in a struggling economy (erm, ours) show a net loss for the economy as a whole; for every dollar cut, you infuse $.99 into the economy.
3. Tax hikes in a struggling economy (ours again!) show a net gain for the economy as a whole; for every dollar taxed, you infuse somewhere around $1.30 into the economy.
   

The interesting part, and the part that the paper omits (or is unconcerned with, or doesn't measure) is what happens when tax breaks are given to one part of the economy while hikes are given to the other? After all, the argument against tax cuts as a means to get out of recession/depression is that, in tough times, people save money. If they're saving, they're not spending, and if they're spending, the supply/demand balance maintains grossly tipped towards the former.

However, what happens when you're giving tax cuts to the portion of the society that's more likely to spend it? Small businesses for one, comes to mind. The working and lower-middle classes do as well. These are the segments of society that have seen their disposable income dip precipitously over the past decade, to the point that another dollar in their pocket now is very likely a dollar that's going to go right back into the economy, rather than under the bed as it would have 50 years ago.

And these are the parts of society where Obama's new stimulus plan will cut taxes and create jobs. There's still some amount of consternation about the mathematics of this whole thing - and I'm not smart enough to figure out who's right and who's wrong - and it does fly in the face of Keynesian economic philosophy, but I like the idea of treating the symptom (by giving tax cuts to people and businesses who will spend) as well as the disease (by raising taxes on corporations and the richest 5%). It makes intuitive sense.

gLibertarians are dumb

Thanks to alert reader Seth for sending along this Social Security vs. Madoff summary from Fortune (via CNN). Michael Zuckoff does a good job of keeping it simple, and at the same time blowing up the gLibertarian memes about Social Security (one of the government programs that actually does work as intended) flitting about the web these days. To wit:

Third, Social Security is morally the polar opposite of a Ponzi scheme and fundamentally different from what Madoff allegedly did. At the height of the Great Depression, our society (see "Social") resolved to create a safety net (see "Security") in the form of a social insurance policy that would pay modest benefits to retirees, the disabled and the survivors of deceased workers. By design, that means a certain amount of wealth transfer, with richer workers subsidizing poorer ones. That might rankle, but it's not fraud.

That $800 or so per month many retirees receive is quite often the bit that keeps them from falling into poverty. If social security keeps even 10% of its recipients from that fate, then it is an absolute bargain for all Americans.

Just remember that the next time you hear a Corporatist say Social Security should be privatized (how would that have gone over this autumn, eh?) or a gLibertarian say it should be done away with all-together.

In other news:
Friday's Jobs Report Could Show Decline of 670,000
December's Job Loss Was Bad. But How Bad?
GM, Chrysler's federal loan deals bar strikes
China Losing Taste for Debt From U.S.

LOLhaters

A cross-section of doom

Courtesy of the NY Times:

The End of the Financial World as We Know It by Michael Lewis and David Einhorn. How the Madoff scandal and the market's general collapse have undermined America's standing in the financial world, and what they reveal about the nation's financial mindset.

Fighting Off Depression by Paul Krugman. This is exactly what it looks like: Krugman says it's time to gird our loins for The Second Great Depression.

Milton Friedman, in particular, persuaded many economists that the Federal Reserve could have stopped the Depression in its tracks simply by providing banks with more liquidity, which would have prevented a sharp fall in the money supply. Ben Bernanke, the Federal Reserve chairman, famously apologized to Friedman on his institution’s behalf: “You’re right. We did it. We’re very sorry. But thanks to you, we won’t do it again.”

It turns out, however, that preventing depressions isn’t that easy after all. Under Mr. Bernanke’s leadership, the Fed has been supplying liquidity like an engine crew trying to put out a five-alarm fire, and the money supply has been rising rapidly. Yet credit remains scarce, and the economy is still in free fall.

Friedman’s claim that monetary policy could have prevented the Great Depression was an attempt to refute the analysis of John Maynard Keynes, who argued that monetary policy is ineffective under depression conditions and that fiscal policy — large-scale deficit spending by the government — is needed to fight mass unemployment. The failure of monetary policy in the current crisis shows that Keynes had it right the first time. And Keynesian thinking lies behind Mr. Obama’s plans to rescue the economy.

But these plans may turn out to be a hard sell.

Obama Plan Includes $300 Billion in Tax Cuts from the NYT business section. It's a good companion piece to get an idea of what "Keynesian thinking" actually is.

And on the lighter side, Bruce Sterling sums it up from a delinquent's point of view, courtesy of BoingBoing:

I'm a bohemian type, so I could scarcely be bothered to do anything "financially sound" in my entire adult life. Last year was the first year when I've felt genuinely sorry for responsible, well-to-do people. Suddenly they've got the precariousness of creatives, of the underclass, without that gleeful experience of decades spent living-it-up.

These are people who obeyed the social contract and are *still* getting it in the neck.

Issue 1: Climate Cha...

Actually, let's call it what it is: Global Warming. And according to The Independent, plan A has already failed:

An emergency "Plan B" using the latest technology is needed to save the world from dangerous climate change, according to a poll of leading scientists carried out by The Independent. The collective international failure to curb the growing emissions of carbon dioxide (CO2) in the atmosphere has meant that an alternative to merely curbing emissions may become necessary.

The plan would involve highly controversial proposals to lower global temperatures artificially through daringly ambitious schemes that either reduce sunlight levels by man-made means or take CO2 out of the air. This "geoengineering" approach – including schemes such as fertilising the oceans with iron to stimulate algal blooms – would have been dismissed as a distraction a few years ago but is now being seen by the majority of scientists we surveyed as a viable emergency backup plan that could save the planet from the worst effects of climate change, at least until deep cuts are made in CO2 emissions.

Wonderful. We've reached the point where atmospheric liposuction, if not quite a gastric bypass, is the preferred route to creating a "sustainable" environment.

"Sustainable" is, of course, the operative word here; the earth, whether we want to admit it or not, has finite resources. And legislation like the Kyoto Treaty has done nothing to curb our hunger for fossil fuels, as you can see from the graph above. Nonetheless, revisiting Kyoto should be high on President Obama's list of priorities.

Almost everyone who thought that geoengineering should be studied as a possible plan B said that it must not be seen as an alternative to international agreements on cutting carbon emissions but something that runs in parallel to binding treaties in case climate change runs out of control and there an urgent need to cool the planet quickly.

Which makes this article from the Times that much more interesting. Right now Obama's energy team is divided into two camps. The first, led by Carol Browner, wants aggressive, immediate and direct action to reduce our carbon emissions. The second, led by Larry Summers, wants a more cautious approach for fear of damaging the economy and further deepening the recession.

Striking the right balance - or perhaps eschewing balance all-together in favor of aggressive action on behalf of one concern or the other is the type of "first hundred days" challenge that could come to define Obama's first term. I don't know the right answer here; hopefully he does.