The Big Zero
By PAUL KRUGMAN
Published: December 27, 2009

Maybe we knew, at some unconscious, instinctive level, that it would be an era best forgotten. Whatever the reason, we got through the first decade of the new millennium without ever agreeing on what to call it. The aughts? The naughties? Whatever. (Yes, I know that strictly speaking the millennium didn’t begin until 2001. Do we really care?)

But from an economic point of view, I’d suggest that we call the decade past the Big Zero. It was a decade in which nothing good happened, and none of the optimistic things we were supposed to believe turned out to be true.

It was a decade with basically zero job creation. O.K., the headline employment number for December 2009 will be slightly higher than that for December 1999, but only slightly. And private-sector employment has actually declined — the first decade on record in which that happened.

It was a decade with zero economic gains for the typical family. Actually, even at the height of the alleged “Bush boom,” in 2007, median household income adjusted for inflation was lower than it had been in 1999. And you know what happened next.

It was a decade of zero gains for homeowners, even if they bought early: right now housing prices, adjusted for inflation, are roughly back to where they were at the beginning of the decade. And for those who bought in the decade’s middle years — when all the serious people ridiculed warnings that housing prices made no sense, that we were in the middle of a gigantic bubble — well, I feel your pain. Almost a quarter of all mortgages in America, and 45 percent of mortgages in Florida, are underwater, with owners owing more than their houses are worth.

Last and least for most Americans — but a big deal for retirement accounts, not to mention the talking heads on financial TV — it was a decade of zero gains for stocks, even without taking inflation into account. Remember the excitement when the Dow first topped 10,000, and best-selling books like “Dow 36,000” predicted that the good times would just keep rolling? Well, that was back in 1999. Last week the market closed at 10,520.

So there was a whole lot of nothing going on in measures of economic progress or success. Funny how that happened.

For as the decade began, there was an overwhelming sense of economic triumphalism in America’s business and political establishments, a belief that we — more than anyone else in the world — knew what we were doing.

Let me quote from a speech that Lawrence Summers, then deputy Treasury secretary (and now the Obama administration’s top economist), gave in 1999. “If you ask why the American financial system succeeds,” he said, “at least my reading of the history would be that there is no innovation more important than that of generally accepted accounting principles: it means that every investor gets to see information presented on a comparable basis; that there is discipline on company managements in the way they report and monitor their activities.” And he went on to declare that there is “an ongoing process that really is what makes our capital market work and work as stably as it does.”

So here’s what Mr. Summers — and, to be fair, just about everyone in a policy-making position at the time — believed in 1999: America has honest corporate accounting; this lets investors make good decisions, and also forces management to behave responsibly; and the result is a stable, well-functioning financial system.

What percentage of all this turned out to be true? Zero.

What was truly impressive about the decade past, however, was our unwillingness, as a nation, to learn from our mistakes.

Even as the dot-com bubble deflated, credulous bankers and investors began inflating a new bubble in housing. Even after famous, admired companies like Enron and WorldCom were revealed to have been Potemkin corporations with facades built out of creative accounting, analysts and investors believed banks’ claims about their own financial strength and bought into the hype about investments they didn’t understand. Even after triggering a global economic collapse, and having to be rescued at taxpayers’ expense, bankers wasted no time going right back to the culture of giant bonuses and excessive leverage.

Then there are the politicians. Even now, it’s hard to get Democrats, President Obama included, to deliver a full-throated critique of the practices that got us into the mess we’re in. And as for the Republicans: now that their policies of tax cuts and deregulation have led us into an economic quagmire, their prescription for recovery is — tax cuts and deregulation.

So let’s bid a not at all fond farewell to the Big Zero — the decade in which we achieved nothing and learned nothing. Will the next decade be better? Stay tuned. Oh, and happy New Year.

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The God That Fails
By DAVID BROOKS
Published: December 31, 2009

During the middle third of the 20th century, Americans had impressive faith in their own institutions. It was not because these institutions always worked well. The Congress and the Federal Reserve exacerbated the Great Depression. The military made horrific mistakes during World War II, which led to American planes bombing American troops and American torpedoes sinking ships with American prisoners of war.

But there was a realistic sense that human institutions are necessarily flawed. History is not knowable or controllable. People should be grateful for whatever assistance that government can provide and had better do what they can to be responsible for their own fates.

That mature attitude seems to have largely vanished. Now we seem to expect perfection from government and then throw temper tantrums when it is not achieved. We seem to be in the position of young adolescents — who believe mommy and daddy can take care of everything, and then grow angry and cynical when it becomes clear they can’t.

After Sept. 11, we Americans indulged our faith in the god of technocracy. We expanded the country’s information-gathering capacities so that the National Security Agency alone now gathers four times more data each day than is contained in the Library of Congress.

We set up protocols to convert that information into a form that can be processed by computers and bureaucracies. We linked agencies and created new offices. We set up a centralized focal point, the National Counterterrorism Center.

All this money and technology seems to have reduced the risk of future attack. But, of course, the system is bound to fail sometimes. Reality is unpredictable, and no amount of computer technology is going to change that. Bureaucracies are always blind because they convert the rich flow of personalities and events into crude notations that can be filed and collated. Human institutions are always going to miss crucial clues because the information in the universe is infinite and events do not conform to algorithmic regularity.

Resilient societies have a level-headed understanding of the risks inherent in this kind of warfare.

But, of course, this is not how the country has reacted over the past week. There have been outraged calls for Secretary Janet Napolitano of the Department of Homeland Security to resign, as if changing the leader of the bureaucracy would fix the flaws inherent in the bureaucracy. There have been demands for systemic reform — for more protocols, more layers and more review systems.

Much of the criticism has been contemptuous and hysterical. Various experts have gathered bits of Umar Farouk Abdulmutallab’s biography. Since they can string the facts together to accurately predict the past, they thunder, the intelligence services should have been able to connect the dots to predict the future.

Dick Cheney argues that the error was caused by some ideological choice. Arlen Specter screams for more technology — full-body examining devices. “We thought that had been remedied,” said Senator Kit Bond, as if omniscience could be accomplished with legislation.

Many people seem to be in the middle of a religious crisis of faith. All the gods they believe in — technology, technocracy, centralized government control — have failed them in this instance.

In a mature nation, President Obama could go on TV and say, “Listen, we’re doing the best we can, but some terrorists are bound to get through.” But this is apparently a country that must be spoken to in childish ways. The original line out of the White House was that the system worked. Don’t worry, little Johnny.

When that didn’t work the official line went to the other extreme. “I consider that totally unacceptable,” Obama said. I’m really mad, Johnny. But don’t worry, I’ll make it all better.

Meanwhile, the Transportation Security Administration has to be seen doing something, so it added another layer to its stage play, “Security Theater” — more baggage regulations, more in-flight restrictions.

At some point, it’s worth pointing out that it wasn’t the centralized system that stopped terrorism in this instance. As with the shoe bomber, as with the plane that went down in Shanksville, Pa., it was decentralized citizen action. The plot was foiled by nonexpert civilians who had the advantage of the concrete information right in front of them — and the spirit to take the initiative.

For better or worse, over the past 50 years we have concentrated authority in centralized agencies and reduced the role of decentralized citizen action. We’ve done this in many spheres of life. Maybe that’s wise, maybe it’s not. But we shouldn’t imagine that these centralized institutions are going to work perfectly or even well most of the time. It would be nice if we reacted to their inevitable failures not with rabid denunciation and cynicism, but with a little resiliency, an awareness that human systems fail and bad things will happen and we don’t have to lose our heads every time they do.

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The real "glory of the system" is that whether your candidate wins or loses, you are still a citizen and no matter how contentious the election you should (but you are not required to) support your country. Obama, like every president, has asked for and deserves that support from all of us, not because you signed a contract, but because you are a citizen. I am willing to support my President, even though I did not vote for him.

So if Hitler was your president and you were German circa 1939 you would have supported him even thought you might have disagreed with him?

Sorry to rain on your parade but i don't have to support anyone however they came to power. I hope Obama fails miserably; you think i want him to succeed in turning America in to a another Euro-Socialist state? i will o everything i can to prevent that.

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"A little nonsense now and then is relished by the wisest men."

Willy Wonka

I agree that we don't have to follow or agree with any elected official.

I'd like to point out that FDR and LBJ did more for socialist programs than Obama could ever dream of. Oh, and guess what. The programs FDR and LBJ started seem to work pretty well as a social safety net for folks that fail at Capitalism. BTW unless you own a business you really don't have any reason to praise Capitalism. The system makes certain that individuals make less than their worth and the owner collects more for your work than they deserve.

Those socalled Euro socialist states happen to be capitalist states. Germany France and Italy have a few of the largest economies in the world. This wouldn't be happening if those countries were true socialist states

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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

The real "glory of the system" is that whether your candidate wins or loses, you are still a citizen and no matter how contentious the election you should (but you are not required to) support your country. Obama, like every president, has asked for and deserves that support from all of us, not because you signed a contract, but because you are a citizen. I am willing to support my President, even though I did not vote for him.

So if Hitler was your president and you were German circa 1939 you would have supported him even thought you might have disagreed with him?

Sorry to rain on your parade but i don't have to support anyone however they came to power. I hope Obama fails miserably; you think i want him to succeed in turning America in to a another Euro-Socialist state? i will o everything i can to prevent that.

Yes, I would support the good things Hitler did for his country. I would vigorously oppose the criminal acts done by his government in the name of his immoral policy of racial supremacy. Nothing (I am aware of) that Obama has done falls in the category of immoral or unjust laws or actions, even though I remain opposed to many of the present administration's incentives. Similarly, the Bush administration did what needed to be done in response to a crisis, and did it legally, with the approval and support of Congress.

I am not saying one should give up political opposition, but it is not your right to deny legitimacy to the elected leader, since that inevitably results in anarchy. My post, which you quoted, was directed to those who felt they were correct in "disowning" their president simply because they disliked the person; my point was and is, that theirs is not a supportable position.

I certainly don't miss him . . . yet, or at all. He had his turn. Bush did lots of good things but he also made lots of mistakes. He inherited the "dot.com" downturn from the Clinton years and a poorly understood terrorist threat that the country was not prepared for; but Obama has inherited even worse economic problems from the Bush years. At least the nations security is a little better off.

Each administration has its problems, and though I would have wanted a different approach to today's issues than those the present administration has supported, they are trying (in their own misguided way) to apply solutions. I do believe we will get through this, probably despite the politicians.

Did Obama buy the billboard? Who else would?

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DR. SEUSS
Did the chicken cross the road? Did he cross it with a toad? Yes, The chicken crossed the road, But why it crossed, I've not been told!

Classic!

I certainly don't miss him . . . yet, or at all. He had his turn. Bush did lots of good things but he also made lots of mistakes. He inherited the "dot.com" downturn from the Clinton years and a poorly understood terrorist threat that the country was not prepared for; but Obama has inherited even worse economic problems from the Bush years. At least the nations security is a little better off.

Each administration has its problems, and though I would have wanted a different approach to today's issues than those the present administration has supported, they are trying (in their own misguided way) to apply solutions. I do believe we will get through this, probably despite the politicians.

I agree. He had his turn. I would be far less inclined to say Bush did "lots of good things" but I certainly don't hold him solely responsible for the present circumstances. He had plenty of help from both sides of the aisles of Congress and the performance of those he appointed. The performance of the current Congress is even worse.

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The first Broadway show that I ever saw on Broadway (actually, the 46th Street Theatre) was the musical 1776.

There are some wonderful lyrics by Sherman Edwards in the second musical number which are timeless, but even more so today:

John Adams praying to the Almighty:

I do believe you've laid a curse on North America
A curse that we now here rehearse in Philadelphia
A second flood, a simple famine
Plagues of locusts everywhere
Or a cataclysmic earthquake
I'd accept with some despair
But, no, you sent us Congress!
Good God, sir, was that fair?

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Seismologists Identify Ground Zero for Underground Disturbance

This past week seismologists across the country have been zeroing in on an unusually source of underground disturbance. Starting early Friday morning the underground vibrations have increased at a steady rate and picked up intensity.

Using different detectors from 17 different universities seizmologists located the disturbance as being in the area of Sharon, a small town located in Litchfield County in Connecticut. Refinements narrowed the search area to Saint Bernard Cemetary and final tests have isolated the vibrations as coming from the the area underneath the marker of William F. Buckley.

William F. Pederstone head of the Geology Department of the University of Pittsburg related his findings to a stunned gathering of reporters. "Once we identified where the sound was coming from we put listening devices on the area and could hear a grinding sound. We then put a sonograph detector on the grave spot and could see that there is actually spinning going on."

Playing back the results of the underground sonograph showed that the rotations seemed to speed up exactly in sinc with developments at the CPAC conference in Washington, DC. Rotations timed at about 57 RPM were recorded when the John Birch Society entered the hall and set up shop, it hasn't been lower than 57 RPM since that time.

Different speakers at the conference triggered different RPM levels Gingrich's speach peaked at 157 RPM while Glenn Becks ran a range of about 450 RPMs and when he broke into tears it double to almost 910 RPMs.

When the CPAC voting concluded selecting Ron Paul and Mit Romney as one and two in the Presidential poll the spinning settled in at a steady 245 RPMs.

In a related development emergency rooms across the US are recording increased stroke and heart attack responses among conservatives and 'freepers' when the vote was announced. Stephen Horsedinker professor of Reactionary Politics at the University of Deleware explained that "Ron Paul and Mit Romney being chosen as leaders of the conservative movement has tea baggers and freepers vomiting all across the country. Paul's antiwar and uhber isolationist viewpoints and Romney's representation of the established CEO corporate eliltist couldn't be further away from the macho Cheney Wing and the evangelical Huckabee Wing of the Party."

"This is why they go crazy over Palin. She unifies the macho and religious fervor that has replaced the Republican equivalent of thinking."


The deep divisions in the Republican Party between Ron Paul's anti establishment grassroots movement, Mit Romney's increasingly discredited representation of the failing CEO class, the religious Huckabee wing and the Macho Cheney Militarists are all coming into conflict with the Tea Party Movement.

It is doubtful that even Ronald Reagan could stem this increasingly inevitable civil war in the Republican/Conservative movement.

The only leader that seems to be able to wed the two largest factions, the radical religious right and the ubher militarists seems to be Sarah Palin.

Scientists in Connecticut are pondering ways to capture the energy source in Sharon, Connecticut as sustainable non carbon energy source.

seepac run runpacrun...

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U.S. Government Recognizes Benefits of Piracy

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me@rescam.org

at least they admit that they were relying whole cloth on the entertainment businesses numbers and not on any factual numbers. I also love how they mention that the numbers the entertainment industry put out are a lobbying tactic.

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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

"One of the most interesting benefits of piracy mentioned in the report is that it encourages innovation, since this is the exact opposite of what copyright holders always argue."

The entertainment industry's claims were always bogus. Nice going GAO.

DL to encourage more innovation. :D

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Obama skips Polish funeral, heads to golf course

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Cyberattack on Google Said to Hit Password System

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