GDP Up 3.5%

If you look at the most recent economic reports, Gross Domestic Product (GDP) has increased 3.5% this past quarter. This is actually very good, especially because most economists expected growth to be 3.2%, so the economy is actually doing better than expected.

Now, some of you may be saying "But wait, didn't Bernanke say we were out of a recession last quarter, and it didn't really do anything in terms of job growth." There's a couple things that need to be teased out with this. When Bernanke said that we were technically out of a recession, he looked at the fact that retail sales had increased 2.7%, showing growth in the economy. However, this number is inflated largely in part due to the Cash for Clunkers program, and really, a 2.7% growth in retail sales isn't large enough to produce jobs. This is why when this data was released, many economists were saying that we were in the middle of a jobless recovery (growth is too slow to produce jobs).

3.5% increase in GDP, however, isn't slow. This increase is a result of more consumer confidence and investment beginning to creep back up, as well as government stimulus. Plus, 3.5% is actually a little bit above what is normal in expansionary times (3% is the goal). This growth is large enough to hopefully begin to produce jobs, which would definitely be a plus.

Before we break open the bubbly and begin celebrating, it is important to keep things in perspective. Although this positive growth is good, it is true that a lot of the change is due to the cash for clunkers program and new houses being built (government programs). It's important for the long term economy that the private sector begin to pick up the slack in the next year or two. Unfortunately, many speculators claim that it is unlikely the private sector will be able to pick up the growth on its own, so we may see growth dampen again next year. Geithner has also warned that this recovery is fragile, and that there are still credit risks. However, while these risks are manageable, they could dampen the economy.

In short, GDP has increased for the first time since the crisis started, which is obviously a good thing. Now the important thing is to make sure that this growth will produce jobs and that it will continue within the private sector (ie, without the government). Still though, any good news about the economy in these tough times is definitely welcome.

For further reading:

Geithner on Credit Risks

Stimulus Impacted Expansion

Muted Forecast for 2010


-The Economist

Hate Your In-Laws? Bob Dylan Does Too!

In the (Holiday) News...
With the holidays approaching at the scary clip they always seem to, its time to start planning for those family gatherings and office parties that always end with stragglers hanging around your parlor/office. You need an escape strategy to get rid of unwanted relatives/coworkers. Thankfully, Bob Dylan, known for his charitable acts to those in need, has given you the perfect weapon in the fight against holiday party leeches. That's right, Bob Dylan has just released a Christmas album bound to dislodge even the most hardened of loafers from your living room sofa. When asked about why he decided to make a Christmas-specific album by Rolling Stone, Dylan responded in his typically nasal twang that:

"I wanted to give folks in America the gift that keeps on giving -- mainly an album so objectionable to the senses on every level imaginable that countless people would no longer have to deal with their crazy brother-in-law Larry, or the creepy guy in accounting who trims his nails at his cubicle any longer than necessary this holiday season. It's so terrible that even the worst of offenders will be forced to leave the party at a decent hour, rather than hanging on till the late hours. Really, I'm doing everyone a favor by making a God-awful holiday album."

The repellent nature of the album is rather potent. The warmly-mumbled "Hark the Herald Angels Sing" is bound to drive away even the most drunken of guests, while the warbling, haggardly-delivered "Have Yourself A Merry Little Christmas" is certain to make your Christmas party the least bearable on the block. All-in-all, the album is a smash hit for those who are looking to host a party with much-loathed in-laws.

"Oh Lord no, I can't stand it," Betty Marshall of Little Rock, Arkansas said in reference to Dylan's 39th studio release. "It's downright painful, but hell, it keeps Robbie's side of the family from staying past nine. Local dogs don't like it none, though."

Others were less harsh on the cheer-themed release:

"It's not exactly 'music,'" Billy Curtain of San Diego, California said. "But it is the most unintentionally funny music release of the year. Maybe even decade, because I'm pretty sure even the Baha Men weren't taking themselves too seriously."

Dylan himself seems quite happy with the release, planning to use it at his own studio's holiday party.

"I used to have to sing holiday covers till everybody left," Dylan mumbled. "Now I have an album specially crafted just for that purpose, that I can pop in the stereo at will--and I didn't even have to do a duet with Leonard Cohen!"

Well, if anything is for sure, Bob Dylan's latest hit will certainly surpass previous Christmas collection releases as the pinnacle of obnoxious, holiday-themed music that everyone hates, but still listens to anyway. It's the audio equivalent of fruitcake for this holiday season and its even available on vinyl so you can have the satisfaction of smashing it to pieces after driving your in-laws out of your home. It really is the gift that keeps on giving.

"BUT WHAT ABOUT THE CHILDREN!?!" cries Louisiana Racist

In the news...
An interracial couple in Louisiana was denied their marriage license because, as the local Justice of the Peace, Keith Bardwell, said, in the most blatant display of lame "BUT WHAT ABOUT THE CHILDREN" logic: "There is a problem with both groups accepting a child from such a marriage...I think those children suffer and I won't help put them through it." That's right, he won't put those future children through a potentially loving and rewarding childhood with excellent parents because everyone knows that children in interracial households suffer so much. Come on, really? Just admit it, you're a racist Keith Bardwell.

"I'm not a racist. I just don't believe in mixing the races that way...I have piles and piles of black friends. They come to my home, I marry them, they use my bathroom. I treat them just like everyone else."

For the love of God, tell me this is trolling. Please, please tell me that there are not people in that much denial in real life. Also, please tell me that I did not just read the phrase "piles and piles of black friends" given as evidence to support a mind free from racism. Come on, Keith, throw me a bone here, just to let everyone know this is just one big trollfest.

"I try to treat everyone equally."

Keith, you are either the best troll on the planet, or the biggest racist to be totally oblivious to their own prejudices. Of course, Keith really is just doing this for everyone's best interests. He's not a racist, just a concerned citizen who justifies his denial of marriage rights because "most of black society does not readily accept offspring of such relationships, and neither does white society."

This is a healthy way to fix all our lingering social problems--the let's just give the hell up attitude is always a solid tactic for creating a better world. I'm pretty sure that's how Nelson Mandela solved the problem of apartheid. Ghandi totally liberated India by just throwing in the towel. And the allies during World War Two? Yeah, they were just all: "Fuck that Normandy Invasion, it's a lost cause."

But in all seriousness...and this will probably be one of those rare moments where I'm actually serious in an entry: Keith, let me tell you something, the second we give up on dealing with racism, that's when racism will become both socially and institutionally acceptable. I don't buy his bullshit claim that he is doing this for the best interest of the children, don't get me wrong. In fact, I'm pretty sure defending your lack of racism with racism firmly places you in the racist column. Or at least the hopelessly confused column.

This is completely unacceptable. This is 2009. There is no excuse for this man's actions and there needs to be a serious, stern response. The ACLU has gotten involved, and there is hope for an appeal to the Justice Department. So, yeah, basically, this asshole has everyone after him, as he should. I mean, I feel like I shouldn't have to even pose this rhetorical question, but...why can't society allow for two people of different racial backgrounds get married? And why can't they have children? It isn't only celebrities who can do this successfully (like Seal and Heidi Klum) I'm pretty sure "regular" biracial couples can do it too without causing the earth to explode and have us all tossed into Gomorrah. Why do we even have to ask this question? The answer is pretty simple: racism is alive and well, no matter how many people try to deny it, and we, as a society, need to decry it for what it is.

Badass

Pop Quiz: What do George Soros and Hong Kong have in common?

They're both badasses.

I've been reading Paul Krugman's book, "The Return To Depression Economics," and I've been thoroughly enjoying it. There's a ton of great stuff in there, but the two most amazing amazing stories so far that I've read are of how George Soros kicked the pound's ass and of how Hong Kong kicked the collective asses of a bunch of speculators that were trying to cash in on it's fumbling economy.

Let's begin with George Soros. George Soros is a Hungarian refugee turned American entrepreneur, and through his Quantum Fund (a hedge fund), he became a billionaire. The way he did this was absolutely amazing. In 1990, England joined the European Monetary System's Exchange Rate Mechanism, which fixed exchange rates throughout Europe in order to create a unified European Currency. The problem with Britain's entry to the ERM is that the exchange rate at which it entered was too high (making it difficult to sell products abroad), and it was in the middle of a deep recession. This lead to the possibility that Britain would drop out of the ERM, but there was doubt as to whether or not this would happen. Soros recognized that if Britain dropped out of the ERM, there was a way he could make money on it.

First, through Quantum Fund, he quietly borrowed about $15 billion worth of pounds and converted them into dollars. In other words, he established a short position on pounds (if the pound collapsed, it would be much cheaper to pay back, and he'd make money). Next, he started a very loud, very forceful attack on the pound, saying that he had short sold, was 100% positive that it would crash, and so on. This generated a run on the pound, and Britain had to spend almost $50 billion in order to defend in. Eventually, Britain left the ERM and allowed the pound to float, which devalued it. Soros made roughly a billion dollars in about a month.

Next, we have Hong Kong. Hong Kong used to be considered one of the greatest free market societies in the world. It had a wide open economy more or less free of government intervention, and operated on the currency board system (currency was backed by other currency, in this case 7.8 Hong Kong dollars to 1 USD). To put it crudely, it was Milton Friedman's wet dream. Of course, as Japan slumped in the 90s, Hong Kong began to slump, due to the fact that it's currency board made the goods it sold more expensive compared to other countries goods and the fact that foreign investors couldn't invest due to the high exchange rates created a very deep recession, and hedge fund's tried to take advantage of it (note the use of the word "tried" here).

What funds did is they sold Hong Kong stocks short, meaning they borrowed stocks from their owners with promise to return them later and sold them in Hong Kong dollars, hoping that when the prices dropped, they could buy them back and make a profit. Then, they took the Hong Kong dollars that they made and traded them for U.S. dollars, similar to what Soros did with the pound. In this way, they were betting that 1 of 2 things would happen. Either Hong Kong would devalue its currency, meaning that they would make money on the currency speculation (trading the HKD to USD) or the Hong Kong Monetary Authority would raise interest rates to defend the currency, causing the stock market to drop, and they would make money on their short positions in the market. Because Hong Kong was such a free market society, there was no WAY they could lose.

NOTE: Not everything that the hedge funds did was legal. When they sold HKD, they did so in very large amounts, making sure everyone noticed. Hong Kong officials also accused them of planting stories suggesting that the HKD was on the verge of devaluation. Basically, they were trying to start a run on the currency.

Well, what happened? Hong Kong decided enough was enough and decided to kick some ass. The Hong Kong Monetary Authority happened to have a HUGE amount of reserves. Remember, every 7.8 HKD was backed by 1USD, so the HKMA had to have enough USD to back what was in the system. However, they had way more than necessary. So, they took the money that was in the reserves and started buying local stocks, driving the price up so that the hedge funds lost money on their short positions. Eventually, Hong Kong realized that it couldn't continue to buy stocks, so they forced hedge fund owners to give back the borrowed stocks, meaning the hedge funds had to buy back the stocks at the elevated prices.

Of course, the backlash from this was incredible. After all, Hong Kong was once heaven for classical economists. Now, with all of the intervention in the stock market and the controlling of prices and the restrictions on short selling, it was insane, according to Milton Friedman.

One fact remains: Hong Kong had beaten the speculators. True, they sacrificed their standing as the one of the greatest free market economies in the world, but they beat the speculators.

And for the aforementioned actions, I would like to award the Nobel Prize for Badassery to George Soros and the Hong Kong Monetary Authority. You earned it!


NOTE: All credit for this blog post goes to Paul Krugman and his book "The Return to Depression Economics and the Crisis of 2008." All the information above is from his book, and I highly recommend reading it, as it is probably one of the best books I've read. For those of you who are not big on Economics, it is an incredibly easy to understand, and you will not be lost while reading it.


-The Economist (who does not want to be sued for plagiarism)

"I Want to Make First All-White Football Team," says Rush Limbaugh

In the news...
Just when you thought the St. Louis Rams could get no worse, Rush Limbaugh has now expressed an interest in buying the failing franchise. Famous for being a crazed racist, drug abuser, and generally huge blowhard, Limbaugh has expressed a desire to get into the NFL ownership to further inflate his own burgeoning sense of self-importance as well as give him access to "athlete-grade drugs." If successful in his endeavor, the St. Louis Rams' first victory would come after having the only owner in the NFL capable of out-crazying Al Davis. Limbaugh made the announcement on his popular radio show after making disparaging remarks about people suffering from Parkinson's disease and overdosing on Viagra. When asked why he decided to try to purchase the St. Louis Rams, Limbaugh replied, lighting up a cigar laced with Oxycontin that:

"We've got too many teams with black people on them. I'm not a fan of black people--or minorities in general, and I think the NFL has pandered to these people for too long by letting them play and whatnot. I think its time for a return to good old fashioned American values. And by that I mean a team entirely composed of white players. So basically, a team of punters, long-snappers, Quarterbacks, the occasional tight end and kickers. Our special teams should be pretty well-covered."

St. Louis Rams coach Steve Spagnuolo, when told of Limbaugh's plan, clapped a hand to his forehead and muttered an audible "Oh, fuck me." Reporters who caught up to Spagnuolo pressed him for an explanation of his comments as he tried to stop Kyle Boller and Marc Bulger from playing grab-ass in the team showers.

"Look, this team is bad enough already," Spagnuolo grumbled as Boller let out a girlish shriek after bieng struck by Bulger's fiercely-crafted rat tail. "All we have is Stephen Jackson and last I checked he was black...so, yeah, we'd totally blow even more than we do now. Also, I'm pretty sure Limbaugh believes Kyle Boller is a secret Muslim, so I mean, we'll lose over half the team."

Players across the NFL are coming out and saying that they would refuse to play for a team owned by Limbaugh, even going so far as to say they would rather play for Al Davis' Raiders than a Limbaugh-run St. Louis team. When asked for a comment about this, Al Davis, speaking from the team's Alameda County practice facility, said, in delirious tones: "I'm glad they want to play for me, as long as they've got the speed. SPEED!" He bellowed at the assembled reporters. "Like the Heyward-Bey, my team needs the SPEED!"

Jerry Jones, the sketchy and skull-like owner of the Dalls Cowboys had a different reaction to Limbaugh's claims of an all-white football program in the NFL: "Well, I think that's pretty stupid. I mean, hell, I'll hire anybody as long as they have a small amount of fame stemming from criminal charges or exceptional levels of egotism." He then quickly changed the subject to his new, billion-dollar stadium and monument to his own, towering, inflated sense of self-worth: "Have you seen my new stadium? Have you? You have to. It's huge. It has a huge video screen that gets in the way of gameplay its so large and obnoxious. It also has cage dancers! Basically, its the biggest, grossest, most Versailles-like palace of sportsdom ever built."

Limbaugh's ambitions are, at this point, just that -- ambitions, but there is a possibility that the ranks of crazy-ass-motherfucking owners could grow soon to include Rush Limbaugh and his crazy-ass drug addiction. And while, right now, he is opposed to black athletes in general, some industry insiders hope that he can bond with athletes like Ricky Williams and Donovan McNabb over their common addiction/need for drugs due to substance abuse problems or being constantly in some state of injury. NFL Commissioner Roger Goodell remarked that he was "hopeful" that Limbaugh's racism could find a productive place within the NFL:

"Well, we already have crazy egomaniacs, self-destructive old men, and overly-wealthy white people running these franchises--but we have yet to get a true dye-in-the-wool racist. It'll do wonders for our new affirmative action plan for getting owners outside the norm, and Rush certainly fits the bill for 'outside the norm.' We hope his racism continues and brings a new spirit to the NFL, while also encouraging white kids in troubled, wealthy, white suburbs to choose sports as an outlet when an excellent public education simply can't cut it for them, now that they know they have a benefactor in the white-only St. Louis Rams."

Limbaugh, in his closing remarks, announced that he had already tentatively chosen Nolan Owen, USC's long snapper, as his first-round draft choice in 2010, before returning to his previous task of fellating himself with a large pickle.

Does America Really Need This?

So, word is that there is a Transformers 3 in the works and that it will again by directed by Michael Bay--the brilliant mastermind of all those explosions, robot testicles, and robots in black face from Transformers 2: Revenge of the Fallen. It's like an adrenaline rush for every pubescent boy in the country, and a kick in the crotch for everyone else. An insulting kick in the crotch, because, let's face it, there was very little redeeming about Transformers 2. There was actually nothing redeeming about that movie. Megan Fox was reduced to a flouncing pair of breasts in Daisy Duke shorts, all the robots were lame and painted like color-changing hot wheels from the mid-90's, and it was like if Michael Bay were making a big, pyrotechnic porno for himself. So why, for the love of all things decent, do we need yet another addition to this spiralling franchise of awful? It's not like this is the epic middle act that Empire Strikes Back was, no this is the epic fail that a Waterworld sequel would've been if anyone had been crazy enough to throw money at such a project. Or maybe any number of Alien v. Predator films would be the best analogy. But one thing is for sure, Transformers 2 was different. How?

It's a fucking cash cow. It somehow ended up to be a spigot of money, dirty, dirty, Michael Bay porno money. And even though it was utter crap, the American people gobbled it up like there was no tomorrow. It further proves that Americans will eat anything that stays still in front of them long enough. Even the unappetizing prospect of Michael Bay being smug and cheerful couldn't prevent the film from being a hit. That alone should've done it. Have you seen the man? He's as repulsive and oily-looking as you'd expect.

And to cap it all, Michael Bay is the biggest "LOL PROJECTOR" in the film industry -- which is saying something considering that the whole industry is built around projecting things. His love of explosions, breasts, and robotic man-bits is not born of irony, humor, or a sort of cheeky self-awareness of his odd obsessions, but just an expression of what Michael Bay wants and, therefore, thinks everyone else wants too. He's like the boy who never grew up except with adult-levels of creep thrown in the mix. You just know Michael Bay got off as a young sociopath by drowning kittens, exploding household appliances, and lighting the neighbor kids on fire. He was probably a demon-child.

So, to answer my pithy title's question, America does not need another of Michael Bay's pubescent, explosion-infused delusions of grandeur. There is no reason to fuel this man's ego and love of all things stupid, sexist, and racist. As much as I love explosions, robots, and the female anatomy, I expect to be treated like I merely tolerate them in film. Anything else is insulting. I want to be treated as if I may, just may, have certain high-brow pretensions about the films I choose to watch. Besides, if people outside the country see this, they will think American culture is a total lack of culture...which, sometimes I wonder if it is. So, Michael Bay, please, for all of our sakes, stop with the...

A Shitload Of Buffalos

The other morning, The Historian exclaimed, "Did you know that you can write a sentence just using the word 'buffalo'?" And indeed, she is right! Well, mostly. The sentence in question is as follows:

"Buffalo buffalo Buffalo buffalo buffalo buffalo Buffalo buffalo."

To the untrained eye, it looks like the word "buffalo," written eight times, with some random capitalization thrown in for fun. But this sentence has an actual meaning!

First, you have to consider the fact that in the above sentence, "buffalo" acts as different parts of speech:

1. Noun (the large hairy animal, most likely referring to the American Bison)
2. Adjective (referring to someone or something hailing from Buffalo, a city in eastern New York which is dangerously close to Canada)
3. Verb (meaning "to intimidate by a display of power").
So looking at the sentence again, we have "Buffalo (adj) buffalo (n) Buffalo (adj) buffalo (n) buffalo (v) buffalo (v) Buffalo (adj) buffalo (n)."

Keeping this in mind, the sentence should be understood as follows (using some synonyms to reduce ambiguity): "Bison from Buffalo, whom bison from Buffalo intimidate, are intimidated by bison from Buffalo." See? Simple!

So technically, that is a grammatically correct sentence, although the meaning is highly ambiguous due to its construction and lack of punctuation or articles. Nevertheless, it has a real meaning, although the sentence would probably make a high school English teacher cry.

For further disambiguation, read the Wikipedia article on the "buffalo" sentence. And if your brain still hurts, just watch this and forget all of your problems!

-The Cunning Linguist

"How I Became A Keynesian"

Most of you may not have heard of Richard Posner. Richard Posner is a judge, and an Economic Law professor at the University of Chicago (which is a hardcore subscriber of the neo-classical school of economics). Posner is considered to be one of the best economic minds at the school, and he was also a subscriber of the classical theory. I say he was because he no longer subscribes to that theory.

In an editorial in The New Republic titled How I Became A Keynesian, Posner details his experience in reading "The General Theory" and how he decided to shift from a classical point of view to a Keynesian point of view (Full Disclosure: As it should be quite obvious from my previous posts, I subscribe to the Keynesian theory). The article itself is excellently written and provides very good insight into why a Keynesian approach is more valid than the neo-classical approach. I recommend reading the article to get the full idea of what he's saying, as it is extremely well written, organized, and clear. I've highlighted a few points here, along with my analysis of them:

1. Keynes states that during a boom, risk estimation is quite low, but that during a bust, nearly everything becomes risky and "entrepreneurs droop." Posner states that this idea is both true and irrational, something that classical economists wouldn't be able to comprehend. If you look at current crisis, this is incredibly true. During booms, money flies everywhere, and the riskiest of propositions get taken up. As Jon Stewart put it during his interview with Jim Kramer, "In what world is 36-1 a good decision?" This is a rationale idea, that no one will take that bet. However, during an upswing, people don't view risky propositions as risky, and therefore would be willing to take that very irrational bet.

2. Keynes claims that "consumption is the sole end and object of all economic activity." Keynes was not interested in consumption itself, but more so how much of their income people allocated to it. Posner here begins to talk about the effect of "hoarding," and how it can lead to economic trouble. He states that while it's true that savings = investment, most of the time peoples savings are hedges against uncertainty and doesn't actually promote growth. Therefore, it's important to distinguish "Active investment (investment that happens immediately, like firms buying machines)" from "Passive investment (investment that takes a while, like saving money for later, unknown uses)." Keynes, therefore, says that the goal is to increase active investment, as this money will circulate through the economy (read the article to see how, as going into how would just be redundant). Therefore, consumption (actively buying goods and services), becomes the engine of the economy. This is radically different from what neo-classicals claim, which is that savings (or thrift/hoarding) is the engine of the economy.

3. This idea of consumption being the main engine of the economy leads Posner to claim that people can save with no intention of spending. Rationally, there is no reason to this, however Keynes tends to deal with the irrational as well. Posner states that people may save for all sorts of psychological reasons (bequeath a fortune, build up reserves). This type of saving is technically investment, but it is passive investment and doesn't actually help stimulate the economy. Therefore, this type of savings with no plans to spend actually hurts the economy, and can lead to recessions. Paul Krugman (another Keynesian economist) in his book "The Return To Depression Economics" claims that "Recessions are caused by people holding money." This is essentially what Keynes and Posner are talking about here. Holding money means less consumption which means less income (as people's income tend to depend on how much of their product other people buy) which means less growth which means less saving (This is known as the paradox of thrift).

4. Next, Posner talks about uncertainty in the markets. Because savers/investors don't know how their money will be used, there are times when they will be less likely to take chances and invest, which will lead to a higher interest rate (people who invest will want to be paid more for their money). These high interest rates will discourage active investment, and lead to passive investment, which as we've already discussed harms the economy.

5. There is an assumption among economists that by getting rid of the minimum wage, we can get rid of unemployment. The idea is that by letting wages to fall, people who would be willing to work at a lower wage would be able to. Unfortunately, this would obviously reduce incomes, leading to deflation, which can be deadly to people who have debt (which is just about all of us). Also, there are differences in skill levels of workers. A worker who is more productive is more likely to get a job than one who is less. Therefore, there CAN be involuntary unemployment that is unrelated to the business cycle, something that is impossible in the classical theory.

6. This leads us to Keynes's main idea, and one that Posner advocates for in his article. He says that when this happens, it is up to the government to invest, driving up demand. They can do this by lowering interest rates (Which the Fed does) and they can spend on public projects. As Posner says in his article, when the government buys a highway, they do so from a contractor who buys the materials, hires workers, and those people all buy things, letting the money cycle through the economy, leading to an upswing. However, this government spending does more, which is build confidence. It shows that the government is there to help business, and therefore, businesses will start to invest. In the Keynesian theory, confidence is key when it comes to stimulating consumption and investment.

Posner's shift has come at a time when it seems that everyone is moving to the Keynesian school, as typically happens during economic downturns. What's interesting to me is why people flee the Keynesian school once upswings happen. The most recent economic collapse can be linked to deregulation, a highly classical theory. I'm not advocating socialism, which seems to be the rallying cry of conservatives when it gets to the talk of government oversight. I'm talking about regulating the economy, re-instituting the Glass-Steagal act (which will be another blog at a future date), and making sure that the next upswing doesn't come in the form of a bubble, which has happened in the last two upswings (Tech and Housing). Keynes was not a socialist, and therefore, those who subscribe to his school of thought, like Posner, are not either. Instead of focusing on long run plans, the theory states that we should focus on the short run.

After all, as Keynes so eloquently put it, "In the long run, we're all dead."



-The Economist

"Bob Dole Thinks Healthcare Will Pass," says Bob Dole

In the News...
Bob Dole came out today in Kansas where he served as Senator and stated simply that "Bob Dole thinks healthcare will pass by late this year or next." Known for speaking in the third person and losing in Presidential Elections, the last living Founding Father of our country (now a spry 263) was reflective in his speech to a few people gathered at the Kansas City A&P. Wedged between the carrots and string beans, Dole related the tale of Clinton's own health care proposal in 1993-94, which ultimately failed, Dole claimed because "[p]olitics took over," he then added, bitterly, pointing at Betty Schriver, 43 of Lee's Summit, MO. "And you lost."

He then took the time once again to state his strong opposition to a public option for heath care before launching into a bizarre story of his exploits as a Wildcat Banker on the American frontier in the 1830's:

"Back when Bob Dole was in banking during the Second Seminole War, no one talked about 'healthcare.' People were too worried about whether or not Wiley Thompson had really killed that Osceola fella and whether all the money we were printing like crazy was worth anything. That's the way Bob Dole sees health care -- we could learn a lesson from the Second Seminole War."

When asked what that lesson was, Mr. Dole would hum loudly until allowed to change the subject to his old stories of drinking and carousing with William Jennings Bryan. Those few gathered around to listen were torn between amusement, downright scorn, and total confusion.

"I like the way he calls himself by his full name and he's more fun to watch than the Kansas City Chiefs," Robert Clark 28, of De Soto Kansas exclaimed. "It's like he has to say that to remind himself who he is. I guess that's not surprising. He's like, as old as the Highlander, isn't he?"

"All I wanted was to get some carrots," Shouted Martha Moxbury 86, of Lake Winnebago, Missouri. "And then this wrinkled, old, fart shows up and starts talking about wildcats and Lord Byron. Sweet Jesus Christmas! Just get out of my way, damnit! The Greatest Generation, coming through! "

"Who the hell is 'Bob Dole,' anyway?" Bonnie Knox 37, of Sibley Missouri asked, confused. "No, really. Who is he?"

Who, indeed? Bob Dole, was last seen in 2006, when trying to take a felt pen to the Declaration of Independence and exclaiming "Bob Dole found a mistake!" He had not been seen or referred to in public since. Surrounded by mystery, our nation's longest-surviving founder has been rumored to be, among other things, hunting for the Jersey Devil, building a time machine to transport him back to 1996 (and, consequently, relevance), drinking lavishly from his private fountain of eternal youth, and trying, unsuccessfully, to moonlight in an E-Street Band cover band. This was his first public statement since 2002, which was a long-winded story about the Panic of 1837 and how much "Bob Dole hated that Andy Jackson fella, and his Specie Circular."

Since then, according to Bob Dole's enigmatic and oft-confusing twitter page, Bob Dole has been "POLISHING BOB DOLE'S BROADSWORD AND PREPARING FOR THE GATHERING, LOLZ!!!1!"

Open Market Operations

As you know, I recently posted a question which you can find here. The question asks what you would do based on a number of different events if you were to work at the Open Market Operation desk at the New York Federal Reserve. To answer this question, there is one thing you need to know, that being what it is you do. When working at the desk, your job is to keep the Federal funds rate (ie, the rate at which banks lend to each other) at the target rate. I'll explain:

When the Federal Reserve sets an interest rate target, it means that the Fed will provide an unlimited amount of money to keep the interest rate at that target. When banks need funds, they go to the Federal funds market to borrow from banks. If, for some reason, banks within that market are not lending, the interest rate will begin to creep up. If there was no one at the Fed watching this, interest rates would sky rocket and the economy would plunge into a depression. So, when they see the interest rate beginning to creep up, they start buying US Treasury bonds, which injects cash into the economy, bringing the interest rate back to the target. The same goes if the interest rate begins to fall. The Fed will start selling bonds to bring it back up to the target. These actions help keep the economy stable and keep interest rates from going out of control.

So where does the desk come in? The desk the one that buys and sells the bonds keeping the interest under control. These trades are called Open Market Operations. The Federal Reserve ALWAYS has someone at the desk preforming these OMOs during trading hours, as without that person, interest rates would fluctuate, and it could have very detrimental effects on the economy. For example, right now during the current recession, without someone at the desk, the Federal funds rate would probably be a lot higher, preventing growth.

Therefore, in response to the problem, there is only one thing you can alter: When the Federal funds rate rises above the target, you start buying bonds to bring it back down. True, the oil prices, China, the commercial bank failure, and the press conference do have economic implications, but there is nothing you can do about those. True, it is possible that the bank failure may be the cause of the rate going up, but there is nothing you can do about that. So, the answer is: When the Federal funds rate starts going up, start buying bonds to bring it back down to the target. Everything else is out of your control.



-The Economist

The Ultimate Fall Break

Hey, kids. Just a short history fun fact for today. If this were the year 1582 and you lived in Italy, Poland, Portugal, or Spain, today would not be happening.

That is to say, in the year 1582 there was no October 5. It's sort of like how in those Wayside School books there was no 19th story.

Yes, if you lived in Spain in 1582, yesterday would have been October 4, and today would be October 15. That's because earlier in 1582, Pope Gregory XIII decided it was time to switch from the Julian calendar, on account of how there were leap years just fucking everywhere. The Julian calendar picked up a day about every 134 years, so by 1582 they were about 10 days off and needed to get back. The solution was to adopt the Gregorian calendar, but first they had to account for those ten days, so the Pope just...got rid of them. Poof. October 5-14, gone. Is that some crazy Rip Van Winkle shit or what?

So that means that Saint Theresa of Avila died 427 years and one day ago, on October 4. And she was buried the next day, 427 years ago...on October 15. Is your mind sufficiently blown?

A-List Celebs, Fuck You Sideways

Since it seems I've made a personal crusade out of this whole Roman Polanski business, I thought I'd add on to my last post about this whole situation. I'm not through with this situation and much like Polanski himself, am "in a fighting mood" (which is apparently different than his usual state of being "in a raping mood"). I suppose my bone to pick this time is a bit more specific. Namely, the whole notion that Polanski deserves some sort of petition for his liberty. You can see the text of it here, if you'd like, but I think I'll just highlight the most hypocritical points and laugh both bitterly and derisively at them. Because, to be quite frank with you, this is all a lot of bullshit. I figure I'll lift my favorite chunk right from the petition and plop it down here, with parts I find particularly tacky and shocking placed in bold.

We have learned the astonishing news of Roman Polanski’s arrest by the Swiss police on September 26th, upon arrival in Zurich (Switzerland) while on his way to a film festival where he was due to receive an award for his career in filmmaking.

Not sure how astonishing it is, unless you consider how long it took to find an internationally famous pervert and finally catch him. Where was Dog the Bounty Hunter in all this? Seriously, this had to have been the longest and most successful flight on bail in history. It's not like Polanski pulled a D.B. Cooper here. He was still producing movies. Maybe that's why it was shocking. Everyone thought he'd gotten away scott-free.

His arrest follows an American arrest warrant dating from 1978 against the filmmaker, in a case of morals.

Oh, so its a case of morals? Is this the white-washed way of saying rape, or does everyone just think that he got a blow job from a hooker? Seriously. A case of morals makes it sound like he did something that a stern, Baptist minster would disprove of, but everyone else would find harmless, or at least worthy of little more than a wag of the finger. Nice dodge on that issue, celebs. Nice try glossing that over.

Roman Polanski is a French citizen, a renown and international artist now facing extradition. This extradition, if it takes place, will be heavy in consequences and will take away his freedom. Filmmakers, actors, producers and technicians—everyone involved in international filmmaking—want him to know that he has their support and friendship.

His freedom? Really? Are we seriously going to use that as our main argument? The man committed a heinous crime and you're going to try to play to sympathies by fencing legalities of his arrest and notions of "freedom?" I'm sorry, this is no longer 2004. The word freedom has been so trampled on in the last decade as to render it meaningless anyway, but doesn't anyone out of the 100 celebrities find this pandering to democratic ideals of personal freedom both tasteless and hypocritical, given Polanski's crime? I cannot think of anything anyone could ever do to violate personal freedom more than Polanski's act of forcing himself upon a 13-year-old. Of course, the French film association that initiated the petition doesn't care about that. Polanski is an artist! He's held to different standards than your bog-standard rapist. No, we can't persecute a man of ideas. Plus, he's a French citizen!

So what is the deal with these celebrities anyway? They cannot possibly be signing their name in support of a child rapist escaping punishment for his crime. No, celebrities always have good reasons to back their causes up, right? They have to. Celebs always have little pet issues that are culutrally-relevant and benefit a greater good. Perhaps they just feel a sense of loyalty to one of their own. Or maybe they feel that this arrest somehow threatens high-profile actors and film industry people the world over?
Or maybe they just like supporting the cause of child rape. I honestly can't figure it out. Do they have something in the water in Hollywood? How can so many people be so hopelessly wrong about something? How can they completely ignore the real issue here? A child was raped. It's not like Polanski was being detained for an overdue speeding ticket. The man forced himself upon a child. And yet, he's the one who gets 100 signatures backing him up? I just want to vomit all over the petition and the piggish people that signed it. I don't care what you're real motive is for signing the petiton -- personal loyalty, asinine concerns about the particulars of obscure extradition laws, or you genuinely believe his freedom is being impugned illegally -- at the end of the day you're attaching your name to a document that, at its symbolic core, states that child rape is O.K. People shouldn't have to face consequences for it. Especially not if they are "exceptional artists."

Apparently some see Polanski as the victim in all of this -- especially in Europe: "In much of Europe Polanski is portrayed as a wayward genius who has fallen victim to American bigotry." I'm not sure what kind of standards they have in Europe, but I thought they'd be a little higher than this. I don't care how much of a genius he is, nor how much the French film association wants to suck him off. At the end of the day he's still a criminal, not some misunderstood genius. He knew what he was doing. There's nothing to be misunderstood there.

Hollywood's residents are known for their love of charities and causes, but this may be one that the signers of this petition won't be able to live down as backlash continues to pour in. Nor should they. The petition itself is a crime, if not against standards of justice, then at least common decency. It's tacky, hypocritical, and completely out of touch with what is at stake here. Apparently this is goes hand in hand with an address in Beverly Hills. Being out of touch can be excused at times, but supporting child rape is not one of them.

I wonder why Jack Nicholson hasn't signed the petition yet?

-The Crier

[Edit: If you want a better-written look at the hypocrisy of the petition, I'd recommend the article over at Jezebel. They do a much better job than I.]

Homework Assignment

So, here's a fun assignment to think about. This is my homework for my econ class, and I think it'd do people a bit of good to think about it. I'll post my answer as well as what my teacher says is the answer at a later date (no later than Wednesday). Anyway, think about it, and leave any comments if you think you have some ideas. I look forward to hearing them.


You work at the Federal Reserve Bank of New York’s Open Market Operations desk. It’s 1:05 PM on Wednesday when a major commercial bank releases its quarterly report showing a $3.5 billion in losses from its subprime investments. The bank also announces it will lay off 12,000 employees over the next three months, thus raising fears about a double-dip recession. The news comes after a rumor that OPEC may be reducing its oil production due to the decline in the value of the U.S. dollar. China reacts by announcing it will increase its aid to and cooperation with oil-producing African nations. The U.S. State Department holds a press conference announcing fresh peace talks in the Middle East, and renewing the United States concern about Iran’s nuclear plans and China’s human rights record.

At 4:13 PM you notice that the Fed Funds Rate (FFR) started to climb to 0.35%, away from the Fed’s target of [0-0.25%]. Concerns about slow economic growth and staggering deficits are now putting the Obama administration under pressure to put forward a solid economic plan to invigorate the economy. At 5 PM, CNN and Fox News announce they’ll be cosponsoring an unprecedented joint interview with President Obama, Chairman Ben Bernanke, and Secretary of Treasury Timothy Geithner in two days to discuss the state of the economy.




-The Economist

Call It For What It Is -- It's Not "Sex"

If anything, the recent Roman Polanski arrest "for having sex with a 13-year-old girl" has shown just how fucked up the media really is. For one, it's not "sex" when it is between a 44 year-old man and a 13 year-old girl. It's rape. Sex implies that its two consenting adults. Rape has completely different, and for Polanski, completely relevant connotations behind it. I cannot tell you how many media sources have referred to it as "sex" rather than "rape" and it got me thinking as to why the words are suddenly interchangeable in this case, when they clearly cannot be. A New York Times article opens with: "The matter of Roman Polanski, film director and fugitive from conviction for forcing sex on a 13-year-old girl, has been followed carefully" and continues by describing the event itself:

In March 1977, Mr. Polanski, 43 at the time, invited a 13-year-old to pose for pictures in a magazine he was guest-editing. He took her to Jack Nicholson’s house on Mulholland Drive and gave her Champagne and a Quaalude. He knew she was 13; he called her mother to tell her they were running late. Then he had...sex with the girl.

Never once in this article is rape mentioned in connection with the crime itself, instead we are presented with the word "sex," occasionally preceded by a word that implies rape, but why is rape so rarely used in these articles? I don't have an answer for that. But what bothers me even more is that, for some reason, the young victim is seen "as ‘loose’ or outside the neat victim box [and] the chances are low that someone will be held accountable" for rape if the victim falls into that category, says Rachel Lloyd. The victim is the one assumed to be at fault from the outset. It's victim-blaming at its worst. In past elements of the case Polanski's lawyers clamored to look at the young girl's sexual history, a history that, for all intents and purposes began with his client, but no one seemed to assume that. Instead the assumption is that Roman Polanski can't be the guilty one, the victim must be guilty of being a harlot. The 13 year-old girl must have seduced the 44 year-old man, not the other way around.

There is a power dynamic at work in rape, one that the "loose victim" argument intentionally works to debase in order to free the perpetrator. Polanski's status as a privileged (highly so, in his celebrity status) white male somehow shifts how the media sees his crime. I cannot tell you how often I've watched the local news and heard them talking about a rape case. The offender in the reported case is almost always black, and if he's not, he's a poor white man. Never do you hear about the rape that happens in the white collar home and workplace. It's always the poor (often "othered" race) that is placed as the perpetrator. And when that happens, he is described for what he is: a rapist and sexual predator. But in the case of Roman Polanski, it seems, the power dynamic is so far skewed in his favor that these labels cannot even be applied to him. So, while all male perpetrators of rape do have an unequal power dynamic on their side (both while committing the crime as well as when being charged, as our country loves victim blaming so much) Polanski and other celebrities like him, have the full weight of doubting the victim's honesty (and ultimately "virtues") on their side.

Is this why celebrities in droves have come out to support a man that committed one of the most heinous crimes I can think of? He raped a young girl, there's no way of getting around that. Let's call it for what it is -- no more wishy-washy terms that vaguely conceal the true nature of the crime behind a less loaded word, because there is no other way to describe what happened between Polanski and his young victim in 1978. Polanski was prepared to plead guilty, but he "skipped out on bail, and then fled the country" in order to avoid prosecution "for having sex with a minor." His guilt should not be questioned -- innocent people don't enter plea bargains, admitting to the crime. There should be no question here of his guilt, and yet we have a petition floating around expressing shock and outrage at his arrest.

We have droves of celebrities lining up to slap their John Hancock onto a document defending a sexual predator, saying his rights were violated by being prosecuted. Sorry, A-List Celebs, but this time you're out of your fucking minds. After raping a young girl, that man should have no rights. He should be in jail. Society demands that others who do such a thing forfeit their freedoms and rights, so why is Polanski any different? Because he has celeb backing?

I'm sorry, that doesn't fly. And that is my complaint with the justice system, the media, and how our culture as a whole "sees" rape. It is a crime that has exceptionally different qualities between rape as reality, and rape as perception. The reality of rape is that it is vastly under-reported, is not one limited to minority groups, and is an exercise of "a 'privilege' of power." And it is a widespread problem that is grossly under-reported because of the societal stigmas associated with it. That is where perception comes in. Victims that report rape often find themselves with the tables turned, as they suddenly must defend themselves (oftentimes more vigorously) than those they were trying to get put away for their crime. The societal perception is that "She must have been asking for it." She must have dressed provocatively, or was out too late at night. And while the situation with Polanski is not one that I would place my daughter willingly in, as her parental guardian did, that does not, no matter what you say, make Polanski any less guilty. He still committed the crime. The victim is cannot be made to suffer for circumstance, but ultimately, it seems she will.

The petition proves that. As long as you have celebrity on your side, it is automatically she who is impugned in some way. Kobe Bryant escaped rape charges and public shaming through a pay out, as his accuser's sex life was dragged throughout the media and she was called, among other things, "loose." Her word couldn't be trusted as a result, and she ultimately had to take an out-of-court settlement rather than face the shame and unfair questioning she would endure in such a high-profile case. Polanski's lawyers are now talking about a protracted legal fight. His victim has asked in the past that charges be dropped and that she forgives him. But who can blame her for wanting to close a 30+ year chapter of her life that has undoubtedly been a painful one.

I suppose my point isn't so much that his arrest is deserved, but more that this whole situation highlights how perceptions of rape are influenced by the media and other cultural factors. Polanski, a white male and Kobe Bryant, a black male (though, importantly, a black celebrity) both have the ability to escape the societal stigma of "Rapist." Bryant because he could pay out the woman that he, his legal team, and the media lambasted as, essentially, a whore until she broke down and accepted their payout. Bryant has emerged largely untarnished -- his career stats taking precidence over his sexual assault statistics. Polanski has, in a sense, a similar opportunity. He is wealthy, has the support of many important figures, is not having his crime widely referred to as "rape" in the media, and has the benefit of a victim who just wishes to move on with her life and her family without having to relive the assault that happened to her 30 some years ago.

Polanski may or may not get away a second time. That's not the point. Or, at least, its not mine. My point is simple: the media reports rape in the same manner that many perceive it -- a crime committed by poor, violent, non-white men against women who were probably asking for it based on their sexual history. A huge number of these crimes go unreported as a result, because there is little hope in the victim for getting a real resolution, and certainly not one without a substantial amount of emotional hardship as every sordid detail of your sexual history will be dragged out in front of a court of law. I understand it is our responsibility to establish guilt, not innocence according to the legal procedure, and I agree with that ideal. But its time to ask ourselves how much does the victim have to suffer on top of the crime itself to obtain justice?

-The Crier

We're Cloudbusting, Daddy!

The other day I shared a very special music video with The Crier, by British songstress Kate Bush. Let's just say that Kate has a proclivity for making strange music, and even stranger videos, so now it's time to share some of that strangeness with a slightly larger audience.

I present "Cloudbusting," a single off of Kate Bush's 1985 album Hounds of Love. The subject of both song and accompanying video is the Austrian psychoanalyst Wilhelm Reich, and his invention, the cloudbuster. You see, Reich thought that rain-making clouds were actually accumulations of orgone energy (fun fact: "orgone" shares its latin root with the word "orgasm"), and that by focusing this orgone energy into the atmosphere with the aforementioned cloudbuster, he could create rain (fun fact: cloudbusters don't work, and orgone energy isn't real).

Figure 1: A cloudbuster

Reich also believed in nude massages and "orgasmotherapy" during his psychoanalyzing sessions, but that is beside the point. Kind of. Reich was taken into custody by the FBI in 1941, and it remains unclear why they decided to arrest him. It could be due to his status as a German-speaking immigrant living in the US during WWII, his communist connections, or simply the fact that he was a pervert who happened to own a copy of Mein Kampf.

Figure 2: Buster Bluth, a monster

But back to the subject at hand, the music video. It stars Donald Sutherland (and his magnificent moustache) as Wilhelm Reich, Kate Bush as his son Peter, who actually witnessed his father's arrest at a young age, and a cloudbuster as itself. Now that you have the full historical and pseudoscientific background to "Cloudbusting," please enjoy the following video!

Because Everybody's Got That Uncle

Hello, ladies and gentlemen, purveyors and enjoyers of history alike! What up. As we all know because it says so at the top of this post, today is October 2. What you may not know is that today we are celebrating the birthday of everyone's favorite baby-killer (or at least in the top 5), Richard III of England. Were he able to live forever, and had he not been cut down really, really violently by pikesman at the Battle of Bosworth Field back in 1485, he would be turning 557 today! Which I think we can all agree is a fine and noble age.

Let me tell you a little bit about Richard III. He was a fairly important dude, in that his death ended the Wars of the Roses and decided who would go on to screw over England for the next few centuries. The Wars of the Roses are really complicated and full of people named Henry and Edward, so I won't go into the whole sordid story. Basically, though, there was this guy named Edward III- a Platagenet, the family that ruled England for a long fucking time. And Edward had four sons, and those sons had MORE sons, and nobody could agree on whose sons should rule England, and so they decided the best way to solve it was to get in an epic decades-long slap-fight while they were also supposed to be fighting a war with France.

So anyway, there were two houses battling it out for control, the House of Lancaster and the House of York. It changed hands a couple of times, but the Yorkists were totally winning until Richard III got himself killed in battle and ruined it for everyone. Henry VII (a Lancastrian, kind of, if you squint) swooped in to marry Richard's niece, this fine young thing, and start the Tudor dynasty (which would go on to produce such delightful figures as Henry VIII, who went through wives like we go through toilet paper, and Mary Tudor, who lit heretics on fire for funsies on the weekends).

Right, so. Richard III. Like many in this particular story, he really shouldn't have been King at all. He was supposed to be serving as protectorate for his 12-year-old nephew, one of the many Edwards. Eventually, though, Richard got to thinking that maybe a pre-pubescent King wasn't really working out so well for the country, so he did a little dubious maneuvering and made HIMSELF the King. Which I'm sure I don't have to tell you comes with lots of fun perks, like beheading people at will, and also all the poon you could want.

This is where it gets a little bit, er, morally ambiguous. The 12-year-old nephew, and his 9-year-old brother, were sent to cool their heels in the Tower of London for a bit while Richard got settled in and painted all the palace walls just the right shade of hunter green. Problem is, the poor babies never came out again. In the 1670s the skeletons of two children were found under a staircase in the Tower- presumed to be the two princes. Gasp! Baby murder! Richard III got a pretty bad reputation for this, as you might expect. A lot of influential people performed some fantastic character assassination and successfully turned Richard III from a normal-looking, fairly intelligent guy into a limping, hunchbacked homosexual with bad hair.

Now, it's worth noting that there's no proof that Richard III murdered those kids and then nommed on their tender young flesh like a ravaging vulture. It could just as easily have been several other shady guys with plenty of motive and opportunity. After all, Ruth Bader-Ginsberg says he didn't, and that probably should be good enough for most people.

On The Hazards Of Crossing

I will try to keep this short, because I am a Bean with a rapidly-approaching bedtime.

If there is one thing I love bitching about, especially this semester, it's linguistics, "race," and power structures within society. In regards to these subjects, there is a lot of bitching to go around. And yes, I am going to continue to put "race" in quotes because it is one of the stupidest categories known to man. That, perhaps, is a rant for another day.

More specifically, the subject I am choosing to bitch about for my first post is "crossing," or "the use of language varieties associated with social or ethnic groups that the speaker does not normally 'belong' to" (mad props to Ben Rampton and Carmen Fought for that definition). What that refers to, in layman's terms, is all of the wangstas in the suburbs who listen to hard core rap, talk about dealing drugs and smacking up their bitches, and try to emulate the speech patterns of the likes of Lil Jon, Lil Wayne, or any rapper with the pejorative "Lil" in front of their names.

Figure 1: Lil Jon

You might ask yourself, "Well, what's wrong with that? Perhaps these youngsters are simply searching for their own identity by borrowing from the culture of others." To that, I have this response: There is something very wrong with it. While these kids may think that they are respecting other cultures, they are in fact appropriating what can only be described as stereotypes. Because listen, I am pretty sure that not every African-American walks around screaming "YEEEEEEAAAAAH-YUH!" like Lil Jon. Okay, that was an extreme example, but you get the picture; the only exposure that suburban white kids have to African American culture is what they hear on KISS-FM or see on BET. Meanwhile, African American culture (which I understand is a GIANT umbrella term, but bear with me) is rich and diverse, and doesn't glorify drugs, beating women, or yelling "WHHHHAT?" or "OOOKAAAAAAYYYY!!!"

Also consider the fact that these kids are adopting bits and pieces of other cultures, completely ignoring other relevant bits like the oppression that continues to this very day. Nope, suburban white kids are happy to keep their societal privilege while appropriating certain aspects of another culture that are "hip." And then there is also the fact that crossing just increases prejudice because of the stereotypes that white kids choose to adopt.

I'm going to have to stop here before I work myself into too much of a lather. And yes, I might be privileged white person myself, bitching about racial issues. But dammit, I took Soc/Anth 100, so I am clearly an authority on such matters.

-The humble opinions of a cunning linguist

Hi There

Me? I blame Reagan.

Don't take it personally, that's just my normal reaction to when something goes wrong in this economy of ours. Blame Reagan. Seriously? Supply side economics? Do people who worship Reagan actually know what this means? It means supply drives demand. Basically, if you produce, people will buy that product. Supply drives demand. When people buy, that money is then paid to the workers which they then use to buy other stuff, and the money spreads throughout the economy making everyone rich. Pretty good deal, right?

It'd be even better if it actually worked.

Here's what really happens: Demand drives supply. I want to buy something, say a car. A car company realizes this, and produces it so I can buy it. Demand drives supply. Then the suppliers use the money I pay them to pay their workers, and money spreads throughout the economy making everyone rich.

End products are the same. Only difference is how we get there. In one, the best thing you can do is give money to the suppliers. In the other, the best thing you can do is give money to the consumers. Some of you may be saying "What's the difference? Everyone gets rich one way or the other." Here's the difference:

Trickle down.

I'll say it again, trickle down. In supply side economics, the assumption is you start at the top and go down. In other words, give money to the top of the ladder (the suppliers) and eventually it'll trickle down to the bottom. After all, the suppliers are producing, people will then buy and you pay your workers who will then buy more stuff, etc... and the money will end up at the bottom. Therefore, the best thing to do is cut taxes for the upper class. After all, they're the producers. Give them more money, they'll produce more and people will get richer.

Or they'll give themselves bonuses. Or spend it abroad. Or save it. Seriously, if you're making $200 million, what's an extra million? Are you really going to do anything productive with that money? Or are you going to go on a vacation to Paris, or some other location? Or are you going to buy a fancy foreign car? Most people would pick the last two. In short, the rich people don't need any more money. After all, it doesn't matter to them whether or not they spend it. Their lives aren't going to change that much.

The poor will spend it. After all, if you're making $20k a year, don't you think an extra grand would mean a lot? Sure, it's not a ton, but it's something. And what are you going to do with that extra grand? Surely you're not going to buy a foreign car. You're going to buy stuff that people produce, like food. You're going to spend that money.

In short, you're going to demand.

So if you're the government, where are you going to cut taxes? At the top, where the people don't really have to spend the money? Or are you going to cut them at the bottom, where the people are going to spend the money as a means of survival? Who do you think is going to stimulate the economy better?

According to Reagan, that first group. Currently, the upper class pay 35% as taxes. In 1980? 70%. That's a 50% drop. For people in the lower class? It's dropped about 5%.

Going along with this is the real income change (income adjusted for inflation) of those people.

In 1980, real income average for the lower class was about $16.68.
Currently, real income average for the lower class is about $16.67.

That's not good, especially because consumer debt is skyrocketing. Right now, it's about 125% of income. So if you make 100k a year, you have 125k in debt. All this leads up to the following point:

We're going to have another crisis.

And this one won't be from the financial market or the auto market or anything like that. This will be from consumption, which happens to be about 65% of GDP. In short, people are going to stop buying stuff so they can afford to pay off their bills, or they'll declare bankruptcy. And when that happens, the goods and services markets are going to go into a free fall. Luckily, this won't be that hard to prevent. Just start slashing taxes for the lower and working class people. Let their real incomes rise and give them time to pay off their debt, especially in this current era of deficit spending. And once they've paid off their debt, let them go back to demanding goods, driving production, making everyone rich.

Of course, to do this, people are going to have to stop viewing Reagan as god. Meaning we're screwed. And when the next crisis happens because consumers don't have any money to spend, people are going to start pointing fingers, class warfare will break out and marxism will take over. Ok, maybe not that. But people will start pointing fingers and blaming each other, like they always do. And people will still fail realize that the best way to economic strength is to have a good base, meaning a strong lower and middle class which can afford to buy the good the upper class is producing. Then the upper class will be able to sell their stuff and get their money. And then everyone would be rich.

You could blame a whole number of people for why this won't happen (inept government, 24 hour news cycles that do nothing but make people angry).

But me? I blame Reagan.


--The Economist