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Tilting at Windmills

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February 7, 2008
By: Kevin Drum

ECONOMIC UPDATE....I'm not trying to compete for the doom-and-gloom world record or anything — honest — but the economic outlook just continues to look really gloomy:

The UBS-International Council of Shopping Centers preliminary sales tally of 43 retailers rose 0.5 percent in January, well below the original 1.5 percent forecast....Michael P. Niemira, chief economist, said January's performance was the weakest ever, according to records that go back to 1970. It is based on same-store sales, or sales at stores open at least a year.

....Wal-Mart, the world's largest retailer, reported a 0.5 percent gain in same-store sales....Wal-Mart noted in its news release that gift card redemptions were below expectations and that customers appear to be holding gift cards longer and ''using them more often for food and consumables rather than discretionary purchases.''

As usual, you should adjust for inflation: an increase of 0.5% is a decline in real terms of more than 3%. That's very gloomy indeed — though not really surprising. After all, the job market is weakening, incomes aren't rising, the home equity ATM has been shut down, and credit cards are maxed out. Where's the money supposed to come from? Senate Republicans?

Kevin Drum 1:34 PM Permalink | Trackbacks | Comments (68)

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one more disaster on my watch...before i go..

Posted by: G.W.B. on February 7, 2008 at 1:37 PM | PERMALINK

"customers appear to be holding gift cards longer and 'using them more often for food and consumables rather than discretionary purchases.'"

And I thought we were the only ones doing this. Easy way to convert $200 in gift cards to Target into $200 cash.

Posted by: Joe on February 7, 2008 at 1:42 PM | PERMALINK

"Where's the money supposed to come from? Senate Republicans?"

Perhaps HC can loan you some...

Posted by: Adam on February 7, 2008 at 1:45 PM | PERMALINK

Off topic, but when is one of the blogs going to address the issue of Florida and Michigan being stripped of delegates? Voting for president is a federal matter, not some private club election.

Posted by: JeffII on February 7, 2008 at 1:51 PM | PERMALINK

Here's the Plan: Republicans just need to ignore, paper over or deny the economy is in all that much trouble through the election. If a Dem gets in the WH the eventual (officially declared) recession will be his/her fault. With the assistance of FoxNews, Rush and owing to their own feeble intellect the electorate will punish Dems in the 2010 midterms for "fucking everything up". If a Repub wins in '08 that same bad economy will mean trillions in tax cuts need funneled to business and the wealthy to "lift us all out of our doldrums". If the tax cuts are fought and scuttled by Dems see above for the 2010 midterms election strategy.

Posted by: steve duncan on February 7, 2008 at 1:52 PM | PERMALINK

The one additional point missing from your analysis is that Republicans have near certain knowledge that the Democrats are bluffing and will back down if the Republicans throw up any obstruction at all.

If Reid had any kind of backbone, or any strategy whatsoever, for dealing with obstruction, the Republicans might be just a hair more discriminating in using the fillibuster.

But at this point, why wouldn't they use it? The fact is, until Reid gets a spine, they are calling the shots.

The Senate is just completely out of control. Completely.

Posted by: The Dude on February 7, 2008 at 1:57 PM | PERMALINK

JeffII:
Wrong. As the courts have stated numerous times, the primaries are indeed like some private club election. The Republicans stripped delegates too(but it doesn't matter now that Willard is toast).

Posted by: Joe Klein's conscience on February 7, 2008 at 1:59 PM | PERMALINK

So Bush is going to be the first president who didn't finish 2 wars and who had 2 recessions.

Is that a double-double?

Posted by: tomeck on February 7, 2008 at 2:04 PM | PERMALINK

Adjust for inflation? But if we do that, the whole last 30 years will have been a mirage!

Posted by: Speed on February 7, 2008 at 2:05 PM | PERMALINK

Voting for president is a federal matter, not some private club election.

You're right about voting for president, but they weren't disenfranchised from voting for president, that happens in November. Voting to select a party nominee is a private club matter.

Posted by: tomeck on February 7, 2008 at 2:06 PM | PERMALINK

Are you sure that the numbers are not adjusted for inflation? Even if they are, however, you also need to adjust for population growth.

Posted by: Cap and Gown on February 7, 2008 at 2:07 PM | PERMALINK

JeffII >"...Voting for president is a federal matter, not some private club election."

You are SO wrong on this.

All voting is a private club matter & will be payed for by all tax payers.

Tough if you don`t like it say the courts (also a very private club).

"The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary." - H. L. Mencken

Posted by: daCascadian on February 7, 2008 at 2:09 PM | PERMALINK

You're right about voting for president, but they weren't disenfranchised from voting for president, that happens in November. Voting to select a party nominee is a private club matter. Posted by: tomeck

Voting in a municipal, county, state or federal election, whether in the primaries or general election, is not a private matter. The elections are all run by county, state and federal elections commissions, not private entities. Therefore, these are not private elections. The Democratic Party of Washington State is not who printed or sent me my mail-in ballot. It was produced and mailed by the State of Washington.

Posted by: Jeff II on February 7, 2008 at 2:14 PM | PERMALINK

Remember when that woman told W she was working 3 jobs and he responded how great that was. I think that is your answer.

Posted by: Bush Lover on February 7, 2008 at 2:22 PM | PERMALINK

"Voting in a municipal, county, state or federal election, whether in the primaries or general election, is not a private matter."

Jeff, the courts have long since decided that the Republicans and Democrats get to make the rules for their primary elections. They get to decide whether to hold primaries or caucuses; they get to decide how many delegates to allocate. This is not a federal matter, it's a party matter which is why nobody has filed suit, and why no such suit would succeed.

Since you live in Washington State, you should know this, since they successfully fought against Washington State's open primary, taking it all the way to the Supreme Court and winning.

Posted by: PaulB on February 7, 2008 at 2:23 PM | PERMALINK

There is no money for increased consumption. That is a politically wrong answer, but it is the awful truth. The US needs to raise taxes, interest rates, reduce public spending and increase savings. That is what the IMF would tells every other nation that has fucked up their finances like the US has.

Posted by: Brojo on February 7, 2008 at 2:23 PM | PERMALINK

Where's the money supposed to come from?

Any tax rebates that people get will be spent on necessities (food-fuel-utilities) and to pay down credit card debt. Some who are behind a month or two on their mortgage will get caught up (those that aren't planning on walking away that is). Chinese consumer products at WalMart are going to take a big beating. With the value of the dollar so low, the retailers don't have the margin to cut prices. Look for a big crash in Asian stocks soon. The Asian exporters are going to endure some really severe competition amongst themselves fighting over who gets the deals with our retailers.

Posted by: Doc at the Radar Station on February 7, 2008 at 2:24 PM | PERMALINK

Kevin,
It's very gloomy out there. And will continue to look gloomy for quite some time.

You should take whatever cash you have on hand and go out and buy a 3 year supply of dry nibblies. I don't think you can use food stamps to buy cat food.

Posted by: optical weenie on February 7, 2008 at 2:37 PM | PERMALINK

We reached the end of the line.

Step 1. Convert manufacturing plants to shopping malls.

Step 2. Ship money overseas to buy goods in the new shopping malls.

Step 3. Stop paying taxes under Bush/Reagan voodoo economics. The corollary to "you don't have to pay taxes" is of course "you don't have to limit spending."

Step 4. Don't limit spending. Import millions of costly immigrants to use up welfare and natural resources and infrastructure to gain a few cents of tax revenue.

Step 5. Hit the credit limit on public and private borrowing.

Step 6. Sharp decline. Pay off debts with $1 million dollar bills printed on newsprint.

Posted by: Luther on February 7, 2008 at 2:44 PM | PERMALINK

Of course the economy is bad, Kevin. You cannot borrow your way to prosperity. Ask M.C. Hammer.

Posted by: The Conservative Deflator on February 7, 2008 at 2:54 PM | PERMALINK

The Conservative Deflator,

Sure you can! You just have to stiff your creditors, like the US Government does.

Posted by: M.C Hammer on February 7, 2008 at 3:04 PM | PERMALINK

Jeff II,

I am afraid it is you who are incorrect. While state governments may choose to assist the parties in some non-partisan way (for example in MN there is a state-funded website which shows you where your precinct caucus is) it is clearly the parties themselves who decide their own method for selecting their candidates.

For example it would be legal for me to form my own party, have myself always be the sole candidate and solicit funds and give no one else any say in the matter.

Posted by: Tripp on February 7, 2008 at 3:08 PM | PERMALINK

>"Adjust for inflation? But if we do that, the whole last 30 years will have been a mirage!"

Indeed it has.

Two simple facts to ponder for a moment.

1)The current monetary system depends on an eternally expanding economy to stay 'ahead' of interest accumulation. **

2)The resources of the planet are finite and cannot support an eternally expanding economy.

Current policy: Clap louder.

(** this is simple math: in a 'fixed' economy all money will eventually end up in the hands of the 'lenders'.)

Posted by: Buford on February 7, 2008 at 3:15 PM | PERMALINK

If it wasn't for the Supreme Joke (err... Court) I would vote for McCain just to see him continue to try to TaxCut and MilitarySpend his way out of the terrible financial hole Chimp has left us in. He would fail miserably and we will finally have a true progressive candidate replace him.

Unfortunately, it may already be too late :-(

If I was the Democratic nominee I would make it clear how bad Chimp has screwed up things and simply say I will do my best with new ideas to clean up the mess; but it won't be easy. Otherwise, just go ahead and vote for more of the same...

Posted by: Brian L on February 7, 2008 at 3:26 PM | PERMALINK

Buford - it's not simple math, it's the first law of thermodynamics.

Posted by: optical weenie on February 7, 2008 at 3:28 PM | PERMALINK

Buford,

Amen. Today we have an economy dependent on two things - constant growth and access to cheap energy (oil). Neither of these things are sustainable. Not for very much longer.

But we are not really simply clapping louder. We're also investing in weapons systems, barricading our borders, and building large US detention camps. Oh, and prosecuting a war on those terrorists who happen to be in oil producing countries.

Your tax dollars at work.

Posted by: Tripp on February 7, 2008 at 3:30 PM | PERMALINK

Kevin Drum:

Well, for the last ten years it's mostly been coming from foreign creditors, particularly central banks. The last few years it's depended heavily on the People's Bank of China.

That's right folks, our "free market" economy has been funded by the China's Communist government!

Pardon us cranks who've been warning about this for a decade, and pointing out that it all ties in to the trade deficit (where'd you think the money for the housing boom came from?) while reasonable centrists and pundits have been mindlessly chanting the "free trade" slogan.

Posted by: alex on February 7, 2008 at 3:39 PM | PERMALINK

Oops, gotta use Preview.

Kevin Drum: the home equity ATM has been shut down, and credit cards are maxed out. Where's the money supposed to come from?

Well, for the last ten years it's mostly been coming from foreign creditors, particularly central banks. The last few years it's depended heavily on the People's Bank of China.

That's right folks, our "free market" economy has been funded by the Chinese Communist government!

Pardon us cranks who've been warning about this for a decade, and pointing out that it all ties in to the trade deficit (where'd you think the money for the housing boom came from?) while reasonable centrists and pundits have been mindlessly chanting the "free trade" slogan.

Posted by: alex on February 7, 2008 at 3:40 PM | PERMALINK

I'm going to get on one of my hobby-horses.

Do not deflate same store sales gains with the CPI.

It massively overstates inflation that departments store type retailers experience.

The correct deflator to use is the the deflator for GAFO sales within retail sales. The measures inflation for general, appliances, textiles, electronics, etc.-- essentially retail excluding autos, grocery stores, restaurants, gasoline and fuel oil. What Wal-Mart sells.

Over the last year this price measure fell 2.7%.

So the 0.5% nominal increase converts to a 3.2% real gain.

The y/y increase in the GAFO deflator has been negative every month for over a decade.

I'm not picking on you, I've seen members of the Fed Board of Governors and regional Fed presidents make the same mistake.

Posted by: spencer on February 7, 2008 at 3:42 PM | PERMALINK

Two simple facts to ponder for a moment.

1)The current monetary system depends on an eternally expanding economy to stay 'ahead' of interest accumulation. **

2)The resources of the planet are finite and cannot support an eternally expanding economy.

Current policy: Clap louder.

A corollary to "fact" 2 (or maybe just a nuance.):

2A) The total global resources available to the U.S. for any defined time period are finite, and will be proportional to both the number of competitors and their skill at procuring a piece of the pie.

Now another "fact"

3) The quality and intensity of competition for global resources is increasing.

ergo...

4) The U.S. has nowhere to go but down if they don't change their consumption habits or somehow partition the resource pie so that there are fewer competitors.

I vote for investing in non-fossil fuel energy sources and creating jobs around any number of "alternative" energy technologies. Global energy demand will only increase. We could set the rules for the "post oil" era and perhaps maintain our edge just a bit longer.

In the absence of fundamental change to our habits as either producers or consumers, we are in for a long period of economic decline.

Posted by: lobbygow on February 7, 2008 at 3:54 PM | PERMALINK

Spencer, the only problem with the GAFO deflator, is it implicitly assumes the consumers have money to spend. But since the things not in GAFO energy/medical/food/mortgage-reset have already consumed the consumers money. But in some sense you are correct, the total amount of junk sold via W-mart has increased by 3.2%.

Alex, the new loaners to our economy are the oil exporting sovereign wealth funds. China has cut back -they don't want to get stuck with any more worthless dollars.

Posted by: bigTom on February 7, 2008 at 4:05 PM | PERMALINK

Buffet buffets Greenspan's buffeted risk pricing.
"Risk was mis priced due to euphoria" was Greenspan's adorable euphemism describing how 'banks' make - package - trade - buy and retrade and repackage crappy investments (for commissions) until their demise.
Read Warren Buffet's commentary in (Reuters) Buffett: Bank woes are "poetic justice"
http://www.reuters.com/article/newsOne/idUSN0631767220080207

Page two second paragraph "risk has been repriced" is a gut buster for me as Buffet responds to Greenspan's euphemism. "Serves them right" ain't such a bad line either.

Posted by: cognitorex on February 7, 2008 at 4:06 PM | PERMALINK
As usual, you should adjust for inflation: an increase of 0.5% is a decline in real terms of more than 3%.

How so? Isn't this January 08 over December 07, not January 08 over January 07? Surely you aren't suggesting ~3.5% monthly rate of inflation.

Posted by: cmdicely on February 7, 2008 at 4:07 PM | PERMALINK

"I know how hard it is to put food on your family."
--George W. Bush

Posted by: Quotation Man on February 7, 2008 at 4:28 PM | PERMALINK
Off topic, but when is one of the blogs going to address the issue of Florida and Michigan being stripped of delegates? Voting for president is a federal matter, not some private club election.

Michigan and Florida haven't been stripped of anything in voting for President.

They've been stripped of delegates to the Democratic Party's nominating convention, in which the Democratic Party's nominee for the Presidency will be elected. Which is, precisely, "private club election".

And they were stripped of those delegates because, knowing the consequences, they violated the rules of the Democratic Party. Should those rules be changed? Perhaps. Nonetheless, Michigan and Florida knew the consequences when they broke the rules.

Posted by: cmdicely on February 7, 2008 at 4:29 PM | PERMALINK

"We need to make the pie higher."
--George W. Bush

Posted by: Quotation Man on February 7, 2008 at 4:31 PM | PERMALINK

Like I recently posted at DeLong's:

Maybe instead of giving some people money (the stimulus package as proposed), reduce some of the worthless (to them at least) costs they incur from Banks and Credit providers, by enforcing or making new laws/regulations about interest, late fees, and especially the execrable (and violative of the spirit of contract law) outrage that debtor can't specify which account (e.g., the one with the *higher* interest rate) to assign payments to.

Posted by: Neil B. on February 7, 2008 at 4:33 PM | PERMALINK

4) The U.S. has nowhere to go but down if they don't change their consumption habits or somehow partition the resource pie so that there are fewer competitors.

Sadly the world has nowhere to go but down as the era of "cheap energy" comes to an end.

I do agree that the US, being the biggest beneficiary of cheap energy, also has the biggest distance to fall.

Posted by: Tripp on February 7, 2008 at 4:38 PM | PERMALINK

bigTom: the new loaners to our economy are the oil exporting sovereign wealth funds. China has cut back -they don't want to get stuck with any more worthless dollars.

Quite right, but either way the effect is the same. The country is in hock up to its eyeballs and keeps going deeper. There has been some recent reduction in the current account deficit but IIRC the path is uneven.

Also, since by definition sovereign wealth funds are government owned, it also makes a joke of the "free market" rhetoric.

Posted by: alex on February 7, 2008 at 4:51 PM | PERMALINK

RON PAUL is gonna win the election and save our economy. Meanwhile, the Democrats suck ass.

John Edwards sucks ass too...with jelly

Heheheheh

Posted by: bush on February 7, 2008 at 5:45 PM | PERMALINK

If it wasn't for the Supreme Joke (err... Court) I would vote for McCain just to see him continue to try to TaxCut and MilitarySpend his way out of the terrible financial hole Chimp has left us in.

I made a sour joke to my DH about this. Whoever becomes president is going to inherit a mess and it's going to take a long time to clean it up. The next president probably won't get any credit and a lot of the blame. Darn that aging Supreme Court.

Posted by: lou on February 7, 2008 at 5:55 PM | PERMALINK
Maybe instead of giving some people money (the stimulus package as proposed), reduce some of the worthless (to them at least) costs they incur from Banks and Credit providers, by enforcing or making new laws/regulations about interest, late fees, and especially the execrable (and violative of the spirit of contract law) outrage that debtor can't specify which account (e.g., the one with the *higher* interest rate) to assign payments to.

That's a really good idea: pro-consumer rights legislation packaged as a response to economic uncertainty would be a good contrast to the offerings of the right, and have good fruits in the long and short terms. As part of it, I think you need a reform of bankruptcy law, as well.

Posted by: cmdicely on February 7, 2008 at 5:57 PM | PERMALINK

Get out there and buy plastic pumpkins or the terrorists will win! I mean it!

Posted by: Conservatroll on February 7, 2008 at 6:06 PM | PERMALINK

I've never heard Kevin speak.

But I always imagined he'd sound a fair bit like Eeyore.

Posted by: Cazart on February 7, 2008 at 6:26 PM | PERMALINK

I think its time we quit whining and started working our problems. Anybody else want to focus on solutions?

Posted by: corpus juris on February 7, 2008 at 6:36 PM | PERMALINK

The lack of growth in shopping center sales is, in part at least, due to a movement of shoppers away from brick and mortar stores to e-commerce. Online sales growth for the Holiday, 2007 season was 19 percent.

It would be better to look at the total combined growth (or shrinkage) of all types of sales.

Posted by: ex-liberal on February 7, 2008 at 7:51 PM | PERMALINK

corpus - focus on the solutions?

I might suggest that we consider investing some of our unlimited deficit dollars in clean coal technology. We use coal a lot, so does China and so will India. The problem with coal in the long term is the CO2 emission problem. If we could figure out a cheap way to sequester the CO2 we would a) help ourselves quite a bit in the area of foreign oil dependence, b) look good to the rest of the world because we have come up with a partial solution to global warming, c) help ourselves financially because we can sell that technology to China and India.

Posted by: optical weenie on February 7, 2008 at 7:54 PM | PERMALINK

Get out there and buy plastic pumpkins or the terrorists will win! I mean it!


Wrong season Conservatroll - we need to be buying plastic easter eggs and baskets. This assumes, of course, that the stimulus handouts won't be in the mail till long after Valentine's day.

Posted by: optical weenie on February 7, 2008 at 7:56 PM | PERMALINK

IOW, spencer, let them eat DVD players!

Posted by: idlemind on February 7, 2008 at 8:12 PM | PERMALINK

http://en.wikipedia.org/wiki/Nixon_Shock

Related reading...


Posted by: Ya Know... on February 7, 2008 at 8:27 PM | PERMALINK

Online sales growth for the Holiday, 2007 season was 19 percent. -Ex Liberal

Perhaps due to high fuel prices people decided to shop online. Even so, sales were sluggish.

Jobs? The BLS [Bureau of Labor Statistics] report came out not to long ago and they updated the jobs created forecast. There were 385,000 LESS jobs created than what was reported. Thats some 30,000 jobs a month that never existed. As well the GDP growth for all of 2007 was only 2.2% In the 4Q it was .06% Inflation is running at around 14%.

Protracted wars, like Vietnam, cause inflation. [Read Nixon Shock]

How the heck McCain is going to fight more wars or stay in Iraq a hundred years is beyond me. Whatever Oil is in Iraq has cost hundreds of billions. Is it worth it, now?

Posted by: Ya Know... on February 7, 2008 at 8:36 PM | PERMALINK

Ya Know

The oil isn't worth it. It never has been. We would all be better off focusing on getting off the oil wagon. It can be done, but won't until the Republican obstructionists have been sent to the sidelines.

Posted by: corpus juris on February 7, 2008 at 8:49 PM | PERMALINK

Where's the money supposed to come from?

Maybe you could apply to join the EU?

I hear the Union is rolling in cash and they dole it out the new members that are in financial difficulties.

;)

Posted by: floopmeister on February 7, 2008 at 9:00 PM | PERMALINK

floopmeister: Maybe you could apply to join the EU?

Don't get too cocky floop - Australia is the other developed country with a persistent large trade deficit.

Posted by: alex on February 7, 2008 at 9:02 PM | PERMALINK

Alex - not getting cocky. Just being silly! Of course I wasn't being serious...
BTW, the difference with us is that we are sitting on a continent-sized resources sandbox.

We're the Saudi Arabia of uranium, for starters, and then there's coal, copper, alum - you name it, we got it.

Posted by: floopmeister on February 7, 2008 at 9:08 PM | PERMALINK

floopmeister: We're the Saudi Arabia of uranium, for starters, and then there's coal, copper, alum - you name it, we got it.

You forgot natural gas and tantalum.

All great resources, particularly in an increasingly resource constrained world. In a thinly populated country like Australia there's plenty to export. Nevertheless, like the US, Australia consistently lives beyond its means.

In the case of the US we have lots of natural resources, but our 15x larger population makes us a net importer of raw materials. Our vaunted surplus in services is small compared to our deficit in raw materials and manufactured goods. The answer is that, as in years gone by, we have to move from a deficit to a surplus in manufactured goods.

To anyone who thinks it's impossible for a high cost of labor country to run a surplus in manufactured goods, look at Germany and Japan - they do it year after year. In fact, they have to import more of their raw materials than we do (and a lot of ag products to boot) and yet they run an overall trade surplus. Can't compete with Chinese labor rates? Anyone who thinks that's a show stopper for all manufacturing doesn't understand what a small portion of the costs are from direct labor in many sophisticated manufacturing processes.

Posted by: alex on February 7, 2008 at 9:24 PM | PERMALINK

If only someone could invent an inexpensive, clean new energy source, eliminating the need for oil, it would usher in a technological revolution.

The benefits would be profound.

Too bad they are using it for weapons right now.

Oh yeah, Exxon would take a hit.

Can’t have that.

Posted by: MEG on February 7, 2008 at 10:38 PM | PERMALINK

I do agree that the US, being the biggest beneficiary of cheap energy, also has the biggest distance to fall.-Tripp

The POSITIVE flipside of that is that since we ARE so wasteful, we can cut back quite severely on imported hydrocarbons and it wouldn't hurt us as badly as other nations that are already highly efficient with hydrocarbon resources. Think about all of those motor homes on the freeways every morning with one person in them. The most positive thing that we can do IMO is to drastically cut consumption of imported oil by transportation fuel rationing. That would result in TRUE carpooling, vanpooling, use of public transit of folks going to work. You keep more money in your pocket and you improve our trade balance in process. There is also a multiplier effect in that you aren't throwing money down the rathole for wear and tear for long commutes. Transfer/shift that savings into energy infrastructure improvements. We've got the leverage-it is whether or not we have the nuts to sacrifice *convenience* collectively for a collective gain and collective invesment. Republicans are tone-deaf to these untapped possibilities.

Posted by: Doc at the Radar Station on February 7, 2008 at 10:46 PM | PERMALINK

They've been stripped of delegates to the Democratic Party's nominating convention, in which the Democratic Party's nominee for the Presidency will be elected. Which is, precisely, "private club election".

Dice, someone else pointed this out up thread. If this were true, which it isn't, what's really at issue is that states pay for primaries. Therefore, it ain't private. It's a publicly funded and part of the federal election process. Therefore, I fail to see, regardless of various court rulings, how parties can arbitrarily determine the "validity" of a primary or decide whose votes count. Elections for public office are not private matters. The parties have the right to put forth their favorite sons and daughters but, again, they can't tell the population whose votes count in a publicly financed election. In fact, I'd say that the parties really have no business in the matter at all other than promoting candidates.

Posted by: JeffII on February 8, 2008 at 1:01 AM | PERMALINK

I agree with Neil B. and cmdicely on the pro-consumer economic stimulus legislation. I'm not sure how far it would get us out of the hole that's been dug, but it would keep a lot of people from digging deeper.

Sadly, this economy has a lot further to fall before the excesses of the Greenspan-Bernanke era have been wrung out. If this economic cycle was a baseball game, we would just be finishing the Star Spangled Banner. We're not even in the first inning yet.

Posted by: DevilDog on February 8, 2008 at 3:27 AM | PERMALINK

"Therefore, I fail to see, regardless of various court rulings, how parties can arbitrarily determine the 'validity' of a primary or decide whose votes count."

Give it a rest. You don't have to tell us that you "fail to see"; you've made that quite clear. Since the Supreme Court has clearly and decisively ruled on this issue, you got nothing; all you're doing is whining.

Posted by: PaulB on February 8, 2008 at 10:28 AM | PERMALINK

Doc,

The POSITIVE flipside of that is that since we ARE so wasteful, we can cut back quite severely on imported hydrocarbons and it wouldn't hurt us as badly as other nations that are already highly efficient with hydrocarbon resources.

Sadly, no. You ever hear of Jevon's Paradox?

I'll try to state it simply, because it is very non-intuitive.

First, you are correct that if we all started driving high mileage vehicles and everything else stayed the same we will slow our energy usage.

The problem is that if we become more efficient in our energy usage everything else will not stay the same.

Our current economic model is essentially energy into the economy, create goods and services, and garbage out. If you improve the energy usage efficiency of the economy and keep the model the same you will just speed the process up.

With our current economic structure the money saved from improved efficiency will ultimately be put to other moneymaking efforts which in our economy means converting more energy to goods and services and garbage out.

Another way to look at it is the current recession has actually lowered the demand for oil and the price of oil has fallen slightly.

I hope I've explained this clearly. That is why I say the problem is systemic. Our economy today is built on constant expansion and the conversion of energy to goods and services and garbage.

Our economic model is a dead end and we are trapped in it.

Yeah, I suppose I have drunk the kool-aid and maybe I have gone off the deep end. I hope so.

But I've done some research on this and I'm a pretty smart guy trained in science and I'm damned if I can see a way around this.

Posted by: Tripp on February 8, 2008 at 10:43 AM | PERMALINK

Tripp, I understand what you are saying. You are looking for a paradigm shift that needs to happen. I'm generally talking about the short-to-medium term (a decade or two). If you make significant efficiency improvements that translate to energy as a much lower share of GDP you can repeat the scenario that happened in the 80s. The longer term fix is switching to *non-hydrocarbon* sources of energy, recycle more, and change *patterns* of consumer good consumption. My Mom has got a 40-year old American made toaster that still works great and that in todays dollars would be quite a bit more expensive than the Chinese toaster that just died on me that I bought 7 years ago for $30. More reliable consumer goods that are made once and used for a much longer time has to smarter, more efficient, and less wasteful.

Posted by: Doc at the Radar Station on February 8, 2008 at 11:04 AM | PERMALINK

Doc,

I agree that it is beneficial to individuals to reduce their energy usage, but that leads to the tragedy of the commons. As I said, making ourselves more efficient and less wasteful and all the good things you said will inevitably lead to an expansion in the global economy. Economist see this as a good thing, because it means higher GDP, but it is really just hastening the end of the oil.

We need a contraction of the global economy to reduce our global energy use, and what politician or businessman or citizen can get away with saying that?

At present there are absolutely NO alternatives to oil as an energy supply, not even if you take them all together. They simply do not add up. Barring a miraculous discovery we will not have any alternative.

This is grim stuff, I know. The industrial age is ending. I suspect the carrying capacity of the earth to be about two to three billion people when this is done. Is barricading ourselves against a hostile world the best thing we can do? Maybe.

Posted by: Tripp on February 8, 2008 at 11:33 AM | PERMALINK

Tripp, I understand your argument. This seems to be a classic "economy of abundance" vs. "economy of scarcity" argument. The scarcity view is definitely more arguable with the high population and commodities consumption. I think a common shortcoming with scarcity, however is that it's difficult to measure and predict innovative processes that change the conditions of the system with time. Not all the feedback is negative, there are unforeseen positives. That's why I'm more optimistic. I think we will see an *evolutionary* change of the current economic model to fit not only the scarcer conditions but to also feedback positively with unforeseen innovation. Gotta go to a class..

Posted by: Doc at the Radar Station on February 8, 2008 at 11:59 AM | PERMALINK

Elections for public office are not private matters.

As has been repeatedly pointed out, primaries are not elections for public office. They are elections for delegates to a political party's nominating convention, which position as a delegate is not a public office but a private party function.

Posted by: Stefan on February 8, 2008 at 12:45 PM | PERMALINK

Doc,

I think a common shortcoming with scarcity, however is that it's difficult to measure and predict innovative processes that change the conditions of the system with time.

As a computer scientist for almost thirty years now I know all about innovation. Some of the things we practically ignore today are absolutely amazing. Incredible really.

But I'm a physic minor and have tried to keep up with the field as best I can. Thermodynamics just ain't consumer electronics. Would that it were but it is not. That is why I referred to a "miraculous discovery." At this point a replacement energy source for oil would be a miracle.

In my opinion the balloon is going down whether we like it or not. The only question is how bad will the crash be?

On a global scale the crash will be awful with billions and billions of deaths. How about in the US? While alternative energy sources cannot possibly replace oil they are certainly better than nothing. I'm talking about nuclear (for the moment although it too is not sustainable), solar and wind.

Any alternative that requires food and enables us to continue the wasteful use of cars is out in my book. In Minnesota 25% of our current corn crop goes to ethanol. The ethanol take two gallons of water to create each gallon of ethanol. The corn remnants that are fed to cattle may be responsible for the huge increase in e coli we've seen lately. Also, the price of corn has jumped which is not good if you are a buyer. Burning our food to fuel cars is a really stupid idea. How will a starving world look at us when we waste our food so we can drive a mile to the exercise center?

Hot air balloonists will sometimes hang a heavy rope over the side to cushion the blow when they land. As the rope coils on the earth the balloon essentially becomes lighter and lighter. We have got to build our own rope and hang it over the side or our landing will kill us.

Posted by: Tripp on February 8, 2008 at 2:16 PM | PERMALINK

Seconding Spencer's comments above regarding the apples and oranges nature of your comparison, you're contrasting a .5% growth in January sales with an annual inflation figure. Either an annual figure for same store sales or a monthly figure for inflation would have been more appropriate.

That said, if I had a gift card right now, I'd buy groceries.

Posted by: Brendan on February 8, 2008 at 8:06 PM | PERMALINK




 

 

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