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Open thread
- By Phillip Brownlee
- Posted May 12, 2007 at 1:04 a.m.
- Filed under Open thread
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Housing sales in Lawrence.Kansas may never return to the 24 miracle sale of yesterday. Irresponsible lending lending habits, a weak dollar and unacceptable construction quality may keep it in a slump for some time.
Not only that a Lawrence person attending an urban planning conference was surprised that Lawrence,Kansas was an example of how not to grow a community. Aside from new crummy constructed homes it is over built in housing and considered 30% over built in retail neither of which is a good economic indicator.
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The Falling DollarThe solution, not the problem
By Dean Baker
In the same way that men are prone to boast about the size of certain body parts, policymakers like to tout the merits of a strong dollar. While the former is usually harmless, promoting an overvalued dollar can be an incredibly destructive economic policy. Fortunately, the United States is moving away from its high dollar days, although not quickly enough, and not before vast damage has been done.
The value of the dollar is the main force equilibrating trade, keeping the value of imports in line with exports. When the value of the dollar rises, it makes U.S. exports more expensive to foreign buyers. For example, if the dollar rises by 30 percent against the euro, it will take 30 percent more euros for someone living in France or Germany to buy a computer or some other item produced in the United States. In this sense a rise in the dollar is equivalent to putting a tariff on U.S. exports—it makes them more expensive, and thereby reduces demand for U.S. exports.
The rise in the dollar has the opposite effect on imports coming into the United States. If it takes 30 percent fewer dollars to buy a euro, then items produced in Europe (e.g., German cars or French cheese) will theoretically cost 30 percent less in the United States. In this sense, a rise in the value of the dollar is equivalent to providing a subsidy for all goods imported into the United States. Therefore, the expected result of a high dollar is an increase in imports. (In reality, however, importers may not fully pass along to consumers the cost savings from a higher dollar in lower prices or the cost increases associated with a lower dollar in the form of higher prices.)
Unpleasant consequences
The United States deliberately embarked on a high dollar policy in 1995 when Robert Rubin took over as treasury secretary. Measured against the currencies of our trading partners, the dollar rose by 30 percent between 1995 and its peak in 2002. The rise in the dollar had exactly the effect predicted by standard economic theory—exports fell, and imports rose.
The high dollar policy has an important class dimension. The negative impact of the high dollar is felt by the sectors of the economy that most directly face foreign competition, primarily manufacturing and therefore manufacturing workers. The United States has lost more than 2.8 million manufacturing jobs since 1995, almost one-fifth of its total, largely because of the overvalued dollar. Furthermore, the loss of millions of jobs that offer relatively high wages for workers without college degrees has placed downward pressure on the wages of less-educated workers in general. In short, the high dollar has played an important role in redistributing income from less educated workers to highly educated professionals (e.g., doctors, lawyers and economists), who are largely protected from foreign competition.
The high dollar has caused the U.S. trade deficit to soar to unprecedented levels. In the third quarter of 2004 the current account deficit (the broadest measure of the trade deficit, which includes international income flows like interest payments and money sent home from immigrant workers) was running at an annual rate of $660 billion, or 5.6 percent of gross domestic product (GDP). Trade data for October and November indicate that the fourth quarter deficit will be even larger.
The current account deficit is similar to a budget deficit. The United States can run modest budget deficits (2 to 3 percent of GDP) indefinitely. It can also run large budget deficits for a short period of time, but it cannot run large budget deficits indefinitely. After a time, lenders become wary of the government’s ability to repay its debt, and they demand higher interest rates on government debt, such as treasury bonds, pushing up interest rates throughout the economy.
The current account deficit is financed by foreigners buying up U.S. financial assets. In the late ’90s the deficit was financed primarily by the willingness of foreign investors to buy into the stock bubble. When the stock market collapsed, many foreign investors started buying U.S. government bonds. But in the last year and a half, they have become less willing to buy government bonds—in part because of the fear of losing money on the falling dollar. Foreign central banks, in particular the central banks of Japan and China, have picked up the slack, buying up hundreds of billions of dollars’ worth of U.S. government debt in the last two years. This has temporarily sustained the value of the dollar and kept interest rates lower than they would be otherwise.
In the short term, the foreign central banks are helping support the U.S. economy, and therefore their own export markets. Without their support, the dollar would fall more sharply. This would lead to higher import prices, which would in turn lead to higher inflation as consumers and businesses are forced to spend more money for the same goods. Higher inflation would lead to higher interest rates on home mortgages and car loans, since investors typically expect that their return on loans will provide a premium above the rate of inflation. The resulting falloff in home and car sales will bring the already weak recovery to a quick end.
In the long run, however, relying on Japan and China to finance the U.S. budget deficit creates greater problems. Japan and China are under no obligation to pay U.S. consumers to buy their products (this is the effect of their current policy of buying up U.S. government bonds). They can just as easily pay anyone else to buy their products, including their own consumers. While Japan, China and other major exporters to the U.S. cannot develop new markets overnight, they certainly can develop alternative markets in the span of a few years. When these countries become less dependent on the U.S. market, they can dump their dollars any time they find it convenient. In the meantime, these countries are accumulating almost $2 billion a day, which may eventually be dumped on international financial markets.
It will not be pretty, but the best thing for the United States would be a quick fall in the dollar, which would provide a rapid correction in the trade deficit, by raising the price of imports and making our exports cheaper to people living in other countries. While this rise in import prices will result in higher inflation, there is no way that an increase in import prices can be avoided. The high dollar policy lets us live beyond our means in the short term by providing us with imports at extraordinarily low prices (just like a budget deficit lets us avoid taxing enough to pay for government spending), but we cannot indefinitely borrow money to import goods. It is best to reverse this high dollar policy and let the dollar fall before we accumulate even more debt and lose even more industry to foreign competition.
Cause vs. effect
Unfortunately, the media has largely clouded the policy debate over the dollar by confusing cause and effect. Numerous reporters have blamed the fall in the dollar on the current account deficit, which in turn is blamed on the budget deficit. While such stories rescue Robert Rubin’s reputation, they defy basic economic logic.
A budget deficit is supposed to lead to a current account deficit precisely because it raises the value of the dollar. According to the textbook story, a budget deficit raises interest rates, which in turn causes foreign investors to buy U.S. financial assets (higher interest rates makes U.S. assets more attractive to foreigners). When foreigners buy U.S. financial assets, the dollar rises, leading to a current account deficit. In other words, there is no way that a budget deficit can lead to the current account deficit, except through an overvalued dollar.
In short, this is one problem that cannot be blamed on President Bush—except in his failure to take steps to correct the imbalance earlier. The Clinton administration deliberately pushed a high dollar policy that, like the stock bubble, gave Americans a short-term illusion of prosperity, making imports cheap and keeping inflation low. Just as the inflated stock prices of the tech bubble could not be sustained indefinitely, it will be impossible to sustain the overvalued dollar for long. The return to reality will be painful, but the pain will only be greater the longer it is delayed.
Dean Baker is co-director of the Center for Economic and Policy Research and co-author of Social Security: The Phony Crisis (University of Chicago Press, 2000).
Speaking of going down the crapper…
Renova is releasing an all black toilet paper. I have pretty much spent the entire day pondering this concept, dreaming and wondering what kind of advantage using black would have on me and my posterior end. Well after finally reading the Renova press release I have unfortunately come to find out that this toilet paper doesn t have a point.
BLACK TOLIET PAPER
“Elegant, sophisticated, rebellious, alternative and eternally fashionable, black has become virtually synonymous with chic and style. But while this colour is often present in avant-garde creative work, no one has ever dared to use it for toilet paper until now. Black in the loo, how chic and sophisticated can you get?
Hey Renova, when I want to be chic and elegant while in the loo, I will probably wear a dress, not use black TP. “
Military: 5 U.S. Soldiers Killed After Unit Attacked South of Baghdad; 3 Others Missing05-12-2007 7:17 AM
BAGHDAD (Associated Press) — An attack on a unit of U.S.-led forces patrolling outside the Iraqi capital before dawn left five soldiers dead and three missing, the military said.
The attack on the patrol of seven U.S. soldiers and an Iraqi interpreter soldier occurred near Mahmoudiya, in a Sunni insurgent stronghold about 20 miles south of Baghdad, the military said.
Troops were searching for the three missing soldiers, the military said.
“O God, our Heavenly Father, we remember before Thee this day,those who laid down their lives in the service of their country.
We remember their courage and devotion to the Sovereign and the country they served.
We pray that their labours be not in vain but that their spirit may live on in us and the generations to come.
We pray that liberty, truth and love may spread over all the world ’til war shall cease to be.We remember our brethren who are in sickness or distress.
We remember the widows and other dependants.
We dedicate ourselves to Thy service in the name of those whose memory we revere.
How about a prayer for all the Iraqi men, women, and children that have died needlessly in this war, also?
To fight today’s wars with an all-volunteer force, the U.S. Army needs more quick-thinking, strong, highly disciplined soldiers. But creating warriors out of the softest, least-willing populace in generations has required sweeping changes in basic training.
The Army We Have
by Brian Mockenhaupt
[...] Turning civilians into soldiers and teaching them to kill has always been difficult work, but these new challenges and demands have made it harder still, so the Army has made sweeping changes in the basic combat training that every recruit must go through. Drawing on the experience of battle-hardened veterans, the Army is incorporating the lessons learned in Iraq and Afghanistan. But at the same time, its overwhelming need for more soldiers puts limits on how tough its training can be. What if the physical and cultural demands of becoming a soldier intimidate potential recruits from signing up, or cause too many to wash out once they join? After all, many of today’s military jobs require more brainpower and technical skill than warrior ethos. (The tooth-to-tail ratio of combat soldiers to support troops has dropped steadily since the Civil War and is now less than 1-to-7.) Is it worthwhile to make a soldier march 20 miles, even though his or her actual job may never call for such a march? The Army’s answer to these questions, for now, is to offer its recruits a less hostile environment that won’t scare off as many people or make them quit: less shouting, less running, more encouragement, more understanding.
Some weak or undertrained soldiers have always gotten through basic training. When they show up at their assigned units, their comrades usually bring them up to speed. But doing so takes time and detracts from a unit’s overall preparedness. And now the Army finds itself facing a double bind: Not only does the new approach to basic training let greater numbers of less-fit soldiers get by; today’s accelerated deployment schedules give units less time for collective training, let alone remedial attention. This winter, for example, two combat brigades had to skip their counterinsurgency and desert training at Fort Irwin, California, in order to deploy to Iraq as part of President Bush’s “surge” strategy. So far, there’s only anecdotal evidence that the changes in basic training are infiltrating more of the weak and the incompetent into the Army’s frontline units.
http://www.theatlantic.com/doc/200706/mockenhaupt-army**************************************************Military: 5 U.S. Soldiers Killed After Unit Attacked South of Baghdad; 3 Others Missing
05-12-2007 7:17 AM
BAGHDAD (Associated Press) — An attack on a unit of U.S.-led forces patrolling outside the Iraqi capital before dawn left five soldiers dead and three missing, the military said.
Bring back the draft, we’ll be out of Iraq in a heartbeat. If everyone had to share the sacrifice, we’d never have invaded in the first place…as long as people can stay detached to focus on the important things like how long Paris Hilton is going to be in jail…the war will just drag on and on and on.So do you think that the soldiers in Vietnam were less effective because most didn’t volunteer to go? What a slap in the face to all the Vietnam vets!
NEW YORK (CNN) — As former Massachusetts Gov. Mitt Romney tries to distinguish himself from his Republican rivals in the race for president, he’s also distancing himself from President Bush.
On the topic of Iraq, Romney gave perhaps his strongest criticism yet of the administration in an interview with CBS’ “60 Minutes.”
“I think the administration made a number of errors,” he told interviewer Mike Wallace. But, he said, Bush isn’t solely to blame.
“Well, he’s the person where the buck stops,” Romney said, “but it goes to the secretary of defense and the planning agencies, the Department of State — it’s the whole administration.”———————————I don’t know how we can have a presidential election in 08. I know the Democratic candidates are going to point out everything that Bush is doing wrong, but how are the Republican candidates going to criticize Presidnet Bush and not get called “Bush Basher”? Seems to me that Mr. Romney is doing a little bit of basher himself.
Mary
You should post one ……
Inventor of Mother’s Day Wants You To Stop Wasting Money
Americans are planning to spend an average of $139 on Mother’s Day gifts this year. That’s a stunning $16 billion national spending frenzy that would have horrified Anna Jarvis, the founder of Mother’s Day.
Anna lobbied for the creation of the holiday as a tribute to her mother and mothers everywhere. Her efforts paid off in 1914 when President Wilson officially designated the second Sunday in May as Mother’s Day.
Later on, after seeing her holiday cheapened by rampant commercialism, Anna denounced her own holiday. She wrote:
I wanted [Mother's Day] to be a day of sentiment, not profit.
A printed card means nothing except that you are too lazy to write to the woman who has done more for you than anyone in the world.
And candy! You take a box to Mother — and then eat most of it yourself. A pretty sentiment.
What will you do to route charlatans, bandits, pirates, racketeers, kidnappers and other termites that would undermine with their greed one of the finest, noblest and truest movements and celebrations?
Ironically, Anna would spend the rest of her life fighting against the holiday she created. She tried claiming copyright over Mother’s Day and started protesting so vigorously against it that she once got arrested for disturbing the peace.
http://news.yahoo.com/edcartoons/ettahulme;_ylt=AkRe.WIZ2OddKS2G9gMhaeYDwLAF
Sam is in front of a Rep gathering in Wisconsin and tells them what a great quarterback Peyton Manning is. Wisconsin. Sam, you’re not in Kansas, Toto. In Wisconsin it’s Farve, not Manning. First you don’t believe in evolution, now you don’t know football. Kansas is looking dumb somemore, thanks to Sam.
What do the following have in common:Mothers Day,Amateur Radio Broadcast,Utz Flower Shop in Pratt Kansas,KANS Radio Station in Wichita,KAKE TV and Romper Room,Hollywood?To find the answer, read this article about a native Kansan who has led a very interesting life.
Almost forgot,see article at http://inpratt.com/site/who/pro_member/miltm/my_stories/more_recollections_of_pratt_from_david_dunn
Sign the petition to get Steven Milloy off Fox News
And ask family, friends, etc., to also sign it.
‘Throw Global Warming Junk Science off Fox News’http://www.ipetitions.com/petition/stopglobalwarmingjunkscience/“On May 9, 2007, Rupert Murdoch, CEO of News Corp. which owns and operates Fox News Channel announced that his company will join the fight to reduce greenhouse gas emissions.
Murdoch stated: “Climate change poses clear, catastrophic threats. We may not agree on the extent but we certainly can’t afford the risk of inaction…”
The first thing Murdoch and News Corp. can do to show that they are truly committed to fighting global warming is ending its reporting of misinformation about the science behind global warming.” (continues)
Info on Milloy,http://www.sourcewatch.org/index.php?title=Steven_Milloy
Steven J. Milloy what a rat!!!
“How about a prayer for all the Iraqi men, women, and children that have died needlessly in this war, also?”————
I don’t know a Muslim prayer for the dead – how about just a plain old Christian imprecatory prayer?
Would that be okay?
Mary — next time you’re on your own :)
For the innocent victims of war—————Lord God, your own Son was delivered into the hands of the wicked, yet he prayed for his persecutors and overcame hatred with the blood of the Cross.
Relieve the sufferings of the innocent victims of war; grant them peace of mind, healing of body, and a renewed faith in your protection and care.
Grant this through Christ our Lord.
—-Prayer for refugees and victims of war
Lord God, no one is a stranger to you and no one is ever far from your loving care.
In your kindness, watch over refugees and victims of war,those separated from their loved ones, young people who are lost,and those who have left home or who have run away from home.
Bring them back safely to the place where they long to be and help us always to show your kindness to strangers and to all in needGrant this through Christ our Lord.
from:http://www.orlandodiocese.org/prayer_scripture/prayer/time_of_war.htm
http://www.moseshand.com/buildup/prayer.htm:
Imprecatory Prayer The Christian answer to persecution, injustice and tyranny.
……. Imprecation: A curse, denunciation that conveys a wish or threat of evil).Imprecatory prayer: To pray for evil or misfortune (malediction, anathema, execration)
……Imprecatory prayer is a last resort appeal to God for justice. The so called ‘curses’ are simply the just penalty called for in the scriptures for the alleged crime. Imprecatory prayer is an appeal to the court of divine justice (1) for protection and (2) the appropriate punishment for the criminals.
Imprecatory prayer is most often used when the criminals are the rich and powerful or corrupt men in government. The prayer asks God to solve the problem and bring the criminal to repentance, or to judgment.
Imprecatory Prayer and Capitol Hillby Edward T. Babinski
http://www.edwardtbabinski.us/religion/capitol-hill-prayer.html
“……In 1994 the Capitol Hill Prayer Alert, a Washington D.C.-based prayer group, produced a list of twenty-five Democratic incumbents, and urged prayer partners to petition God to bring evil upon the people on that list. “Don’t hesitate to pray imprecatory Psalms over them,” wrote one of the group’s founders, Harry Valentine, in the group’s newsletter. Imprecatory means to “call down evil upon.”
Such Psalms include: “Let his days be few; and let another take his office.
Let his children be fatherless, and his wife a widow.” (Ps. 109:8,9) “Let death seize upon them, and let them go down quick into Sheol.” (Ps. 55:15)
“The righteous shall rejoice when he sees the vengeance: he shall wash his own feet in the blood of the wicked.” (Ps. 58:10) (How is this different from sticking pins in voodoo dolls, or whipping up a witch’s brew and mumbling curses? I guess it’s all right for Christians to “curse” people so long as they use a “Biblically sound” method. ……”
“Hey Renova, when I want to be chic and elegant while in the loo, I will probably wear a dress, not use black TP. ”
And here I was going to sit down and enjoy dinner, but picturing repube in a dress just killed my appetite.
Ken – I was wondering if anyone was paying attention.
Should’a known it would be you.
However, Mary specifically asked for a prayer for those who already died.
That somehow implies that prayers of the living – can influence the decision of God, if, indeed, God DOES judge anyone, in His decision of what their final resting place will look like.
That kind of prayer in Roman Catholicism would be one of the living praying the dead through Pergatory.
I was not aware there WAS a parallel in Islam for that doctrine.
As far as the imprecatory prayer – I was just joshin. I hope no one really does that kind of thing.
Publican,”Well after finally reading the Renova press release I have unfortunately come to find out that this toilet paper doesn t have a point.”
Good, good. I much prefer my toilet paper without points, as opposed to the 80 grit kind found in most public facilities.
Speaking of imprecatory prayers, for all of you who have yet to run across Mark Twain’s War Prayer, here’s the link: http://www.midwinter.com/lurk/making/warprayer.htmlIt should be mandatory reading in every school and church in the country!
Cosmos just can’t stand it when someone trained in statistics like Milloy uses the IPCC own numbers and proves them faulty.
That’s right, the IPCC own numbers is disproving the talking points of the Man Made Global Alarmists. These are not made up numbers, it’s from, as Cosmos would say it, from thousands of credible scientists.
As I’ve said many times before, if one bothers to read the many scientific papers that the IPCC lay claim to, there are no words by these scientists that state that man made Climate Change is an absolutely certainty.
To counter attack these claims by Milloy, what do the Alarmists do? They attack his credibility of course and start their cute little petition.
In fact, the IPCC has started recently a paper called the Uncertainty principles. They are threatening those credible scientists by forcing them to use words like absolute certainty, most highly probable and etc.
If they don’t, those scientists may lose their funding and credibility as the attack dog IPCC wants to ram down the throat their religious belief of man made Global Climate Change.
There you have it, the philosophy of the IPCC -”Push our ideas or we will crush you!”
Reminds one of the good old days of Soviet Communism, doesn’t it?
Republican’s smarter than the vast majority of researchers studying global warming.
What a towering intellect this man is!
You’d think he’d be able to get a job . . .
Hey Capn? How are is your wife and my kids doing?
Hey Capn? How are is your wife and my kids doing?Posted by: Republican | May 13, 2007 at 03:46 PM
Is this an admission of adultery?
Republican,
“That’s right, the IPCC own numbers is disproving the talking points of the Man Made Global Alarmists.”
Quote those #’s.Milloy has no credibility — he uses inaccurate pseudo-science to con fools like Republican.
Republican: “In fact, the IPCC has started recently a paper called the Uncertainty principles. They are threatening those credible scientists by forcing them to use words like absolute certainty, most highly probable and etc.”
In Republican’s very twisted world, “guidance” = “forced”.
http://ipcc-wg1.ucar.edu/wg1/wg1-report.html(emphasis added)’Uncertainty Guidance Note for the Fourth Assessment Report’The following notes are intended to assist Lead Authors (LAs) of the Fourth Assessment Report (AR4) to deal with uncertainties CONSISTENTLY….Use the appropriate level of precision to describe findings…Communicate carefully, using CALIBRATED language…Exceptionally unlikely < 1% probability “
Tom (re Republican’s post)
“Is this an admission of adultery?”
Republican cannot defend his opinion re GW with credible science, facts, logic, etc — so he instead makes false personal attacks.
Ease up on Republican, you guys.
You shouldn’t make of fun those who have to live on the government dole . . .
No Tom, the Capn’s Wife ask for a favor as Capn couldn’t deliver the seed. I was more than happy enabled him to have a family of future thinkers and doers – Republicans. :D
Yeah Cosmos, calibrated language…
Too bad a lot of your “proven science” falls on the low side in likelihood events. That’s why the IPCC has to make these charts of nonsense and “Calibrated” language.
It’s like temperature rise, is 3 times as much as it was 3 years ago. What they don’t tell you is what that means in Degrees F.
They try to scare the public by making hundredths of a degree sound impressive.
No Tom, the Capn’s Wife ask for a favor as Capn couldn’t deliver the seed.Posted by: Republican | May 13, 2007 at 06:50 PM
Just when I think I’ve seen you at the far boundary of being foul and vulgar, you manage this new low. Not only do you try to smear another poster, but you demean and degrade his wife in the process. You’re a foul and nauseating man, Republican. You disgust me.
Republican,
“Too bad a lot of your “proven science” falls on the low side in likelihood events.”
Actually, what the climate models in the past projected for air and ocean temperature rises fairly closely matches the observed rises.
Perhaps you’ve been conned by Lindzen’s obvious deception re Hansen’s 3 scenarios?
But unfortunately, scientists are sometimes wrong.They did not expect the Larsen ice shelf to break up so quickly — nor the big speedup of land-based ice, after Larsen broke up.
And this important error, which is a positive feedback that will speed up GW.
‘Arctic Ice Retreating More Quickly Than Computer Models Project’http://www.ucar.edu/news/releases/2007/seaice.shtml
I implore you guys not to make fun of Republican.
His LAME insults show his CRIPPLED mind, his DISABLED moral sense, and his HANDICAPPED self-respect.
I understand that someone like Republican who is too DEFECTIVE to support a wife and a family would strike out at what he most desires and can never acheive.
Really, wouldn’t you be a vicious hate-monger if you had to live his life?
We should respond to him with pity . . .
Republican,
I apologize for my error — it was Pat Michaels (not Lindzen) who first misused Hansen’s graphs.
This is old (1999) but explains it,http://www.giss.nasa.gov/edu/gwdebate/“All of the maps of simulated climate change that I showed in my 1988 testimony were for the intermediate scenario B, because it seemed the most likely of the three scenarios.
But when Pat Michaels testified to congress in 1998 and showed our 1988 predictions (Fig. 1) he erased the curves for scenarios B and C, and showed the result only for scenario A. He then argued that, since the real world temperature had not increased as fast as this model calculation, the climate model was faulty and there was no basis for concern about climate change, specifically concluding that the Kyoto Protocol was “a useless appendage to an irrelevant treaty”. ”
Republican hates the U.N and Kyoto, so I guess he prefers to believe Michael’s inaccurate “erased” version?
‘Patrick Michaels, Paid by fossil fuel industry’http://www.desmogblog.com/node/1567http://www.sourcewatch.org/index.php?title=Pat_Michaels
‘FACTSHEET: Patrick J. Michaels’http://www.exxonsecrets.org/html/personfactsheet.php?id=4