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Printing money is not as crazy as it may sound

August 21st, 2011

MacroeconomicsI am not an economist.  However, for reasons I dare not delve into too deeply, my lady finds discussions of economics a turn-on.  The downside is that now I not only have to compete with George Clooney and Toby Keith, but also with the likes of Ezra Klein and Brad DeLong.  If one of them ever develops tech skills, I’m toast.  In the meantime, “Get in line boys.”

As I’ve written in this space before, one of the damnable things about macroeconomics is that it is so blastedly non-intuitive.  Most of us are schooled or experienced in microeconomics (open systems), whether that be managing a household budget or running a business.  Macro, or closed systems like the U.S. economy, work on a very different set of rules and have a very different set of control levers to work with.  It’s abstruse stuff, and my hope is that maybe I can do a bit of the heavy lifting here, so some elements of macroeconomics make a little more sense.

Presidential hopeful Rick Perry made headlines this week for his statement that if the Fed decides to print more money, it should be seen as a treasonous act. Perry’s not alone here.  While most politicians are distancing themselves from claiming it’s treasonous, many are advocating that the Fed should not take further actions like “Quantitative Easing” to increase the money supply.

So what does all that mean?  Printing money out of thin air sure sounds like a dumb solution.  Doesn’t that just make my hard-earned money worth less? How would that help the economy?  These are all reasonable questions.  Questions which I’ve been struggling to get my own non-economist head around by reading what actual economists are saying.  The trouble is, folks like Matt Yglesias and Scott Sumner often write for an audience of fellow economic geeks.  And it’s often damn hard to wade through the jargon to figure out the underlying principles at work.  But I think I have a handle on it, and want to share my translation and understanding.

First, “printing money” is a euphemism.  No actual currency gets produced.  Rather, the Federal Reserve has a number of levers by which it can alter the supply of money.  Think of the U.S economy as the proverbial pie.  Each slice of pie represents a unit of money, like a dollar.  Increasing the money supply doesn’t change the size of the pie, but it does change the size of the dollar (slice).  If you carve the pie into more slices, then each slice has less in it.  “Quantitative Easing” is one of the levers the Fed can use to increase the size of the money supply.  And yes, the effect of this is to lessen the value of the dollar.

A weaker dollar seems like a bad thing.  It offends the American sensibilities to think of anything about us as weak.  But in cold economic terms, there are pluses and minuses to a devalued dollar.  A weak dollar doesn’t translate to a weak economy.  In fact, in our present situation, it could translate to a stronger one.  But first, a word about… inflation.

Another term for devaluation is inflation, a word that also sounds bad.  Inflation is especially troubling to those of us that lived through the 70′s and early 80′s where double-digit inflation was rampant.  We also saw the economic collapse of Argentina, Zimbabwe, and other countries because of hyperinflation.   But we need to remember that inflation is a lot like oxygen.  Too little can be just as deadly as too much.  Japan’s “lost decade” of the 1990′s was a period marked by very low inflation, economic recession, low productivity, and high unemployment.  Sound familiar?

Inflation in America has been at historic lows for the last couple of years.  The key is to find the sweet spot of around 3% and hold that.  In many respects, this is what the Fed’s job is.  It tries to maintain that small positive healthy inflation rate.  It’s a balancing act.  And an over-correction could send inflation spiraling in either direction.  This is primarily what conservative fear at the moment.  That an attempt to nudge inflation up will start a cascade reaction that will send us back to the 70′s.  No one wants that.  (Unless you’re invested long in polyester and hairspray commodities.)

But why is some inflation good, and why would a little extra be good right now?

In terms of the flow of money in an economy, the net effects of inflation in absolute dollars are a rise in the cost of goods, a rise in the cost of labor (wages), and a rise in value of assets (homes, stocks).  Granted, these don’t always rise uniformly.  Prices tend to rise ahead of wages, causing short term pain.  But wages do follow suit, eventually making the inflation kind of a wash.  Remember back in the early 80′s when getting a 10-15% annual raise was common?

What doesn’t change in a good way with inflation is cash.  In other words, if you’re sitting on a lot of liquid assets, those assets become worth less.   Who’s sitting on cash?  Well, big corporations are sitting on over a $1 trillion, and of course banks have a lot of fixed cash assets, not the least of which are all the mortgages out there.  If you’ve loaned out $100k at 4% for 30 years and inflation suddenly hits 5%, you’re losing money.

On the flip side, inflation would be great for consumers who are currently sitting on near record household debt.  As an example, many people are currently underwater on their mortgages.  Let’s say you owe $200k on a $175k house.  Inflation doesn’t change the amount you owe, but it does increase the value of the property.  So now you’re not underwater anymore.  Further, if you have a low-interest home loan, a higher inflation rate suddenly makes that nearly free money.  It doesn’t decrease your absolute debt, but it does decrease your relative debt, especially as your wages start to rise.

Finally, inflation also punishes people who are sitting on cash.  As almost everyone has said since the economy went south in 2008, we need cash to flow to stimulate the economy.  Think of money like the blood of the economy.  To the body as a whole, it’s less important exactly how much blood you have, than that the blood you have is circulating vigorously through your system.  The U.S. has an ample blood supply, but it’s currently pooled.  We need to get it pumping, and inflation helps that.

There are also advantages to America relative to the world.  A weaker dollar makes our goods cheaper to sell to other countries, and imported goods more expensive here.  This is an immediate boon to exporting companies.  However, given that we import a ridiculous portion of the goods bought in this country, it will drive the cost of those goods higher.  The good news is that there will be less incentive to design, manufacture, and service goods overseas, and that would mean more jobs for Americans as jobs start to come back onshore.  But again, that’s a short term pain for long term gain bargain.

Hopefully by now, you’re starting to think that maybe this whole printing money thing doesn’t sound quite so treasonous. Maybe you’re thinking it’s even worth a shot, or at least that it’s a perfectly reasonable tool to use.  Ironically, Rick Perry himself believes it will have a positive effect on the economy.

Perry said the central bank’s leader would be committing a “treasonous” act if he decided to “print more money to boost the economy.” Such action, the governor told a crowd in Iowa, would amount to a political maneuver aimed at helping Obama win re-election.

Perry is explicitly saying that increasing the money supply would boost the economy.  What he finds treasonous is only that he knows a better economy would help re-elect Obama.  All of which brings us to why increasing the money supply is politically unpopular.

  • It aids Obama’s re-election, so Republicans are opposed
  • It hurts banks so they are opposed
  • It hurts companies who have moved all their operations offshore, so they are opposed.
  • It raises prices ahead of wages and new jobs, so in the short term, voters will be opposed.
  • Voter anger and the resultant news cycles and Gallup polls will crucify incumbents, so they are opposed.

None of these reasons make increasing the money supply bad policy.  They simply mean that this is a situation where the needs of the many outweigh the needs of the few.  Unfortunately, the few are largely in charge of the policy.  However, the beauty of the money supply is that changing it does not require Congressional approval.  The Fed has the authority to act on its own.  Although the Fed is largely populated with people from the financial industries who appear to be way more scared of large inflation than lack of it.  But still, there is less of a barrier to action here than almost any other plan available.

Anything we do to fix the economy is going to cause some pain somewhere.  Increasing the money supply is perhaps the most actionable thing we can try.  It may be insufficient, and there are some risks involved.  But dammit, let’s at least do something.  I’m tired of our strategy being all hope and no change.

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Headbangers Ball: The GOP is Rockin’ to the Beat

August 19th, 2011

HeadbangerThe blogs are perpetually alight with the gaffs, lies, misstatements, and factually challenged utterances of the GOP Presidential candidates field.  Rick Perry and Michele Bachmann are so reality challenged it isn’t even fun to pick on them anymore.  (Well, almost…)  Poor Rick Santorum, no stranger to wacky rhetoric, can’t get a sound-bite in edgewise.  Why are people remotely listening to these whackjobs other than for the sheer entertainment value?

Then, I heard former GOP Chairman Michael Steel speak this morning.  He was being asked about Perry’s latest claims about Creationism being taught in Texas.  Steel noted that it’s only August, 2011.  At this point, candidates are not yet speaking to wide audiences.  You have to take what they say in the context of who was listening in the audience.  And what Perry said resonated with the crowd he was speaking to.  Hmmmm.

On a completely different vector, earlier today I was included on the distribution of an email touting the horrors of HR 4646.  The essence being that Obama is trying to take all your money and ruin the country.  (Insert audible sigh here.)  I readily debunked it, but I’m still responding to people defending the initial email, regardless of the facts.

What occurs to me is that politicians, pundits, and emails thundering about God and country, warning of apocalyptic conspiracies, and shouting from their ideological towers are the political equivalent of a musician standing on a stage before a crowd of half intoxicated college students and screaming, “Are you ready to rock?”

Hell yeah.  Where’s my lighter cell phone?  You’re in the moment.  You feel the beat.  You don’t really give a rat’s ass what the lyrics are.  It feels good.  It feels right.  And if you’re not at the concert, you just don’t get it.

The difference is that the morning after a concert, the lyrics really don’t matter.  But the morning after an election, they matter a great deal.

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Forward to the Past

August 9th, 2011

Current Conservative dogma is that Doc & MartyFederal government is bad.   The belief is rooted in the premise that it is the wrong level at which to govern.  Policy should be made at the state level, or better yet, at the county or town.

There is a visceral appeal to this position.  If government is about me, I want it close to me so I can be heard.  I don’t wish to be one of millions of voices, but rather one of hundreds or thousands.  That way, what’s important to me and my neighbors will get done.  Someone will care about me.

The result of this view is Conservative opposition to federal meddling in education, roads, health care, commerce, environmental conservation, banking, and almost anything else excepting the military.

And a century and change ago, this view made perfect sense.  But the world has changed since then, and policy needs to change with it.  In fact, decentralization is decidedly the wrong trend in today’s world.

Back in the day (circa 1900), you could spend the better part of a day searching your hometown for something made more than a few hundred miles away.  When someone left town, they moved to the next county.  Living your life in that time involved a largely local dependence.  Events happening half a continent or half a world away were interesting news items, but bore no real consequence on your life.

Look around your town or workplace today.  Try to find something of local origin.  Hell, try to find something strictly made in the USA.  Your dependence is easily national, and rapidly becoming global.  You may live in New York, but you care that roads are maintained in Kansas so that a truck can bring you a new Samsung TV.  Your car runs on imported oil.  Your new boss telecommutes from a different state.  And your Internet tech support comes from Mumbai.  Whether you like it or not, and even whether you realize it or not, you are dependent on a national and international infrastructure.  An infrastructure encompassing transportation, safety, education, economy, and much more.

Yes, local control is dwindling, but not because larger governments are usurping power.  Rather, it’s because where local governments used to contain all the dependent pieces, now larger governments do.  And effective management and control is only achieved if all the dependent pieces are under the umbrella.  The inevitable trend is toward consolidation.

Interestingly, this globalization trend has been recognized and embraced on the business side for decades.  No one is arguing that Microsoft should be broken up and managed as a loose confederation of state-specific companies. (“I’m sorry, you’re running Windows 7-Virginia, so I can’t read those files.”)  That the scale and scope of business and government should trend in opposite directions is nonsensical, and ultimately bad for both.

That said, there are still monumental dysfunctions in the way the federal government operates.  Early attempts at inter-country governments like the European Union or even the United Nations demonstrate that we are a long way from knowing how to govern effectively at scale.  The key point being that we have to set our collective mind to finding a way to make this scope of government work, and give up on the foolish notion that we can live in a 21st-century capitalist world, ruled by a 19th-century political system.

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The budget problems are all healthcare related

July 29th, 2011

Fix ItHealthcare spending in the U.S. accounts for 17.6% of the economy, and is projected to be 20% by the end of this decade.  These are not federal budget numbers, this is the whole economy.  $1 out of every $6 that’s spent in this country is spent on healthcare.

For context, that’s double the percentage spent in the average OCED country.  In absolute dollars, we spend 2.5 times more per capita than average, at $8,650/person.  And for all that money, we rank just under the average for life expectancy and infant mortality.

This is a pointless drag on the entire economy.  Not only for the government and private employers, but for workers as well.  One of the reasons wages have been so flat for the last decade is that money available for employee raises has gone into preserving medical coverage rather than increasing take home pay.

Yet this is also a big issue, perhaps the only issue, for the current budget problems faced by the federal government.  Government spending on healthcare (including employee plans, veterans benefits, as well as Medicare and Medicaid) is $1.17 trillion each year.  And this is projected to double over the decade.  Granted, these numbers are inclusive of state and local government spending as well, but this is still paid for with our tax dollars.

In other words, considering our 2.5x cost premium, there’s $700 billion/year sitting on the table if we manage to get our healthcare costs in line with our global peers.  Even assuming the federal portion is only half of that, the numbers dwarf any of the cost savings currently proposed by either party’s budget plans.  Couple this with the already planned savings for drawing down the wars, and our deficit goes away by 2020.

This is the only budget problem we need to be addressing.  It saves Medicare, Medicaid, Social Security, NASA, Pell Grants, and everyone else currently on the chopping block.  Do the math.

So why aren’t we focused on fixing this?  Primarily because the proven method of achieving the healthcare cost goals, the one used by pretty much every other OCED country we are benchmarking against, is some form of single-payer model.  And for reasons known mostly to powerful corporate lobbies for insurance, pharmaceutical, and medical device  companies, single-payer health plans are socialist Nazi plots to kill Grandma. Instead, we are committed to responsible prudent austerity founded on shared sacrifice… because Grandma prefers be bankrupt such that she is forced to choose between food and medicine.  After all, it is about having a choice.

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The country is not broke, but it is broken

July 24th, 2011

Broken ChainPopular wisdom has it that the US is largely now “owned” by China or other foreigners.  That we are basically borrowing from the world to stay afloat.  Thus, ushering in the specter of these lenders calling our loans due and breaking us.

It turns out that’s not quite true.  In fact, it’s not even a little true.  Business Insider actually looked at the data, and the perhaps surprising result is that two-thirds of the $14.3 trillion debt is held right here in the US.

Think of that a little differently.  $9.8 trillion of American government debt is held by US taxpayers.  The same people (well, some of the same people) ultimately responsible for paying off that debt.  The same people who would pay should the government opt to raise more revenue through taxes.

The government is the people in this country.  We hear all the time how the US debt is a legacy of burden on our grandchildren.  Yet, at least collectively, those same grandchildren are sitting on a massive asset which is the notes on that very same debt.  It would be as if you had $70,000 worth of gold buried in your backyard, a $100,000 mortgage you couldn’t make the payments on, and spent all your time whining about how you were broke.

Make no mistake, the current debt crisis is one of choice on many levels.  The government may well be broke, but the country is not.  And the government is broke only because it (or we) have chosen make it run that way.  This leaves us no license to bitch about it.

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Be careful what you wish for – Congressional Edition

July 22nd, 2011

Capitol DomeA new Washington Post/ABC News poll finds that nearly two-thirds of registered voters say they plan to “look around” to vote for someone other than their current member of Congress in 2012.

This is pretty understandable given the utter dysfunction of the 112th Congress and the debt ceiling gauntlet they have chosen to run us through.  However, it’s worth noting that this sort incumbent dissatisfaction is what got us here in the 2010 election cycle.

The 2010 elections were all about throwing out the incumbents and sending Washington a message that the voters were mad as hell and wanted things to be different.  The result being an extremely large crowd of 93 Freshman Representatives in the House and 13 fresh-faced Senators.  And well… it’s different in Washington, but is it what we wanted?

The mad as hell, ideologically driven, take no prisoners and accept no compromise spirit of the voters is arguably embodied in the newly elected legislators.  But the result has been virtual political paralysis.  The people sent to “shake things up” have failed to realize that beyond being a message incarnate, they are actually supposed to run a government and act in the best interest of the people.  And the very nature of that in any democracy is about compromise and negotiation, a subtle point of complexity apparently lost on the Freshman class.

The lesson here for us voters should be that while there’s lots of good reasons to revile the incumbents, it’s vitally important to replace them with someone competent and capable, not merely someone loud and angry.

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If the economy tanks, will Conservatives repent?

July 19th, 2011

Debt Ceiling Implications Poll

The scariest debt-ceiling poll results, ever

The debt ceiling talks appear to have stalled and the August 2nd date of economic doom draws neigh.  Wall Street bankers, The Fed, the Treasury Department, and most every economist on the planet believe that hitting the debt ceiling will have dire consequences, and that actually defaulting on the debt would be even worse.  Estimates vary in terms of the degree of catastrophe, but virtually no one in a position to be considered an expert on macroeconomics thinks that hitting the ceiling will be no big deal.

In that light, the poll results depicted here are truly frightening.  53% of Republicans, 43% of Independents, and even over a quarter of Democrats believe hitting the ceiling won’t cause a crisis.  Further, somewhere around 60 Congressmen have vowed to vote against any debt ceiling increase, no matter the deal.  Clearly they aren’t worried either.

Chauncey DeVega, over at AlterNet, thinks the reason is that evangelicals have a strong hold on the GOP, and that the fervently faithful have a mindset that ignores numbers that don’t agree with their ideology.  He posits that the Tea Party and other far right conservative groups are running on faith rather than fact.  While there may be some truth to that, it doesn’t explain the plurality of Independents or the chunk of Democrats beholden to the notion that banging into the debt ceiling is a non-event.

I personally think there’s also an element here of “The Boy Who Cried Wolf”.  Political issues have become so hyperbolic in the media that virtually every issue is positioned as a looming Armageddon of one sort or another.  Unless you’re following the minutiae of the debates, you’re bound to get pretty numb to all the doomsaying.

However, presumably our elected officials are above simply blowing in the media wind.  They have access to data and discussions those of us in the cheap seats do not.   They are in the position to be able to discern hyperbole from actual danger.  Yet this would not prevent them from being blinded to facts by faith.

GOP legislators faith-blindness goes beyond the debt ceiling.  Similar faith-trumps-data rationale fuels denial of global warming, belief that tax cuts don’t have to be paid for, belief that progressive tax codes constitute class warfare and destroy jobs, belief that trickle down economics is always the answer, and government regulation is always evil.

The problem is that proving that tax cuts actually lower revenue, or that CO2 contributes to global warming, requires many years of data.  And even then,the results are subject to interpretation and are not readily understandable by the average Joe.

Should we hit it, the debt ceiling presents an interesting test case.  If the experts are right, the impact will be felt in the very short term.  It will be widespread, affecting almost everyone, everywhere.  And the impact will be felt for awhile.  It will be virtually impossible to deny that such an impact was directly attributable to ignoring the debt ceiling.  The Conservatives who claimed it would be no big deal will be demonstrably and painfully proved wrong beyond any reasonable doubt.

Should that come to pass, the question is, will that shake the faith of Conservative politicians and supporters in their other sacred tenets?  Might they be willing to entertain the reality of global warming given the catastrophic impact of their blind faith in the debt ceiling non-crisis?  Or will this be swept under the rug much like the predicted May 21st end of the world predictions.  That was also proved wrong, but the faithful seem to somehow have accepted that failure with no apparent impact on their other beliefs.  Maybe a sufficiently strong faith is even able to overcome incontrovertible reality.

Either way, if the economy tanks, it should certainly cause the “Boy Who Cried Wolf” crowd to pay attention.  Maybe that bodes well for our collective political future if we can at least get the majority of the voters to begin operating from data-based rather than faith-based policies.  Although, it would be a hellish way to learn a lesson.

 

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The Anthony Verdict in Perspective

July 5th, 2011

Anthony VerdictCasey Anthony was acquitted today of both murder and manslaughter charges, thus concluding the highly publicized and emotionally charged trial concerning the death of her 2-year old daughter. This outcome is both outrageous and satisfying.

The outrage is pretty easy to understand judging by most any social media feed.  People all over Facebook and Twitter feel young Caylee Marie Anthony was not properly avenged because now no one will be held accountable for the atrocities she endured.  Further, the popular perception was that the conviction of Caylee’s mom was a slam dunk.  That’s certainly how the media portrayed it. And it was certainly my personal expectation as well.  From the news reports and analysis I wasn’t certain they’d get a Murder 1 conviction, but manslaughter seemed a sure thing.  In this respect, there’s a feeling that a guilty person is walking away.

But maybe in its own curious way, this can be viewed as a satisfying outcome.  By all accounts, it seems the justice system worked the way it should.  The difficult thing to keep in mind is that “the way it should” isn’t the same thing as “the way I wanted”.

Anthony was convicted in the court of public opinion long before the trial started.  Despite this, and all the TV cameras rolling in the courtroom, a jury of her peers deliberated the evidence presented and unanimously decided there was reasonable doubt.  That was not the easy decision.  It certainly wasn’t the popular or expected decision.  However, our judicial system is founded on the idea that 1000 guilty people should go free rather than a single innocent person be convicted.  Doubt, any doubt, about the certainty of guilt, is supposed to be a reason for acquittal.

Keep in mind, this was not a celebrity trial.  Anthony didn’t buy a dream team of lawyers, and she didn’t get off on any legal technicality.  She didn’t prey on the emotions of the jury because of her stardom; she had none. Instead, she came off cold, aloof, and decidedly unsympathetic.

Still, with all that against her, 12 people unanimously decided there was reasonable doubt.  Please pause and give that word its due weight.  Unanimously.  This was not a case where one or two bleeding hearts couldn’t be persuaded.  They all agreed.  Furthermore, they agreed to bear the probable scorn of those who had convicted her from their living rooms.  They agreed to go home and face their family and friends, and explain ad nauseum, why they did what they did.  They agreed to not take the easy way out.

And this, whether you like the outcome or not, is how our system is supposed to work. It’s not about vengeance or spleen venting.  It’s not about emotion or empathy.  It’s not about popular opinion.  It’s about truth and justice… the American way.

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No Good Deed Goes Unpunished

June 25th, 2011

Just MarriedLast night, New York State made history on a couple of counts.  Most prominently, it became the sixth and largest state to legalize same-sex marriage.

Secondarily, the passage of the bill happened because four Republicans crossed the aisle and signed on to the legislation in the State Senate.  These people should be lauded as they will doubtless face repercussions for stepping out of party ranks.  They did what they believed was right, without regard to their political futures.

However, while these two accomplishments are overdue and encouraging, the late night Albany session also produced approvals of several other policies which are going largely unnoticed in all the hoopla.

Buried on page two of this story is a brief mention that also approved was a tuition hike for SUNY Schools that will result in a 30% increase over the next five years.  For parents of teen children, this is not small potatoes.  This means a year’s expenses that currently cost $19k would rise to almost $25k by 2016.

Also approved was Governor Cuomo’s property tax cap.  The cap limits property tax growth to 2% or the rate of inflation in any year.  There’s no doubt that New York’s property taxes are ridiculously expensive, but as I’ve written about before, the tax cap is an ugly solution.  It virtually guarantees preemptive maximum tax increases every year because local governments and schools can’t take the risk of keeping taxes low and then not being able to cover expenses in future years.

So while marriage equality and non-partisan action are things to feel good about, plan to have your wallet drained for college tuition and property taxes.

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One nation, easily divided

June 20th, 2011

Kids Saying PledgeMashable reports, “Soon after NBC aired a pre-taped segment for a golf tournament that twice omitted the words “under God” from the United States Pledge of Allegiance, the Twittersphere erupted into a fury of controversy.” (See the video here.)

Meanwhile, my better half wondered aloud on her blog today why we consistently manufacture mountains out of mole hills.  There’s little to suggest this was an overt message as much as a poor editing choice.  As she notes, “one nation” and “indivisible” also get left out at points.  And no one is screaming that NBC is advocating a new civil war.

Yet I’d approach the question somewhat differently.  What if NBC did do this on purpose?  I doubt that’s the case, but so what if it is?  The majority of the outrage seems to be coming from Christian groups who are apparently maligned, abused, and oppressed because the phrase “under God” was left out.  Really?  Just because you can’t force everyone to be like you doesn’t mean you’re being discriminated against.  Despite Michele Bachmann’s efforts, this is (not yet) a theocracy.  The very fact the words “under God” are in the Pledge are a nod to the reality that some 90% of Americans worship God in one form or another.  But it’s not a requirement to be an American.

Even as an atheist, I don’t and won’t advocate for the return of the Pledge to its pre-1954 godless state.  This is primarily because “under God” is a harmless and somewhat meaningless phrase when spoken the the context of a mass pledge.  It has personal meaning to many people when they say it because they know what they mean by it.  Fine. No harm done.  But hearing the person next to you say “under God” doesn’t remotely mean they share your meaning.  By “God” they could be referring to Shiva, Odin, or the rabbit’s foot in their pocket they happen to worship.  Or they might just be reciting it they way they learned in school and the words have no meaning whatsoever.  It might be just a rote saying.  And if hearing someone say something is meaningless, can it really be meaningful when they don’t?

 

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Taking the Sheen off of Reagan

June 11th, 2011

President Reagan

Who knew Reagan was a MaSheen?

I was reading a somewhat interesting article on my computer called “The Backfire Effect,” when my 16-year old son wandered into the room.  He did what he always does… made a lazy circle around behind me and perused whatever was on my screen.

It just so happened, I was far enough down the page that the picture of Reagan (shown to the right) was on the monitor.

It was at that moment I became comforted my boy had not fallen in with any Young Republican groups at school, nor had he been sneaking out at night to attend Tea Party rallies.

He looked at me and said, “Is that Charlie Sheen?”

And I have to admit, there is a resemblance.  Maybe that’s why Reagan has become a sacred idol of the Conservatives.  He’s got tiger blood too.

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Chase can kiss my pasty white ass

June 9th, 2011

mad-man-pulling-hair-out

Artist's rendering of me on the phone with the bank.

Oh, it’s on.  These sociopathic banking bastards are tap dancing on my last remaining nerve.

At the beginning of May, my automatic payment to Chase for my credit card statement balance failed to post. I caught this quickly, reported it, and electronically transferred the $463.20 I owed to them.  The root cause of this was a glitch in one of Chase’s own systems.  But the fact remained, it was 18 hours past the due date.

I soon discovered I had then been charged $33.39 in fees and interest.  That works out to 9.6% interest PER DAY.  Being robbed at gun point and pistol whipped would have been a better feeling.  But I had the inner peace and satisfaction that comes from knowing you’re right, and the maniacal determination to make that reality known to the cadre of clueless meatbags that stood between me and my squeaky clean credit history.

The next few weeks involved more phone calls and faxes than I care to mention.  At one point Chase required that I actually had to print documents off of the Chase system and fax them back to Chase as evidence of my claim.  This sort of bureaucratic bullshit is not incompetence.  It’s a carefully crafted strategy to frustrate and abuse the opposition in hopes they give up and walk away.  Not a chance.

They finally relented, and agreed to credit me the $33.39, which was damn sporting of them considering their computer caused the problem in the first place.  I was frustrated, but contented.  I got my due.

Today my June statement dropped.  I opened it only to find a new interest charge on there.  I grab the phone, dial the number and punch zero until the IVR cries uncle and connects me to a human being.  I explain that I want to know what this interest charge is.  The agent informs me he’d be happy to help me with that today.  I somehow suspect he’s going to change his mind.

He cheerfully drops into a canned script about how interest charges are calculated, and I cut him off at the dangling participle. I explain there should be no interest at all as they credited me the $33.39, and otherwise the card is paid off.

He clicks away at his keyboard for a moment, and announces he has an answer.  There were almost 3 weeks that went by from when the $33.39 was charged to me and when they credited my account for the same.  This was the interest I owed on that overdue charge, prior to them issuing the credit.

I left the line silent for a moment assuming the insanity of what he just explained would trigger a follow-on statement, or at least a satisfying “splat” as his head popped and the gelatinous goo dripped from his monitor.  But nothing.

“Let me see if I have this right,” I offered. “You’re charging me interest for failure to pay you money you agree I didn’t owe you?”

“Well Sir, the system doesn’t remove the charges, it merely credits you.  And according to policy you are still responsible for the initial charges and any late fees or interest on those charges.” He spoke with a straight face, however improbable that may seem.

Donning the face in the illustration above I roared back, “This is completely unacceptable!  Chase agreed I was not liable for initial problem.  That’s why they credited the charges in the first place.  I will not be held financially responsible for the vagaries of your internal accounting system. You agreed to credit the charges. I expect that to be all of them.  And I do not expect to have to waste my time or yours having to explain this all over to someone else next month.”

Another long silence loomed on the line.  Then much to my surprise, “Yes Sir, I’m going to go ahead and credit that interest charge back to your account.”

This should have been a good outcome.  I ultimately got my justice (at least until next month).  But at what price?  Financially, I’m in way over the $33 limit if I remotely try to factor in the time devoted to this.  And I’m sure they’ve spent way more dealing with this resolution as well.  Yet I suspect that for every one of me who goes to the wall over this stuff, hundreds of folks just pony up the extra fees in the interest of keeping it simple.  And that’s why banks do it.

I’d like to even think this was strictly a Chase problem, but it’s not.  I’ve already stopped doing business with Citi and Capital One because of different situations where I was treated like somehow I should consider it a privilege to do business with them.  Somewhere along the line the whole equation got inverted.

It’s not that these banks are too big to fail… it’s that they’re too big to give a flying f*#k about their customers.

 

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The GOP may be running out of feet to shoot

June 4th, 2011

National Lampoon Cover

Don't make us resort to drowning kittens!

Senate Minority Leader Mitch McConnell continues to stand by his claim that Job 1 for Congressional Republicans is to defeat Obama in 2012.  Yet the question looms, how far are they willing to go to make that happen?  Recent history suggests, pretty damn far.

To understand what’s going on, you have to first recognize that the GOP is beholden to two major groups.  On the one hand they are funded by big business and the wealthy businessmen created therein.  The interests of this group define the overall agenda and goals for the party.

On the other hand, the foot soldiers at the polls are largely made up of blue-collars, religious fundamentalists, and seniors.  This group is necessary because, come November, you have to have lots of bodies show up to vote for you.  But they are ultimately fodder as far as the policy agenda goes.  They get tossed a rousing speech, a few sound bites, and an occasional red meat issue and it keeps them fired up and loyal. I’m somewhat reminded of Dennis Hooper’s line from Waterworld where he launches into a motivational tirade for his crew and they all storm off below decks to row their hearts out.  He’s asked, “So which way we rowin’?” And he replies, “I don’t have a goddamn clue. Don’t worry, they’ll row for a month before they figure out I’m fakin’ it.”

Now consider, the GOP won handily in 2012 on their promise of jobs, jobs, jobs.  Then, once in office, immediately focused on Obamacare and abortion.  Why?  For starters, creating jobs is hard. Especially when the economy is in a demand slump and the interest rates are bumping the zero-bound. The only solution is federal deficit spending, and they sure as hell weren’t going there.  After all, deficits are bad.  Not for the reasons often touted, but because ultimately deficits have to get repaid through taxes—something their corporate benefactors are not fond of—especially when corporate profits and CEO salaries are soaring.  Which brings us to the second point.  Among their fodder constituents, abortion and Obamacare are both reviled.  So the strategy was essentially to distract one group while appeasing the other.

Next up is the Paul Ryan budget.  No one in the GOP thought the plan had a snowflake’s chances in hell of passing, yet they lined up behind it in droves.  Why?  Two reasons.  First, the plan was a message to the corporate benefactors.  This was a wish list for the privatization of government programs and tax cuts that all serve to line the pockets of the folks who in turn fund the Republicans.  By standing behind it, they were assuring the benefactors they had their backs.  Secondly, the plan was political.  Actually passing a plan means you can be evaluated down the road for its efficacy.  Proposing a plan that can’t pass puts you in a position down the road to say that things suck because nobody listened to your ideas.  Politically this was a much more powerful position to be in.

However, the GOP underestimated their fodder constituents.  You’d think they’d have learned from Bush’s crash and burn on Social Security privatization, but not so much. They tried to couch the language, but the public saw through that.  The result being that Ryan’s budget is now enormously unpopular because it is recognized to fundamentally change Medicare.  It turns out that when fodder folks talk about support for smaller government and less spending, they don’t mean to include programs from which they benefit directly.  The message sent to Republicans in NY’s 26th District special election was overwhelmingly, mess with Medicare and we will vote your ass out.  This was the GOP’s first shot to its own foot.  It’s limping, and looking for a path back to hale and healthy. (Gee, I hope they can afford medical insurance.)

Still, the scary specter on the horizon is the debt ceiling.  If the Ryan budget was a pistol shot to the left foot, the debt ceiling is a hacksaw poised above the right knee.  All the sane people (which is not all of the people) on both sides of the aisle agree the ceiling must be raised.  To not do so would be economically disastrous with long-term consequences.  Even Wall Street is saying this has to happen. Both sides also recognize the Republicans are simply taking an opportunistic hostage to gain political advantage.  This is a dog they clearly don’t want to shoot, but if you think they just might be crazyenough, maybe you’ll buy the magazine anyway.

Again, why are they playing it this way?  And again, there are a couple of forces at work here.  On the one hand, the debt ceiling is enormously unpopular.  In fairness, understanding the nuances of the impact of the debt ceiling on the macroeconomic health of the U.S. economy is hard to capture in a sound bite, and most people lack the interest or the time to delve into the details.  Besides, the GOP has already established with the fodder constituents that deficits are bad. So selling a refusal to move on the debt ceiling is duck soup.  Besides, if they can get major concessions from Democrats, they will be in the politically favorable position of being able to crow about their accomplishments.  But there are more subtle and insidious forces at work here.

Everyone acknowledges that Obama’s reelection hopes hinge on the economy.  The last thing the GOP wants is for the economy to make any demonstrable progress, especially in the area of jobs, wages, or anything felt directly by their fodder constituents, prior to 2012.  Obama’s demise (Job 1) is directly contingent on the majority of Americans feeling substantive economic pain going in to the election booth.  The GOP is talking about needing $2 trillion dollars in cuts as ransom to get them to release the debt ceiling.  Those cuts cannot be achieved without significant job losses (both government and downstream private sector jobs as well) in addition to major entitlement programs like Social Security and Medicare.  This exacerbates the demand slump the economy is in, and pretty much guarantees pain for middle America, and what will border on inhumanity to the poor, disabled, and unemployed.

The gambit here is that Republicans can successfully hang the 2012 economic conditions on Obama—that their fodder constituents will blame their plight on “Obama’s wild spending spree” rather than on Republicans draconian budget cuts.  And you can bet there will be additional tax cuts for corporations and the rich included in any debt ceiling as well, which will seal the love of the GOP benefactors.  This is arguably the sweet spot for the GOP going in to the elections.

However, the downside is they are playing chicken with investors by holding the debt ceiling hostage.  Wall Street and foreign investors alike certainly recognize individually that raising the U.S. debt ceiling is a matter of when, not if.  But what the investors realize is that the market behaves like a herd of buffalo rather than as a single rational actor.  Everyone may realize that long term there’s no danger, but if one animal spooks and heads out, the herd will react and follow, trampling all of us in its wake.  This means the benefactor constituents are justifiably nervous about this brinksmanship.  They can’t control all the buffalo, so everyone is tip-toeing about hoping to keep everyone else calm.  Should someone spook, the results will be disastrous.  But the devastation will not be just to our economy.  The benefactors will doubtless bail on the GOP, who’s political ploy just cost them billions.  If this happens, the Republicans will have effectively lopped off their right leg.

This is high stakes poker.  The GOP may win at the polls.  The corporate benefactors may win, lose, or break even.  The rest of us will lose.  The only path here on which we win would be if Democrats refused to bargain, called the Republicans bluff, and got them to fold.  It’s pretty clear that won’t happen.

Is this view overly cynical?  Perhaps.  Maybe the GOP is not behaving with this much premeditation.  Perhaps they are instead just ignorant and reckless or opportunistically sociopathic.  But any way you slice it, unless you’re in the GOP’s corporate benefactor class, you voting for a Republican is like a chicken voting for Col. Sanders.

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Zero tolerance makes zero sense

May 11th, 2011

Zero Tolerance

When we lose our ability to make qualitative decisions, we lose much of what it means to be alive.

Have we lost all ability to make reasonable judgements?  Is the fear of being unfair so great that we are willing to subject ourselves to draconian rules to avoid making subjective decisions?  Apparently so.

In Easton, MD two high school lacrosse players have been arrested for possession of weapons on school grounds. The weapons were found in the boys’ equipment bags during a search of the team bus prior to a game.  One kid had a Leatherman tool.  The other a Bic lighter, which was classified as an explosive device.  Both are tools reasonably used to repair lacrosse sticks.

Unfortunately, this is not an isolated incident.  In Portland, ME a freshman girl was expelled for asking a friend for some Tylenol. In New York, a 17-year-old Eagle Scout was suspended from school for a month for bringing an antique two-inch penknife to school. The knife was found after school officials searched his car in the school parking lot and found the knife in a survival kit the honor student kept in the locked trunk of his car.

Supreme Court Justice Potter Stewart famously said of pornography, “I know it when I see it.”  Why can’t a similar test be used with regard to weapons and drugs in schools?  There is an understandable desire to keep weapons and drugs out of schools.  But what constitutes a weapon or a drug has a large gray area.

You can get drunk on mouthwash, yet a small travel bottle or spritzer for getting the lunchtime pizza off your breath before locking lips with your boyfriend after class is probably not an indication of someone with a budding drinking problem.  Yet, finding quarts of Scope stashed in your locker might be such an indication.

Similarly, pocket knives are incredibly useful tools for all manner of small tasks.  Could you kill someone with one?  Sure.  You could also kill them with a rock, your hands, or gravity. And we haven’t seen a move to outlaw gravity. (Although given the way evolution is treated in most schools, gravity shouldn’t get too cocky.)

We talk about truth, justice, and the American way, but there can be no justice so long as laws are absolute.  Even life itself is an exercise in exceptions.  When has justice ever been as simple as a rulebook?  And what are we teaching our children by raising them in this environment?  That laws are capricious, unyielding, and without mercy?  That common sense has no place in society?  That being good means following the rules to the letter of the law and never stepping outside the lines?

These are not lessons I want my children to learn.  I make my living designing machines capable of only black and white reasoning. Yet, the world is mostly shades of gray. I do not want my children programmed.  When we lose our ability to make qualitative decisions, we lose much of what it means to be alive.

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Poking your way to the pokey

May 10th, 2011

Poke ButtonToday’s local newspaper reported that federal prosecutors are alleging that a Hell’s Angels member threatened a witness—through a Facebook page “poke.”  Seriously… you can’t make this stuff up.  How lame of a Hell’s Angel do you have to be that your preferred intimidation tactic is a button on a web page?

Wait… Facebook still has a “Poke” button? And people use it?  I can’t remember the last time I was poked, but maybe I’m just inherently unpokable.

Then again, my immediate family has a lingering bad taste about poking as my youngest used to instigate serial poking episodes from the back seat of the car.  His opening volley would be to stick a pointed finger into a fellow passenger and then issue the drawn out low-key utterance, “po…ke”.  This would then propagate randomly through the vehicle for what seemed like an eternity as everyone poked everyone else while I gripped the wheel and muttered, “Are we there yet?”

So, maybe it’s just that my circle doesn’t poke.  But either way, this notion of Facebook poking as harassment has to be a bit of a legal stretch, no?  Apparently not.  Google “Facebook poke considered harassment” and you get a ridiculous number of hits.  People being arrested and sued for all manner of virtual abuse.  This is just one out of control poke-analia, to the point that it’s rather amazing CNN hasn’t devoted a full news segment to scourge.  After all, they spend most of their time reporting on Facebook and Twitter anyway.

I guess the upshot here is just a word of warning to all your serial pokers out there.  Trespass on your friends’ cyberspace with care.  One poke too many and you’ll be headed to the pokey.

 

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