A bubble DECADES in the making

That's the bottom line on today's anemic economic bottom line in America, from Dave Leonhardt.

He cites a variety of statistics to back this up:

The auto industry is on pace to sell 28 percent fewer new vehicles this year than it did 10 years ago — and 10 years ago was 2001, when the country was in recession. Sales of ovens and stoves are on pace to be at their lowest level since 1992. Home sales over the past year have fallen back to their lowest point since the crisis began. And big-ticket items are hardly the only problem.

The Federal Reserve Bank of New York recently published a jarring report on what it calls discretionary service spending, a category that excludes housing, food and health care and includes restaurant meals, entertainment, education and even insurance. Going back decades, such spending had never fallen more than 3 percent per capita in a recession. In this slump, it is down almost 7 percent, and still has not really begun to recover.

And then reminds us of more liberal means that businesses are only, in light of this, acting rationally in not hiring more people:

If you’re looking for one overarching explanation for the still-terrible job market, it is this great consumer bust. Business executives are only rational to hold back on hiring if they do not know when their customers will fully return. Consumers, for their part, are coping with a sharp loss of wealth and an uncertain future (and many have discovered that they don’t need to buy a new car or stove every few years). Both consumers and executives are easily frightened by the latest economic problem, be it rising gas prices or the debt-ceiling impasse.

So, maybe Krugman is right in calling the current times the "Little Depression" now instead of the "Great Recession."

And it may stick around a while, Leonhardt says:

Sure, house and car sales will eventually surpass their old highs, as the economy slowly recovers and the population continues expanding. But consumer spending will not soon return to the growth rates of the 1980s and ’90s. They depended on income people didn’t have.

His solution? Tax cuts, but ones targeted to businesses who hire, and more stimulus, but targeted to industries of the future.

In short, Leonhardt is saying, don't abandon Keynesian ideas, but get smarter about how to use them.

Conservative shilldom doesn't float Faux News stock

Over at Forbes, Peter Cohan has a great column about how it may be time for Fox News parent News Corporation, which is after all a publicly traded corporation, to go beyond dumping Rupert Murdoch flunkies, but to dump the Murdochs.

Why? Because they're bad for business, that's why:

Over the last decade, News Corp’s stock has been in the doldrums. It’s lost 15% of its value since July 14, 2001 while the Dow Jones Industrial average has gained 21%. And that’s not surprising when you consider that News Corp. has been earning way less than its cost of capital. For example, in 2009 its economic value added — after tax operating income compared to its weighted average cost of capital — was negative $9.5 billion. That “improved” to negative $1.1 billion in 2010.

If you are a shareholder, it’s hard to find a reason to celebrate Murdoch’s control over this company.

Cohan even throws out a potential new CEO name: Lou Gerstner, former IBM turnaround artist.

One could argue for media stocks in general to be struggling. But, News Corp. has cable channels, pay cable channels and other media ventures that are immune from the ad plunge of newspapers and network TV.

Its other assets include American Idol, a rugby league, a sports simulation website (fantasy sports to the next level), an Aussie equivalent of Monster or CareerBuilder and part ownership of Hulu. Let's not forget that his publishing side includes HarperCollins and Zondervan as well as all of his newspapers. And, he also has the apolitical FoxSports.

What that means is that Faux News and other ventures are a fucking lead weight.

That said, Cohan's colleague at Forbes, suggests that Murdoch could pre-empt that by taking News Corp. private. He's got a $5 billion buyback plan, apparently to do just that.

This strategy makes sense because Murdoch has clearly never had as his top priority creating value for other shareholders. Far from it . His priority has been the aggrandizement of media power the past 11 years, especially by vastly overpaying for the Wall Street Journal. A massive write-off of over $2 billion was the result. Never you mind; Murdoch controlled the Wall Street Journal.

So, if you're a News Corp. investor, and one who actually, even if a strong conservative, cares about making some money, are you elbowing others aside trying to get Uncle Rupert to buy you out rather than others? Afraid that you'll be stuck with albatross-like stock after it goes private? But, if you bought into it because you believed the myth of Rupert, we liberals are laughing at you, not with you.

A Lou Gerstner would see them for what they are: equivalents of the Washington Examiner.

The Examiner is different, of course, in that it's privately held by at least some of the Moonie family. So, if you're a News Corp. investor, do you really want to continue to fatten the ego and the wallet of a man and family as stupid and intransigent as Sun Myung Moon and offspring?

Obama still slaps left in face - #ElizabethWarren #debtshowdown

There's a whole raft of ways in which he's doing this, and to lead off, we have one that has nothing to do with his ongoing debt showdown sellouts.

To wit, Elizabeth Warren is officially off the table to head the Consumer Finance Protection Bureau. Judging by the story, Obama wants to appoint some mid-level wonkish type who will be as unoffensive as possible to both Congressional Republicans and his own Wall Street friends.

Part of why Warren isn't getting the job? She refuses to go along with Obama's bankster friends, and their friends inside Team Obama, and continues to oppose a toothless settlement of the apparent mortgage fraud problems that have the housing bubble collapse still unsettled.

But, let's get back to that debt issue, though, shall we?

Greg Sargent blogs on Obama's plea to liberals to sign off on cutting the debt. Why? He continues to throw more and more spending cuts into the mix, none of them for things like defense spending, subsidies to big business, etc., and still gets nothing in return. He's like an even-more-naive Reagan.

Obama’s argument is that progressives won’t be able to make the case to the public for more spending unless the deficit is neutralized as an issue. ... Some liberals will respond that this risks ceding the short term argument in advance, with the result that the public never gets to hear the case for running deficits in a bad economy and dealing with them later.

Exactly. Also given the fact that Obama has done little to sell the public on the idea that much of the current high deficit level is not structural but is recession-related tax revenue declines (and, given Obama's increasingly neoconservative turn, one suspects this is deliberate), why should "we" trust him?

Joan Walsh, a reliable semi-Obamaic, chides Obama for believing that slashing now will mean spending more later, citing the example of that great neolib, William Jefferson Clinton.

For a guy whose presidential candidacy was greatly defined by his not being a Clinton, Obama is clearly following the Bill Clinton playbook. Clinton spent his entire political career trying to kill right-wing stereotypes about "big spending" liberals. Not only did he balance the budget to eliminate Ronald Reagan's deficit, he endorsed and enacted a welfare reform plan largely crafted by Republicans. Both bold decisions were supposed to show that Democrats could be trusted to tame the excesses of the Great Society, and usher in an era of smart, pragmatic, humane government that combined private sector discipline with New Deal values. If Clinton could get the issues of welfare and bloated government "off the table," he believed, he could set the table for a progressive agenda.

Had Clinton been right about that, he would have been able to say: “Our fiscal house is in order. ...

Instead, the conciliating Clinton met increasingly savage political opposition ... (a)nd right now, Republicans in Congress are on the verge of sending us back to the 19th. To the extent that Clinton was able to turn back his Republican foes ... and win re-election in 1996, it wasn't because he compromised, but because he had the winds of the economy at his back. (You can argue Clinton's deficit-cutting helped improve the economy, but it certainly didn't turn it around.)

So there is no reason to believe that "getting our fiscal house in order" would vanquish Obama's political enemies and create a mandate for the kind of government spending that would "win the future."

Other than still, even with her caveats, perhaps being too charitable by half to Clinton, Walsh makes valid points re Dear Leader.

Andrew Leonard, meanwhile, notes that even as discussion numbers tighten, Obama will still chase after GOP debt ponies.

Robert Reich, meanwhile, tells Obama to learn something else from Clinton, namely, after the debt showdown, it will still be about the economy, stupid.

Obama's war sure to widen

With the U.S. and other major nations officially extending diplomatic recognition to rebels in Libya, the war there ought to widen, extend longer, etc.

But, but, but ... this Congress-free bout of adventurism is being led by Dear Leader, Barack Obama, and has the official imprimatur of the UN. So, Juan Cole should be happy.

And, here's the basics that both Juan and Dear Leader should have considered pre-fighting, and apparently have magically changed in some people's minds, though, I doubt, in reality:

For weeks, U.S. officials have stopped short of full diplomatic recognition even as they inched up support for the Libyan rebels’ cause. The main concern was over how capably and inclusively the rebel leaders would govern, said a senior U.S. state department official who was not authorized to speak by name. ...

The worry among U.S. and other foreign powers was that after Gaddafi falls, the oil-rich country could become embroiled in tribal conflicts or ethnic tensions. A British-led group planning for post-Gaddafi Libya is recommending that the Libyan army be left intact to avoid the tactical mistake made after the Iraq war, when U.S.-led forces dismantled Saddam Hussein’s army.

Wild card: Since he's got nothing to lose now, and Beijing wasn't one of the "recognizers," what's to stop Muammar Gadhafi from making a deal with Hu Jintao? Both China and Russia declined to attend the "recognition" meeting, so this isn't a totally unrealistic situation. China would, of course, walk the Arab League tightrope carefully.

More liberal Obama enablers

Oh, they're going to protest his threatened social service budget cuts, sellouts to the GOP, etc.

But, showing that they've learned the "compromise away the compromise in advance" idea from Dear Leader, they're still going to vote for him:

A liberal group upset over potential cuts to Medicare, Medicaid and Social Security delivered pledges Friday to President Barack Obama's national campaign headquarters threatening to pull its support.

About a dozen people representing the Progressive Change Campaign Committee delivered what they said were 200,000 pledges from people who will refuse to donate or volunteer for Obama's re-election campaign if he cuts the entitlement programs.

"It's not a question of who they're going to support for president, they're going to vote for Barack Obama. It's a question of where their time and money is going to go," spokesman T. Neil Sroka said.

And, I use "enabler" just like the spouse/lover of an alcoholic is an "enabler." Threatening to cut off your donations? They're a pittance of Dear Leader's proposed billion-dollar campaign. Your volunteering time? Enough Obama fear-mongering will probably bring most of you back to do that, too.

One #HarryReid national debt clusterfuck coming right up!

The Washington Post reports that Senate Majority Leader Harry Reid is the mastermind behind what could be just such a clusterfuck.

He wants to combine elements of Senate Minority Leader Mitch McConnell's "let's punt the debt decisions off to Obama in 2012" idea with a Congressional national debt commission, similar to the military base closures commission of the 1990s. Combine that with Dems like Reid still trying to out-deficit-hawk some GOPers, and we get this trifecta.

First, the sign-off on McConnell's plan:

Reid confirmed that discussions are focused on what McConnell has called “Plan B”: an elaborate legal framework to raise the debt limit by $2.5 trillion that would place the entire political burden for the unpopular move on Obama.

Followed by Dems wanting more spending cuts:

Unveiled earlier this week, McConnell’s plan included no mechanism to force the sharp spending cuts that Republicans have demanded in exchange for voting to lift the debt limit. But in a sign of the unusual political times, Democrats said they were reluctant to go along with that proposal and are pressing to add roughly $1.5 trillion in cuts to government agencies to the measure.

Topped by the debt commission:

Talks were also underway over a plan to appoint 12 lawmakers from both parties to draft a long-term framework to stabilize the national debt. The new debt committee would be given a deadline, and its recommendations would be fast-tracked to a vote in the House and Senate without amendment, similar to the process used to close military bases.

Late Thursday, McConnell told a radio interviewer that the new debt-reduction panel would “probably be part of the bill” and that it would likely be asked to issue its report by the end of the year.

Let's unpackage this whole craptacular bag.

First, "pulling a McConnell." Are Senate Dems that worried about getting blamed for a default that they'll throw Obama under the bus? The sight of Obama and Reid shadow-boxing each other politically would have a certain attractiveness, were the stakes not so high.

Second, besides the uncuttable, sacrosanct Department of Defense not being on the table, what IS on the table?

Third, we've already seen Obama's Catfood Commission. Reid's Denture Commission, or whatever cynical name we want to give to it, will surely be worse, and more politicized. Note that McConnell said it should report back by the end of the year, just in time for political fireworks.

I'll be waiting for the Serious People in the DC Village and the NYC adjunct to applaud this.