The good news: in a deal yet-to-be-passed by either house, Obama and Boehner’s Raucous Caucus have finally agreed to raise the debt ceiling by $2.4 trillion in two stages, in exchange for an equal amount of spending cuts — with $917 billion of the cuts to span the next 10 years.
How will the rest of the cuts be administered? By special committee. (That’s the bad news.) Why rush these cuts when we were all starting to have so much fun?
Part of keeping the fun going is that Americans will continue to live in the shadow of the sword. Due to a small proviso cleverly tucked into this legislation, if the special committee doesn’t come up with at least $1.2 trillion in additional cuts (the goal here, is actually more like $1.5 trillion in cuts) or Congress doesn’t agree to green-light them, something akin to martial law will kick in.
What will this look like? Think of a nail-bomb set in advance, designed to spray cuts to the military and Medicare if anyone makes one ill-advised move.
Basically, this part of the deal ensures that even you, the taxpayer, will be begging members of Congress to ratify every last spending cut, lest you dial 911 one day and find that nobody answers.
Hey, what’s a bill without a little blackmail?
Still, it is a sad state of affairs that the only way to get things done these days is to hold ourselves at gunpoint.
The bill is expected to be voted on today. Obama, for all his speeches, has been brutally cowed, again. Spending cuts reign supreme, while Bush-era tax cuts remain unchallenged. It is official: our president buckles like a belt.
I was cleansing my inbox today and found this friendly letter to the Fed from 2007 written by our comrades at Long or Short Capital (vaguely connected to our own fake hedge fund, Intergalactic Capital). I was all ready to take a whimsical walk down memory lane, since 2007 was the year before our financial meltdown. Yet strangely, this missive does not seem dated.
To: The Fed
From: Long or Short Capital
Re: You suck
Dear the Fed,
You suck. You don’t have a backbone and as a result you are slowly and very surely making our country and our currency irrelevant. Usually the masses rebel and bring down great empires but luckily for us democracy fixed that problem. Unfortunately, democracy can’t fix how lame and fickle you are and so you will be our ruin.
A few things to tell you:
1) Inflation isn’t 2% like your pathetic CPI ex-Food & Energy says it is.
First of all, as far as I can tell food and energy are the only two items you should NEVER exclude from an inflation index. Tell your wife and kids they can have everything in the consumer basket except food and energy and you will quickly see that they are actually the two MOST important and indispensable factors in the CPI.
You can find substitutes for, or go without, everything in the basket EXCEPT those two.
Secondly, stop using “Seasonally Adjusted Intervention Analysis” it’s as sketchy as the Seldom-Accepted-Accounting-Principles (SAAP) we use to cook the books here at LoS. I mean writing a computer program to automatically remove any items in the basket which deviate meaningfully from the previous year? Isn’t the point of the data to SHOW the change versus the previous year, not hide it? Oh, I found the list of items that you’ve adjusted for and it’s embarrassing. Continue reading Dear The Fed: You Suck→
My New England home was my favorite place in the world when I was little. We bought it with several acres of land and it was surrounded by fields and forests and freshwater ponds on all sides. Our property was flanked by the longest line of ancient green-and-blue fir and spruce trees in the state. My parents were very proud of that. We grew up blueberrying and ice-skating and catching painted turtles.
My parents, who were born of Depression-era parents, were fiscally conservative and hugely diligent savers. They bought the house for $49,000 in the mid-70s and sold it for almost a half million in the late 90s when they retired. In the interim, they ceaselessly worked the land to make it beautiful.
Growing up, my mother was the only mother I knew who fed her kids from her own orchards and gardens year round, just for the pleasure of it. A teacher and artist, she set her summers aside for planting and canning for winter. My father was the only father I knew who could build and landscape almost anything from nothing. He loved deep-sea fishing and we ate seafood — mussels, scallops, flounder, bluefish — year-round hooked off his boat. He caught so much he would often give it away to the neighbors. Continue reading What’s Left Of My Childhood Home→
So there’s this small issue of the world being debt-ridden and nobody hiring and the delicate financial machinery of our country breaking down in a way that can only be called utterly embarrassing.
This is not altogether bad news. For those who have long been looking for their moment to escape a lifetime of professional drudgery, it is a chance to hit the reset button. Go back to university, take a master class in sculpture or become a Cordon Bleu chef. Our favorite course of late is this one.
Go to the desert and paint your masterpiece knowing you will be unmolested.
The great thing about no opportunity is this: if you remove yourself from the world to do what you want to do, as opposed to doing the fake thing you’re pretending to want to do, it comes with no opportunity cost. You will not be missing out on all the good jobs. There are no good jobs!
The best part is, after taking a year or two out to reposition yourself, the odds are you’ll be returning to a world of renewed opportunity. Maybe not of the milk-and-honey variety, but certainly superior to what you see today.
Hold the phone, we run of cash when? In two and a half weeks? Bah, fie and tut-tut. So that’s what’s behind this whole debt-ceiling/deficit talk getting in the way of my “Mad Men” re-runs. But maybe there’s a silver lining. One humble query: If our entire nation can no longer pay its bills and decides to cut little old ladies’ social security checks, will anyone notice — or care — if I don’t pay mine?
Seems if the U.S. Treasury and Congress can’t get it together, then why should I?
During a pivotal summit with Republicans yesterday, Obama rose, looked around and, well, booked it out the door. (Or as The Wall Street Journal more kindly put it, Obama found himself “abruptly walking out of a key meeting.”)
Having done that, I now turn to more important matters.
Like this cash-or-credit debate taking place in the papers. Financial vigilantes are urging consumers to cut up their credit cards and throw them away. One article in SmartMoney actually sounded the shibboleth: “I’m going all cash!”
To which readers had a range of emotional responses. Two encapsulating these:
“This is simply an irritating article. I am willing to bet $1000 that the author
is lying and in fact is still using his credit cards and not wandering around
paying for everything with cash. If you’re going to write an article, at least
please be intellectually honest. Do you think we are that stupid?’
“Already living this dream. In fact it is a great reality to know that you owe nothing to anyone. We do not have credit cards either, we have covered that with an emergency fund. We own a house (no mortgage) and we have paid cash for all of our vehicles (no financing). As far as I’m concerned, living within your means and being debt free is the NEW AMERICAN DREAM.”
The most compelling reason for getting rid of your credit cards is obvious: ordinary folk have to pay 14% interest on average for them. Yet banks pay less than 1% whenever they feel like borrowing from the government (yes, that includes JPMorgan Chase, Bank of America — even Goldman Sachs and Morgan Stanley, which received “bank holding company” status during the credit crisis).
As most writers, I am a tiny bit obsessed with music. Apropos of nothing, more than 14 million Americans are now out of work (according to the latest blizzard of stunningly disappointing U.S. Labor Department data released Friday).
In the past, we’ve seen our tired, poor and huddled masses of unemployed making not-happy-to-be-unemployed noises. Loudly.
Not so this time around.
If nearly 10 percent of the U.S. population is not working — not even beginning to count those who simply choose not to work, which would make it over 11 percent — why don’t we see any Million Unemployed Man Marches on Washington?
It now takes nine months on average for someone who is let go to find work again. That’s plenty of time to bang garbage can covers together with the other unemployed, if one feels like it.
Here’s the problem: these days, not making a lot of money — and especially being unemployed — is tantamount to wearing a scarlett letter. Professionally, it’s rough. But socially, it is a death sentence.
Which brings me back to the music, the best reflection of our culture I can think of. During the money-crazed 80s we had no dearth of songs about money, but they were ironic. Continue reading Money and Music→
Quote from a great piece in this month’s Vanity Fair, penned by the illustrious Mr. S…
“Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest. When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we’re doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth.”
– Joseph E. Stiglitz, economist and Nobel laureate