Relevant and even prescient commentary on news, politics and the economy.

Happy Sesquicentennial Birthday, Vladimir Lenin! (Oh, And Happy Half Century Earth Day)

(Dan here…a day late to AB better than not)

Happy Sesquicentennial Birthday, Vladimir Lenin! (Oh, And Happy Half Century Earth Day)

A half century ago today was the first Earth Day, which I paerticipated in while at the University of Wisconsin-Madison.  Although I did not know him well, I even met the founder of the event, then Senator Gaylord Nelson of Wisconsin.  While it is easy to be discouraged by the ongoing failure to deal with the global warming issue as well as the large amount of rollbacks of reasonable environmental regulations in the US by Donald Trump, with several happening very recently under cover of the SARS-Cov-2 pandemic, much has also been achieved, with vastly reduced air and water pollution of many types over the last half century in most nations.

It is easy to forget that in 1970 there was no Enviromental Protection Agency and that most of the most basic laws regulating most air and water pollutants were not in place almost anywhere in the world. I remember seeing the Cuyahoga River in Cleveland in 1965, a year it caught fire, when it not only stank but had an unpleasant pinkish hue to it. Today it looks like regular water and fern bars and restaurants stand beside it where in good weather (and no pandemics) people sit outside to eat and drink beside it.

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Prairie du Chien Selects Jill Karofsky Over David Kelly!

Prairie du Chien Selects Jill Karofsky Over David Kelly!

I have previously posted on the highly swingy politicsal nature of southwestern Wisconsin, symbolized by the town there at the mouth of the Wisconsin River, French-founded Prairie du Chien (named for an Indian cheif, it turns out, who was “Dog of the Prairie” in English).  It seems that how SW Wixsonsin goes, so goes the whole state, at least in 2012, 2016, and 2018.

Now we can add an election in 2020, that for a seat on the state Supreme Court, where liberal Dem Jill Karofsky from Madison clobbered incumbent super conservative Justic David Kelly by 11%.  And, yes, SW Wisconsin went for her, along with some areas not expected, such as traditionally conservative counties in the Northeast that contain Green Bay, Appleton, and Oshkosh.  Milwaukee suburbs still went for Kelly, bur Karofsky made gains there.

Of course this election was marked by major GOP efforts to suppress voting, restricting absentee ballots (a move backed 5-4 by the SCOTUS)  and with only 5 out of 180 polls open for voting in Milwaukee, source of the largest Dem voting base in the state.  But even with covid-19, long lines formed there, and many observers think the GOP shot itself in the foot with its restriictive moves, angering Dem-leaning voters who turned out indroves, despite the health danger.

An amusing tidbit is that now GOPs are saying it was all a plot by Dems (probably Obama in the background) urging Bernie Sanders to stay in the race through Wisconsin, something many observers had long predicted since his losses on Super Tuesday.  Maybe that made some difference, although personally I think it is the Prairie du Chien Effect.

Barkley Rosser

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Trump Defunds WHO and USPS: Will Motherhood and Apple Pie Be Next?

Trump Defunds WHO and USPS: Will Motherhood and Apple Pie Be Next?

Yes, Trump is out to cut the roughly half a billion $ US contribution to the $6 billion budget of the World Health Organization (WHO).  It seems that he now sees his path to reelection to be based on blaming China for the coronavirus and the WHO for supposedly supporting China in their supposedly nefarious conduct, alloeing hin to wallow in  fit of xenophobia as well as accusations against Joe Biden for being “soft on China.”  Certainly China was slow to act against the virus, although not as slow as Trump and his team here in the US, and the WHO may well have been too soliciitous of China and its interests. But the WHo remains the central organization for  coordination the global response to thie situation.  This is simply stupid in terms of fighting the virus.

And then we have him going out of his way to demand that funds for the nearly bankrupt US Postal Service (USPS) be removed from the recent stimulus bill. GOPs in Congress have burdened them with having to fund future pensions at a level no other entity in the nation has to do, and, of course their business is in long term decline.  But apparently the USPS is the single most popular federal agencyy there is, with a 90% popularity rating, putting it ahead of even NASA and the National Park Service.  But, hey, it delivers packages for Amazon, whose owner owns the Washington Post, which says bad things about him, not to mention if USPS can be shut  down, then all these Dem proposals to have people mail in their votes can be quashed, and as we have seen in Wisconsin, making it hard for people to submit ballots by mail is really popular.

Anyway, at this rate, I expect Trump’s next move to be to defund entities supporting motherhood and apple pie.

Barkley Rosser

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Trump All Over The Place On Oil Prices

Trump All Over The Place On Oil Prices

Indeed, are we surprised? But POTUS has reached a new level of hypocrisy on all this.

So a while ago when oil prices began falling sharply, Trump bragged about how much this was going to help consumers, and he should get credit for it, of course.

More recently, since WTI crude and even Brent fell below $30 per barrel (with WTI just over 20 right now, and Brent just over 30), he became worried about his pals in the oil patches of Texas, Oklahoma, and North Dakota, with Putin and MbS openly declaring they want to put US frackers out of business, oh dear.  So Trump piled in to strong arm Putin and MbS into supposedly making a production cut deal, maybe 10 mbpd, although unclear either of them actually following through solidly (and some others, such as Oma, pumping it up all the way). This got about a day or two’s worth of a blip in the prices.

But now we find out that Trump has not agreed to any cuts in US production, and the prices have proceeded to plunge again, for better or worse.

This has led to something almost unheard of in more than half a century, the Texas Railroad Commission.  It has authority over days oil can be pumped in Texas, and it and its equivalent in Oklahoma are apparently contemplating intervening and on their own reducing production in their states in order to try to prop up prices.  There was a time, back in the 1950s, when the Texas RR Commission was effectively OPEC, controlling global marginal production. That has not been the case for many decades, but who knows, maybe they will be back.

But then maybe Trump will not like this, given his recent claims about having “absolute authority” over all state entities and actors.  As it is, on this, he does not seem to know what  he wants.  But what can one expect from somebody who one minute is declaring himself free of “all responsibility” but the next is claiming “absolute authority”?

Barkley Rosser

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Something Good From The Panemic? Maybe A Cease Fire In Yemen

Something Good From The Panemic? Maybe A Cease Fire In Yemen

Yes, in the midst of deaths and deep recession there may be someting good that may come from this pandemic.  Saudi Arabia’s leaders have announced a cease fire in Yemen after five years of war, one also accepted by its ally, the recognized government there.  Unfortunately so far the Houthi enemies of the Saudis and the recognized government have not so far accepted this proposed cease fire, and in fact it is not the first time the Saudis have called for one, with the previous efforts having failed.

However, this time maybe it will stick.  So far there are no officially recognized cases of covid-19 in Yemen.  But tens of thousands of Yemenis are returning home from KSA, thrown out as low oil prices have strained the Saudi economy, with the numerous Yemeni guest workers taking the hit, Yemenis being the only non-Saudis allowed to come and go without getting visas, so easy come and easy go.  In KSA there are now over 3,000 recognized cases while in Yemen more than half the health infrastructure has been destroyed by the Saudis in the war.  Yemen is facing a potentially disastrous situation.

A further aspect of this on the Saudi side is that 150 members of the Saudi royal family have apparently become infected.  Most of these are in the lesser branches, with the family now ridiculously large at about 15,000, of whom about 2,000 are “core.”  But in fact some serious “senior” members have fallen ill, with perhaps the most prominent (and seriously ill) is the powerful governor of Riyadh province, which contains the capital city, Faisal bin Bandar bin Abdulaziz, a nephew of King Salman, who is reportedly hiding on an island in the Red Sea, with de factoo ruler Crown Prince MbS also in seclusion somewhere.  This seems to have spooked the Saudi leadership so that even if the Houthis do not like what is being offered, the Saudis may simply stand down.

The virus may be bringing about peace in a long-suffering nation. Let us hope so.

Barkley Rosser

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The D Word

The D Word

Yes, depression, and not the psychological type, although the economic type leads to the psychological type, whether ot not it is the other  way around (see Keynes’ “animal spirits).

I often make fun of Robert J. Samuelson in the Washington Post, but in Washington Post today he raised the possibility that we are going into a depression, not just a bad recession.  On TV this evening I heard Austen Goolsby throw it out as well.  I suspect we are going to hear it a lot more.

The problem is not just that we have seen the highest increase in joblessness ever, but the increasing prospect that there will not be a quick recovery once the virus is under control. This is partly due to the global nature of this pandemic and the economic decline that has come with it.

A sign of what may be coming is what is going on in China.  The virus seems to be under control, despite some doubts about their numbers and new cases happening due to people arriving there.  But they have been to get their economy started up again, even in Wuhan. Supposedly 98% of firms have restarted.  But there are problems.  One is that many such places are missing crucial workers still under quarantine somewhere  or other.  Then there is the other side of this, the demand side.  China expects to sell goods through exports, but other countries are not buying.  And also domestic consumers are not buying either out of fear and low income.  Apparently there are factories running machines and using power even though they are not producing anything just to please the government that is making these claims of 98% of firms operating, but this seems to be an exaggeration.

Clearly at least on the demand side getting money to people and businesses through easy credit and a large fiscal stimulus are the obvious things to try to avoud this D outcome.  But Samuelson fears that they may be insufficient to this current situation, with no obvious alternative.  I fear he might be right on this one

Barkley Rosser

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In 2020 A March Of Madness

In 2020 A March Of Madness, Econospeak

Just before the end of February, President Trump declared that there were only 15 Covid-19 cases in the US, and that “they will soon go to zero.”  Deaths from COVID 19 now passed 3,000 (March 30th) and yesterday Trump declared that because we might have had over 2 million dead if nothing had been done, it would show “we did a good job” if deaths kept to “only” 100,000 to 200,000.  To do this “good job” he has extended his “social distancing” policy to the end of April rather than Easter, April 12 (my birthday). Also yesterday Virgina Governor Northam intensified a stay-at-home policy and extended it to June 10, the longest such period of any state.  All this on the next-to-last day of a month with more dramatic changees for the world than any in a long tim, certainly more than any that I can remember in my nearly 72 years.

Probably the closest rival I can remember is Septembrr, 2011, which also changed the world, although that all happened on one day.  This has been day after day, with the US death toll now surpassing that of 9/11.  I think to match this month one has to go back to September 1939 or maybe August 1914, or maybe October 1918 when the Spanish flu epidemic reached its maximum death rate in the US just before WW I ended.  In any case, when I think of the beginning of this month it seems like another era, way more than a year ago.

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Is Pompeo The Worst Secretary Of State Ever?

“Is Pompeo The Worst Secretary Of State Ever?”, Econospeak, by Barkley Rosser

This is the title of a column in today’s Washington Post by Jackson Diehl. His answer is an unequivocal “yes,” and I must say on thinking about it I know of no others clearly worse than him, maybe not even any as bad as him.

Diehl focuses on some general incompetence but then focuses on two specific issues that I have posted on here previously. The most important one, which is getting more serious by the minute, involves Iran. It is increasingly clear that Pompeo is probably the lead figure in pushing for heightening sanctions on Iran and also increasing the chance of war with them. He was a key player in Trump’s initial exit from the JCPOA nuclear agreement and has argued that making it harder for Iran to get medical equipment even as they face a deepening epidemic with thousands dying will bring them to the negotiating table or even lead to regime change. There is no evidence of any of that, just an immoral making many more people die awful deaths.

He is also apparently a key figure in labeling Covid-19 “the Chinese virus” or “Wuhan virus.” Trump has said he won’t call it those things anymore, apparently being told that this has been leading to attacks on Asian Americans. But Pompeo continues to push this line for no obviously good reason.

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The Oil Price War

The Oil Price War

One consequence of the emerging global Covid-19 recession has been that it has helped push world oil prices down from the $60.77 per barrel range near the beginning of 2020 to $23.12 for West Texas Crude and $29.00 for Brent Crude, levels not seen since the end of 2008. But part of why that decline has been so sharp and deep has been thet Saudi Arabia has increased production while Russia has kept up production, despite the Saudis demanding that they cut production.  So there is an oil price war going on.

Of course this will tend to cushion the recession for oil consumers.  But the US has become a small net oil exporter, and reports have it that a subsidiary reason for the Saudis and Russians getting into this price war has been to tank the US fracking industry in oil and natural gas, which by most reports cannot survive if prices remain as low as they are now.  So while US oil products buyers may be better off, the recession in oil producing parts of the US will be made worse.  It  should be kept in mind that a non-trivial part of the US economic growh in 2017 was a major increase in fracking activity, with half the increase in capital investment coming from that sector alone.  The damage to oil production in the US will probably exceed the benefits from lower prices at the pump in the US.

A curious corollary to this is that the leaders of both Russia and Saudi Arabia have made serious moves to enhance and expand their own power.  In Russia, Putin has moved to change the constitution so that instead of having to step down as president, he can run again twice more, keeping him still in as late as 2036, by which time he will be 84.  This still needs to pass a referendum, but few doubt that it will fail to do so, despite reported declines in Putin’s popularity.

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The Coming Fiscal Crisis Of State And Local Governments

The Coming Fiscal Crisis Of State And Local Governments

Yesterday my wife Marina and I met with our personal attorney, a close friend also, to fix  some loose ends in our wills due to some recent family deaths, as well the current situation.  He also happens to sit on the Harrisonburg City Council, as well as having been Mayor for a  while and a longtime member of the city Planning Commission, someone whose competence we have great respect for.  Anyway, he noted that on April 14 the City Manager is to present a proposed budget to the City Council, and that it will have a giant hole in it given that taxes on restaurants are a significant source of revenues for the city, and while not completely shut down, restaurants are now seriously restricted in their activity, not to mention that students will not be returning this semester, and they provide a lot of business.  In short, the city will face severe budgetary problems as the now occurring recession proceeds.  It is not only Harrisonburg that faces this problem, but probably just about every state and municipality in the United States.

Obviously this is currently low on the priority list of most people, and while Congress has now voted for a stimulus bill that will help out indiviuals and businesses, and another may be on the way, so far there  has not been a whisper regarding a likely need to help out state and local governments, who, after all, contribute more to the US GDP (and employment) than does the federal government, which mostly just ransfers money, except for the DOD in substantial terms.  The problem is that unlike the federal government, nearly all state and local governments face balanced budget rules for their current activities, with most needing to pass bond referenda for specific projects in order to borrow money.  So when the revenues fall short, which they shortly will start to do for all these state governments, they will face the choice of cutting spending and laying off workers or raising taxes on populations facing sharply reduced incomes and employment.  The sooner the federal government recognizes this and starts to do something, the better, although probably for now natonal politicians are hoping this will all be over before too much damage happens to the local governments, to the extent they are thinking about this at all, which I doubt.

I note that in the Great Recession, this problem was recognized, and the 2009 fiscal stimulus plan by Obama included as about a third of its spending the distribution to state and local governments of revenue  sharing.  This did help out their  problems that arose at that time.  Doing so again I think would be wise, but again, for the moment this problem is under the radar at the national level.

Barkley Rosser

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