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

No Sh*t

SACRAMENTO, Calif. – Gov. Arnold Schwarzenegger (news – web sites) declared California in a fiscal crisis Thursday and invoked emergency powers so he could impose $150 million in spending cuts without the Legislature’s approval.

“I had to do this,” Schwarzenegger said at a news conference Thursday.

The move comes as local governments in the state edged closer to financial meltdown following the loss of millions of dollars a day in revenue resulting from Schwarzenegger’s decision to cut a car tax.

Let the recall begin.

AB

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An Interesting Question

Where’s the inflation?

Everywhere you turn, there are red-light indicators of inflation: the dollar’s value is plunging, gold prices are through the roof and commodity prices are marching upwards, including Alan Greenspan’s pet indicator, scrap steel…

This piece asks the right questions. Yes, it is a bit of a mystery, though regular readers of Angry Bear already know my answer to the question…

Kash

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Slightly Sinister

Yes, many of us have commented on it before, but it’s worth a repeat: the Bush administration loves to change history. Today’s Washington Post runs a short story on it:

White House Web Scrubbing: Offending Comments on Iraq Disappear From Site

It’s not quite Soviet-style airbrushing, but the Bush administration has been using cyberspace to make some of its own cosmetic touch-ups to history…

Milbank picks out just two recent examples, but there are dozens. It’s a good reason to regularly check out sites like The Memory Hole.

Kash

p.s. No, I’m not awake at this hour because I just saw TROTK. I wish.

UPDATE: See this AB post for another Orwellian example.

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Math and Economics

Economics and economists use a lot of math. Sometimes perhaps even gratuitously. Daniel Davies has a lengthly disquisition of the issue over at Crooked Timber. Here’s a sample:

The use of mathematics in economics isn’t the sort of Theory we’re concerned with trying to stamp out; like the War on Drugs, the War on Theory isn’t meant to touch the recreational hobbies of nice people like us. Nobody would question the right of economists to use whatever mathematical toolkit they need in order to write economics, because unlike the Bad Writing crowd, they’re using mathematics precisely in order to ensure the rigour of their analysis, not to cover up a lack of such rigour.

Well, not quite. The position that mathematics in economics is a) the best way to do economics and b) the only rigorous way to do economics can be attacked on two separate fronts.

I may have something to add after I actually read the post.

AB

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Rogue Attack Operation?

There’s a little more detail today on the funding for the anti-Dean attack ads that Kash wrote about yesterday. Who is in the group?

The group, called Americans for Jobs, Health Care & Progressive Values, was formed a month ago by veteran Democratic campaign staffers who refuse to identify their financial backers until Jan. 31 … The group’s treasurer is a longtime fundraiser for Rep. Richard A. Gephardt of Missouri, one of Dean’s rivals in the Democratic presidential race, and its spokesman recently quit as press secretary for Massachusetts Sen. John F. Kerry’s presidential campaign. Both Gephardt and Kerry have denied any involvement with the group.

Who is funding the group?

A secretive political group financed in part by labor unions has raised $500,000 to air anti-Howard Dean ads in three early primary states, angering the Dean campaign and drawing sharp criticism from campaign finance reform advocates.

Are they happy with their investment? Apparently not.

Two of the unions renounced the effort Tuesday, saying the ads — including one featuring an image of Osama bin Laden — are not what they thought they were paying for.

[snip] … “I tell you, these ads are despicable,” said Rick Sloan, communications director for the International Assn. of Machinists and Aerospace Workers, which donated $50,000 to the effort. “If I have my way, we’ll ask for a refund.”

… Robert Gleason, treasurer for the International Longshoremen’s Assn., said his union also donated about $50,000 for what it thought would be general issue ads on jobs and health care, as in the group’s name. When the first anti-Dean ads were aired, the union decided not to send more money.

A final note: all three of the unions that have admitted funding the group behind the attack ads have endorsed Dick Gephardt. Still, I’m inclined to believe the unions’ statements of regret and dismay, as well as Gephardt’s denial of involvement.

AB

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Inflation Still Falling

This news surprised most economists: today’s release of the November CPI showed a fall in prices of .2%. The core rate, excluding food and energy, showed a fall in prices of .1%. The 12-month inflation rate in the US has now fallen to 1.20% (see this graph for context).

Those economists would have been less surprised if they had read this post. I’ll spare the bother of repeating it here, and just say: “Yup. Still true.”

Kash

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Closer to a Yuan Revaluation?

Back in August, I wrote that a rise in inflation in China might make the Chinese government more inclined to revalue the yuan against the dollar. Part of Stephen Roach’s commentary this week suggests that that time might be getting closer:

Meanwhile, there has been an important shift in the Chinese inflation dynamic: After 15 months of deflation, China transitioned back into positive inflation territory at the start of 2003. And slowly but surely, the rate of inflation has begun to accelerate. The just-released inflation report for November 2003 was mildly disturbing — a 3.0% y-o-y increase, which represents the sharpest rise in nearly seven years. The mix of Chinese inflation is important, but not for the reasons we stress in the industrial world. The recent surge is concentrated in food prices, where annualized inflation is now running at an 8.1% rate. Weather-related or not, this is a big deal in a nation that still has about two-thirds of its population living at poverty levels. Unlike the West, where we strip out food in an effort to come up with “core” inflation, the Chinese have no such luxury…

As you know, the China issue has been growing for months. So this news matters. If the Chinese are serious about wanting to slow inflation, they will have no choice but to revalue, for various reasons. But first, they’ll probably try to sell some of their $500 billion of US government bonds.

The year 2004 could bring some interesting times…

Kash

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Does This Rule Out Dean-Clark ’04?

Salon recently interviewed Wesley Clark, and asked him about the possible “dream team” Democratic ticket against Bush:

[J]ust 48 hours before before the capture of Saddam Hussein outside of Tikrit, Clark made his strongest statement to date about why a Dean-Clark ticket is a bad idea. Clark, who says that he’s uniquely qualified to go “toe-to-toe” with President Bush on security issues in 2004, said that whether he’s on the ticket or not, the Democrats can’t win with Dean as their presidential candidate.

“I don’t think the Democratic Party can win without carrying a heavy experience in national security affairs into the campaign,” he told Salon in a phone interview last week. “And that experience can’t be in a vice president.”

Asked if he was referring specifically to the much-discussed possibility of a Dean-Clark ticket, he said: “It’s no substitute. It won’t work, and it won’t carry the election for this party.”

Of course, when running for president one must not seem to be really running for vice-president. But if we take him at his word, Clark seems to be ruling out an alliance with Dean.

Or, do his comments leave that door open just a crack…?

Kash

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Ugly, Ugly Fratricide

This is not pretty. And one wonders why the Republicans have gained such complete control over the US’s political system, given that the majority of American’s are closer to Democrats than Republicans on the issues…

Dr. Dean, the former governor of Vermont, had billed his speech here to the Pacific Council on International Policy as a sweeping international tour of what he said were his moderate foreign policy views…

“The difficulties and tragedies which we have faced in Iraq show the administration launched the war in the wrong way, at the wrong time, with inadequate planning, insufficient help, and at the extraordinary cost, so far, of $166 billion,” he said. “The capture of Saddam does not end our difficulties from the aftermath of the administration’s war to oust him.”

Dr. Dean’s Democratic opponents immediately seized on the speech to raise new questions about his viability in a general election… At the same time, a group of Democrats known informally as a “stop Dean” coalition began running a television advertisement in New Hampshire and South Carolina that shows a photograph of Osama bin Laden with the warning, “It’s time for Democrats to start thinking about Dean’s inexperience.”

Regardless of your opinion of Dean, I think that anyone who wants to get rid of Bush in 2004 should find this disgusting.

Kash

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