So Tim Pawlenty has dropped out of the race for President. I’m not sure if anybody is really surprised; certainly, nobody should have expected a different outcome (I certainly didn’t). Which makes you wonder exactly why nobody bothered to tell him, although as long as the paychecks were still being signed I’m sure his advisors would have told him anything.

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• Current Mood: Chilling
• Currently Listening To: "Long, Long, Long", The Beatles

The quickest explanation of why we are in such a huge economic contraction/retrenchment is this: the real estate bubble of the aughts gave more equity to consumers in the form of rising home prices. They turned this equity into cash to fuel their spending. Now the bubble has burst, consumers have more debt than their homes are worth, and so they have cut back on spending and don’t plan on increasing it until they pay off debt. I’m avoiding how the bubble got inflated, who was responsible, etc. for simplicity. It’s boiled down two pretty much one thing: too much debt.

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• Current Mood: Rested
• Currently Listening To: "Young Americans", David Bowie

I didn’t watch last night’s Republican debate in Iowa since it sounded about as much fun as, well, listening to Rick Santorum and Herman Cain and Michelle Bachmann wax political. The highlights were more than enough for me, and even those few minutes had me utterly confused and depressed.

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• Current Mood: Friday
• Currently Listening To: "all in the name of grace", Eddy Burke
• Just Watched: Kramer vs. Kramer

On first blush, the results of yesterday’s recall elections in Wisconsin would appear to be disheartening for Democrats. They won only two out of the six elections, one short of taking over the state senate. The goal of changing the dynamics in the legislature was not achieved, and so some may feel it was all for naught. However, if you think about it a bit more, the results can only be a victory for those activists who set the recalls in motion earlier this year.

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The economy is in terrible shape these days, not only in the U.S., but around the globe. And there doesn’t seem to be any way out of it. In Europe, the debt crisis clearly calls out for two solutions, default and inflation. Unfortunately, these are anathema to the ECB, leaving the continent to muddle along until the zombie banks simply run out of brains to ingest and it all falls apart. Here, consumer spending is going nowhere (although luxury spending is just fine), while corporations sit on mounds of cash they aren’t spending. It’s hard to see how the market is efficiently allocating capital right now. It’s almost as if the tragedy of the commons is real and requires government intervention to take some of that capital and redirect it to projects that benefit everybody, like infrastructure.

I don’t see how we are going to get out of this slump anytime soon, so we may as well shoot for the moon. Why not a goal to make the country carbon-neutral by 2050? Sure, it would be a monumental undertaking, with no guarantee of success. But it would put us on the forefront of technology that is going to happen sooner or later, and what we are doing at present clearly isn’t working. Is there anybody who can provide the leadership to arouse the public support for a project like this comparable to the Apollo Program? Our country’s future may depend on it.

• Current Mood: Morning
• Currently Listening To: "The Man Who Sold The World", Nirvana
• Just Watched: Casino

One of my most talented friends, Murali Balaji, whom I have known since we were sitting in Russian class and cheering the Vikings as U of M undergrads many years ago, has started a new blog (long overdue, I say). In one of his first blog posts, he talks about the knowledge disparity in this country, and how he is in the rarefied atmosphere of academia, much different from where most people spend their lives. It definitely resonated, as I feel that I am on the same side of that widening gorge.

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• Current Mood: Weekend
• Currently Listening To: "Born in the U.S.A.", Bruce Springsteen

The U.S. defeated the Fascists, built the Interstate Highway System, put a man on the Moon, and heralded in the end of Communism and the spread of Democracy. These were major undertakings, but they were successfully completed, and with a lot of government help to boot! These days, however, all we hear from Republicans is “No We Can’t”. No we can’t raise the debt ceiling. No we can’t put people back to work. No we can’t fulfill the promises we’ve made to seniors. Enough is enough.

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• Current Mood: Fire and brimstone
• Currently Listening To: "The Burning of the Midnight Lamp", Jimi Hendrix

It’s stories like these that make me wonder if having a rational, adult conversation about budget priorities is even possible. People like roads. They use them every day. Most people would say that the quality of roads in this country is not great. And yet nobody wants to raise the federal gas tax, despite the fact that it has remained unchanged for eighteen years.

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• Current Mood: Hot
• Currently Listening To: "Casey Jones", The Grateful Dead

Over and over we are hearing that health care has to become more of a market like retail, or maybe dining: educated consumers would comparison shop for the cheapest quality care, thus keeping prices down. This is the logic behind high-deductible insurance plans, which are on the upswing: “These plans give employees some ‘skin in the game’ and an incentive to not only better manage their health but also to be a more educated consumer” one CEO says. Funny thing, though: if health care is supposed to be more like coupon-clipping and waiting for sales, it appears that somebody forgot to tell the doctors.

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• Current Mood: Lagging
• Currently Listening To: "Hallelujah", Leonard Cohen

When the mortgage bubble exploded, and the economy was sent into a tailspin, the more intelligent commentators had a plan for hastening the recovery: a big stimulus program, preferably aimed at fixing some of our country’s ancient infrastructure, and mortgage cramdown to take the sting out of the bubble collapse for homeowners. What we got was a stimulus that was too small to affect the economy much, and an incredibly ineffective program known as HAMP. As a result, the economy is stalling, and the Fed is essentially giving up: growth will be lackluster, and perhaps the unemployment rate will drift back down to normal levels by 2014, 2015, 2016…

In Greece, which is also in full meltdown mode, the sanest, most humane outcome for the Greek people would be a default on Greek bonds. Painful in the short term, but better overall in the long term. Instead, we get round after round of austerity that is supposed to improve the economy, but instead is leading to a potential death spiral. The latest idea is selling off state assets, which I guess makes sense in a perverse way: if your house is on fire and you manage to sell off the bedroom and kitchen, you can say that you now have fewer things on fire, and so you’re improving!

In both instances, the rational choices were not taken, both for ideological reasons and because it meant that the banksters would have to lose some money (the fact that at least in the U.S. there were no strong voices actively pushing for things like cramdown was also a huge problem). What’s good for the people in general isn’t what’s important; what’s important is what is best for those who already have most of the money.

As for the current deal-making on the federal deficit, the easy thing to do would be to let the Bush tax cuts expire (and winding down the wars in Afghanistan and Iraq won’t hurt either). Thus, we will end up doing anything but that. It’s only reasonable!

• Current Mood: Full
• Currently Listening To: "Life In A Glasshouse", Radiohead