Bane (or Selina Kyle's choice)*

"There's a storm coming, Mr. Wayne. You and your friends better batten down the hatches, because when it hits, you're all gonna wonder how you ever thought you could live so large and leave so little for the rest of us." 

―Selina Kyle 

Mercenary: We've started a fire?  

Bane: Yes! The flame grows higher!

Anne Hathaway's Selina Kyle is in my opinion the center of The Dark Knight Rises. She recognizes the corruption of the Gotham elite, is not of that elite and does not want to be part of it. She tells Bruce Wayne she doesn't care what they think of her. She has nothing but contempt  for them.

(Spoilers...)

The League of Shadows  (Ra's al Ghul, Talia al Ghul, Bane) sees this corruption (hedge fund manager Daggart, the mob, Wall Street) and wants to wipe Gotham clean and "restore balance." Batman/Bruce Wayne, commissioner Gordon, and Joseph Gordon-Levitt's Blake want to reform it. Obviously the League of Shadows' program would cost many innocent lives.

It's interesting to consider director/writer Christopher Nolan's take on what is corrupt about contemporary America. He includes Democratic Senator Leahy cameos in the last two films. Leahy is a big fan of Batman, but it's possible Nolan shares his politics. The opening of the film has the CIA engaging in its ruthless War on Terror and threatening terrorists with being dropped out of a plane (reminiscent of the Argentinian military junta's police state methods and Vietnam).  (The CIA officer is played by Aidan Gillen of The Wire and Game of Thrones. The black army officer on the bridge who negotiates with Bane's men is another actor from The Wire. He played the police chief who made a drug legalization haven.)

The last film with the Joker was more about 9-11, the war on terror, Binladenism, police-state/surveillance state, wiretapping and torture. This one brings in elements of the housing bust, financial crisis, nuclear proliferation, rising inequality and the Occupy movement. There are images of class warfare as the lower class has a revolution against the upper class thanks to Bane taking out the police force. In the assault on the stock market, Bane and his men disguise themselves as cheap labor: food deliveryman, a courier, a shoe-shine man, a construction worker, a janitor. (Selina Kyle sneaks into Wayne Manor disguised as a servant.) Nolan depicts the trader-banksters - and hedge fund manager Daggart - as stereotypical entitled douchebags. It's hard not to share in Bane's obvious disdain for them. One of the hostages they take looks like a young Mitt Romney.

Though not all of the rich are corrupt in Nolan's Gotham. Bruce Wayne and the Penny Pritzker-philanthropist Miranda Tate invest heavily in research into clean, sustainable energy, something "wise stewards" would do. And Bruce's wealthy parents invested in public transportation and other infrastructure projects that a non-corrupt elite would do, unlike, say, today's Republican Party and its financial backers. At Tate's charity event, reformer Bruce Wayne expresses his contempt for the elite to Miranda Tate. Tate in turn expresses her disdain for bankster Daggart when he comments on how she's losing money investing in clean, sustainable energy.

Where does Bane get his zealous recruits? At the orphanage, officer Blake interviews an orphan who says that boys who "age out" and are put on the streets - like his older brother whose body Blake found - have no job prospects, but there's work available in the sewers. Bane has a jobs program while the nation's central bank fails to fulfill its mandate by targeting a 2 percent inflation-ceiling-cross-of-gold. Another instance of the priorities of Gotham's elite.

Anne Hathaway's Catwoman must decide whether its worth it to risk her life to try to help Batman save Gotham and its corrupt elite, ground-down poor, and "silent majority." Nolan vaguely makes references to the French Revolution, Robespierre, and the storming of the Bastille. Things are so crappy for the lower orders and the corruption of the elite is so obvious, that many of Gotham's citizens do riot and rise up against the one percent. (Think of Selina Kyle's young friend or the "aged out" orphans.) They are able to do so because of Bane. He neutralizes the police force and the possibility of any intervention from the Federal government.


So it looks like the League of Shadows will succeed in wiping the slate clean, but Batman foils their plans with assists from Gordon, Blake, Matthew Modine's police chief and Catwoman. Levitt's Robin quits the police force to become a vigilante maybe because the police wouldn't let him cross the bridge, following orders. But it was Commissioner Gordon whose kindness towards a young Bruce Wayne helped Wayne become the do-gooder he became (also thanks to Alfred and Fox). Bruce Wayne/Batman also helped inspire the young orphan Blake and helped give Catwoman the chance to do the right thing and earn a clean slate.


Police officer Gordon's humanity towards the young Wayne helped create Batman.  Thanks to Catwoman decision to involve herself and save Batman from Bane, Batman is able save Gotham from a nuclear holocaust.

On a side note, the film had a number of exciting action sequences: the opening scene with the kidnapping of  a Russian nuclear scientist; the assault on the stock exchange and motorcycle chase; Catwoman and Batman versus Daggart's henchmen and the brief appearance of Bane at the end; the pièce de résistance  with massive streetfighting on the steps of City Hall with snow falling all around.

Conservatives have argued that the film is a conservative film in that it makes the left look bad. Rather I think it makes some accurate diagnoses of the current political scene. In his speech at the football stadium, Bane mentions the "myth of opportunity." That's an accurate description of contemporary America. Moviegoers are often said to pay to watch dreams and The Dark Knight Rises is a lefty dream with many details displaying a lefty take on things, including another series cameo by Senator Leahy. The outcomes aren't ideal, but this is a comic book movie. The Orwellian talk of the hanging judge at the people's court reminds me very much of the constant "2 + 2 = 5" up-is-down rhetoric of Republicans and their paid-for pundits. The class conflict portrayed on screen is a reversal of what's really happening currently with the upper classes mauling the lower class. It's a fantasy where entitled, douchebag banksters get roughed-up by avenging everyday people and where a classy jewel thief articulates our revulsion at an elite as corrupt as Marie Antoinette's 18th Century French aristocracy.

----------------
* revision from July 26th version

Trade-offs between inequality, productivity, and employment by Steve Randy Waldman

currency exchange rates

The Value of the Yen, the Dollar, and Generational Issues by Dean Baker

Remarkably, while the value of the currency is apparently a hotly debated issue in Japan (at least according to the NYT), it is rarely mentioned in the United States. This could be due to the fact that more powerful interests than retired workers support an over-valued dollar in the United States.

The financial sector typically supports an over-valued currency since it reduces the risk of inflation and it makes them bigger actors overseas. Also, major retailers like Wal-Mart have established extensive supply networks overseas that rely on being able to buy goods cheaply. Most major manufacturers have also established subsidiaries in China and other countries with low wages.

These powerful interest groups would strongly resist any effort to lower the value of the dollar and thereby make U.S. goods more competitive in world markets. This could explain why the value of the currency is debated in Japan, while the NYT tells us that is only a matter of historical concern (the 1980s) in the United States.

Mitt Romney's Big Polish Idea: Let's Debase the Dollar! by Matt O'Brian

Pole's Apart by Krugman

Monetary Expansion Works: Poland Edition by Yglesias

Gore Vidal died

Gore Vidal Dead at 86

Fire Ed DeMarco by Krugman

Easing as Insurance

Some at Fed Are Urging Pre-emptive Stimulus by Binyamin Appelbaum

The Goldman Sachs economist is quoted as saying that Greenspan eased in response to Russia's 1998 default even though many on the board wanted to tighten. Unemployment dropped to 4 percent and labor shared in productivity gains something that hadn't happened in a while and hasn't happened since.

This led to the stock bubble (and jobless recovery and housing bubble.) Say the easing was correct. What could have been done to prevent the stock bubble? 

(my view on the direction of the economy also.)

True Blood’s blood orgy has given us a vampire hangover by Meredith Woerner

Positive Outlook

With the economic outlook turning gloomy and Q2 growth at 1.5 percent, Baker points out some positive data points:

Commerce Department Issues Secret Report Showing Plunge in Housing Vacancy Rates

Good News on Weekly Unemployment Claims and No One Notices

Washington Pundits Are So Cute When They Try To Figure Out the Obvious by Dean Baker

Robert Samuelson's column lays out the factors that caused the huge surplus predicted for the last decade by the Congressional Budget Office to turn into a huge deficit. Samuelson cites analysis of the $12 trillion shift from the Congressional Budget Office (CBO) and two "non-partisan" groups, the Committee for a Responsible Federal Budget and the Pew Fiscal Initiative. 

Samuelson and these groups are careful to say that blame for this shift is widely shared, but that the largest chunk stems from weaker than projected economic growth and changes in technical assumptions. If we look more closely at the weaker than expected economic growth and some of those technical assumptions, the picture gets a bit more interesting. 

The economy grew much more slowly than expected in 2001 and 2002 because of the collapse of a stock bubble. It grew much less rapidly than expected in 2008 and 2009 because of a collapse of the housing bubble. Some of the "technical changes" were the result of much lower capital gains income than had been projected. That is what happens when a bubble bursts. (The official data probably understates the falloff, since it is likely that much capital gains income shows up as normal income.) 

In short, the main reason that the CBO projections understated the deficits over the last decade was that it twice failed to recognize asset bubbles. In fact, the impact of this failure on projections is even larger since some items on the Samuelson deficit list would not have been there absent the slower growth, like the Obama stimulus. 

So there is a clear villain in this story, economic analysts who were too incompetent to recognize two huge bubbles and the impact that their collapse would have on the economy. Unfortunately, in Washington policy circles, such failures are a badge of honor ("who could have known?" is the official motto in these parts), so these folks continue to hold their jobs and get regular promotions and increased authority. 

While we might prefer to see people with better knowledge of the economy in positions of responsibility, there is a bright side. These jobs keep people without marketable skills employed.

Doug Henwood on Cockburn

audio of interview from August 2011

In Tribute to Alexander Cockburn, 1941–2012, in The Nation

We know the how, but not the where by Ryan Avent

Yield Stories by Krugman

Maybe there’s some truth to some of these stories. But surely the dominant story is very simple: it reflects market perceptions that the economy is going to be depressed for a long time. As I’ve argued before, you really want to look at Japan, which exhibited this syndrome at a time when there was clearly no shortage of safe assets and few were talking about disaster...

SF Fed's John Williams Gets It on Monetary Policy by Yglesias

But since the Federal Reserve isn't an investor trying to make money, but rather a policy-making institution trying to achieve some policy goals, it needs to articulate those goals.

That's why it's exciting to read San Francisco Federal Reserve President John Williams calling for what's being termed "open-ended QE."

We should probably just retire the term "QE" at this point. What he's talking about is going back to doing asset purchases, but doing them in potentially unlimited quantities in order to meet a goal. You say, for example, "we're going to spend BLAH BLAH a week to try to get inflation expectations up to YADDA YADDA and if after five weeks we're not there yet we're going to start spending DOUBLE BLAH BLAH." This is not my idea of what an asbolutely optimal policy agenda looks like, but it would work much better than trying to decide how much to buy in advance....

True Blood gets high and does Vampire Karaoke, but with naked ladies and blood by Meredith Woerner

Dean Baker Reduces Uncertainty

Spanish Debt, the European Central Bank, and the Maginot Line by Dean Baker

Problems arise due to the distribution of the debt. If every third household borrowed $600,000, which was lent by the other two households, then this third household is getting deep in debt, with the other two are appearing to build up large amounts of assets.

This is what happened to Spain, the United States and other countries with serious housing bubbles. The other two households were willing to lend money to the third household because they thought it held an asset (a house) of great value. When this turned out not to be true, the third household found itself with an unsustainable debt burden and the other two households found themselves with assets of questionable value. If the third household can't repay its debt, then the loans are no longer worth their face value.

Central banks should be paying attention to the buildup of such unsustainable debt burdens. Unfortunately, the European Central Bank (ECB) was focused on building up its Maginot Line, being vigilant in its fight against inflation.

The problem now is to try to correct the imbalances created by growth of the housing bubble. Spain and the rest of Europe is getting little help from ECB which is still focused on reinforcing the Maginot Line rather than promoting growth in the euro zone. 

Something the followers of Steve Keen don't understand?

Sticky Wages and the Macro Story by Krugman

In any case, however, we are in a liquidity trap, and balance sheet effects are very important. So there is no reason to believe that cutting wages would be helpful; on the contrary, falling wages would worsen the balance-sheet problem, a point some of us have been making for quite a while. 

So when I emphasize nominal wage rigidity, I am defending an analysis of how the economy works, which is not at all the same thing as saying that this rigidity is the problem. On the contrary, for the US (though not for countries like Spain), wage stickiness is if anything good for us right now, helping stave off destructive deflation.

Michal Kalecki on the Great Moderation by Steve Randy Waldman

Alexander Cockburn: 1941-2012

Jeffrey St. Clair writes a few words

coincidently I posted about him on May 23rd

John Nichols at The Nation

Nieces Olivia Wilde and Chloe Cockburn on Twitter:

Chloe Cockburn: "My uncle #AlexanderCockburn is dead. Fierce, witty, loving, gentle, brilliant to the end. http://www.counterpunch.org/2012/07/21/farewell-alex-my-friend/ …http://www.thenation.com/blog/168996/alexander-cockburn-and-radical-power-word# …"

Wilde: "My uncle, the brilliant, kind, and hilarious Alexander Cockburn, passed away last night. He was my friend, and my hero. RIP Uncle Al."

"He taught me how to make coffee in a jar, how to listen to LPs, how to ride a horse through a river, and how to drive a classic with love."

Fed Fail

I.M.F. Warns of ‘Sizable Risk’ of Deflation in Euro Zone 

The International Monetary Fund warned Wednesday of “a sizable risk” of deflation in the euro zone, and called on the European Central Bank to begin buying huge amounts of government bonds to help hold down borrowing costs for troubled countries. 

In a report on the state of euro zone policy, I.M.F. staff said there was a 25 percent risk of consumer price deflation before 2014, and that the danger was greatest in countries like Italy where growth is slow and tax increases have made inflation appear higher than it really is. 

Deflation, a destructive decline in prices that can be extremely difficult to reverse, would make it even harder for countries like Greece, Italy and Spain to get government debt under control, the I.M.F. said, because falling prices and wages would further depress tax receipts.

Bernanke to Economy: Drop Dead by Yglesias

Appelbaum on Bernanke's testimony via his Twitter account

Will Yglesias blog a post of distilled rage?

Bernanke the Unready by Ryan Avent

BEN BERNANKE is on Capitol Hill today, providing his semi-annual commentary on the state of monetary policy. The backdrop for this testimony is as dark as it's been in some time. We would expect the American economy to manage trend growth in nominal output of about 5%, corresponding to about 3% real annual GDP growth and 2% annual inflation, give or take. In the 11 quarters since the end of the recession, NGDP growth has come in at more than a 5% annual rate only twice. In 6 quarters, by contrast, it's been below 4%. Keep in mind that the American economy fell dramatically below trend NGDP growth during the recession, and we would expect consistent above-trend growth during the recovery to make up some of the lost ground.

True Blood does very bad things to our favorite monster by Meredith Woerner

Comic-con panel on Firefly

Medicaid expansion and glibertarian lies

Let’s try to stick to the real world when we talk about Medicaid by Aaron Carroll

(via Krugman)

Retail sales negative three months in a row. Such streaks are rare, and almost always occur in recessions. We'll be wearing barrels soon! by Doug Henwood


(via DeLong)

Well today the New York Times has vanished behind a paywall.* I refuse to subscribe because they run travesties like this Tyler Cown piece on Medicaid expansion. They do have good stuff somtimes though, like this interview with Dave Eggers:

Christopher Hitchens was the most erudite and eloquent human I've ever met. He could speak on any topic, and hour of the day or night, at length, and captivate anyone in the room. I didn't agree with all of his politics, but he was always an extremely warm and generous man.

 And he was very funny.

-------------
*some stuff I can see, like Krugman's blog.

Audio of Doug Henwood on LIBOR rate fixing

The Common People

In Latest Data on Economy, Experts See Signs of Pickup by Annie Lowrey

Very Bakeresque contrarian take on the direction of the economy by Ezra Klein's wife. Also she's reporting in essence what Jared Bernstein has been saying.

Birthday Boasts by Dean Baker

The Washington Post Throws a Barrage of Non Sequiturs at Readers in Fed Editorial by Dean Baker

As a practical matter, investment in equipment and software is already pretty much back to its pre-recession level measured as share of GDP. Given the large amounts of excess capacity in many sectors this is a very strong pace of investment. If surveys can be trusted, the National Federation of Independent Businesses tells us that their members see a lack of demand as the major factor restraining hiring and investment, not uncertainty about entitlement programs. 

In short, the Post doesn't seem to have any obvious source of demand to show Mr. Arithmetic that would replace whatever demand the Fed might be able to stimulate. Many economists would point to the last part of the equation, X-M, as the way to boost the economy. This could be helped by additional quantitative easing from the Fed, since that would put downward pressure on the dollar. 

In a system of floating exchange rates, the way in which countries with large trade deficits like the United States are supposed to see their deficits move toward balance is to have their currencies fall in value. The Fed could play a large role in this process. If the dollar fell enough to bring the trade deficit into balance, it could generate close to 5 million new jobs in manufacturing. That would be a solid boost to the economy and to middle class living standards.

My uzi weigh a ton son carry it

Yellow Plenty

I'm reading Krugman's The Return of Depression Economics and he has an interesting hypothesis about the collapse of the Soviet Empire. He believes it might have been partly caused by the Soviets being demoralized by the success of capitalist development in Asia. Specifically, Japan from 1953-1973 developed at warp speed going from a largely agricultural economy to an economic powerhouse cranking out steel, autos and consumer electronics. And now robots. I wonder how they managed their monetary policy.

Don't Mess with Walmart

Janet Maslin reviews Kurt Andersen's "True Believers."

What would a young left-wing radical from the 1960s think of the 21st century? Kurt Andersen poses that question in “True Believers,” his fact-packed new book about the differences between the eras. In his opinion, a time-traveling radical might think the revolution had succeeded: no more draft, ecology taken seriously, Communist China on the rise, women in the work force, old guys with marijuana listening to rock music in sneakers and jeans. And instead of scarcity, too much information at any hour of night or day.

By coincidence I saw Oliver Stone's Savages (see above) and one of the young protaganists, Ben, seemed like a 60s throwback, or rather an example of how the 1960s ethos lives on to this day. From A.O. Scott's review of the movie:

Ben (Aaron Johnson) and Chon (Taylor Kitsch), best buds who grow the best buds on the planet, never think twice about sampling their own wares. Nor does O, the movie’s narrator and the hypotenuse of a happily triangular domestic ménage. Played with radiant vagueness by Blake Lively, O explains a lot to us, about her own household and the world beyond it. Her real name is Ophelia, and the nickname suggests, among other things, a certain emptiness. But Mr. Stone and Mr. Winslow (who collaborated on the script, along with Shane Salerno) don’t quite make her into a caricature of vacuous rich-girl blonditude. Instead they allow O to pursue and to represent a version of the American dream that is open to reverence as well as ridicule. She has everything she wants, and why shouldn’t she? 

Ben and Chon are the equal and opposite loves of her life, while she is, in her own words, “the only thing they have in common.” Chon is a combat veteran, whose tours of duty in Iraq and Afghanistan have left him cynical and suspicious, as well as tactically adept when it comes to dealing with trouble. Ben, a Berkeley graduate, is sensitive and soulful, the poetic yang to Chon’s warrior yin. Together they satisfy O and run a lucrative business, which Ben enhances by “going all Bono” and putting some of the profits to global do-gooder use.

The two reminded me of the Stone's two contrasting sergeants in Platoon played by Willem Defoe and Tom Berenger. The movie is sort of an answer to Maslin's question. The time-traveling 60s radical would find a thriving weed industry (demand is high). But sixties radicals believed small is beautiful and the 21st century witnessed the rise of Walmart and the big box store rather than the flourishing of small anarchist co-ops. The plot of the movie involves a Mexican drug cartel (Walmart) moving north of the border and attempting to acquire Ben and Chon's boutique operation. As their paid-off D.E.A. agent tells them "You don't mess with Walmart."

Why is the cartel moving north? The pie is smaller because of the recession (i.e. Fed policy) and the screenplay correctly predicts PRI has taken back over from PAN in Mexico and the PRI favors a different cartel, pushing the PAN cartel north in reaction.

Fed Fail Part XXIV

Fed Harms Itself by Missing Goals by Betsey Stevenson and Justin Wolfers

STEVENSON AND WOLFERS ON HOW NOT TO BUILD CREDIBILITY by DeLong

Explaining the Federal Reserve's Complacency by Yglesias

Betsey Stevenson and Justin Wolfers note that if the Federal Reserve didn't care about unemployment at all and merely tried to hit a two percent inflation target that would imply that we need monetary easing. So why doesn't the Fed ease? They say that failing to hit either inflation or job-creation targets undermines credibility: 

There are real costs to the Fed’s failures. Millions remain unemployed in the service of keeping inflation below its target level. We risk the possibility they may not work again as their skills atrophy and they lose hope. The Fed’s confused communications have undermined its own effectiveness and harmed its institutional prestige.

In the long run, a Fed whose word we don’t believe, and whose principles it views as optional, is a Fed that will be less able to influence the expectations of consumers and investors, rendering it less effective at pulling us out of the next economic decline.

The costs to workers and to the real economy are a quite serious matter. But as for the Fed's reputation, I'm much less sure. It seems sort of odd to think that the Fed is persistently missing its inflation target on the downside while also leaving millions to languish unemployed. The parsimonious explanation is that regardless of stated objectives the Fed is in fact trying to target something like the current inflation trajectory. You could characterize it as a policy of "inflation that's as low as possible without pushing the economy into a new recession."

The technical term is "opportunistic disinflation." When recession hits, you try to bring back growth. But you also seize advantage of the slack in the economy to push the trend level of inflation down, rather than seeking a rapid return to full employment conditions. It's morally wrong, but very consistent with the value system of modern central bankers. Recall that Jean-Claude Trichet proclaimed his disastrous turn helming the European Central Bank to be a smashing success because inflation was lower than it had ever been under the Bundesbank. By the same token, Ben Bernanke has brought us the lowest inflation of any Federal Reserve Chairman of the postwar period. You may call it prolonged mass unemployment, but he may see it as a huge success.

With Johnny Depp’s Help, Woody Guthrie Novel to Arrive in 2013

This Land Was His Land: Woody Guthrie’s Dust Bowl Novel By Douglas Brinkley and Johnny Depp

Price Data Suggest Specter of Deflation in China

True Blood serves up crazy in a pair of He-Man Footie Pajamas by Meredith Woerner

A Song of Ice and Ire

A Bruised Iceland Heals Amid Europe’s Malaise by Sarah Lyall

But during the crisis, the country did many things different from its European counterparts. It let its three largest banks fail, instead of bailing them out. It ensured that domestic depositors got their money back and gave debt relief to struggling homeowners and to businesses facing bankruptcy. 

“Taking down a company with positive cash flow but negative equity would in the given circumstances have a domino effect, causing otherwise sound companies to collapse,” said Thorolfur Matthiasson, an economics professor at the University of Iceland. “Forgiving debt under those circumstances can be profitable for the financial institutions and help the economy and reduce unemployment as well.” 

Iceland also had some advantages when it entered the crisis: relatively few government debts, a strong social safety net and a fluctuating currency whose rapid devaluation in 2008 caused pain for consumers but helped buoy the all-important export market.

Iceland's unemployment rate is at 6 percent while Ireland's is at 15 percent.  Australia has done well also.

What is a bank loan? by Steve Randy Waldman

Gas and Housing

Prices: You've Got a Friend by Jared Bernstein

No mention of housing bubble by Samuelson.

Robert Samuelson Blames the 60s Again by Dean Baker

The Wire

In the Life of 'The Wire' by Lorrie Moore

Realism and Utopia in The Wire by Fredric Jameson

But it is the genius of Lester Freamon (Clarke Peters) not only to solve these problems in ingenious ways, but also to displace some of the purely mystery and detective interest onto a fascination with construction and physical or engineering problem solving—that is to say,something much closer to handicraft than to abstract deduction. In fact, when first discovered and invited to join the special investigative unit, Freamon is a virtually unemployed officer who spends his spare time making miniature copies of antique furniture (which he sells): it is a parable of the waste of human and intelligence productivity and its displacement—fortunate in this case—onto more trivial activities that nonetheless absorb his energy and creative powers more productively than crossword puzzles, say. But Lester is also the type of the archivist-scholar capable of spending long hours on minutiae and in dusty files, which ultimately cracks open financial conspiracies all over the city; and he has deep, unostentatious, yet invaluable, roots in the community, as when he first uncovers an old photo of the youthful Barksdale in an old boxing hangout not many of his fellow officers would be likely to have any knowledge of: and to many of them he is also an inestimable mentor. This is then the sense in which The Wire not only offers a representation of collective dynamics (on both sides) but also one of work and productivity, of praxis. In both instances, then, there is at work a virtual Utopianism, a Utopian impulse, even though that somewhat different thing, the Utopian project or program, has yet to declare itself.  

But Lester’s creativity may also be said to have a counterpart on the other side. We have not yet mentioned Barksdale’s sidekick, Stringer Bell (Idris Elba), who is something like his executive officer or prime minister in the classic political situation: the police themselves also have a degraded version of this dual structure, where the second in command is however by no means as disinterested or as efficient as Bell...

...This episode then adds something to The Wire that cannot be found in most other mass-cultural narratives: a plot in which Utopian elements are introduced, without fantasy or wish fulfillment, into the construction of the fictive, yet utterly realistic, events.

Yet Sobotka’s Utopianism would remain a mere fluke or idiosyncrasy if it did not have its equivalents in later seasons of The Wire. (We could write it off, for example, by observing that the creators of the show, in their local patriotism, had taken this occasion to add in some more purely local statement.) But in fact it does, and at this point I can only enumerate the later incidence of a Utopian dimension in succeeding seasons. In season 3, Utopianism is certainly present in Major Colvin’s “legalization” of drugs; that is, his creation of an enclave of drug use closed to police intervention. In season 4, on education, it is to be found in Pryzbylewski’s classroom experiments with computers and his repudiation of the exam evaluation system imposed by state and federal political entities. Finally, in season 5, the most problematical, it is to be located in Jimmy’s invention of a secret source for funding real and serious police operations outside the bureaucracy and its budget—and this, despite the artificial crime panic he deliberately fosters, and also somewhat on the margins of what was to have been a series dominated by the newspaper and the media (for each season of The Wire, like Zola’s great series, or like Sara Paretsky’s Chicago crime novels, is also organized around a specific industry).

The future and future history have broken open both high- and masscultural narratives in the form of dystopian Science Fiction and future catastrophe narratives. But in The Wire, exceptionally, it is the Utopian future that here and there breaks through, before reality and the present again close it down.

Peaks, Troughs and Crisis by Krugman

One place where I do disagree with Ryan is in his desire to stop talking about Iceland. Yes, it’s a small island exporting mainly fish and aluminum. But you take your natural experiments where you find them. (Milton Friedman made his original case for floating exchange rates in part by invoking the example of, believe it or not, Tangier). Iceland was the only European-periphery country that received huge capital inflows, then responded to crisis not with a grim determination to stay on or pegged to the euro, but by devaluing. In the process it demonstrated that devaluation is a lot easier than “internal devaluation”, which is actually the main point.

Meloni finally gets his hands dirty on True Blood by Meredith Woerner

Attacking the Treasury View, Again by Dean Baker

The IMF had become an unexpected opponent of fiscal austerity. Its research demolished the intellectual basis for the claim that fiscal contractions could be expansionary. It also showed that, at least in the short term, there was no basis for preferring spending cuts to tax increases to reach whatever deficit goal was set as a target.
...

Of course getting to full employment is the key question, but in principle if we get back to full employment we can hope to be able to restore the virtuous circle of the decades immediately following World War II, in which gains in productivity translated into gains in wages. This, in turn, led to increased consumption, spurring more investment, and, therefore, more productivity growth. It is important that the public understand that whether macroeconomic policy focuses on full employment or inflation-fighting, it is very much a class issue. Those placing the priority on inflation-fighting have decided to impose higher unemployment and lower wages on ordinary workers as the price of achieving their stated goal.

No Respite for Liberals by Pamela S. Karlan

How Liberals Win by Bill Scher

Health care was not an anomaly for Mr. Obama. His original stimulus package never faced well-financed conservative opposition in part because the United States Chamber of Commerce backed the business tax cuts in the package. We got a Consumer Financial Protection Bureau after Mr. Obama put Wall Street at ease by resisting proposals to cap the size of banks. New standards lifting average fuel-efficiency goals were set once the White House accepted the automakers’ demand for a review in 2021 and flexibility regarding light trucks. The food safety bill empowered the Food and Drug Administration to recall tainted items but won industry support by dropping a ban on bisphenol A, or BPA, a chemical used in food and beverage containers.

The necessity of forging coalitions with corporations is understandably difficult for progressives to accept. Every time it happens, corporations seem to quickly go back to their usual tricks. They lobby to weaken enforcement. They litigate to have rules overturned. They abandon politicians who risked compromise for them. Corporations are exasperating, irritating and untrustworthy partners.

But most of the time politics is exasperating and irritating, not euphoric and cathartic. As Roosevelt himself told a group of dissatisfied youth activists in 1940, “if you ever sit here you will learn that you cannot, just by shouting from the housetops, get what you want all the time.”

Obamacare or the PPACA was aimed at fixing two problems in the broken health care system: millions of uninsured and rising costs.

It helps more people get insurance and get the health care they need.

As Dean Baker writes:

The system put in place under the ACA would put the government in a position where it could squeeze money out of providers. It could specify prices for services and procedures and tell providers take it or leave it. Given the enormous and rapidly growing size of the Medicare market, most would likely take it.

If prices keep rising a public option can still be added to help keep them down. If that works voters may finally decide to follow advanced European countries by using a single payer system which delivers the most bang for the buck.

There will still be people uninsured after 2014 when much of the ACA takes effect. Expanding the ACA to Medicare-for-all would be a major further reform that would cover the remaining uninsured and help contain price increases.

Mexico

Yglesias has been pushing the idea that Mexico is growing faster than Brazil. Is the implication that Clinton's NAFTA worked?

Dean Baker writes:

The Post's prohibition of honest discussion of Mexico's economy is apparently continuing. In a piece on Mexico's elections today, the Post told readers:

"But annual growth during Calderon’s six years has averaged a middling 2 percent."

This statement gives a whole new meaning to word "middling." If we turn to the IMF's data and look at per capita GDP growth in the years 2006-2011, we find that on average Mexico's per capital GDP shrank by 0.1 percent annually over this period. This is not middling; this performance places Mexico dead last among Latin American countries (several countries in the Caribbean did worse.)

For some reference points, per capita growth in Argentina averaged 5.8 percent, Bolivia 2.8 percent, Brazil 3.1 percent, Ecuador 2.6 percent, and Peru 5.6 percent. There is nothing middling about Mexico's economic performance over this period; it was bad. 

Hoisted from Comments: Coercion of the States Edition by DeLong

Matt writes:

Live by the Technicality, Die by the Technicality: Orin Kerr on the ACA Decision: And that drinking age requirement [that states raise their drinking ages to 21 or have their federal interstate highway funds pulled] was enacted by none other than the sainted Ronald Reagan, and then upheld by none other than Antonin Scalia and William Rehnquist in a 7-2 SCOTUS ruling. Furthermore, it's worth noting that the 21st Amendment has always been held as giving the states the power to regulate alcohol. So unlike Medicaid, it's a federal encroachment on a power explicitly reserved to the states.

The Commerce Clause and Federal Power

Wikipedia entry on the Commerce Clause


In Obama's Victory, a Loss for Congress by James B. Stewart

Will we be entering a new Lochner era?

(Roman almost stakes Bill Compton as Roberts almost staked Obamacare.)

In this season's True Blood, the backdrop is a conflict between the vampire Authority and the vampire Sanguinista movement. The Authority desires co-existence with humans via its strategy of "mainstreaming" as a matter of survival since vampires are outnumbered. The Sanguinistas believe in the literal interpretation of the vampire bible which says that humans are no more than food and to treat them as other than such is blasphemy.

Chief Judge John Roberts just acted like Christopher Meloni's Roman, the lead "Guardian" of the Authority. Roberts saw that if the conservative judges continued to act like super Senators with super vetoes - see Bush v. Gore and Citizens United - it would provoke a backlash. It would turn the U.S. into a banana republic instantly (rather than the slow erosion of Citizens United.) Likewise, Roman concludes that the Sanguinistas have not learned the historical lesson that it would be suicidal for the vastly outnumbered vampire population to start a war with humanity.

John Roberts Saves Us All by Jonathan Chait

Two fears have hovered over American liberals since the legal case against the Affordable Care Act began wending its way through the legal system. The first was a fear that conservatives would succeed in revising what Jeffrey Rosen called (in a prescient and classic 2005 New York Times Magazine story) "The Constitution In Exile" — that it would interpret the Constitution to require right-wing economic policy. A second, and darker, fear was that five Republican-appointed justices would concoct a jury-rigged ruling in order to win a huge battle that its party had lost in Congress — that wildly partisan Bush v. Gore–style rulings would now become regular features of the political scene.

The two fears were, of course, deeply intertwined. What happened, and what nobody expected, was that they diverged. The second fear was decisively refuted. The first is very much alive.

The fearful part is that five justices ruled that the Affordable Care Act cannot be upheld under the Commerce Clause. This is a bizarre and implausibly narrow reading — if Congress cannot regulate the health-care market, then it cannot really regulate interstate commerce. By endorsing this precedent, Roberts opens the door for future courts to revive the Constitution in Exile. 

But Roberts will do it by a process of slow constriction, carefully building case upon case to produce a result that over time will, if he prevails, rewrite the shape of American law. What he is not willing to do is to impose his vision in one sudden and transparently partisan attack. Roberts is playing a long game.

But it would be unfair to attribute his hesitance solely to strategy. Roberts peered into the abyss of a world in which he and his colleagues are little more than Senators with lifetime appointments, and he recoiled. The long-term war over the shape of the state goes on, but the crisis of legitimacy has been averted. I have rarely felt so relieved.

David Brooks Never Heard of Prescription Drugs by Dean Baker

At the top of the list is patent protection for prescription drugs. These government granted monopolies raise the price of drugs by around $270 billion a year above their free market price. This is roughly five times the size of the cost of the Bush tax cuts to the rich. Patent monopolies also encourage drug companies to mislead doctors and patients about the merits of their drugs, leading to poorer quality care.

A second item that Brooks somehow missed is the inefficiency of the insurance industry, which is left in tack by the ACA. We waste between 10-15 percent of our health care spending ($250-$375 billion a year) on unnecessary administrative costs as a result of our system of private insurers, as opposed to a public Medicare type program. Of course top executives at the insurers do very well with this system.

The third obvious source of waste that Brooks failed to catch was the excess pay for our doctors, especially highly paid specialists. If the pay for our doctors was comparable to the pay of doctors in Germany or Canada it would save us around $100 billion a year, or roughly two Bush tax cuts for the rich. 

It is striking that Brooks has such difficulties noticing inefficiencies in the health care system that redistribute income to the rich.

The Real Winners by Paul Krugman

Yes we can!

Peter Edelman has a new book on poverty out.  He famously resigned from the Clinton administration in protest of welfare reform. The New York Times recently had an in-depth piece about how he was in the right in light of the recent increase in poverty after the downturn. (Looking at the number he was right even before 2008.)

In 5-4 decision, Supreme Court rules for the uninsured by Ezra Klein

And, to be sure, it’s all those things. But those stories don’t capture the effect this decision will have on ordinary Americans.

The individual mandate, by bringing healthy people into the insurance market and lowering premiums, means health insurance for between 12.5 million and 24 million more Americans than if the mandate was struck down. And as Kennedy said in his dissent that the conservatives on the Court believed the entire law should have been invalidated, it means health insurance for 33 million more Americans than if Kennedy and the conservatives had their way. 

Those are big numbers, But behind them are real people. People like Eric Richter.

After Years of False Hopes, Signs of a Turn in Housing by Binyamin Appelbaum

Housing Market Continues to Show Strength by Dean Baker

Three More Governance Questions for the Fed by Simon Johnson

(via Dean Baker)

Okay I saw another contender for saddest movie ever alongside The Sweet Hereafter and Bridge to Terabithia. It's 2001 movie titled Things Behind the Sun* and stars Kim Dickens as a messed up musician who was raped as an adolescent. It's not that these movies are tearjerkers. They're sad to an extent that they're existentially horrifying.** I've always liked Dickens who was in Deadwood among other good things.*** She's 47 and according to IMDB she "made her stage debut in a student production of David Mamet's "Sexual Perversity in Chicago" at Vanderbilt University." So maybe she graduated the year before I arrived from Chicago. I visited a friend's brother the year before attending so maybe we were at the same bar or party. Yeah probably not.

--------------------
* The title is taken from a Nick Drake song (see above). In 1999, "Pink Moon" was used in "Milky Way", a Volkswagen Cabrio commercial, leading to a large increase in his record sales. The song plays at the end of the movie or over the credits, I forget which, maybe both. The film was directed and written by Allison Anders. When writing fiction in high school and or at college (in a fiction class with New Republic writer Michelle Cottle) I'd often use pop songs as spring boards for my fiction as Anders does here. Supposedly the movie is semi-autobiographical.
** As in Edvard Munch's The Scream. One of the things that makes these movie the best sad films, is that their young characters have a redeeming humanity and resilience in the face of tragedy (Although what doesn't kill you doesn't necessarily make you stronger. It can fuck you up royally basically ending your chances at a "normal" life.)
*** I haven't watched Treme but will check it out now. A new seasons starts this fall. (Adolph Reed Jr. doesn't like the show, comparing it unfavorably with The Wire.)

What was Spain supposed to have done? by Martin Wolf

(via DeLong)

True Blood finally takes off Meloni’s shirt by Meredith Woerner

Bad news for Mitt Romney and Putin.

The Coming Oil Crash by Steve Levine

Good news! Gas prices could go down to $2 a gallon by autumn -- and that's bad news for Vladimir Putin.
...
In an email exchange, Verleger pointed me to an interview he did a few days ago with Kate Mackenzie at the Financial Times. First, he explains, the Saudis are out for blood when it comes to fellow petro-states Russia and Iran, the former for failing to help calm the fury in Syria, and the latter for refusing to go to heel and give up its nuclear ambitions; in both cases, the Saudis think lower prices will produce a more reasonable attitude. In addition, Saudi Arabia is terrified of a current U.S. boom in shale oil; it is hoping that lower prices will render much of the drilling in North Dakota's Bakken Shale and Canada's oil sands uneconomical. Finally, the Saudis are well aware that low oil prices helped to turn around the global economic downturn in 1998 and 1999, and they hope to help accomplish the same now, and perhaps win new affection from the world's leading economies.

From The Guardian

Fifty Shades of Grey leaves records black and blue

Erotica trilogy breaks weekly paperback sales record, with all three books selling more than 100,000 copies in seven days

When will Zizek write about the phenomenon?

Pearlstein Gets Europe Half Right by Dean Baker

Steven Pearlstein gets half of the story of the euro zone right, it will take renewed spending supported by euro-wide bonds to end the crisis. But that is only half. To restore the competitiveness of the peripheral countries, Germany and other core countries will have to see higher inflation.

We are not going to see prices actually fall in Spain and Italy. This means that if output in these countries is going to become competitive again in a reasonable period of time we will need to see inflation in the 3-4 percent range (possibly higher) in Germany and other core countries.

In keeping with this target, the European Central Bank should be the issuer or guarantor of the bonds. This should help to bring about the higher rate of inflation that is needed to restore balance between the euro zone regions.

Stabilizing prices is immoral by Steve Randy Waldman

It is certainly true that there are groups in our society whose purchasing power we ought to collectively insure: retirees on fixed incomes, savers with moderate nest eggs. It is great that Social Security payouts are indexed, so that retirees enjoy some protection of purchasing power. But indexing is a visible, and visibly costly, form of social insurance. Because it is visible, we transparently ration its provision and allocate its costs. I do not argue that purchasing power insurance is immoral. On the contrary, we need purchasing power insurance and the state should invent explicit means to provide it. What is immoral is to hide what is arguably the government’s largest social insurance program behind the technocratic phrase “price stability”. This a scheme that forces the most precarious members of our society to insure the purchasing power of the most secure, without any limit or even any accounting of the scale of the transfer.

generational warfare fail by David Leonhardt by Dean Baker

Robert J. Gordon: Is Modern Macro or 1978‐era Macro More Relevant to the Understanding of the Current Economic Crisis? by DeLong

Martin Amis moves to Brooklyn

Even before he moved to this country, Mr. Amis nursed a fascination with it in his fiction and journalism. He titled his 1986 collection of pieces about America “The Moronic Inferno,” a phrase he took from his friend Saul Bellow.

These days, he can’t take his eyes off the presidential race, in particular “the incredible convulsions of the Republican Party,” he said. “It’s completely fascinating. What a great time to be coming to America.

“Is Mitt Romney electable?” he continued. “On the face of it, he looks presidential and he’s not stupid. But he lets himself down hideously whenever he has a victory. He looks as if he’s had five grams of coke — he’s shaking with a power rush. And that was always the most impressive thing about Obama: how he didn’t let that happen to himself. As if he didn’t feel it.”

...

A few weeks ago, he and the journalist Ian Buruma chose some of their favorite films for a discussion at the Morgan Library moderated by Antonio Monda, the ebullient Italian artistic director of Le Conversazioni literary festival. Mr. Amis chose “The Godfather,” “The Wild Bunch,” “Raging Bull” and “Blade Runner,” and got things rolling by saying, in his opinion, no good movies were made before 1966. 

After the event, Salman Rushdie, a beautiful young woman in tow, sailed up to Mr. Amis and said hello. Then Mr. Amis and Ms. Fonseca headed to Mr. Monda’s Central Park West apartment, where bowls of piping-hot pasta and glasses of Chianti were passed among a shoulder-to-shoulder crowd that included Robert De Niro and Isabella Rossellini.

Quite a party!

Getting Away With It by Krugman and Wells

As Edsall concedes, this changing face of the electorate has had the effect of radicalizing the GOP. “For whites with a conservative bent,” he writes—and isn’t that the very definition of the Republican base?—

the shift to a majority-minority nation [i.e., a nation in which minorities will make up the majority] will strengthen the already widely held view that programs benefiting the poor are transferring their taxpayer dollars to minority recipients, from first whites to blacks and now to “browns.” 

...

What the country faces, they write, isn’t a problem with partisanship in the abstract; it’s a problem with one party:

However awkward it may be for the traditional press and nonpartisan analysts to acknowledge, one of the two major parties, the Republican Party, has become an insurgent outlier—ideologically extreme; contemptuous of the inherited social and economic policy regime; scornful of compromise; unpersuaded by conventional understanding of facts, evidence, and science; and dismissive of the legitimacy of its political opposition. When one party moves this far from the center of American politics, it is extremely difficult to enact policies responsive to the country’s most pressing challenges.

(via Thoma)

The Violent Visions of Slavoj Žižek

Dean Baker reduces uncertainty

 
Jared Bernstein had mentioned this earlier

Reporting on the Housing Market: Do We Need Drug Testing for Economists? by Dean Baker

This report should have been seen as very positive news on the housing market. Unfortunately, the economists who missed the bubble still don't seem to know much about the housing market. While house prices are not going to return to their bubble levels (which no one in their right mind should want), they have bottomed out and will likely be rising modestly through the rest of 2012 and beyond. Furthermore, we are seeing higher rates of construction as the backlog of unsold homes has been whittled away in many areas. Housing is now making a positive contribution to the recovery.

Meanwhile China and India slow, causing oil prices to drop.

Chinese Data Mask Depth of Slowdown, Executives Say

Record-setting mountains of excess coal have accumulated at the country’s biggest storage areas because power plants are burning less coal in the face of tumbling electricity demand. But local and provincial government officials have forced plant managers not to report to Beijing the full extent of the slowdown, power sector executives said.

Reserve Bank Holds Interest Rates Steady to Fight Inflation

In spite of growing calls for it to support India’s slowing economy, the Reserve Bank of India said on Monday it would not cut interest rates or lower banking reserve requirements because inflation was still too high for it to act.

  
The Euro Is Flat by Krugman

So it comes as something of a shock to look at Eurostat data (pdf) on real GDP per capita (or productivity, which look similar). Sure, Greece and Portugal are relatively poor, with GDP per capita of 82 and 77 percent, respectively, of the EU average; this means roughly 76 and 71 percent of the eurozone average, since the euro countries are a bit richer than the EU as a whole. Meanwhile, Germany is at 120 percent of the EU, or 112 percent of the EZ.

But it’s no different, really, than the US situation (look under per capita GDP). Alabama is at 74 percent of the US average, Mississippi at 67, with New England and the Middle Atlantic states at 118 and 116.

In other words, as far as underlying economic inequalities are concerned, the EZ is no worse than the US.

The difference, mainly, is that we think of ourselves as a nation, and blithely accept fiscal measures that routinely transfer large sums to the poorer states without even thinking of it as a regional issue — in fact, the states that are effectively on the dole tend to vote Republican and imagine themselves deeply self-reliant.

Anna Schwartz died

Mrs. Schwartz, who earned her Ph.D. in economics at the age of 48 and dispensed policy appraisals well into her 90s, was often called the “high priestess of monetarism,” upholding a school of thought that maintains that the size and turnover of the money supply largely determines the pace of inflation and economic activity.

Fed Fail Part 10

The Recovery The Fed Wants by Yglesias

Learning to See Brown Shoots Instead of Green Ones by Jared Bernstein

On NGDP level targeting, True Blood, Tara, etc.

The Fed Keeps Slouching Towards Oblivion by Matt O'Brien

Fed Watch: Where to Next? by Tim Duy

True Blood’s got 99 plot lines, and now Rick Santorum’s one? by Meredith Woerner

Lots of whining and complaining also in the comment section along with these classic GIFs.

Money, mind, and matter: a psychocultural digression by Doug Henwood

Fed downgrades its forecasts yet again

Public Workers Face New Rash of Layoffs, Hurting Recovery

1970s Stagflation by David Glasner

Econ round-up: truncated version by Jared Bernstein

–But there are two notable tailwinds: gas prices and housing. The average price at the pump is down about 20 cents over the past few months. That’s big, and if it sticks, it will continue to help to offset the euro-drag.

I've read stories that say Iraq has been pumping a lot of oil, making up for Iran.

As Europe’s Currency Union Frays, Conspiracy Theories Fly by Floyd Norris

Conceivably, Germany learned three things from the 1992 experience, and mapped out a course with those lessons in mind. First, absent fixed exchange rates, its export-oriented companies faced the risk of periodic competitive devaluations from the rest of Europe.  

German exports had peaked in 1990, and did not fully recover until 1994. They would not fall again for an entire year until 2010, after the credit crisis devastated world trade. 

Second, a currency union could help German exports if the euro’s value were held down by less competitive economies. 

Italy had been forced repeatedly to devalue the lira as rising costs made its exports too expensive. A common currency would not stop the rising costs, but it would prevent a new devaluation.         

Finally, if Germany adopted a low-interest-rate policy, and superlow rates arrived in European nations accustomed to high rates, banks could open the credit spigot and create a debt-financed boom in much of Europe. That would invite a mushrooming of imbalances. Ultimately, deeply indebted countries would face a crisis, one that they could solve only if they acquiesced to German policies and surrendered a large part of national sovereignty.

Germany, China and the Republicans are the Axis of Fools.

Still a Phantom Menace by Krugman

To be fair, I and other have been surprised by the stubborn persistence of low core inflation; if you’d asked me three years ago, I would have predicted slight deflation by now. My current interpretation is that downward nominal wage rigidity is a bigger issue than we realized. But this is a relatively small failure of prediction compared with the dire forecasts of soaring interest and inflation rates.

Finally, I just want to flag this for the record:

Regardless of what the triumphant Keynesians would have you believe, my analysis continues to be that the current combination of monetary and fiscal stimulus is driving us toward disaster. Instead of a real recovery, the US will experience an inflationary depression. Europe, on the other hand, will suffer much less, precisely because it was not seduced by the short-term appeal of stimulus.

Yep.

The Stock Bubble Created the Budget Surplus: Not Bill Clinton's Tax and Spending Policies by Dean Baker