Wednesday, July 31, 2013

Obamacare Frenzy

Thought I would collect and post examples of the anti-Obamacare frenzy that is occurring on the Right. In the last few days, we have:

What in the world is the GOP going to do when the rollout goes pretty well beginning October 1; when the subsidies begin flowing January 1; when enrollment targets are being met or exceeded; when young people sign up in good numbers - ensuring the economic viability of the insurance pool; when evidence shows up that many folks that had been in the individual market, and were now buying their insurance in the Exchanges, did in fact end up with significant premium drops after applying subsidies and tax credits; when the numbers come in from existing employment based insurance studies that very few employees have lost coverage and that there was not so much downsizing and part-timing as the critics had said, especially now that the Employer Mandate has been deferred for at least a year - in other words, what will the GOP do when Obamacare works?

My best guess is that they will spend a lot of time putting out stories and "evidence" that in this way or that, there are problems, and that the "train wreck" narrative will come true eventually. Perhaps they will shift back to the narrative that we cannot possibly afford it, that this new entitlement will finally sink our ship of state.

A lot of evidence will be in by next summer. Will the GOP still run against it, calling for repeal? Since I am predicting a 90% chance of a successful rollout, my guess is they will not run against the ACA, and will be hugely vulnerable to smart Democratic campaigns pointing out that the GOP has tried over and over again to kill Obamacare, and that if you send these Conservative guys back to Washington they will try to take all your entitlements away.

Remember, the GOP will not have been simply defeated on Obamacare. They will (I predict) be proved wrong on essentially all of their predictions:

  • The new state Exchanges will work, contrary to all GOP predictions.
  • People with existing employment-based insurance will be able to keep their current plans.
  • Premiums for some will go up in the individual market; but for most, after computing subsidies, they will go down as plan proponents had forecasted, and not one single GOP analyst figured out that this would be the case.
  • Young, healthy people will sign up - contrary to the predictions of every single GOP politician, pundit, or analyst that I have read (and I have read plenty!). Why? Because only a small slice of the 30 million eligible uninsured are young, healthy, with no children, and with incomes over $30,000 when subsidies stop. In fact, only 6% of the under 30 year olds without insurance fit those criteria; 94% do not - hence signups will be healthy.
  • Obamacare will quickly collapse of its own dead weight, mostly because (per George Will and many, many others) there is "no rational reason the young and healthy should sign up."
Can a party be this completely wrong, not in choosing policy, but in simply making reasonable predictions about what the likely outcomes of particular policy decisions will be? Can they be almost 100% wrong and maintain any credibility?

The answer, as we all know, and sadly, is Yes, they can. But it will make the 2014 midterms a very difficult patch for our GOP friends.

Tuesday, July 30, 2013

Leadership and Other Problems

Some strong articles today on leadership and other problems in the GOP - "The Republican Leadership Problem" at Smartypants; "The Destructive Rise of the No-Government Conservatives" by Obama's former speechwriter, Jon Favreau; and "Are Republicans Too Divided to Have a Civil War" by prominent conservative pundit Byron York. Interesting articles, all of them.

Smartypants places Rand Paul and Ted Cruz in the "lunatic caucus" and Marco Rubio and Jeb Bush in the "know better but too afraid to take them on" camp. The first too, per Smartypants, wants to eliminate good government; the latter two are trying to get elected, and know they must steer away from extreme conservative positions.

Jon Favreau makes a similar distinction, using the same grouping: Paul and Cruz represent a brand new phenomenon - the coming together of the libertarian GOP and its new Tea Party wing in what Favreau calls the No-Government GOP wing, versus Rubio and Bush in the traditional small government wing. Here's Favreau:

"The goals of no-government conservatives are not primarily economic. They will propose more tax cuts in times of surplus and times of deficit. They care little when the nonpartisan experts and economists at the Congressional Budget Office say sequestration will cost up to 1.6 million jobs next year, or that immigration reform will boost our GDP, or that Obamacare will reduce the debt over time. No-government conservatives are not compelled by the evidence that temporary benefits such as food stamps and unemployment insurance put money in the pockets of those most likely to spend it at local businesses that will grow and create jobs as a result. Their only jobs agenda, their only growth agenda, their only deficit agenda is eliminating government, no matter how many people it helps or how big a boost it provides the economy."

Byron York is remarkably candid and straightforward in his article. He clearly acknowledges the divisions but then points out that the different factions are not iron-clad; they tend to shift, depending on the issue. For example,  Paul and Cruz were on opposite sides in immigration, but are standing together on going to the wall to defund Obamacare. Hence his title and theme: Republicans are too divided; the varying sides cannot stay together long enough to have a real civil war!

I believe we are seeing the initial signs of a serious fracture within the GOP. I really like Favreau's distinction: the no-government group versus the small government group - and notice, the moderate GOP wing has already been eliminated by the ascendant Tea Party.

The next few months will be critical. In my last post I said there is a 60% chance the GOP will lose the House in November, 2014. Here are my predictions on the three major "happenings" coming up:

  • GOP block on Immigration - 80% chance (no bill fore the mid-terms)
  • Government shutdown or Debt Default/Near Default - 60% chance
  • Successful rollout of Obamacare - 90% chance
If all three happen, GOP mid-term loss odds go up to 75%. If just two of the three happen, I think the odds drop to 60% (predicted above).

How would you rate the chances of one, two, or three of the three trigger events happening?

And one more thing: do you think this split within the GOP would have happened if Obama had followed his liberal critics constant advice and declared war on the GOP? As Smartypants calls it: "conciliatory rhetoric as a ruthless strategy." Our President, remember, plays the "long game', and he has played it brilliantly.

Sunday, July 28, 2013

Interview with the President

This New York Times interview is really very good. Yes we need long term budget discipline, but now is not the time for aggressive cuts. The recovery is fragile, but we need to invest for the future, in research, education, infrastructure, manufacturing. We need to put some oomph into the economy, with selective job-increasing, economy and productivity enhancing investments. The way to get the deficits down is to grow. We are doing that now - not strong growth - modest, but much better than Europe that has seen the austerity cuts go deeper than here.And what we need least of all is a "manufactured crisis" that is all about politics, and not about making the day to day lives of middle class families better.

What for me is most remarkable about the interview is the tone, the balance, the refusal to sling darts against the GOP opposition every time he is given a chance (which was often), and the reasonable, unflappable responses to questions from the reporters about how and why he screwed up in this situation and that. The President has been channeling Gandhi, perhaps King, in his non-violent responses to political attacks. Conservatives will say I'm nuts, but I'm pretty sure the public agrees with me: our President has been unfailingly thoughtful, gracious, unprickly and generous in his response to the unceasing GOP venom.

Do you know how hard that is? The attacks are personal, direct, vindictive and relentless. Staying calm, receptive, poised when the incoming fire is really designed to cripple you, to take you out of the play - this is a true Master's capacity, achieved rarely in the real world. And don't tell me that he was born this way, with a genetic predisposition to equanimity. 19th Century Continentals would have called this a "phlegmatic disposition". That's just not who this guy is. I'm a life coach. This is the work I do - coaching people who want to develop their leadership capacities. One of the key qualities awake leaders try to develop is centeredness, quiet and calm at the center of one's being, so that we can stand quiet when all around us is falling apart.

Yes, some people are born with a predisposition to quietness, introspection, and a positive outlook. But if you can wind up into powerful, emotional, preacher-like cadence, as you rally the troops to share your vision, you are too close to the fire to be "phlegmatic", or just naturally calm. Fire and cool - that's what our President has; and I guarantee you those qualities don't show up without a ton of personal, self-awareness work. Our President is a Master. I promise you. And we are truly blessed.

But back to the speech: being calm and collected does not mean you can't be sharp as a razor. Take this exchange on healthcare:

NYT: Polls this week have shown your health care law has lost support. What are you going to be doing to build support?

MR. OBAMA: We’re going to implement it.

And the reporter was left speechless, and moved on to the next question.

We are blessed, my friends. Truly blessed.

The GOP is angry. Its base is angry. Its leadership is angry. There are some (Senators McCain, Graham, Coburn and Rep. Cole) who see that the Government shutdown or debt default is disastrous. They will not carry the day. My predictions:

  • An immigration bill will not be signed this year.
  • Either the GOP will shut down the Government over the budget or they will take us up to the brink on the debt ceiling, possibly requiring the President to exercise his 14th Amendment powers to protect the country's national debt.
  • Based on the above taking place, the GOP will lose the House in 2014.
  • Obamacare will open on schedule. Many premiums will actually go down, especially after including the subsidies and tax credits. Employers will not dump large numbers of employees  into the Exchanges. And young people, largely due to the subsidies/credits making insurance affordable, will sign up. Obamacare, said simply, will work. Not without glitches, but it will work.
  • If all the above happens, we will mark this Fall as the denouement of the Republican Party.
I put the odds at 60%. This is the long game Obama has been playing for. The GOP has continuously underestimated this man.

As Julia Roberts said in Pretty Woman: "Big mistake."

Thursday, July 25, 2013

The Manchurian Candidate

Many on the Left think the President is a Manchurian Candidate: he came in professing deep commitment to Progressive values, but at the core, he is a neoliberal elitist, fully in the pay of Wall Street; committed to protecting the banks from any exposure to the GFC mess they caused; only pretending to support immigration reform; and most of all wanting to make the Grand Bargain (the Great Betrayal) that would gut Medicare, privatize Social Security and firmly cement his legacy as the President who destroyed liberalism. Naked Capitalism is a prime example of this point of view.

Take today's blog on Naked Capitalism: Michael Hudson Shreds Obama's Orwellian Speech on Middle Class Prosperity.  It's a merciless hatchet job, and you won't find a more ideologically rigid perspective anywhere on the right. Frustrating, because blog founder Yves Smith, formerly of Goldman Sachs, is one of the smartest analysts I've run into on the web.

Here are some questions I would like to ask Yves or Michael Hudson:

  1. Do you really think Obama sold his soul to Big Finance for $15 million in 2008, falling to $5.5 million in 2012 (see here)? This was less than 2% of his 2008 total and under 1% of the total raised in 2012. Also, Goldman Sachs dropped from his second largest contributor in 2008 to his 53rd largest in 2012. They obviously were not pleased with the service the President rendered.
  2. Isn't it possible that he consistently (and, I agree, incorrectly) deferred to Geither over his Treasury Secretary's advice to go easy on the banks, in order to facilitate the recovery, instead of being in a dark, subterranean conspiracy to screw homeowners and enrich the banks?
  3. You do remember that he did raise the minimum wage in 2009, don't you (see here)?
  4. You do know that he lowered FICA from 7.65% to 5.65% in 2011 and 2012, before raising it back to 7.65% in 2013 as part of the fiscal cliff deal (see here)? And you do understand that one of the reasons he felt he had to move it back up to 7.65% is so that Social Security critics would not be able to say the Social Security will soon be bankrupt? (Obviously, if you know your MMT, you know that the Government does not really need a dedicated funding source to fund Social Security, but the public doesn't know that, and amazingly enough, Presidents do best when they work within the concepts public understands.)
  5. Do you really think that Obama defines high quality education as whatever non-unionized teachers provide? How do you account for the enormous amount of work educators in 40 states have done on Common Core standards and new methods of testing for both College and Career Readiness (see here)?
  6. What in the world does Michael mean by dissing the very modest progress in Manufacturing jobs, by saying that the Government includes "junk food and other ballast" in the manufacturing job category? That is just crap, and sloppy crap at that (see here and here).
  7. Do you know why 3/4 of medical bankruptcies involved people with insurance? Because these folks had crappy insurance, with limits or loopholes or the like. The ACA sets tough new standards and will effectively eliminate medical bankruptcies. If you think I'm wrong, let's make a penny bet and check in with each other in 2-3 years.
  8. Can you rigorously defend the claims you (Michael Hudson) make in this sentence: "Healthcare is going to remain overpriced, with bad incentives, too much bureaucracy, and too many costly middlemen"? The cost curve is bending. The ACA has set off a small revolution as providers move to Electronic Medical Records and away from fee-for-service healthcare delivery. We will witness a remarkable productivity jump in healthcare precisely because the incentives have been shifted, and through IPAB, there is a kaizen or constant improvement process testing, and a politically unstoppable way to scale up ideas and practices that test well. Again, a penny bet and let's check back in 2-3 years.
  9. What are you and Yves going to say when the President leaves office in 3 and 1/2 years and there has been no gutting of Medicare, Medicaid or Social Security? Will you allow the possibility that he played the Republicans austerity game with them, because he felt he had to - that he felt the only way to engage the austerity and debt fanatics was to play the game with them, get to $4 trillion in cuts and taxes over ten years that would lower deficits and stabilize the debt; that the whole austerity/Grand Bargain game was a political dance that the President eventually won - which is about to happen, when the Congress blows up over the CR or the debt ceiling this Fall, and Obama wins a huge victory? Or will you say he just wasn't smart enough to effect the Grand Betrayal and gut entitlements?
I've read the Chris Hedges piece that Yves linked to - America is a Tinderbox and the Bill Robinson piece - Global Capitalism and 21st Century Fascism. Obama frightens you, as so much of mid-20th Century capitalism frightened and discouraged Antonio Grammsci, when he saw how folks were hoodwinked into supporting The Big Con. Obama just might succeed, you fear. Obamacare might work. Immigration reform may happen. income inequality may begin to shrink a bit. Hope may actually catalyze positive change. And the Fat Cat Bankers will never get properly broken on the rack as a proper structural power change, or revolution, would ensure.

Without an overthrow of the Fat Cats, we are doomed to become a 21st Century Fascist state. From my perspective, if Republicans win, this might happen.

What I have struggled mightily to understand is - if you fear this scenario, why are you working so hard to take down the one person most likely to prevent it?


In the next year or so, I predict Japan will be a game-changer. The country will grow robustly, contrary to many economists' expectations, including all of the deficit and inflation hawks. What's going on?

As Ambrose Evans Pritchard of The Telegraph explains in this article today (here), new Prime Minister Shinzo Abe is taking a leaf from the book of pre-World War II Finance Minister, Takahashi Korekiyo, and combining very aggressive fiscal and monetary policy to lift Japan out of the deflation/low growth doldrums.

"Abenomics is working," says Klaus Baader, from Societe Generale. The economy has roared back to life with growth of 4pc over the past two quarters – the best in the G7 bloc this year. The Bank of Japan's business index is the highest since 2007. Equities have jumped 70pc since November, an electric wealth shock.

"Escaping 15 years of deflation is no easy matter," said Mr Abe this week, after winning control over both houses of parliament, yet it may at last be happening.

Prices have been rising for three months, and for six months in Tokyo. Department store sales rose 7.2pc in June from a year earlier, the strongest in 20 years.

Why might this be a game-changer? Stimulus works. And it works best when combined with aggressive monetary policy. We used to know that. John Maynard Keynes, an economist hero of the Depression, who developed the case for fiscal policy when demand was deficient to power the economy to full employment, reigned supreme until the mid-70s'. Milton Friedman, the Monetarists, and the Chicago School succeeded him. Reagan took some of this brew, combined it with Supply-Side Economics, and US policy-makers never looked back.

The GFC (Great Financial Crisis), that should have thrown this neoliberal orthodoxy out the window, simply failed to do so. We got the Stimulus, but only barely. Europe had even less stimulus, before it quickly reverted to neoliberal, inflation-fighting, there-is-no-demand-problem form. Austerity, in simpler language. And the neoliberal argument was, and continues to be: "Cut Government spending. Reduce deficits. And businesses will begin investing, because their confidence will have improved through this demonstration of fiscal propriety."

What's happening in Europe is, for me, convincing evidence that austerity does not work to create demand. It works to reduce demand even further, resulting in a downward sloping deflationary path. Here in the US we had insufficient stimulus to really knock unemployment down, but just enough to move us into modest, still fragile growth. Obama has done a brilliant job holding off the mad dogs of the GOP that wanted radical budget cuts, to turn around the debt and save us from imminent economic calamity. But he could not completely stymie the budget cutters, viz. the mess of the sequester.

Now enter Japan. Beginning in December, when he was elected, Prime Minister Abe and new Bank of Japan Chair, Haruhiko Kuroda, have been flooding the markets with money and the economy with fiscal stimulus. Just Sunday, Abe won a landslide election, putting his Liberal Democratic Party in control of both houses of Parliament, for the first time in many years. He intends to move forward with market-opening reforms, particularly in the hugely inefficient agriculture sector. We are starting to hear real noises that Japan will join the Trans Pacific Partnership, a trade pact under negotiation right now, and likely to have a giant impact on the Pacific region in coming years (even China is now considering membership).

Japan is starting to grow. Inflation/deficit hawks (i.e., most mainline economists) consistently and loudly say this is simply insanity ("How can you add more debt onto one of the most indebted countries in the world?") They predict the bond market will plunge (quite possibly collapse), causing JGB (Japanese Government Bonds) interest rates to spike, threatening the solvency of the Japanese Government, threatening a complete meltdown. Even Pritchard in this article is not sure if the low 10 year JGB interest rates can hold; he suspects this high money/high spending strategy may well blow up.

It won't. Why I am sure it won't will be the topic of many future blogs. One of the things I've been doing in my 18 month blog sabbatical is studying economics, particularly a relatively new school called Modern Monetary Theory, or MMT. I have concluded that MMT has it right (they are among the very few that called the 2008 GFC) and the neoliberals and other VSPs (Very Serious People, per Krugman) have it absolutely wrong. More about all this later.

So how might Japan and Abenomics be a gamechanger for us. If they demonstrate that fiscal stimulus, combined with aggressive monetary policy works, and works Big Time, the progressive voices calling us to do the same will, I hope, become a deafening chorus. And at the same time, the Eurocrats will be made to look the policy fools that they are, and Europe can begin to grow its way back to life.

I am ever hopeful!

How Do They Do It?

Marco Rubio just put up an editorial on Fox News' website titled "America - It's Not Too Late to Stop Obamacare Train"(here). Here's the money quote:

"This September, Congress will have to pass another short term spending bill to fund the federal government. We should pass one that keeps the government open, but doesn't waste any more money on ObamaCare.

The president and his allies – and even some Republicans – will accuse us of threatening to shut down the government. In fact, it is President Obama who insists on shutting down the government unless it funds his failed ObamaCare experiment."

How do they do it? And this guy will be a candidate for President in 2016? Come on!

Republicans are going to overreach, and overreach big time. Consistently treating the electorate as dumb is not a winning strategy.

Tuesday, July 23, 2013

Food Stamps

Had a heated discussion with my Aunt at dinner tonight about Food Stamps. Her conservative sons had told her that folks they had heard of were buying turkey and roast beef with their Food Stamps, which was clearly not right. I asked her why this was wrong, and she said that if they are having their food paid for, they shouldn't be ordering fancy things, as much and as often as they liked.

I more or less lost it; said she had no idea what she was talking about; that people who qualify based on income are given a fixed amount per month; that they could buy what they wanted, but if they weren't smart about it, they would be out of money in no time. She said I was nuts and that I ought to go and watch how people use the food stamps to discover what's really happening.

So I did a quick Google search to see if I was nuts, and to my relief, found I was not. Here's my source.  Food stamps are given out based on income level for the household; are credited to your account once a month; you can buy any food in the store that is not taxed - so no alcohol, cigarettes, or most deli items; you have a sort of debit card with your ID that runs down to zero as you use it, and will be automatically replenished at the first of the month. The maximum a single person can get is $162 per month or $5.40 per day. As you add people to the household the per person max goes down; so a two person household can, at most, receive $298; a three person household, $426.

How would you do at $1.80 per meal? I would, quite simply, die.

I really have no patience for people who make judgments with incomplete and incorrect information. And why have so many of us decided that the poor and struggling are just trying to rip us off? The conservative meme in this country is making us mean spirited.  And that is not who we are.

Our First Lady

These images are from FLOTUS greeting people at the National Council of La Raza and a visit to Sterling Farms Grocery in Marero, La, where a local African American entrepreneur opened a store, post-Katrina, with lots of fresh produce to help folks in the neighborhood eat more healthy foods   (from

The Coming Fight

I think we are in for some terrific political theatre this fall. Look at the pieces that are coming together and need some kind of resolution:

  • Budget resolution, needed by September 30
  • Debt ceiling increase - Treasury Secretary Lew just said we're good at least through Labor Day
  • Immigration reform - what will the House do?
  • Obamacare - Exchanges are supposed to open October 1
What's the Current Wisdom? Nobody much seems to know for sure. So let me give it a try:

 I think there will be a Government Shutdown during the first two weeks of October. The GOP will insist on defunding Obamacare as part of the new budget resolution. Dems will refuse. No new budget or Continuing Resolution will be passed by September 30. The Government will shut down.

And then what? Republicans will be forced to cave. Completely. The President won't budge. The Dems and the public will back him. It will be a rout. The Exchanges will either open on time, or will be delayed a month, and will work pretty well, disproving both GOP and many liberal critics. Conservatives still won't pass a comprehensive immigration reform bill through the House. But a debt ceiling increase will be approved with no conditions by the end of October.

If you're a Republican, this scenario will be more than a bit unsettling. If it happens, the odds of the GOP losing the House in the Midterms goes from almost nil to likely in my book.

Despite the pain, I hope it happens. We really do need more accountability in our political process. It is wrong that the House GOP can hide behind their big 2010 win in their gerrymandered districts, with little apparent interest in considering what the broader public really want and need. And they should pay a price for continually underestimating the President. They are sure he will fold. He won't.

Monday, July 22, 2013

The Bidens Visit Gandhi's Bilal House

This is very touching.Wouldn't have guessed that Biden had learned deeply about Gandhi, and felt who he was. Gandhi's Granddaughter is on the mark: when we connect at the heart level, we know we are part of each other's family.

Sunday, July 21, 2013

Starting Again

After about eighteen months of quiet, have decided to restart my blog. The time off was helpful: believe my perspective has deepened and I'm a bit less attached to being right. Oh yes - am also a bit less angry at those who disagree. Not sure how often I will post. Most likely 4-5 times a week.

I believe the US is at or approaching a turning point. So are many other parts of the world, in particular Europe, Japan, China and much of the Middle East. Three years from now, in the mid-summer of 2016, as we move into the final leg of the 2016 elections here in the US, there will be, I predict, some big changes from where we are today. Here's a short list of predictions:

  • The Republican Party will be in disarray. They will have barely held the House in 2014 and did not retake the Senate. They look on track to nominate Sen. Ted Cruz, who is way behind Hillary in the polls.
  • After the near disaster of November 2014, GOP leadership in the House finally pulled together and pushed through Immigration Reform, with a path to citizenship. Hispanics are wildly enthusiastic about their place in the US, and it looks like they will show up in large numbers at the polls in November, mostly to vote for Hillary.
  • Obamacare is working, and working very well. 20 million people have signed up in the Exchanges, most of them previously uninsured. An additional 10 million -people have been added to Medicaid. Every state except Texas that refused to set up an Exchange or accept the Medicaid expansion have caved in and are actively in support. Employers did not dump employees from their existing plans. Young and healthy people did sign up, contrary to GOP expectations. The employer mandate was waived permanently, so the 30 hour part-time issue disappeared. And the 2009-2013 cost moderation in overall healthcare costs has continued through 2016, making it very clear that providers, by adopting Electronic Medical records and moving away from Fee for Service, are learning how to make healthcare delivery more efficient. Turns out that the GOP was wrong on every single prediction they made about Obamacare, and it looks like they will be punished for it at the polls in November.
  • With healthcare costs under control, the talk of long term budget and debt disaster - primary GOP talking points - has almost completely disappeared. The economy has been strong, supported by the continuing energy investments, the stimulus infusion from healthcare transfer payments, and the amazing exuberance of the Hispanic community fully emerging from the shadowlands, where much of it had been residing. CBO projects 4.5% nominal GDP growth, with a modest 3% deficit. Inflation, despite the robust growth, is still under 2.5%. The Fed has moved short rates to .75% and 10 year Treasuries are about 3%, way under what inflation hawks had forecasted.
  • The Eurozone has broken up, overloaded by the weight of its austerity programs. The Eurocrats, under German leadership, never relented, insisting on continuing budget cuts, doing nothing to stimulate demand. Italy, under Beppe Grillo's Five Star program, was the first to leave. Spain, Portugal, Italy, Greece and Cyprus soon followed. With their own sovereign currencies back again, Southern Europe looked poised to be back in the growth column in 2017. Germany, Austria, Holland, Belgium and Finland have stayed together in a Northern European bloc, and their trade sectors have struggled with the newly appreciated Euro, after Southern Europe's departure. France, after considerable soul-searching has stayed with Germany and the northern bloc.
  • Japan under Abenomics has boomed. Nominal growth continues to top 4%. Inflation has moved up to 1.5%. 10 year JGBs are near 2%, well below inflation hawks' expectations. Government deficits have been in the 10% range; debt has increased; yet most are not worried, saying, "How can we go broke when we have our own currency?" The success of Abenomics, with its aggressive government-directed demand stimulation, combined with the utter failure of austerity in Europe, has put a large puncture wound in neo-liberal, high austerity, low government engagement economics. Keynes is ascendant again.
  • China, on the other hand, has had tough sledding.  Growth is averaging 3.5%, as it becomes clear that rebalancing the economy away from exports and investment and towards the consumer and consumption is a longer, harder road than many had thought. Michael Pettis has clearly won his bet with The Economist, who bet that China would catch the US in 2016. At this point it does not look like China will ever catch the US, while more and more pundits are making the case that the 21st Century, far from being a time of decline for the US, will be The American Century.
  • One of the truly unforeseen positives from the Trans Pacific Partnership Trade Pact, that has just been signed, is that China and Japan are using its requirements to mediate their maritimes disputes, and it looks like the waters of the Western Pacific and the South China Sea are mostly peaceful, with no great power confrontations.
  • Two other breakthroughs have changed everyone's War/Peace calculations: Iran has agreed to thorough and intrusive inspections of their nuclear program to demonstrate there will be no weaponization, and sanctions are in the process of being dismantled. China has finally decided to rein in North Korea, and an agreement has been reached on eliminating their nuclear capability. In the Middle East, although Syria is still unstable (living under international peace treaty with peacekeepers from a variety of Arab states), negotiators are cautiously optimistic about an Israeli-Palestinian peace deal.
  • Finally, in the US, with the collapse of neo-liberal, austerity economics, and the reemergence of Keynesianism, new macroeconomic approaches are being adopted on an experimental basis. Specifically, Modern Monetary Theory, which argues that the US, as a sovereign currency issuer, always has enough money to invest in important public policy priorities. The constraint on spending is not deficits, per se, it's what are the economic resource constraints that would cause new spending to translate into higher prices, instead of higher output. Under MMT policy input, the US is beginning to experiment with a Job Guarantee program, where everyone willing to work is given a basic wage in the new Infrastructure Redevelopment program, backed up by self-selected on job training in crafts and skills useful for the future. Through programs like this and the stronger regulatory focus in the financial sector, folks are beginning to be hopeful about redressing the enormous income inequalities that developed before and after the Great Crash.
These are some of the areas and issues I will be following. As you can see, I'm an optimist (although if you're a Republican, a European, or a Chinese, you might disagree with that characterization). I think many things are about to move in a defining direction. I look forward to sharing my musings and analysis as we go forward.