"It's better to remain silent and be thought a fool than to speak out and remove all doubt." -- Abraham Lincoln.
The Constitution doesn't grant free speech; it guarantees a right we already have.
You have a right to express your opinion. I have a right to ignore you.
"Any growing interest in soccer can only be a sign of the nation's moral decay. If more Americans are watching soccer today it's only because of the demographic switch effected by Teddy Kennedy's 1965 immigration law. I promise you: No American whose great grandfather was born here is watching soccer. One can only hope that in addition to learning English these new Americans will drop their soccer fetish with time. " -- Ann Coulter.
The depth of her idiocy continues to astound. -- ER philosopher in residence Dinty Ramble.
The arch-conservative pundit Ann Coulter posted the above rant last week, and the backlash was widespread and varied, with reactions coming from the media both right and left. Nearly all of them negative.
Perhaps immigration control agents can identify "true Americans" from illegals by asking questions about baseball, basketball or football (American style) and if they can't answer correctly they will be immediately deported. No matter that many stopped following baseball when the Dodgers left Brooklyn. If such questions worked for GI's in WW2, surely it will work again today.
No matter that baseball itself evolved from various stick and ball games, including cricket, found in many other countries. No matter that American football descended from rugby, which was first called "rugby football" to differentiate it from "association football," also known as "soccer." No matter that most of the action in American football involves carrying the ball in your hands. No matter that the only "true American" sport is the one developed by native tribes and now known as lacrosse -- a French term, by the way.
Coulter claims that the growing interest in futbol, as it is known around the world, is evidence of America's "moral decay."
Are you for real? Or is your ranting solely meant to entertain? Surely you can't be serious.
"I am serious. And don't call me Shirley." -- Leslie Nielsen.
Sunday, June 29, 2014
Thursday, June 26, 2014
Write to the Litter Bin
ER followers worldwide were venting their ire after yesterday's posting. Here's a summary of their comments.
Millions of American citizens live abroad, but they have even less chance of getting a message to Congress than those still in the U.S.
Congressional websites require a current U.S. residence and zip code in the email message format. If not, the message goes to a cyber litter bin.
In addition, these millions of conscientious voters have the right to use absentee ballots, but many of these overseas citizens question whether their absentee ballots, now submitted electronically, are even counted.
As for letters sent to regional offices, one ER follower noted, "We have one good 'thinking' person (in our district) and a couple of -- well, who knows what they think."
The ER resident philosopher Pug Mahoney wondered whether they think at all. And as for the idea that eventually they may actually read some of the letters, the cynical side of Pug wondered whether they have that ability.
Some of us even remember a vice president who couldn't spell "potato."
Millions of American citizens live abroad, but they have even less chance of getting a message to Congress than those still in the U.S.
Congressional websites require a current U.S. residence and zip code in the email message format. If not, the message goes to a cyber litter bin.
In addition, these millions of conscientious voters have the right to use absentee ballots, but many of these overseas citizens question whether their absentee ballots, now submitted electronically, are even counted.
As for letters sent to regional offices, one ER follower noted, "We have one good 'thinking' person (in our district) and a couple of -- well, who knows what they think."
The ER resident philosopher Pug Mahoney wondered whether they think at all. And as for the idea that eventually they may actually read some of the letters, the cynical side of Pug wondered whether they have that ability.
Some of us even remember a vice president who couldn't spell "potato."
Wednesday, June 25, 2014
Write to Congress? Fuhgeddabowdit!
Got a complaint? Write your congressman or woman.
Fuhgeddabowdit! -- New York City dialect for Guideline No. 1
Guideline No. 2 : "For security reasons, mail delivery to United States Capitol offices is very slow. The best way to contact me or my Washington, DC staff is via the contact form on this page, or either by fax or by phone." -- From a senator's web site.
For those with computers, it's hard enough to send a message to your representative in the U.S. Senate or House of Representatives. For those without, don't bother.
Assuming you have a computer, or have access to one at your local library and are able to get there and you know how to use it, here's what you have to do:
Go to the congressional web site (http://www.usa.gov), click on your state, find your representative, go to that representative's web site, click on "contact," set up the message format, fill in all the required fields, such as name, address, home phone, email address (yours, which leaves you open to a deluge of emails from the congressional office in the future, but if you're at a public computer and you don't have an email address, follow Guideline No. 1: Fuhgeddabowdit and go away), then select and click on a topic from the limited choices, fit your message into the designated space, and, finally, type in the security code and hope the computer recognizes it so you don't have to try again. If you can't decipher the camouflaged security code, see Guideline No. 1 and go away.
If the above is too tiresome or too complicated or you don't have a computer, see Guideline No. 1.
Otherwise, if you still want to do it the old-fashioned way and send your message via the Postal Service, see Guideline No. 2 and then follow Guideline No. 1.
You could, of course, mail your letter to the regional office of your Congressional representative. If you don't have the address, you can look it up on your computer. Oh, wait, you don't have one. Maybe the phone book will have it.
Once you have found the address and typed up or hand-written your congressional complaint, you affix a stamp and drop the letter in the mail. In a few days, the Postal Service will dutifully deliver it to the local congressional office, where an aide or intern will open the envelope, read the message and decide whether it's worth bringing it to the attention of the senator or representative. Assuming he or she is there and has the time and inclination to read it.
Meanwhile, you can expect a non-responsive response such as this, received within minutes of a message sent from ER headquarters today: "Thank you for contacting my office. I appreciate your taking the time to share your thoughts about current issues. Please be assured that constituent correspondence will receive a reply in the near future."
Or this: "Thank you for contacting me. Your e-mail has been received and will be responded to shortly. P.S. If you would like to respond to this message, please use the contact form on my website:"
Don't hold your breath.
And for those who are determined to write to their congressional representatives in Washington, be prepared to go to the desired web site or web sites each and every time you want to communicate, and be ready to follow the same procedure as above each and every time for each and every member of the Senate or House.
As for compiling your own mailing list so you can send future messages to all your congressional representatives with just one click, see Guideline No. 1:
Forget about it and go away.
Fuhgeddabowdit! -- New York City dialect for Guideline No. 1
Guideline No. 2 : "For security reasons, mail delivery to United States Capitol offices is very slow. The best way to contact me or my Washington, DC staff is via the contact form on this page, or either by fax or by phone." -- From a senator's web site.
For those with computers, it's hard enough to send a message to your representative in the U.S. Senate or House of Representatives. For those without, don't bother.
Assuming you have a computer, or have access to one at your local library and are able to get there and you know how to use it, here's what you have to do:
Go to the congressional web site (http://www.usa.gov), click on your state, find your representative, go to that representative's web site, click on "contact," set up the message format, fill in all the required fields, such as name, address, home phone, email address (yours, which leaves you open to a deluge of emails from the congressional office in the future, but if you're at a public computer and you don't have an email address, follow Guideline No. 1: Fuhgeddabowdit and go away), then select and click on a topic from the limited choices, fit your message into the designated space, and, finally, type in the security code and hope the computer recognizes it so you don't have to try again. If you can't decipher the camouflaged security code, see Guideline No. 1 and go away.
If the above is too tiresome or too complicated or you don't have a computer, see Guideline No. 1.
Otherwise, if you still want to do it the old-fashioned way and send your message via the Postal Service, see Guideline No. 2 and then follow Guideline No. 1.
You could, of course, mail your letter to the regional office of your Congressional representative. If you don't have the address, you can look it up on your computer. Oh, wait, you don't have one. Maybe the phone book will have it.
Once you have found the address and typed up or hand-written your congressional complaint, you affix a stamp and drop the letter in the mail. In a few days, the Postal Service will dutifully deliver it to the local congressional office, where an aide or intern will open the envelope, read the message and decide whether it's worth bringing it to the attention of the senator or representative. Assuming he or she is there and has the time and inclination to read it.
Meanwhile, you can expect a non-responsive response such as this, received within minutes of a message sent from ER headquarters today: "Thank you for contacting my office. I appreciate your taking the time to share your thoughts about current issues. Please be assured that constituent correspondence will receive a reply in the near future."
Or this: "Thank you for contacting me. Your e-mail has been received and will be responded to shortly. P.S. If you would like to respond to this message, please use the contact form on my website:"
Don't hold your breath.
And for those who are determined to write to their congressional representatives in Washington, be prepared to go to the desired web site or web sites each and every time you want to communicate, and be ready to follow the same procedure as above each and every time for each and every member of the Senate or House.
As for compiling your own mailing list so you can send future messages to all your congressional representatives with just one click, see Guideline No. 1:
Forget about it and go away.
Biting the Hand that Helps
The U.S. economy slid worse than expected in the first three months of this year, by 2.9 percent, compared to a 1 percent drop in an earlier estimate, the Commerce Department said today.
As noted here earlier this month, the U.S. economy began to slide last fall. The first quarter drop of 2.9 percent is a sharp turnaround from the fourth quarter increase of 2.6 percent. The July-September period saw a prosperous jump of 4.1 percent.
So a change in the growth rate from positive 4.1 percent to positive 2.6 percent to negative 2.9 percent in less than a year is a clear downward trend. And if the second quarter, which ends June 30, also posts a negative rate, that fits the definition of recession: Two consecutive quarters of decline. We'll know July 30, when the first estimates come out.
Meanwhile, the Party of No is continuing its rant to shut down the Export-Import Bank, a government-sponsored facility that helps American firms do business overseas. Notwithstanding the fact that the Ex-Im Bank actually posts a profit and contributes $1 billion to the U.S. Treasury yearly, the ranters insist that the lending facility is a waste of taxpayer money.
One of the reasons for the economy's poor performance in the first quarter was a decline in exports, according to the Commerce Department, even as imports increased. There was also less inventory investment, as well as declines in state and local government spending.
Separately, the chief of the Ex-Im Bank today struck back at the naysayers in the agency's annual report to Congress.
"There is no stronger brand in the world than ‘Made in America,’ but the increasingly aggressive approach by some foreign competitors in the export financing marketplace presents an ever-growing threat to U.S. jobs,” said Export-Import Bank Chairman and President Fred P. Hochberg. “Our job at the Export-Import Bank is to back American workers and ensure that U.S. exporters, especially small businesses, remain competitive and have the support they need to export their products and create jobs here at home.”
Last year, the bank approved more then $27 billion in guarantees, export-credit insurance, and financing to help foreign buyers buy U.S. goods and services. In doing so, the Ex-Im Bank earned more than $1 billion above the cost of operation, the report to Congress said. These moves supported $37.4 billion in export sales and 205,000 American jobs. And nearly 90 percent of these projects were for small businesses, the Ex-Im Bank said.
The downturn in GDP (Gross Domestic Product, the total value of all goods and services produced in the U.S.), "primarily reflected a downturn in exports," in addition to the other declines, the Commerce Department said.
So if the economy is declining because American firms can't sell stuff overseas, the answer is to stifle their ability to get financing to help sell their stuff overseas, according to ranter reasoning.
Never mind fact or reality, that without Ex-Im Bank financing American firms lose a competitive edge. If government does it, it must be bad, goes the mindless reasoning. Perhaps corporate leaders and the Chamber of Commerce, as well as some few politicians who understand arithmetic, can override the Tea Party verbosity and get Congress to reauthorize the Ex-Im Bank. Oddly, even the ranters most strident in opposing the bank have voted to keep it alive in the past.
As noted here earlier this month, the U.S. economy began to slide last fall. The first quarter drop of 2.9 percent is a sharp turnaround from the fourth quarter increase of 2.6 percent. The July-September period saw a prosperous jump of 4.1 percent.
So a change in the growth rate from positive 4.1 percent to positive 2.6 percent to negative 2.9 percent in less than a year is a clear downward trend. And if the second quarter, which ends June 30, also posts a negative rate, that fits the definition of recession: Two consecutive quarters of decline. We'll know July 30, when the first estimates come out.
Meanwhile, the Party of No is continuing its rant to shut down the Export-Import Bank, a government-sponsored facility that helps American firms do business overseas. Notwithstanding the fact that the Ex-Im Bank actually posts a profit and contributes $1 billion to the U.S. Treasury yearly, the ranters insist that the lending facility is a waste of taxpayer money.
One of the reasons for the economy's poor performance in the first quarter was a decline in exports, according to the Commerce Department, even as imports increased. There was also less inventory investment, as well as declines in state and local government spending.
Separately, the chief of the Ex-Im Bank today struck back at the naysayers in the agency's annual report to Congress.
"There is no stronger brand in the world than ‘Made in America,’ but the increasingly aggressive approach by some foreign competitors in the export financing marketplace presents an ever-growing threat to U.S. jobs,” said Export-Import Bank Chairman and President Fred P. Hochberg. “Our job at the Export-Import Bank is to back American workers and ensure that U.S. exporters, especially small businesses, remain competitive and have the support they need to export their products and create jobs here at home.”
Last year, the bank approved more then $27 billion in guarantees, export-credit insurance, and financing to help foreign buyers buy U.S. goods and services. In doing so, the Ex-Im Bank earned more than $1 billion above the cost of operation, the report to Congress said. These moves supported $37.4 billion in export sales and 205,000 American jobs. And nearly 90 percent of these projects were for small businesses, the Ex-Im Bank said.
The downturn in GDP (Gross Domestic Product, the total value of all goods and services produced in the U.S.), "primarily reflected a downturn in exports," in addition to the other declines, the Commerce Department said.
So if the economy is declining because American firms can't sell stuff overseas, the answer is to stifle their ability to get financing to help sell their stuff overseas, according to ranter reasoning.
Never mind fact or reality, that without Ex-Im Bank financing American firms lose a competitive edge. If government does it, it must be bad, goes the mindless reasoning. Perhaps corporate leaders and the Chamber of Commerce, as well as some few politicians who understand arithmetic, can override the Tea Party verbosity and get Congress to reauthorize the Ex-Im Bank. Oddly, even the ranters most strident in opposing the bank have voted to keep it alive in the past.
Tuesday, June 24, 2014
Congressional Kooks
We get the kind of government we deserve. Not always the kind we want or need.
It ain't that hard, folks. Listen up.
Shake enough hands with enough people and anybody can get elected to anything.
The level of perception and the quality of questions raised by members of Congress is often astonishing for their lack of depth. Those who ask simplistic questions and demand simplistic answers don't deserve to hold positions of complex responsibility.
Recently, a member of Congress wanted to know which is better for reviving the economy, federal investment or deficit and debt reduction. The Radical Right, led by Tea Partiers, insist on the simplistic answer of less spending and more saving. Missing from that line of thought is the reality that money flow is the lifeblood of any economy. And a simple response is this: Cut off the flow and the patient dies.
As for the question of which is better, the answer is: Both are important, and each is a useful method in either short-term or long-term planning.
As Doug Elmendorf, the chief of the Congressional Budget Office explained in a CBO blog posting this week, "Both sound federal investment and reductions in federal deficits and debt can boost economic growth in the long term." In the short term, however, "reducing federal deficits and debt would tend to lower economic growth, whereas increasing federal investment would tend to raise it."
This is Economics 101: When the economy is in trouble and the private sector is not spending, the government should step in, investing in projects that will benefit the nation. Going into debt is less important. Then, as the economy improves, government spending can be reduced and more money set aside to trim deficits and debts.
As Elmendorf put it, "decreased federal spending or raised taxes (and thus decreased federal deficits) would generally reduce demand." If people have less money and must pay more in taxes, they spend less. And in spending less, the entire economy suffers. That, in effect, is a recession. Production drops to match a dip in spending. And so it goes, ever downward.
The solution, then, is for government to prime the economic pump. Later, as the economy recovers, government can -- and should -- cut back and then deal with deficits and debts.
The critical issue, however, is timing. How much and when should government intervention retreat.
The arch-conservative insistence that there be no government intervention of any kind, under any circumstance, ever, can only lead to a wildly cyclical economy.
That way madness lies.
It ain't that hard, folks. Listen up.
Shake enough hands with enough people and anybody can get elected to anything.
The level of perception and the quality of questions raised by members of Congress is often astonishing for their lack of depth. Those who ask simplistic questions and demand simplistic answers don't deserve to hold positions of complex responsibility.
Recently, a member of Congress wanted to know which is better for reviving the economy, federal investment or deficit and debt reduction. The Radical Right, led by Tea Partiers, insist on the simplistic answer of less spending and more saving. Missing from that line of thought is the reality that money flow is the lifeblood of any economy. And a simple response is this: Cut off the flow and the patient dies.
As for the question of which is better, the answer is: Both are important, and each is a useful method in either short-term or long-term planning.
As Doug Elmendorf, the chief of the Congressional Budget Office explained in a CBO blog posting this week, "Both sound federal investment and reductions in federal deficits and debt can boost economic growth in the long term." In the short term, however, "reducing federal deficits and debt would tend to lower economic growth, whereas increasing federal investment would tend to raise it."
This is Economics 101: When the economy is in trouble and the private sector is not spending, the government should step in, investing in projects that will benefit the nation. Going into debt is less important. Then, as the economy improves, government spending can be reduced and more money set aside to trim deficits and debts.
As Elmendorf put it, "decreased federal spending or raised taxes (and thus decreased federal deficits) would generally reduce demand." If people have less money and must pay more in taxes, they spend less. And in spending less, the entire economy suffers. That, in effect, is a recession. Production drops to match a dip in spending. And so it goes, ever downward.
The solution, then, is for government to prime the economic pump. Later, as the economy recovers, government can -- and should -- cut back and then deal with deficits and debts.
The critical issue, however, is timing. How much and when should government intervention retreat.
The arch-conservative insistence that there be no government intervention of any kind, under any circumstance, ever, can only lead to a wildly cyclical economy.
That way madness lies.
Monday, June 23, 2014
Market Wages
"All things are for the best in this best of all possible worlds." -- Dr. Pangloss, in Candide, by Voltaire.
"No bread? Let them eat cake." -- Marie Antoinette.
Assistance for those in need? "Humbug!" said Ebenezer Scrooge.
Some folks insist a free market economy is the best of all possible economic worlds, and should be left to itself while it balances supply and demand, settling on an appropriate cost for all things, including wages.
Many of these same folks oppose a rise in the federal minimum wage, based on their faith in a free market economy, unencumbered by government intervention of any kind.
Reality check: While the federal minimum wage is now $7.25, states, cities and employers are free to pay more to attract workers. In fact, many do. This is the free market at work.
Moreover, 22 states and the District of Columbia already have wage minimums higher than the federal mandate. New Jersey, for example, has a wage floor of $8.25 an hour, and New York State requires a minimum of $8.00 an hour. Delaware's new minimum of $7.75 an hour just went into effect on June 1. Pennsylvania and Maryland match the federal minimum of $7.25 hourly, but as noted, many employers offer more. Baristas at Starbucks in Doylestown earn a minimum of $8.20 hourly, plus fringe benefits and tuition assistance. And that is 13.1 percent above the federal mandate.
Aside from the moral argument that workers deserve a livable wage, there is the practical issue of "you get what you pay for."
Employers cannot hire skilled workers at unskilled pay levels and expect them to stay. Perhaps, in hard times, when workers are desperate, they may take a job at low pay, especially when the alternative is no pay at all, but as soon as an economy improves and job opportunities arise, these low-paid skilled workers are gone, leaving the employer short-handed and forced to hire and train new, unskilled workers.
Historically, some employers were willing to do just that, when race, religion, or ethnicity were conditions of hire. The employer bigotry preference was so strong that they would hire an unskilled, incompetent worker of a preferred group -- even at higher pay -- rather than a skilled expert from a disliked group who would be willing to work for less.
Inefficient? Yes. From an economic viewpoint, bigotry in hiring is inefficient.
Here's another reality: We do not have a fully free economy, where all elements of supply and demand as well as other factors are left alone (laissez-faire) to reach a new equilibrium. In the case of wages, union contracts and government mandates mean that pay scales cannot go downward as the economy changes. It's a condition called "sticky wages."
In addition, the federal proposal to raise the minimum wage to $10.10 won't take place overnight, but over a period of several years.
As for the argument that if the price of a hamburger rises because of a hike in the minimum wage, resulting in customers going elsewhere, consider this. Customers in Pennsylvania are not likely to travel to New Jersey just to save 20 cents on the price of a hamburger.
Just to be clear, we do not have a fully free market economy in America. Nor do we have a fully controlled economy. The first was backed by Adam Smith in the 18th Century, and the second by Karl Marx in the 19th Century. Neither works. We live in a mixed economy, with many freedoms as well as many controls.
As for those who still insist that despite short-term problems, in the long run things balance out, consider the response by John Maynard Keynes: "In the long run we are all dead."
"No bread? Let them eat cake." -- Marie Antoinette.
Assistance for those in need? "Humbug!" said Ebenezer Scrooge.
Some folks insist a free market economy is the best of all possible economic worlds, and should be left to itself while it balances supply and demand, settling on an appropriate cost for all things, including wages.
Many of these same folks oppose a rise in the federal minimum wage, based on their faith in a free market economy, unencumbered by government intervention of any kind.
Reality check: While the federal minimum wage is now $7.25, states, cities and employers are free to pay more to attract workers. In fact, many do. This is the free market at work.
Moreover, 22 states and the District of Columbia already have wage minimums higher than the federal mandate. New Jersey, for example, has a wage floor of $8.25 an hour, and New York State requires a minimum of $8.00 an hour. Delaware's new minimum of $7.75 an hour just went into effect on June 1. Pennsylvania and Maryland match the federal minimum of $7.25 hourly, but as noted, many employers offer more. Baristas at Starbucks in Doylestown earn a minimum of $8.20 hourly, plus fringe benefits and tuition assistance. And that is 13.1 percent above the federal mandate.
Aside from the moral argument that workers deserve a livable wage, there is the practical issue of "you get what you pay for."
Employers cannot hire skilled workers at unskilled pay levels and expect them to stay. Perhaps, in hard times, when workers are desperate, they may take a job at low pay, especially when the alternative is no pay at all, but as soon as an economy improves and job opportunities arise, these low-paid skilled workers are gone, leaving the employer short-handed and forced to hire and train new, unskilled workers.
Historically, some employers were willing to do just that, when race, religion, or ethnicity were conditions of hire. The employer bigotry preference was so strong that they would hire an unskilled, incompetent worker of a preferred group -- even at higher pay -- rather than a skilled expert from a disliked group who would be willing to work for less.
Inefficient? Yes. From an economic viewpoint, bigotry in hiring is inefficient.
Here's another reality: We do not have a fully free economy, where all elements of supply and demand as well as other factors are left alone (laissez-faire) to reach a new equilibrium. In the case of wages, union contracts and government mandates mean that pay scales cannot go downward as the economy changes. It's a condition called "sticky wages."
In addition, the federal proposal to raise the minimum wage to $10.10 won't take place overnight, but over a period of several years.
As for the argument that if the price of a hamburger rises because of a hike in the minimum wage, resulting in customers going elsewhere, consider this. Customers in Pennsylvania are not likely to travel to New Jersey just to save 20 cents on the price of a hamburger.
Just to be clear, we do not have a fully free market economy in America. Nor do we have a fully controlled economy. The first was backed by Adam Smith in the 18th Century, and the second by Karl Marx in the 19th Century. Neither works. We live in a mixed economy, with many freedoms as well as many controls.
As for those who still insist that despite short-term problems, in the long run things balance out, consider the response by John Maynard Keynes: "In the long run we are all dead."
Thursday, June 19, 2014
Offshore Data Centers
"You can't move or shut down your computers. We're not finished searching through them!" -- Government snoopers.
The British government claims that its spy agency, GCHQ, breaks no law when intercepting email. So GCHQ can intercept and inspect electronic messages legally, according to a statement from Parliament.
Some months ago, Yahoo said it would move its European headquarters and operations out of the UK to Ireland, citing security issues. The British government objected, complaining that if Yahoo moved to Ireland, the British spy agency could no longer browse through private emails. And that, they claim, would make it harder for them to fight crime and terrorism.
Meanwhile, across the Atlantic, a judge granted a search warrant for U.S. government snoops to search Microsoft email servers. Problem: The email servers are not in the U.S. but in Ireland. Microsoft appealed, saying that even if the FBI has a valid search warrant, they can't knock on someone's door in another country to serve it.
The legal question now is whether a search warrant issued in one jurisdiction can be served in another, especially across international jurisdictions. If that principle is upheld, look for offshore data centers to become just that -- aboard ships that stay in international waters.
Unless government agencies hire more super duper snooper scoopers to hack into the floating data centers. Or maybe they're already doing that, browsing through computer servers in other countries without the benefit of lawful approval.
The British government claims that its spy agency, GCHQ, breaks no law when intercepting email. So GCHQ can intercept and inspect electronic messages legally, according to a statement from Parliament.
Some months ago, Yahoo said it would move its European headquarters and operations out of the UK to Ireland, citing security issues. The British government objected, complaining that if Yahoo moved to Ireland, the British spy agency could no longer browse through private emails. And that, they claim, would make it harder for them to fight crime and terrorism.
Meanwhile, across the Atlantic, a judge granted a search warrant for U.S. government snoops to search Microsoft email servers. Problem: The email servers are not in the U.S. but in Ireland. Microsoft appealed, saying that even if the FBI has a valid search warrant, they can't knock on someone's door in another country to serve it.
The legal question now is whether a search warrant issued in one jurisdiction can be served in another, especially across international jurisdictions. If that principle is upheld, look for offshore data centers to become just that -- aboard ships that stay in international waters.
Unless government agencies hire more super duper snooper scoopers to hack into the floating data centers. Or maybe they're already doing that, browsing through computer servers in other countries without the benefit of lawful approval.
Tuesday, June 17, 2014
Beltway Blinders
They didn't see it coming because they weren't looking.
Watch the center, but don't ignore the fringe.
The fuss over House GOP leader Eric Cantor's defeat reminded me of a youth soccer league for 10-year-olds. The coaches said, "Spread out, and pass the ball." However, as soon as the ball was put in play, all the kids piled into a mob, all looking to control the ball. The adults (can't really call them coaches) thought the mob scene was wonderfully amusing and did nothing to stop it.
Similarly, as media columnist Andrew Carr noted in the New York Times yesterday, big league reporters in DC had become so focused on the Capitol ball and the political players that they ignored the folks back home.
The Beltway media mavens and the pollsters were stunned when Cantor lost. The reason they didn't see it coming was because they weren't looking.
Local reporters on Cantor's home turf, however, were not surprised at all. They saw it coming because they were out on the street, talking to the home folks, unlike the Capitol crowd who only talked to each other, much like the soccer kids who crowded onto the ball and failed to see open players on the fringe.
Years ago, we noted a tendency for reporters to focus on the main attraction at a major news event. The advice then holds true today -- look around to the fringes. That's where some of the best, more interesting stories are. Besides, it's less crowded, and you may be the only journalist there.
It happened in Virginia last week, as the major media mavens thought they had the Cantor saga well covered by focusing on the Beltway business. Besides, it saved the time and expense of traveling all the way to suburban Virginia. Save a dime, lose a dollar.
One of the most significant examples of staying observant occurred on 9/11, as a photographer was heading back to his New Jersey newsroom when he noticed several firemen raising a flag amidst the rubble of the World Trade Center.
Result: A photo that hit Page One of newspapers around the world, appeared on a First Class postage stamp, and ranks with the flag-raising on Iwo Jima as one of the most famous pictures in the world.
Watch the center, but don't ignore the fringe.
The fuss over House GOP leader Eric Cantor's defeat reminded me of a youth soccer league for 10-year-olds. The coaches said, "Spread out, and pass the ball." However, as soon as the ball was put in play, all the kids piled into a mob, all looking to control the ball. The adults (can't really call them coaches) thought the mob scene was wonderfully amusing and did nothing to stop it.
Similarly, as media columnist Andrew Carr noted in the New York Times yesterday, big league reporters in DC had become so focused on the Capitol ball and the political players that they ignored the folks back home.
The Beltway media mavens and the pollsters were stunned when Cantor lost. The reason they didn't see it coming was because they weren't looking.
Local reporters on Cantor's home turf, however, were not surprised at all. They saw it coming because they were out on the street, talking to the home folks, unlike the Capitol crowd who only talked to each other, much like the soccer kids who crowded onto the ball and failed to see open players on the fringe.
Years ago, we noted a tendency for reporters to focus on the main attraction at a major news event. The advice then holds true today -- look around to the fringes. That's where some of the best, more interesting stories are. Besides, it's less crowded, and you may be the only journalist there.
It happened in Virginia last week, as the major media mavens thought they had the Cantor saga well covered by focusing on the Beltway business. Besides, it saved the time and expense of traveling all the way to suburban Virginia. Save a dime, lose a dollar.
One of the most significant examples of staying observant occurred on 9/11, as a photographer was heading back to his New Jersey newsroom when he noticed several firemen raising a flag amidst the rubble of the World Trade Center.
Result: A photo that hit Page One of newspapers around the world, appeared on a First Class postage stamp, and ranks with the flag-raising on Iwo Jima as one of the most famous pictures in the world.
Friday, June 13, 2014
Media Manipulation
Saying so doesn't make it so.
Let the people know the Truth and the Truth shall make them free.
"Ye shall know the truth and the truth shall make you free."
-- 2 John 1:4-6
One duty of a free press is to report what government officials and corporate executives say. A second duty is to check and confirm the veracity of what they say.
Many reporters follow this principle: Politicians lie. Many others carry that further and ask, why are they lying? Often, it is not enough to know that someone is being disingenuous, so the real questions are these: Why, and what is the real truth? What are they trying to conceal, and why?
Of the famous Five W's of journalism -- who, what, where, when and why -- the most important is the last one: Why? And that one is often the hardest to find out.
One simple answer is that candidates, politicians and governing officials do so to advance their agenda and to obtain or retain governing power. To this end, they will change or modify their positions to reflect the views of the noisiest segment of the electorate.
Thus, a noisy few can influence candidates and officials to change their publicly expressed positions. Their own view may remain the same, but chameleon-like, they change to better fit their surroundings.
Meanwhile, a more obdurate few will hold their minority views, claiming that they are supported by a "silent majority" of the public.
But how are we to know that, if the majority are silent?
Meanwhile, money talks, as wealthy campaign donors hire public relations and marketing firms to spread their views and create the impression that the majority support their views. And these agencies are skilled at manipulating media messages to sway public opinion.
A free and independent press, including broadcast journalists, have an obligation to seek truth, despite what marketing practitioners would have everyone believe.
In the business and political world, it's called public relations.
When government does it, it's called propaganda, and when successful such tactics lead to dictatorship.
It can't happen here, you say?
Think again. It very nearly did. Twice. And not in the fictional novel of the same name.
Let the people know the Truth and the Truth shall make them free.
"Ye shall know the truth and the truth shall make you free."
-- 2 John 1:4-6
One duty of a free press is to report what government officials and corporate executives say. A second duty is to check and confirm the veracity of what they say.
Many reporters follow this principle: Politicians lie. Many others carry that further and ask, why are they lying? Often, it is not enough to know that someone is being disingenuous, so the real questions are these: Why, and what is the real truth? What are they trying to conceal, and why?
Of the famous Five W's of journalism -- who, what, where, when and why -- the most important is the last one: Why? And that one is often the hardest to find out.
One simple answer is that candidates, politicians and governing officials do so to advance their agenda and to obtain or retain governing power. To this end, they will change or modify their positions to reflect the views of the noisiest segment of the electorate.
Thus, a noisy few can influence candidates and officials to change their publicly expressed positions. Their own view may remain the same, but chameleon-like, they change to better fit their surroundings.
Meanwhile, a more obdurate few will hold their minority views, claiming that they are supported by a "silent majority" of the public.
But how are we to know that, if the majority are silent?
Meanwhile, money talks, as wealthy campaign donors hire public relations and marketing firms to spread their views and create the impression that the majority support their views. And these agencies are skilled at manipulating media messages to sway public opinion.
A free and independent press, including broadcast journalists, have an obligation to seek truth, despite what marketing practitioners would have everyone believe.
In the business and political world, it's called public relations.
When government does it, it's called propaganda, and when successful such tactics lead to dictatorship.
It can't happen here, you say?
Think again. It very nearly did. Twice. And not in the fictional novel of the same name.
Thursday, June 12, 2014
Apathy Loses
Shallow current on the fringe runs faster than deeper waters midstream.
Those who don't vote have no standing to complain when their side loses.
Minority extremists who exercise their right to vote count on mainstream apathy that lets them float to victory.
This is not a new phenomenon -- Theodore Roosevelt knew it when he noticed that the wealthy Republican elite in his New York City district did not bother to vote in local elections, but only showed up for major contests. (See The Bully Pulpit by Doris Kearns Goodwin). And Archie Bunker in the TV series "All in the Family" proudly saved his vote for "presidential, senatorial and mayororial" elections, and did not "waste it" on lesser contests.
The latest example of activism defeating apathy happened this week in Virginia, as Tea Party extremists rejected Eric Cantor in favor of their own favorite in a primary election. A voter turnout of just 14 percent clearly played a major role in taking down the Number Two Republican in the U.S. House of Representatives. Cantor has been the Majority Leader, second only to Speaker John Boehner.
Pollsters were surprised at the election result. They had expected Cantor to coast to victory. Instead, he lost by a double-digit margin.
What happened? Cantor wasn't extreme enough for the extremists, who turned out to support their Tea Party favorite, David Brat.
So a strong turnout of dedicated, activist adherents to extreme views easily defeated a weak turnout of mainstream voters.
Those who don't vote have no standing to complain when their side loses.
Minority extremists who exercise their right to vote count on mainstream apathy that lets them float to victory.
This is not a new phenomenon -- Theodore Roosevelt knew it when he noticed that the wealthy Republican elite in his New York City district did not bother to vote in local elections, but only showed up for major contests. (See The Bully Pulpit by Doris Kearns Goodwin). And Archie Bunker in the TV series "All in the Family" proudly saved his vote for "presidential, senatorial and mayororial" elections, and did not "waste it" on lesser contests.
The latest example of activism defeating apathy happened this week in Virginia, as Tea Party extremists rejected Eric Cantor in favor of their own favorite in a primary election. A voter turnout of just 14 percent clearly played a major role in taking down the Number Two Republican in the U.S. House of Representatives. Cantor has been the Majority Leader, second only to Speaker John Boehner.
Pollsters were surprised at the election result. They had expected Cantor to coast to victory. Instead, he lost by a double-digit margin.
What happened? Cantor wasn't extreme enough for the extremists, who turned out to support their Tea Party favorite, David Brat.
So a strong turnout of dedicated, activist adherents to extreme views easily defeated a weak turnout of mainstream voters.
Wednesday, June 11, 2014
Breaking the News
"The U.S. Constitution guarantees a free press. It does not guarantee a fair press." -- Edwin Newman.
"There is also no guarantee of a competent press." -- Pug Mahoney
"A lie can run around the world before truth can get its shoes on." -- Mark Twain.
Government troops in Nigeria this week reportedly confiscated and destroyed copies of a newspaper in the name of searching for "security risk material." It seems that a few days before, the newspaper Weekly Trust published an article accusing generals of using an army barracks for personal use. (Agence France Presse, via the New York Times.)
There are many examples of incompetent reporters, especially at smaller publications that hire newbies at low wages. It's also true that many publications broadcast outlets have agendas. (Read: Propaganda.) This is often true at government-run news operations.
Most major independent news organizations, unaffiliated with government agencies or political parties, do their best to publish truth and to avoid falling victim to government and political lies. It's up to readers, therefore, to scan everything they seen in print and on television with a jaundiced eye, knowing there are several sides to every story and sometimes it takes a while for all the facts to become known. Moreover, some news organizations are more blatant in their coverage viewpoints than others. In the main, however, major mainstream news media are neutral.
This is not to say, however, that they are always competent and are never misled. It is, after all, the task of the spinmeisters to get coverage as favorable to their clients as they can. That said, many public relations practitioners are forthright in their dealings with reporters. Each has a job to do. On the other hand, there are those in the PR field who are not forthright and truthful with reporters and the general public. They are called flacks.
Given all that preliminary comment, here's the status of a couple of news stories taking up time and space in the media today. In brief, we don't yet know all the circumstances surrounding the actions of Bowe Bergdahl and Edward Snowden, and it may take many more weeks before we do.
When Sgt. Bergdahl was first released after five years as a captive in Afghanistan, politicians jumped on the PR bandwagon to declare him a hero. Later, when reports came that he may have walked away from his post, these same pols reversed their positions and chanted a different song.
Likewise, Snowden was initially accused of being a traitor for divulging the secret and possible illegal and unconstitutional activities of the U.S. government. Will that label still hold as the government activities are proven to be illegal and unconstitutional?
But politicians and government agents have an agenda, and are not always forthcoming, much less truthful, about what they do in the name of their vaguely defined "interests of national security."
Is it really "national security" or a CYA tactic to protect their jobs, their strategies and their own political ambitions?
Meanwhile, journalists are move likely to dig for information in the public interest than are politicians with an agenda.
To quote Thomas Jefferson, "Given the choice of government without newspapers or newspapers without government, I would take the latter."
This, of course, was said when he was out of office. As President, he signed and enforced the Sedition Act, which made it a federal crime to criticize the government.
In some countries today, criticizing the government is still a crime. Fortunately, it's not true in America.
Yet.
"There is also no guarantee of a competent press." -- Pug Mahoney
"A lie can run around the world before truth can get its shoes on." -- Mark Twain.
Government troops in Nigeria this week reportedly confiscated and destroyed copies of a newspaper in the name of searching for "security risk material." It seems that a few days before, the newspaper Weekly Trust published an article accusing generals of using an army barracks for personal use. (Agence France Presse, via the New York Times.)
There are many examples of incompetent reporters, especially at smaller publications that hire newbies at low wages. It's also true that many publications broadcast outlets have agendas. (Read: Propaganda.) This is often true at government-run news operations.
Most major independent news organizations, unaffiliated with government agencies or political parties, do their best to publish truth and to avoid falling victim to government and political lies. It's up to readers, therefore, to scan everything they seen in print and on television with a jaundiced eye, knowing there are several sides to every story and sometimes it takes a while for all the facts to become known. Moreover, some news organizations are more blatant in their coverage viewpoints than others. In the main, however, major mainstream news media are neutral.
This is not to say, however, that they are always competent and are never misled. It is, after all, the task of the spinmeisters to get coverage as favorable to their clients as they can. That said, many public relations practitioners are forthright in their dealings with reporters. Each has a job to do. On the other hand, there are those in the PR field who are not forthright and truthful with reporters and the general public. They are called flacks.
Given all that preliminary comment, here's the status of a couple of news stories taking up time and space in the media today. In brief, we don't yet know all the circumstances surrounding the actions of Bowe Bergdahl and Edward Snowden, and it may take many more weeks before we do.
When Sgt. Bergdahl was first released after five years as a captive in Afghanistan, politicians jumped on the PR bandwagon to declare him a hero. Later, when reports came that he may have walked away from his post, these same pols reversed their positions and chanted a different song.
Likewise, Snowden was initially accused of being a traitor for divulging the secret and possible illegal and unconstitutional activities of the U.S. government. Will that label still hold as the government activities are proven to be illegal and unconstitutional?
But politicians and government agents have an agenda, and are not always forthcoming, much less truthful, about what they do in the name of their vaguely defined "interests of national security."
Is it really "national security" or a CYA tactic to protect their jobs, their strategies and their own political ambitions?
Meanwhile, journalists are move likely to dig for information in the public interest than are politicians with an agenda.
To quote Thomas Jefferson, "Given the choice of government without newspapers or newspapers without government, I would take the latter."
This, of course, was said when he was out of office. As President, he signed and enforced the Sedition Act, which made it a federal crime to criticize the government.
In some countries today, criticizing the government is still a crime. Fortunately, it's not true in America.
Yet.
Monday, June 9, 2014
Riley Redux
"My head's made up. You can't confuse me with the facts." -- Chester A. Riley, lead character in "The Life of Riley" radio series starring William Bendix.
"More than four in 10 Americans continue to believe that God created humans in their present form 10,000 years ago, a view that has changed little over the past three decades." -- Gallup Inc., June 2, 2014.
Since 1982, the Gallup organization, based in Princeton, NJ, has been asking Americans about evolution and whether God guided it. In the latest poll, 42 percent agreed with the statement that God created humans in their present form 10,000 years ago. In 1982, those who agreed were 44 percent of the total. That percentage ranged from a high of 47 percent in 1994 and in 2000 to a low of 40 percent in 2011.
About a third of those surveyed accepted that humans beings developed over millions of years, but maintained that God guided the process. Finally, those who subscribed to a secularist viewpoint -- that humans evolved but God had not part in the process -- doubled in number since 1999, but still accounted for only 19 percent of those surveyed, according to the Gallup report.
The scary thing remains the lack of change over the years the survey has been taken, using the same questions. Regardless of any and all evidence to the contrary, it's frightening that so many people -- 42 percent -- hold a view that has little scientific support.
Spirituality and religion have important places in human society, but so does science, and there need not be any conflict between them. Whether one believes in a Creator God or not, whether Deist, Theist, Atheist or Agnostic, we are given the intelligence and therefore the obligation to seek answers to Nature's puzzles. While we search, religion (or spirituality, if you will), provides a way to explain or at least accept the unexplainable until we acquire enough knowledge to understand and explain.
Many of the best scientists have themselves been sincere believers in a Creator God. Charles Darwin, the best known proponent of evolution, was himself an ordained minister.
The word "science" is rooted in the Latin term "to know." And that is the goal of scientists, to learn, to know and to understand.
The education system fails in its duty when it fails to balance knowledge and belief.
Hence the motto for this series of commentaries: Belief without thought endangers freedom.
"More than four in 10 Americans continue to believe that God created humans in their present form 10,000 years ago, a view that has changed little over the past three decades." -- Gallup Inc., June 2, 2014.
Since 1982, the Gallup organization, based in Princeton, NJ, has been asking Americans about evolution and whether God guided it. In the latest poll, 42 percent agreed with the statement that God created humans in their present form 10,000 years ago. In 1982, those who agreed were 44 percent of the total. That percentage ranged from a high of 47 percent in 1994 and in 2000 to a low of 40 percent in 2011.
About a third of those surveyed accepted that humans beings developed over millions of years, but maintained that God guided the process. Finally, those who subscribed to a secularist viewpoint -- that humans evolved but God had not part in the process -- doubled in number since 1999, but still accounted for only 19 percent of those surveyed, according to the Gallup report.
The scary thing remains the lack of change over the years the survey has been taken, using the same questions. Regardless of any and all evidence to the contrary, it's frightening that so many people -- 42 percent -- hold a view that has little scientific support.
Spirituality and religion have important places in human society, but so does science, and there need not be any conflict between them. Whether one believes in a Creator God or not, whether Deist, Theist, Atheist or Agnostic, we are given the intelligence and therefore the obligation to seek answers to Nature's puzzles. While we search, religion (or spirituality, if you will), provides a way to explain or at least accept the unexplainable until we acquire enough knowledge to understand and explain.
Many of the best scientists have themselves been sincere believers in a Creator God. Charles Darwin, the best known proponent of evolution, was himself an ordained minister.
The word "science" is rooted in the Latin term "to know." And that is the goal of scientists, to learn, to know and to understand.
The education system fails in its duty when it fails to balance knowledge and belief.
Hence the motto for this series of commentaries: Belief without thought endangers freedom.
Sunday, June 8, 2014
Bank Job -- Addendum
"The public be damned, I'm working for my shareholders." -- William H. Vanderbilt, president of the New York Central Railroad in 1882.
The primary directive of a bank is the same as any other business -- to earn a profit for its owners. To do this, they rent out money, in the form of cash lent to them by depositors, for which the bank pays interest. The bank, in turn, markets loans to other borrowers for a higher rate of interest. The difference, then, between the bank's cost of funds and the price it charges borrower-customers supports the bank's operating expenses.
Thus, anything left over after paying employe salaries and other operating expenses is profit, which is distributed to shareholders. Banks can also obtain operating cash by borrowing from other banks or from a government-run central bank. In America, that's the Federal Reserve.
Credit unions and other depositor-owned institutions redistribute excess funds to their owner-depositors in the form of interest on savings accounts. Often, these rates are higher than savings rates paid at commercial banks.
The point is that bankers make money by acquiring and marketing other people's money. In recent years, financial institutions have rightly begun calling these arrangements "financial products."
The downside is that they no longer think of what they do as providing services to the public. Instead, they are marketing and selling "financial products."
The primary directive of a bank is the same as any other business -- to earn a profit for its owners. To do this, they rent out money, in the form of cash lent to them by depositors, for which the bank pays interest. The bank, in turn, markets loans to other borrowers for a higher rate of interest. The difference, then, between the bank's cost of funds and the price it charges borrower-customers supports the bank's operating expenses.
Thus, anything left over after paying employe salaries and other operating expenses is profit, which is distributed to shareholders. Banks can also obtain operating cash by borrowing from other banks or from a government-run central bank. In America, that's the Federal Reserve.
Credit unions and other depositor-owned institutions redistribute excess funds to their owner-depositors in the form of interest on savings accounts. Often, these rates are higher than savings rates paid at commercial banks.
The point is that bankers make money by acquiring and marketing other people's money. In recent years, financial institutions have rightly begun calling these arrangements "financial products."
The downside is that they no longer think of what they do as providing services to the public. Instead, they are marketing and selling "financial products."
Thursday, June 5, 2014
The Money Trolls
Money is made round to go 'round.
A bank's job is to put money to work, and to do that, money must move. But if the only movement is among banks and between banks and government, the general public -- consumers -- benefit not at all.
If you had to pay a bank to hold your money, would you do it? Not likely. People set up savings accounts so they can earn interest on their money. Preferably, the interest rate should be higher than the rate of inflation, because otherwise you lose money as your cash declines in value.
Moreover, why should banks offer you next to zero interest on your savings as they buy government bonds that pay them interest, and they pocket the difference?
In effect, banks gobble up your savings as you try to cross a bridge to prosperity.
So if money doesn't go 'round -- consumers don't buy and companies don't invest so they can produce more -- the money flow slows or stops. Picture a water wheel, where money is the stream that drives the mill that powers the economy. If the stream runs dry, the mill shuts down.
The problem, then, is to make sure the money keeps flowing. That's what central banks are for, to regulate monetary policy -- the money flow -- and thereby encourage smooth production and a growing economy. And a small amount of inflation -- an increase in the money supply and rising prices -- can help to do that.
But interest rates, or the price of borrowing money, can't be too close to each other, or there's no incentive to lend. Thus, if banks don't lend and firms don't borrow, the cash flow stops and the economy sags. In brief, that's what's been happening in America and in Europe.
Meanwhile, to kickstart a national economy, central banks can lower key interest rates so that commercial banks have easy access to funds, and they can pass on the lower cost to borrowers. But when that key interest rate drops to zero and nothing happens, it's time for a more drastic measure.
That's what the European Central Bank has done. It has put its deposit rate -- the interest it pays to commercial banks that park funds at the Central Bank -- to below zero. In other words, the customer must pay the bank to hold its cash. Since the deposit rate was already at zero and the European Union economy was not improving, the Central Bank cut its deposit rate to -0.1 percent.
The ECB stressed that this move affects only commercial banks, and not consumers in the general public. Even so, the principle is there. Why pay someone to hold your cash for you when you can earn a profit by lending it to someone else?
That's the latest in Europe. Will something similar happen in America? Perhaps. The Federal Reserve, America's central bank, has already reduced its key lending rate -- the price it charges commercial banks to borrow funds -- to near zero, and still the economy stumbles along.
As mentioned in this blog earlier this week, if consumers don't spend and firms don't invest, government must step in to jumpstart the economy through increased spending.
Recession is the best time for firms to invest in new equipment to expand production for better days to come. Why? Because borrowing costs are low, wages are reasonable and labor is readily available and eager for work.
However, if firms lack the confidence that an upturn in consumer spending will come soon, they may delay investment and/or reduce production further. As that happens, consumers -- many already unemployed -- lose their confidence also and cut back their purchasing. As consumption drops, so does production. And so it goes, as one factor pulls the other down in a vicious recessionary cycle.
So, how to solve the dilemma? The move by the European Central Bank is an attempt to discourage commercial banks from parking their cash and to encourage them to lower their own interest rates and increase their commercial lending activity.
In a statement, the ECB admitted that commercial banks "may of course choose to lower interest rates for savers. At the same time, though, consumers and businesses can borrow more cheaply and this helps to stimulate economic recovery."
In the U.S., similar thinking has prompted the Fed to push borrowing costs to very low levels, even though the key rate it charges commercial banks is still barely in positive territory and consumer savings accounts fail to outpace inflation.
So the question becomes, why save? If the rate of inflation is higher than the savings rate, I'm losing money, people think. Besides, spending money is the best way to pull the country out of recession.
A good point, but for those out of work, and those who have already drained their savings, the point is moot.
A bank's job is to put money to work, and to do that, money must move. But if the only movement is among banks and between banks and government, the general public -- consumers -- benefit not at all.
If you had to pay a bank to hold your money, would you do it? Not likely. People set up savings accounts so they can earn interest on their money. Preferably, the interest rate should be higher than the rate of inflation, because otherwise you lose money as your cash declines in value.
Moreover, why should banks offer you next to zero interest on your savings as they buy government bonds that pay them interest, and they pocket the difference?
In effect, banks gobble up your savings as you try to cross a bridge to prosperity.
So if money doesn't go 'round -- consumers don't buy and companies don't invest so they can produce more -- the money flow slows or stops. Picture a water wheel, where money is the stream that drives the mill that powers the economy. If the stream runs dry, the mill shuts down.
The problem, then, is to make sure the money keeps flowing. That's what central banks are for, to regulate monetary policy -- the money flow -- and thereby encourage smooth production and a growing economy. And a small amount of inflation -- an increase in the money supply and rising prices -- can help to do that.
But interest rates, or the price of borrowing money, can't be too close to each other, or there's no incentive to lend. Thus, if banks don't lend and firms don't borrow, the cash flow stops and the economy sags. In brief, that's what's been happening in America and in Europe.
Meanwhile, to kickstart a national economy, central banks can lower key interest rates so that commercial banks have easy access to funds, and they can pass on the lower cost to borrowers. But when that key interest rate drops to zero and nothing happens, it's time for a more drastic measure.
That's what the European Central Bank has done. It has put its deposit rate -- the interest it pays to commercial banks that park funds at the Central Bank -- to below zero. In other words, the customer must pay the bank to hold its cash. Since the deposit rate was already at zero and the European Union economy was not improving, the Central Bank cut its deposit rate to -0.1 percent.
The ECB stressed that this move affects only commercial banks, and not consumers in the general public. Even so, the principle is there. Why pay someone to hold your cash for you when you can earn a profit by lending it to someone else?
That's the latest in Europe. Will something similar happen in America? Perhaps. The Federal Reserve, America's central bank, has already reduced its key lending rate -- the price it charges commercial banks to borrow funds -- to near zero, and still the economy stumbles along.
As mentioned in this blog earlier this week, if consumers don't spend and firms don't invest, government must step in to jumpstart the economy through increased spending.
Recession is the best time for firms to invest in new equipment to expand production for better days to come. Why? Because borrowing costs are low, wages are reasonable and labor is readily available and eager for work.
However, if firms lack the confidence that an upturn in consumer spending will come soon, they may delay investment and/or reduce production further. As that happens, consumers -- many already unemployed -- lose their confidence also and cut back their purchasing. As consumption drops, so does production. And so it goes, as one factor pulls the other down in a vicious recessionary cycle.
So, how to solve the dilemma? The move by the European Central Bank is an attempt to discourage commercial banks from parking their cash and to encourage them to lower their own interest rates and increase their commercial lending activity.
In a statement, the ECB admitted that commercial banks "may of course choose to lower interest rates for savers. At the same time, though, consumers and businesses can borrow more cheaply and this helps to stimulate economic recovery."
In the U.S., similar thinking has prompted the Fed to push borrowing costs to very low levels, even though the key rate it charges commercial banks is still barely in positive territory and consumer savings accounts fail to outpace inflation.
So the question becomes, why save? If the rate of inflation is higher than the savings rate, I'm losing money, people think. Besides, spending money is the best way to pull the country out of recession.
A good point, but for those out of work, and those who have already drained their savings, the point is moot.
Wednesday, June 4, 2014
Whether Words
Moderate, less robust, recovered from weather-related weakness, mixed, some weakening, "shortage of skilled workers," and "wage increases have remained generally subdued."
These are some of the words and phrases culled from the latest edition of the Beige Book, the Federal Reserve Board's periodic report on economic conditions throughout the country, and released today.
Separately, the Commerce Department said the April international trade deficit increased 6.9 percent in April from the month before. Exports fell and imports rose, increasing the gap to $47.2 billion. This may not seem like much, for a total economy valued at some $16 trillion, but as overall performance slows and American firms sell less stuff overseas as consumers buy more stuff from foreign companies, it raises a question as to how long (and by whom) the spending spree can continue.
Several sources have reported strong activity in new home construction despite the Beige Book survey that new home sales and construction activity was mixed. It's good to keep in mind, however, that residential construction typically aims at the higher end of the market. Meanwhile, sales of existing homes "were being held back due to low or dwindling inventories," the Fed said. And as supply dwindles, prices go up.
Meanwhile, a slowdown in inflation may lead to trouble in Europe. How is it possible that lower prices are bad? Certainly such a situation is good for consumers -- those with money -- but it's not so good for vendors, who suffer lower profits and as competition drives prices even lower, entrepreneurs resort to layoffs and even shutdowns.
As reported here in early March, "even low inflation -- let's call it lowflation -- can be problematic," according to a study by the International Monetary Fund. Thus, keeping interest rates low and making more cash available can help an economy.
The problem, then, in America as well as in Europe, is this, ER commented three months ago: "Firms borrow at low interest rates but use the funds to pay down older, higher rate debt and don't use the money for investment in new capacity. Result: Production is stagnant because consumer demand is holding steady. There's no reason to boost supply because demand isn't there."
Even though the effective interest rate is zero.
As it is, banks pay nearly nothing on savings accounts, and buy government bonds that pay them interest. Executives and shareholders are happy, but the general public might as well stash their cash in a mattress.
Watch, then, for federal regulators to push financial institutions to increase lending, and for other governmental agencies to encourage more investment. In effect, this is what the Fed has been doing for a couple of years, and clearly it hasn't been enough. The solution isn't hard to figure out, either. Since money flow is the fuel that powers economic growth, the answer is more spending. And if consumers can't and corporations won't, the government must.
What happens otherwise? Look for another recession.
Simplistic? Yes. But economic recession is defined as two consecutive quarters of decline in Gross Domestic Product (GDP), the total value of goods and services produced in a country. The U.S. economy started a downward slide last fall, and during the first quarter of this year posted a negative growth figure -- an estimated -1.0 percent.
If the second quarter, which ends June 30, posts another negative rate, that will officially mark another recession. Stay tuned.
These are some of the words and phrases culled from the latest edition of the Beige Book, the Federal Reserve Board's periodic report on economic conditions throughout the country, and released today.
Separately, the Commerce Department said the April international trade deficit increased 6.9 percent in April from the month before. Exports fell and imports rose, increasing the gap to $47.2 billion. This may not seem like much, for a total economy valued at some $16 trillion, but as overall performance slows and American firms sell less stuff overseas as consumers buy more stuff from foreign companies, it raises a question as to how long (and by whom) the spending spree can continue.
Several sources have reported strong activity in new home construction despite the Beige Book survey that new home sales and construction activity was mixed. It's good to keep in mind, however, that residential construction typically aims at the higher end of the market. Meanwhile, sales of existing homes "were being held back due to low or dwindling inventories," the Fed said. And as supply dwindles, prices go up.
Meanwhile, a slowdown in inflation may lead to trouble in Europe. How is it possible that lower prices are bad? Certainly such a situation is good for consumers -- those with money -- but it's not so good for vendors, who suffer lower profits and as competition drives prices even lower, entrepreneurs resort to layoffs and even shutdowns.
As reported here in early March, "even low inflation -- let's call it lowflation -- can be problematic," according to a study by the International Monetary Fund. Thus, keeping interest rates low and making more cash available can help an economy.
The problem, then, in America as well as in Europe, is this, ER commented three months ago: "Firms borrow at low interest rates but use the funds to pay down older, higher rate debt and don't use the money for investment in new capacity. Result: Production is stagnant because consumer demand is holding steady. There's no reason to boost supply because demand isn't there."
Even though the effective interest rate is zero.
As it is, banks pay nearly nothing on savings accounts, and buy government bonds that pay them interest. Executives and shareholders are happy, but the general public might as well stash their cash in a mattress.
Watch, then, for federal regulators to push financial institutions to increase lending, and for other governmental agencies to encourage more investment. In effect, this is what the Fed has been doing for a couple of years, and clearly it hasn't been enough. The solution isn't hard to figure out, either. Since money flow is the fuel that powers economic growth, the answer is more spending. And if consumers can't and corporations won't, the government must.
What happens otherwise? Look for another recession.
Simplistic? Yes. But economic recession is defined as two consecutive quarters of decline in Gross Domestic Product (GDP), the total value of goods and services produced in a country. The U.S. economy started a downward slide last fall, and during the first quarter of this year posted a negative growth figure -- an estimated -1.0 percent.
If the second quarter, which ends June 30, posts another negative rate, that will officially mark another recession. Stay tuned.
Monday, June 2, 2014
Word Games
"A rose by any other name would still smell." -- Gertrude Stein
"Big Brother is ungood" is an impossible construction. -- George Orwell
Remove the sting and a word loses meaning. Redefine the term sharply enough and you define the term out of existence. Thus, "enhanced interrogation" is not torture.
Redefining something doesn't make it go away, although a new label may change public perception. Advertisers and marketers have known and acted on this concept for a long time, and politicians even longer.
Renaming something, especially using a polysyllabic, Latin-based phrase, doesn't change its nature, but only changes people's perception of the term. "Enhanced interrogation techniques" are just as painful as when called by they really are -- torture.
Such techniques were used during the Spanish Inquisition, but since torture was defined as broken skin, loss of blood or broken bones, the inquisitors were careful not to inflict those injuries, so they could not be accused of torture. They had defined torture out of existence.
Leave no marks, and it's not torture.
Government lawyers thus twisted and rationalized definitions to clear the way for their inquisitors to use extreme measures against those they deemed to be suspects.
Their main weapons were fear, surprise and an almost fanatical devotion to Dick Cheney.
"Big Brother is ungood" is an impossible construction. -- George Orwell
Remove the sting and a word loses meaning. Redefine the term sharply enough and you define the term out of existence. Thus, "enhanced interrogation" is not torture.
Redefining something doesn't make it go away, although a new label may change public perception. Advertisers and marketers have known and acted on this concept for a long time, and politicians even longer.
Renaming something, especially using a polysyllabic, Latin-based phrase, doesn't change its nature, but only changes people's perception of the term. "Enhanced interrogation techniques" are just as painful as when called by they really are -- torture.
Such techniques were used during the Spanish Inquisition, but since torture was defined as broken skin, loss of blood or broken bones, the inquisitors were careful not to inflict those injuries, so they could not be accused of torture. They had defined torture out of existence.
Leave no marks, and it's not torture.
Government lawyers thus twisted and rationalized definitions to clear the way for their inquisitors to use extreme measures against those they deemed to be suspects.
Their main weapons were fear, surprise and an almost fanatical devotion to Dick Cheney.
Sunday, June 1, 2014
Social Science
Politics and government, history and economics, language and culture are all aspects of the same story.
If economics is the study of what people do with what they have, history is the study of what people did with what they had available to them in the past.
Politics deals with who's in charge of government.
Government deals with how those in charge serve and protect the rights of the people.
In another sense, politics is about getting elected, and government is about getting something done. Too often, the two have little to do with each other. Currently in America, we are seeing the exercise of politics having the upper hand. It's not about getting anything done by your own party, but preventing the other guy from getting anything done. Hence the use of the phrase, "the party of No." Whatever the Democrats propose, the Republicans are against it. That phenomenon is not new, but it has reached a new low these days.
This summarizes the guiding principle of Editor's Revenge. For the academia nuts, each topic -- politics, government, history, economics, language, culture, sociology, anthropology and other fields -- are to be studied separately. From this editor's viewpoint, they are all part of the same story: What people do for and to and with each other.
We seek not to demand agreement, but to provoke thought. And if, after thinking over your disagreements with comments made here, you still disagree, that's good, because you have thought about your opinions. Hence the motto under the title: Belief without thought endangers freedom.
If economics is the study of what people do with what they have, history is the study of what people did with what they had available to them in the past.
Politics deals with who's in charge of government.
Government deals with how those in charge serve and protect the rights of the people.
In another sense, politics is about getting elected, and government is about getting something done. Too often, the two have little to do with each other. Currently in America, we are seeing the exercise of politics having the upper hand. It's not about getting anything done by your own party, but preventing the other guy from getting anything done. Hence the use of the phrase, "the party of No." Whatever the Democrats propose, the Republicans are against it. That phenomenon is not new, but it has reached a new low these days.
This summarizes the guiding principle of Editor's Revenge. For the academia nuts, each topic -- politics, government, history, economics, language, culture, sociology, anthropology and other fields -- are to be studied separately. From this editor's viewpoint, they are all part of the same story: What people do for and to and with each other.
We seek not to demand agreement, but to provoke thought. And if, after thinking over your disagreements with comments made here, you still disagree, that's good, because you have thought about your opinions. Hence the motto under the title: Belief without thought endangers freedom.
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