Quote of the Evening

“The stimulus was not, as conservatives have convinced many of their fellow Americans, big government on steroids; it was Keynesian economics on birth control. It did not restore the 8 million jobs lost to the crash of 2008 or provide the 200,000 jobs a month needed for new entrants into the labor market, but it did prevent a second Great Depression.”

Drew Westen, “If Obama loses the election, here’s why,” WaPo

Krugman Blasts Fed

From  “The Great Abdication,” Paul Krugman, NYT:

“Ben Bernanke…has warned in particular about the damage being done to America by the unprecedented level of long-term unemployment.

“So what does the Fed propose doing about the situation?  Almost nothing.  True, last week the Fed announced some actions that would supposedly boost the economy. But I think it’s fair to say that everyone at all familiar with the situation regards  these actions as pathetically inadequate — the bare minimum the Fed could do to deflect accusations that it is doing nothing at all.

Why won’t the Fed act?  My guess is that it’s intimidated by those Congressional Republicans, that it’s afraid to do anything that might be seen as providing political aid to President Obama, that is, anything that might help the economy.

“None of this should be happening.  As in 1931, Western nations have the resources they need to avoid catastrophe, and indeed to restore prosperity — and we have the added advantage of knowing much more than our great-grandparents did about how depressions happen and how to end them.  But knowledge and resources do no good if those who possess them refuse to use them.

“And that’s what seems to be happening.  The fundamentals of the world economy aren’t, in themselves, all that scary; it’s the universal abdication of responsibility that fills me, and many other economists, with a growing sense of dread.”  Emphasis added.

GOP Hates Obama, Not Keynes

I grew up hearing about the deprivations of the Great Depression from my parents and grandparents.  But I took comfort in the fact that because governments now understood Keynesian economics, I didn’t have to worry about a repeat of that experience.

That’s why I’ve watched in perplexity and frustration as the Republicans have trashed Keynesian theories as the way to get us back on track after the Great Meltdown.

But I finally get it — it’s not that they reject John Maynard Keynes, it’s that they reject Barack Hussein Obama.  It pure politics, not economics.

Mitt admitted as much when he recently said that you can’t do big budget cuts in the near future without throwing the economy back into recession.

If Mitt wins, suddenly we’ll all be Keynesians again.

Must Read About Our Troops

Nicholas Kristof has a breakthrough  column today, “Veterans and Brain Disease,” NYT.

He writes about the autopsy of a Marine who committed suicide after two tours in Iraq:

“His brain had been physically changed by a disease called chronic traumatic encephalopathy, or C.T.E.  That’s a degenerative condition best know for affecting boxers, football players and other athletes who endure repeated blows to the head.

In people with C.T.E., an abnormal form of a protein accumulates and eventually destroys cells throughout the brain, including the frontal and temporal lobes.  Those are areas that regulate impulse control, judgment, multitasking, memory and emotions.

“That Marine was the first Iraq veteran found to have C.T.E., but experts have since autopsied a dozen or more other veterans’ brains and have repeatedly found C.T.E.  The findings raise a critical question:  Could blasts from bombs or grenades have a catastrophic impact similar to those of repeated concussions in sports, and could the rash of suicides among young veterans be a result?

“‘P.T.S.D. in a high-risk cohort like war veterans could actually be a physical disease from permanent brain damage, not a psychological disease,‘ said Bennet Omalu, the neuropathologist who examined the veteran.

“The discovery of C.T.E. in veterans could be stunningly important.  Sadly, it could also suggest that the worst is yet to come, for C.T.E. typically develops in midlife, decades after exposure.  If we are seeing C.T.E. now in war veterans, we may see much more in the coming years.

“C.T.E. leads to a degenerative loss of memory and thinking ability and, eventually, to dementia.  There is also often a pattern of depression, impulsiveness, and, all too often, suicide.  There is now no treatment, or even a way of diagnosing C.T.E. other than examining the brain after death.”  Emphasis added.

This article made me wonder if what was called “shellshock” after WWI may have been C.T.E.  Also, much of what we’re doing for our veterans right now may be a complete waste — if they have C.T.E., anti-anxiety and anti-depressant drugs and cognitive therapies like anger management won’t provide any relief.

 

 

 

Fun in Youth Could Be Blessing in Old Age

Many in my generation, the Baby Boomers, did a lot of drugs in their youth (and beyond!), including psychedelics like LSD and Magic Mushrooms.  While I didn’t participate, I can’t help but join my peers now in the aging process.  More and more of us will face a terminal diagnosis, an expiration date stamped on our foreheads that will cause terrible anxiety, depression, and fear, and prevent us from enjoying the time we have left, even when we still feel well physically.

An amazing article in the NYT Sunday Magazine, “A Kaleidoscope at the End of the Tunnel,” by Lauren Slater, says that the drugs that once were fun in youth, now could be a blessing in old age, with studies showing that LSD, MDMA (ecstasy), and psilocybin, significantly reduced anxiety and depression in terminal patients, and gave them a sense of oneness and participation in a greater whole that took away much of the sting of approaching death, replacing it with a sense of inner peace.

Many respond to a terminal diagnosis by deciding to go on a trip.  In the future, the best possible “trip” might not be hopping on a plane to Europe, but swallowing a pill.

While the Storm Clouds Gather, Far Across the Sea…

Once again (see WWI, WWII), we will get dragged into Europe’s mishegas and suffer for it.  In a global economy, the Atlantic Ocean really is just a pond, or maybe just a puddle.

From “Europe’s Economic Suicide,” Paul Krugman, NYT:

“The question then was whether this brave and effective action [the European Central Bank’s making money available to banks late last fall] would be the start of a broader rethink, whether European leaders would use the breathing space the bank had created to reconsider the policies that brought matters to a head in the first place.

“But they didn’t.  Instead they doubled down on their failed policies and ideas.

“Consider the state of affairs in Spain, which is now the epicenter of the crisis.  Never mind talk of recession; Spain is in full-on depression, with the overall unemployment rate at 23.6 percent…, and the youth unemployment rate over 50 percent.  This can’t go on — and the realization that it can’t go on is what is sending Spanish borrowing costs ever higher.

“[T]he prescription coming from Berlin and Frankfurt is, you guessed it, even more fiscal austerity.

“This is, not to mince words, insane.  Europe has had several years of experience with harsh austerity programs, and the results are exactly what students of history told you would happen:  such programs push depressed economies even deeper into depression.  And because investors look at the state of a nation’s economy when assessing its ability to repay debt, austerity programs haven’t even worked as a way to reduce borrowing costs.

The Continent needs more expansionary monetary policies, in the form of a willingness…on the part of the European Central Bank to accept somewhat higher inflation;  it needs more expansionary fiscal policies, in the form of budgets in Germany that offset austerity in Spain and other troubled nations around the Continent’s periphery, rather than reinforcing it.

“What we’re actually seeing, however, is complete inflexibility.

“Rather than admit that they’ve been wrong, European leaders seem determined to drive their economy — and their society — off a cliff.”  Emphasis added.

The lamps are going out all over Europe, and we shall not see them lit again in President Obama’s first term, which may make it his only term.  He’s not just facing Mitt, he’s facing Merkel.