Monday Morning News Update

Los Zetas, a Mexican drug cartel, has claimed that Bank of America has helped launder money through a Texas based racehorse business with BofA accounts. While the bank has admitted in errors of laundering in the past, the question remains whether or not Bank of America has any sort of participation in such money laundering and if they have any efforts in preventing this in the future.

At 11:50 AM this morning, President Obama proposed the extension of tax cuts for citizens earning less than $250,000 a year. This will cost the government $150 billion in revenue in 2013. While Romney's campaign efforts supports tax cuts for individuals on all income levels, will Obama's venture of building a stronger middle class win him the presidential election?

Our poor, earthquake-damaged Washington Monument has now postponed is open date to past 2014. The 5.8 earthquake that shook it last year has caused renovations to reach up to $15 million.

A seemingly death sentence to a cancer patient has turned out to become a potential cancer killing life saver. While unfortunately the patient who received the new drug therapy passed away, the new-found realization of what this drug could do has paved a new path for cancer research. 

Congratulations to Roger Federer's seventh Wimbledon title over Andy Murray this weekend. It's been more than two years since Federer has won a major title. Congrats Federer, you still got it!

Debunking Liberal Economics Volume 1 "A College Degree is Key to the Middle Class" Issue 1: Government Inflated a Bubble

Before I begin I also would like to welcome our new writers and thank them for their time to helping Matt and I out on this crazy project we envisioned. To our readers, I hope I am turning you. 

(Matt, I would love to put up a poll to find out the ideological skew of our readers, my guess is at least 70-30 against me. Maybe even 95-5…) 

Now, I will dive into the issue at hand: liberal policies of just throwing money at the problem have created an issue and the only way to solve it is by completely re-envisioning the model.

I didn’t mean to make this post a response to Matt, but I later decided to just focus this post on something Matt wrote in his last post in what has shaped up to be “Education Week at CR”. Matt wrote, “Whenever anything goes wrong, you can always expect conservatives to blame the government.” Matt, there’s probably a cause-effect problem here. You see if A constantly causes B, one would be correct to say that A caused B. However, what you are asserting in that statement is that A did not actually cause B. So let’s take a look at whether A did cause B, shall we?

State of the Economy: Part II

Over the past several weeks, the writers of Conflict Revolution have been exchanging a series of emails on the state of the US economy.  This is Part II of an ongoing debate that seems to have some serious legs - see where it takes us, and share your own thoughts, below:

Also see: State of the Economy: Part I

Matt: Stephen, you've conceded that the stimulus created some jobs.  Are you accepting it as an Obama accomplishment?

Stephen: I’m not going to argue that spending does nothing, that’s a bit absurd. But let’s look at your math. The average of 3.6M, 1.97M, 2.1M and 1.5M is definitely not 3.9M… my numbers say its 2.29M – which I’ll still give you is significant. But, like I said above, all of these studies are done on economic models which basically assume that the inputs always work (which is how we get the saved number – the group is saying it should give us this, so if they didn’t really exist then they must just be saved jobs). So at best, we can say that these numbers are fuzzy; econometric models, which also have problems, think it was either entirely useless or helped about 2M jobs.  If your point was that the recession could have been worse, I’ll concede you the point. However, what I see as the real issue is effectiveness of the stimulus and if it’s actually helping to “stimulate” the economy. It seems to me like it was more of a Temprapetic bed than a Viagra.

Matt: On those numbers, you took the low baselines for all the analyses and I took the median, which seems fairer, and yields 3.9 million jobs created between 2009 and 2011.  Even if it was your number, I thought any job created was a good thing?  Either way, I'm not arguing that stimulus should fuel our economy forever.  In fact, if you were actually going to make an honest argument, you would acknowledge that the stimulus was only through 2010.  But the fact is, where else do you expect demand to come from in an economy where everyone is losing their job?  Give me a better answer than government stepping in to help out and maybe I'll consider it.

Email Debate: State of the Economy, Part I

It's election season, and one guy is running for re-election, which means this isn't the first, and will likely be far from the last time you read the words, "are you better off than you were four years ago?"  Still, as amateur members of the American punditocracy, Stephen and I could not suppress the urge to fire the first shots.  Here's Conflict Revolution on the State of the Economy (Part I):

Stephen: Hey Matt, do you think the economy is better today than it was 4 years ago?

Matt: Well, considering that in late April 2008 the global financial system was about four months away from near collapse, the auto industry was about to die, and American households were as debt-saddled and overleveraged as ever... yes, yes I do.  State your claim to the contrary. 

Stephen: Let's start with GDP, since that's the only thing that has really gone up. GDP has risen by an unimpressive $235.6B, which is a total of 1.8% or 0.4% annually. Let's ignore the fact that people have been expecting the US economy to take off now for 3 years (I won't say it has no chance this year, just that its a heavy underdog). Now, I'm sure you are familiar with how GDP is calculated, GDP = C+I+G+(X-M). That G piece (government) has increased by 681.2B. So we can see where the new growth is coming from right? And after three years, it's still unimpressive. At what point do we say this is the problem and not the solution? (But let's try to stay off that for now, that's an entirely different debate)

Unemployment - the unemployment rate is at 8.1%, up from 5%. But that probably doesn't tell the whole story since labor force participation is constantly declining... look at the U-6 rate (unemployed/underemployed/"marginally attached workers" aka people who dropped out of the labor force but want a job) and that's up to 14.5% from 9.2%.  Total payrolls are down 5.9% as well.

Should we get into household income or housing? They are both down, housing by as much as 50%. Or how about the S&P 500, which is generally used a gauge of American business performance? Its down about 10% still from its 2007 highs and just about equal with its 2008 high. Oh and did I mention that QE1, 2 and Operation Twist have managed to push the money supply into stupid levels? Or that inflation has increased by 7% since Obama took office (I understand these is totally normally inflation rates, but it puts into perspective how bad things are since NOTHING else is increasing so rapidly).

Friday Update: Links for 5/11/12

Its been a relatively eventful week in the news, with opposition politics on the march in Europe, former playboy models upstaging Mexican presidential debates, and our own president declaring his support for gay marriage here in America.  Here at Conflict Revolution, we'll cap it off for you with a roundup of what's on our reading lists this Friday morning:

1) The unemployment rate would be a full percentage point lower today (7.1%) if not for cuts to government at the federal, state, and local level since the recession took hold ["Unemployment Rate Without Government Cuts: 7.1%," Wall Street Journal, 5/8/12].

2) Meanwhile, the economy has added 4.2 private sector jobs since the official end of the recession in June 2009, but government payrolls, including for police officers, teachers, and firefighters, have fallen by over 600,000 during that time ["CHART: Economy Has Recovered All Private Sector Jobs Lost Since Obama Took Office," Think Progress, 5/4/12].

3) Even the Wall Street Journal admits those cuts have held back the economy recovery ["Depth of Recession Makes Recovery Look Worse," WSJ, 5/4/12].

4) But that won't stop the Washington Times from arguing its all Obama's fault ["Desperately avoiding Obamanomics and Obamacare," Washington Times, 5/8/12].

5) If the presidential nominee of your party tries to reverse his position on a decision that he blatantly opposed at the time, that probably means it worked, right?  Mitt Romney tries to take credit for the auto bailout ["Romney taking credit for auto industry success," US News, 5/7/12].

6) Lastly, conservatives really want you to care about this, but it probably says more about West Virginia than it does our sitting president.  Sorry, John Denver ["Ouch! Obama loses 41 percent of W. Va. vote to federal inmate," CS Monitor, 5/9/12].



Be sure to stay tuned later today for Part I of our most recent email debate on the state of the economy since President Obama took office, along with a recap of what went on the blog this week. 

Happy Friday, folks!

Friday Links: Economic Magicians and Real Ones

An economic inequality-themed morning update to dampen your naturally perked up spirits this Friday morning, lest you be in too good of a mood before the weekend has really begun (you've still got 8 more hours).  In sports, they call that regressing to the mean.  Here at Conflict Revolution, we're just mean.

Steve and I are getting ready to debate this topic in the near future.  We've just been waiting for an opening, and with the return of Occupy Wall Street, not to mention the informal kickoff of a general election campaign involving a former private equity executive that happens to be a multi-millionaire, it may be time.  So stay tuned, readers.  All eight of you are in for a real payoff in the near future.

Here's what's on our desktops, laptops, iPads, and iPhones right now:

1) Ed Conard, a former Romney partner at Bain Capital, says that inequality makes the economy more efficient and helps us all out in the long run... and points to a soda can as evidence.  Some fascinating back and forth here between the subject and author - though I must say, in addition to my general disagreements with his thinking, I too found Conard's economic philosophy to be disturbingly indicative of a worldview where none of us are worth anything unless we make boatloads of money.  Hat tip to CR reader Mario Arthur-Bentil for the link ["The Purpose of Spectacular Wealth, According to a Spectacularly Wealthy Guy," The New York Times Magazine, 5/1/12]. 

2) Former Clinton Labor Secretary Robert Reich makes a counterpoint as well as anyone, and marks the occasion of the Dow Jones returning to its 2007 high by noting that the ratio of total income going to capital (investors) rather than labor (workers) is at its highest level since the 1920s.  I'd like to see him and Ed Conard debate ["The Tinder-Box Society," Huffington Post, 5/1/12]

3) On a related note, why tax cuts won't jolt the economy ["Tax Cuts and Job Growth: They're Just Not That Into Each Other," Huffington Post, 5/2/12]

4) And on an unrelated one, even I'm not going to deny that this doesn't look good.  Magicians?  Really NOAA?  ["NOAA pulls ad seeking magician for training event," CNN.com, 5/3/12]

5) Finally, if you're a recent college grad, and you live in DC, there's a good chance you work at one - they have names like the American Society for Surgery of the Hand, and they are the country's professional associations.  Really interesting take, I think, on how a lot of these membership organizations find themselves at a crossroads between being creators and curators, and the implication that holds for the future of managing digital overload ["The Secret Power of Associations - Revealed," Forbes, 4/29/12]. 

W.H. Auden once said that "a false enchantment can last a lifetime," so if you're a returning visitor to Conflict Revolution, we've got you good!  Enjoy your Fridays, folks.  Keep your browsers dialed for this week's roundup later in the day, only at the one and the only.