The ECB Destroys the World

Here's something from Matt Yglesias I read this morning:

UK Can Now Borrow Cheaper Than Germany

By Matthew Yglesias

| Posted Thursday, Nov. 24, 2011, at 11:00 AM ET

If you want proof that the Eurozone's sovereign debt woes are fundamentally about the governance of the single currency and the odd behavior of the European Central Bank, then look no further than the fact that Germany's 10-year borrowing costs are now higher than the UK's. It's very difficult to explain this in terms of the kind of scolding moralism that the Germans have been deploying this fall to explain borrowing problems in the Mediterannean countries. The British aren't out-exporting the Germans. The Germans don't have a bad work ethic or a corrupt political system. The German government hasn't been more profligate than the British government in running up debt over the past 10-15 years. The Bank of England has been much less focused on fighting unemployment than has the Bundesbank/ECB. And over the past year the growth performance of the UK has been terrible as austerity budgeting crushes domestic demand and the economy continues to lack appropriate structure for export-led growth.

And yet financial markets would rather lend to the UK. Because the UK's not in the Eurozone, and because everyone knows the UK's central bank isn't going to let anything crazy happen or get into any wild games of chicken.

I didn't know anything about the European Central Bank a few months ago, and my critics would argue that I still don't know anything about it, but reading Yglesias and Krugman lately has me really depressed about what's going on there.

We keep getting forecasts of doom about European budget problems from the Right, warning that the US is going to be like Greece, just as Spain/Italy/Portugal are following Greece into debt crisis.  They keep saying that this is all because those countries spend too much, because, well, I guess because if they have a debt problem then spending too much is the only reason that can be considered.

But now that Germany is starting to have borrowing problems, even though they're the ultimate savers, running responsible budget surpluses since forever, how can we fit that into the Right's morality play?

Answer: it doesn't fit. Because the problem isn't spending- in other words, spending isn't the reason that European debt problems are spreading all over. The problem is that the European Central Bank is refusing to solve the problem because they're locked into their own morality play and want to scold the southern countries and don't want to bail them out. So now a problem that should be just in Greece (which is the one country that deserves the morality play) is leaking out everywhere, even to Germany.

The good news for American conservatives, though, is that their like-minded European friends are going to drive that whole continent into the ditch, which is going to lead to a huge recession here too, which will get blamed on Obama since he's president, which will get us President Romney. Good times!

Good links on Republican Radicalization

Some of my web-surfing this morning is relevant to my last post about the radicalization of the Republican party.  Rather than rehash yesterday's post, here are some links that bolster the point:

Here's one from David Frum about how the Republican party has changed since 2000, written by a conservative former speechwriter for George W. Bush.

Here are a couple of posts from Jon Chait making the point that Republicans aren't really interested in deficit reduction, only tax cuts, and defending President Obama's leadership around budget issues (basically making the point that he has tried being very involved, tried staying out entirely, and tried negotiating behind the scenes all at different times, and found that none of those approaches work.  In order to lead, the other party has to be willing to follow).

Radicalization of the Parties

I am so sick of the Common Wisdom that both parties in the US have become radicalized.  It's basically an article of faith among the "Third Way" crowd.  But it's a classic example of false equivalence.

Sarah Pailin, Michelle Bachman, and  Herman Cain are extremely radical- much more so than anyone I can think of in the Democratic party mainstream.  The equivalent to those politicians on the Left would be Noam Chomsky and Michael Moore- but those guys have no pull at all in the Democratic party. The list of crazy stuff said by Bachman, for example, could fill a book, and she won the Iowa Straw Poll!

Let me put it this way: think about both parties and their mainstream platforms in, say, 2000. I can name a half dozen major issues on which the Republican party has moved way Right (torture, religious diversity for Muslims, cap & trade/ environment, health care, progressive taxation, etc). Now think about areas in which the Democrats have moved Left- I can come up with one- Gay Rights/marriage/civil unions. That's it.  (Some people jump in with Health Care, in which Democrats passed a bill much less liberal than that proposed by the Clintons, with ideas drawn originally from Right Wing think tanks in response to ClintonCare. The only thing that makes it seem more liberal is that it succeeded in passing).

Obama has tried mightily to work from the Center, but every time he turns that direction the Republicans have responded by running 10 steps toward the Right.

Hey, maybe the radicals are right: maybe we need to ditch the entire modern welfare state and return to 1929 America. I'm not buying it, but that's what a huge chunk of the GOP is selling.

By the way, I recommend browsing through the Third Way website.  It's staggering- the position papers criticize the stale thinking of Left and Right, contrasting the Michael Moore position with the mainstream Republican position on every issue. In the economics paper, the authors quote Brad DeLong and Paul Krugman from the Left- two voices totally marginalized by actual policy-makers in Washington.  Then they go on to propose.... basically the exact position of the Obama administration.  Unbelievable- they want so badly to believe in their narrative that they miss what's right in front of them.

Defenseless!

I was talking with a family member about the SuperCommittee and the looming automatic cuts to the Defense budget.  Am I worried about America's security? 

No.  Why not?  The Pentagon budget will be cut 10% starting in 2013!  How can the US remain a superpower?

OK, here's my answer:

I think the US can survive a 10% cut in spending on the military, considering we currently spend six times as much as our next closest competitor.

The SuperCommittee Fails- The Sky is Not Falling

The SuperCommittee has failed to come to an agreement.  It's been pretty obvious the last few days that this would be the case.  For me it comes as a relief, since I was concerned that Senator Kerry and other Democrats were going to give away the store in the face of Republican intransigence. 

As I look at Politico's front page, I can't even bear to read the stories about who is to blame.  I expect the "pox on both your houses" view to be the overriding narrative in the Mainstream Media.  The Dow dropped 250 points today, which is apparently due to the lack of a deal.  Let me make a few points:

• This isn't really a big deal.  The law that created the SuperCommittee also mandated automatic cuts to go into effect in the case of failure to agree.  These cuts hit the Defense budget worst of all, which is OK with me, although they hit domestic discretionary spending too, which is not so great.  But they don't touch Social Security or Medicare, which is very important.
• The Bush tax cuts are still set to expire at the end of 2012.  When that happens, the medium-term budget problems will be nearly solved, if the Democrats can just hold firm- which is a big if.
• If you want to blame someone, it's really not hard to parse the whole thing out.  Democrats insisted on a mixture of spending cuts and revenue increases to solve the budget gap.  Republicans insisted that there could not be one dime of tax hikes.  They pretended to offer some revenue increases, but said that they would only do so if the Bush tax cuts were also extended permanently, which would be a huge tax cut compared to the status quo law.  Now again, this is all OK with me- I think the Democrats would have taken a deal with token tax hikes in exchange for wholesale slashing of Social Security and Medicare, which would have been a policy and political disaster for them.  Thank God the Republicans can't take yes for an answer. 
• The MainStream Media's portrayal of the blame pie was summed up nicely by Paul Krugman a few days ago.  I can't find the passage, but it was something like: Media: The parties can't get together because Republicans won't raise taxes and Democrats won't touch entitlements. Obama: I am willing to reform entitlements in exchange for tax increases. Media:  Democrats are not willing to touch entitlements and Republicans won't accept tax increases. It's just that simple; Democrats are willing to cut spending, and seem willing even to slash social programs to get a deal, but they aren't going to do those things because they want to, they do them in exchange for something else.  Since Republicans have nothing they're willing to offer, there's not going to be a deal.

An Ayn Rand Diversion

OK, a little break from the nws of the day, and a point that's been rattling around in my brain for a few days:

Ayn Rand is a mid-20th century novelist and philosopher, much revered by many on the Right.  She was the leader of a movement at that time called Objectivism, which as I understand it posited that morality should not be based on traditional religion, but rather people should do what benefits themselves without regard to others.  From the Ayn Rand Institute:

1. Reality exists as an objective absolute—facts are facts, independent of man’s feelings, wishes, hopes or fears.
2. Reason (the faculty which identifies and integrates the material provided by man’s senses) is man’s only means of perceiving reality, his only source of knowledge, his only guide to action, and his basic means of survival.
3. Man—every man—is an end in himself, not the means to the ends of others. He must exist for his own sake, neither sacrificing himself to others nor sacrificing others to himself. The pursuit of his own rational self-interest and of his own happiness is the highest moral purpose of his life.
4. The ideal political-economic system is laissez-faire capitalism. It is a system where men deal with one another, not as victims and executioners, nor as masters and slaves, but as traders, by free, voluntary exchange to mutual benefit. It is a system where no man may obtain any values from others by resorting to physical force, and no man may initiate the use of physical force against others. The government acts only as a policeman that protects man’s rights; it uses physical force only in retaliation and only against those who initiate its use, such as criminals or foreign invaders. In a system of full capitalism, there should be (but, historically, has not yet been) a complete separation of state and economics, in the same way and for the same reasons as the separation of state and church.

As you can see, religion, Christianity or otherwise, doesn't get any emphasis here.  In fact, this philosophy seems completely antithetical to Christianity with its emphasis on charity to the poor and loving one's enemies.  Which makes it so puzzling that the Randian philosophy has taken hold so strongly with politicians from the Republican party.  Paul Ryan is said to be a strong devotee, as is Newt Gingrich.  Both also claim to be Christians, espousing strong pro-Life abortion views based on their beliefs in God.

There's just no way to square this circle.  Ayn Rand was an atheist.  She was actively hostile to the ideas of Jesus and pretty much any other religion.

I'm not a Christian either, so I'm not offended by any of this.  But the extent to which the Evangelical Christian Right has been sullied by support in the churches for government policies that are the exact opposite of the teachings of Jesus is just staggering.  By their strong support for two pieces of their agenda (abortion and gay rights), Republicans have pulled this whole community over to an economic philosophy that a Christian theologian would never countenance.

The Party of the Rich

Great piece from Rolling Stone detailing the Republican party's shift to become the "party of the rich".  The conclusion:

...equating taxation with theft – is exactly the kind of talk that dismays old-line Republicans. Many of those who fought for years at the side of Ronald Reagan say they no longer recognize traditional GOP values in the new Republican Party. Fighting for the rich, after all, is not the same as championing the right.
"You can look up my record: On conservatism and taxes I was better than Jesse Helms," says Simpson, the former senator. "But whatever happened to common sense? People are going to look around in five or 10 years and say, 'Whatever happened to the things that made me comfortable? That made our streets and schools good things?' And they'll look, hopefully, at Grover Norquist. I can say to you with deepest sincerity: If this country and this legislature are in thrall to Grover Norquist, we haven't got a prayer."