John & Belle Have A Blog

A Robot in Chalk Stripes

Do you think Larry Kudlow actually bothers to comment on the Corner, or do they just have a bot that periodically calls for cuts to corporate and capital gains taxes? Hey, I bet you can't guess how Obama should stimulate the economy, now that some study from Chicago has proved that infrastructure spending doesn't work!

A lot of people on Wall Street are praising Obama’s infrastructure plan for roads, highways, tunnels, schools, green tech, and other build-outs. But they don’t know that in 2008 alone the U.S. spent $114 billion on infrastructure, following $102 billion in 2007. Didn’t do much for growth did it? [Hey, what happened to all that "the Bush economy is the greatest story never told" stuff?]

Over the past five years infrastructure spending domestically for non-defense comes to nearly $500 billion, with another $500 billion spent on defense-related infrastructure. But an academic study from the University of Chicago argues that government spending does not stimulate jobs and growth, and in fact crowds out private investment. Infrastructure spending also doesn’t create permanent new businesses, jobs, or incomes.

What Wall Street may be missing is that only a permanent change in tax-rate incentives — such as slashing the corporate tax — will reignite investment and job creation. Governments don’t create new technologies or new risk-taking. For that matter they also don’t create the new profits that are so essential to private enterprise. In the short-run, infrastructure building appears to create jobs. [By the extraordinarily devious means of creating jobs--ed] But these are not permanent.

The Obama package is unbalanced by relying on this infrastructure business without any real permanent reductions in tax rates or business cash-expensing for investment. That’s why the Obama plan needs to be changed.

That's right you Keynesian bitchez! My pointless, context-free litany of our recent infrastructure spending, which was necessarily at the perfect level because, hey, it's the Bush years--refutes you. Plus Chicago infinite no backsies.

Tobin's Q--That Annoying Dude From Star Trek

Not really. But this would really suck if it were true, much like an episode with Captain Janeway being bemused by the impertinent Q. OK, even worse.

A global stock slump may have further to go, according to Tobin’s Q ratio, which compares the market value of companies to the cost of their constituent parts, CLSA Ltd. strategist Russel Napier said.

The ratio, developed in 1969 by Nobel Prize-winning economist James Tobin indicates the Standard and Poor's 500 Index is still too expensive relative to the cost of replacing assets, said Napier. While the 39 percent drop in the S&P this year pushed equity prices below replacement cost, history suggests the ratio must sink further as deflation sets in, he said. The S&P may plunge another 55 percent to a trough of 400 by 2014, the strategist said.

“Things have always looked absolutely terrible at the bottom,” said Napier, Institutional Investor’s top-ranked Asia strategist from 1997-1999. With deflation “the value of assets falls and the value of debt stays up, then equity gets crushed. The results are always horrific.”...

The Q ratio on U.S. equities has dropped to 0.7 from a peak of 2.9 in 1999, and reaching 0.3 has always signaled the end of a bear market, said Napier, the author of "Anatomy of the Bear", a study of how business cycles change course. The Q ratio for U.S. equities has fluctuated between 0.3 and 3 in the past 130 years.

When the gauge is more than one, it indicates the market is overvaluing company assets, while a Q ratio of less than one signifies shares are undervalued because it is cheaper to buy companies than to build them from the ground up.

At the end of the four largest U.S. bear markets in 1921, 1932, 1949 and 1982, the Q ratio fell to 0.3 or lower, and history is likely to repeat, said Napier. From the 1982 trough, the S&P 500 grew more than 14-fold to the middle of 2000, when Napier says the last bull market ended.

So I should invest in what, rocks now? Little pieces of lint?

Extreme Makeover, Underwater Edition

In a predictable but sad development, another one of the houses featured in Extreme Makeover is facing foreclosure.

It looks like yet another “Extreme Makeover” home is in trouble, this one in Oak Park, Mich., near Detroit: Judy and Larry Vardon, struggling with a hefty mortgage payment and medical bills, worry that foreclosure is a possibility, The Associated Press reports.

The Vardons, who are deaf, were featured on the popular television show about four years ago. Millions watched as their 980-square-foot house was transformed into a dream home with cameras and flat-screen monitors that let them monitor Lance, their blind and autistic son.

Post-makeover, the couple refinanced the mortgage, and their monthly payments skyrocketed from $1,200 to $2,300, according to the AP.

Things are tense as they work to modify the crippling 11% mortgage rate. “I’m afraid I’m going to lose my house now,” Judy Vardon is quoted as saying via an interpreter.

It's not surprising that people who were in some financial difficulties to begin with ended up tapping the newly splendid house for further 'equity' after the renovations. I hope they will be able to stay in their home.

I Always Wondered Who Made The Giant Puppets...

Oh, hey, it seems I have a blog of some kind. I should probably post on it, and stuff. Walp, in Takoma Park news, the local cops were spying on citizens involved in non-violent protest and then putting their names on national terrorism lists. Great. The government does this kind of stuff every time. Why? I guess nuns and papier-mache-puppet-makers are easier to spy on than some group of close-knit friends who know each other from childhood in Jeddah or whatever, but this is hella weak.

Maryland officials now concede that, based on information gathered by "Lucy" and others, state police wrongly listed at least 53 Americans as terrorists in a criminal intelligence database -- and shared some information about them with half a dozen state and federal agencies, including the National Security Agency.

Among those labeled as terrorists: two Catholic nuns, a former Democratic congressional candidate, a lifelong pacifist and a registered lobbyist. One suspect's file warned that she was "involved in puppet making and allows anarchists to utilize her property for meetings."

"There wasn't a scintilla of illegal activity" going on, said David Rocah, an attorney for the American Civil Liberties Union, which filed a lawsuit and in July obtained the first surveillance files. State police have released other heavily redacted documents....

Investigators, the files show, targeted groups that advocated against abortion [I wonder if this is right given the array of causes, but it could be--Belle], global warming, nuclear arms, military recruiting in high schools and biodefense research, among other issues.
he Maryland operation also has ended, but critics still question why police spent hundreds of hours spying on Quakers and other peace groups in a state that reported more than 36,000 violent crimes last year.

Stephen Sachs, a former state attorney general, investigated the scandal for Gov. Martin O'Malley -- a Democrat elected in 2006. He concluded that state police had violated federal regulations and "significantly overreached."

According to Sachs' 93-page report and other documents, state police launched the operation in March 2005 out of concern that the planned execution of a convicted murderer might lead to violent protests.

They sent Lucy to join local activists at Takoma Park's Electrik Maid, a funky community center popular with punk rockers and slam poets. Ten people attended the gathering, including a local representative from Amnesty International.

"The meeting was primarily concerned with getting people to put up fliers and getting information out to local businesses and churches about the upcoming events," the undercover officer reported later. "No other pertinent intelligence information was obtained."

That proved true for all 29 meetings, rallies and protests that Lucy ultimately attended. Most drew only a handful of people, and none involved illegal or disruptive actions....

Greg Shipley, a state police spokesman, said that no one in the department had been disciplined in connection with the spying program. Lucy, who has not been publicly identified, would not consent to an interview, he said.

The surveillance, Shipley said, was inappropriate. And the listing of lawful activity as terrorism "shouldn't have happened, and has been corrected."

Most of the files list terrorism as a "primary crime" and a "secondary crime," then add subgroups for designations such as antiwar protester.

Some contain errors and inconsistencies that are almost comical.

Nancy Kricorian, 48, a novelist on the terrorist list, is coordinator for the New York City chapter of CodePink, an antiwar group. She serves as liaison with local police for group protests, and has never been arrested.

"I have no idea why I made the list," she said. "I've never been to the state of Maryland, except maybe to stop for gas on the way to Washington."

Josh Tulkin, 27, a registered lobbyist with the Virginia state Legislature, is cited under "terrorism -- environmental extremists." Tulkin was deputy director of Chesapeake Climate Action Network, an environmental group that claims 15,000 members and regularly meets with governors and members of Congress.

"If asking your elected officials a question about public policy is a crime, then I'm guilty," he said.

Barry Kissin, 57, a lawyer who ran unsuccessfully for Congress in 2006, heads the Frederick Progressive Action Coalition, a group that works "for social, economic and environmental justice," according to his police file. Their protests "are always peaceful," it added.

He was labeled "Terrorism -- Anti-Government."

Nadine Bloch, 47, runs workshops for protest groups that seek corporate responsibility and builds huge papier-mache puppets often used in street marches. Her terrorism file indicates she participated in a Taking Action for Animals conference in Washington on July 16-18, 2005.

Animal rights, Bloch said, is one of the few causes she doesn't actively embrace. Besides, she was attending an educators conference in Hawaii that week as a contractor for the National Oceanic and Atmospheric Administration.

"This whole thing," she said, "is so absurd."

Go to all this trouble and they can't even get their bogus info right? Somebody ought to face sanctions for rank incompetence, in addition to all the rights violations. I hear these poetry-slamming monsters were also plotting to hand out vegan cupcakes after the demonstrations. Good thing we were kept safe from that threat.

I actually have a good recipe for vegan cupcakes, the cake recipe here but baked in cupcake pans with paper liners for 15-20 minutes. I guess you could make the icing vegan by substituting Crisco for butter (and water or soymilk for milk), but all the awfulness of veganism is encapsulated in that deadly alteration. On the plus side it will hold its shape better when piped and be more stable at warm room temperature, so you can line three up and pipe "Fuck Tha Police" across them without worrying it might run!