Ezra Klein recommends this LRB piece about the current phase of our economic crisis by popularizer John Lanchester. And why not? It's pretty good.1 European banks, he says, are in way worse shape than they've ever been willing to admit. This is true — and it's something that a lot of us have been puzzling over for a good many years. Our puzzlement was related to the fact that although European banks really did appear to be in bad shape, they mostly managed to sail along seemingly unscathed regardless. But Lanchester thinks the era of the brave facade is finally over, and a day of reckoning is near. Unfortunately, as always, Europe is still unwilling to fully recognize reality and do what it must to fix things properly. The best-case scenario is already out of reach:

The next scenario — the one we are on course for at the moment — is not so much the next-best as the next-least-worst. It is modelled on what happened to other parts of the world over recent decades, from Latin America to Russia to South-East Asia, as they underwent debt crises and consequent economic collapse. In all cases, the relevant economies recovered, after about a decade of hard times and widely shared economic pain. In this model, the debts are gradually paid down, the economy is slowly and miserably rebalanced, and eventually things grow back to where they were when the bubble burst. There is a general sense of baffled incomprehension in the West at the idea that this should be happening to Us, instead of to Them; it turns out that this trajectory of crisis and slow recovery is a lot more bearable when it happens to other people, ideally in far-away countries of which we know little. But that is what we look to be on course for at the moment.

Unfortunately, I think I agree with Lanchester. I'd prefer to think that we'll all come to our senses soon and do what needs to be done, but as he says, "I fear that the grip of anti-spending ideology is so strong throughout the West, and the politicians’ fear of the banks is so entrenched, that the ten-year slog looks more likely." Urk.

1And be sure to read the footnote!

What's in a Name?

From the Washington Post today:

Next up: How Kafakaesque was Kafka? Was Old Blood and Guts really bloody and gutsy? How Platonically lovely was Plato's life? Did Oedipus actually have an Oedipus complex? Was Christ a Christian? Was Buddha a Buddhist?  Did Henry Ford truly practice Fordism? Was Julius Caesar born by Caesarean section? Did Jelly Roll Morton eat jelly rolls? Was Homer really homeless? All this and more in Part 2 of this series.

This week's catblogging plan originally focused on cats and laser pointers. Unfortunately, it was too dark and none of the pictures turned out. So instead we get preprandial playtime—a fixture of our day around here. On the left, Inkblot is rolling around and looking at a big black blob. That would be Domino. On the right, Domino is now plonked on the carpet staring at someone. Guess who? This all lasted about five minutes, until one of Inkblot's alpha-cat neurons fired and Domino decided to hightail it out into the yard. But it was fun while it lasted. Dinner followed shortly after that.

Have a nice Labor Day weekend, everyone. Go Trojans!

Barack Obama has pretty much caved in to the Republican contention that budget deficits are the biggest problem our economy faces. He's pretty much caved in to the Republican contention that higher taxes are bad for the economy. And he's pretty much caved in to the Republican contention that nothing big can done to improve the unemployment picture.

So what's his next cave-in on the economy? Apparently this. I guess regulatory uncertainty is what's holding us back after all. So much for the agenda-setting power of the presidency.

The Immigration Trap

Ed Kilgore notes that Rick Perry will be spending his Labor Day weekend in South Carolina and might end up walking into a buzz saw:

It’s well known that Perry’s record and positions on immigration represent the one glaring area where he’s significantly out of step with conservative orthodoxy. He has, after all, consistently supported a guest-worker program and a path to citizenship for undocumented workers, both positions contemptuously dismissed as code for “amnesty” by many conservative activists. Worse yet, from their point of view, he signed and still defends a state version of the DREAM Act, which provides in-state tuition rates at state universities for illegal immigrants brought to this country as children.

....So it’s well worth noting that the co-inquisitor who will be sitting next to Jim DeMint (along with right-wing Princeton professor Robert George) at the Palmetto Freedom Forum event on Labor Day will be none other than [Tom] Tancredo’s successor as Congress’ preeminent anti-immigration agitator, Representative Steve King of Iowa. King, whose views on the subject are so extreme that he was denied the chairmanship of a House subcommittee on immigration despite being its senior member, can hardly be expected to pass up an opportunity to bash Perry’s record in the forum’s one-on-one questioning format.

....If Rick Perry does walk into a beatdown by King in Columbia, and doesn’t handle it well, the political consequences could be pretty serious....If the extremely powerful Jim DeMint is looking for an excuse to support someone else or simply withhold his imprimatur, watching Perry squirm while his buddy King taunts him with a hot poker could provide an excellent excuse. And even more obviously, King is a major powerbroker back home in Iowa, and is likely capable of stopping Perry’s recent momentum in the state.

My guess is that if Perry has been able to handle himself on this issue in Texas, he can probably handle himself in South Carolina. Besides, where is the hardcore anti-immigrant vote going to go? Mitt Romney? Hardly. Michele Bachmann? Maybe. She's the obvious choice, and she's made a show of talking up immigration issues lately. What's worse, on immigration Perry really will have to contend with the ghost of George Bush, another Texas governor who held moderate immigration views and ended up getting pilloried by his own party for it.

Still, I suspect that Perry will he able to pivot well enough to avoid a disaster. He'll never be the favorite of the anti-immigration crowd, but he'll probably be good enough. It'll be worth watching how he does, though.

Another day, another lousy jobs report. The Washington Post headlined it like this:

Job creation in U.S. comes to a halt in August

At the risk of being tiresome, this isn't correct. We need to add about 150,000 jobs each month merely to keep up with population growth, which means that real net job growth is negative and has been for over a year. The chart below shows real net job creation over the past three years. We should do something about this. How about a trillion dollars for infrastructure?

Perry and the Press

Last weekend, Rick Perry held a private Q&A with evangelical leaders to assure them that he was Christian enough for their taste. Fine. Political leaders meet with interest groups all the time. But there's also this:

Attendees were struck not only by the clout of those who participated, but by the amount of time Perry spent with the group. The governor and his wife mingled with the Christian leaders Friday evening and for several hours Saturday, fielding questions about their faith and his record.

It would be nice if Perry were willing to spend this much time — hell, even half this much time — giving actual interviews to actual reporters. I mean, he is running for president, after all. If he can afford this much time on an evangelical panderfest, how about sparing a few hours for the press too? What's he afraid of?

ARRA and Unemployment

Should we spend a trillion dollars on new infrastructure, as I suggested this morning? Reasonable people can differ. But this comment via Twitter is sadly all too common:

Didn't we do this less than 2 years ago? Jobless went from 7.5% to 9.8%. Do it again, Jobless to 11%. Insane!!!

I know this is just a conservative shoutfest talking point these days, but on the off chance that anyone still cares about the actual evidence, a chart of unemployment is below. In February of 2009, when the stimulus bill was passed, the unemployment rate stood at 8.2%. It peaked eight months later at 10.1% and then started to decline. If you want to, you can argue that ARRA had no effect on unemployment over the long term, but there's really no credible way to argue that ARRA was implemented so fast, and then had such an immediate effect, that it had any serious impact on unemployment up through the fall of 2009. CBO estimates that it lowered unemployment by 0.3% in the third quarter of 2009, and that's about the biggest impact, positive or negative, you can credibly suggest at that point. "Approximately zero" is probably the best estimate so soon after the law was passed.

The White House prediction that ARRA would lower the unemployment rate to 8% was one of the great messaging fiascos of all time. I hardly blame Republicans for throwing this back in the president's face. Nonetheless, private forecasts suggest almost unanimously that ARRA did lower the unemployment rate, and in any case, it certainly had nothing to do with the unemployment rate rising in the immediate few months following its passage. Those are just the facts.

A few weeks ago I rode an American train for just about the first time in my life. It was the 9:07 Metro North from Grand Central Terminal to New Haven, Connecticut, and I'm sort of embarrassed to say that I was slightly shocked by the experience. It's not that I had any problem getting to New Haven: The train left on time and arrived on time. But the two-hour ride itself was terrible: bouncy and loud and swaying and uncomfortable for practically the entire way. If you're not a car-happy Southern Californian like me, maybe this doesn't surprise you. But it did surprise me—at least a little—and there's a reason for this: Although I've never taken a train anywhere in the United States, I've been on plenty of trains in Europe. Not bullet trains, just ordinary intercity trains. And so I always figured this was what all first-world trains were like: fast and quiet and suspended on a railbed that's smooth as glass.

Go ahead and laugh. I deserve it. But although this is a minor annoyance in the great scheme of things, it's symptomatic of our deteriorating public infrastructure in the United States. A gas pipeline in San Bruno, California, exploded last year, killing eight people, and on Wednesday the chair of the National Transportation Safety Board announced the results of its investigation: The explosion was a story of "flawed pipe, flawed inspection, and flawed emergency response." It was, she said, "not a question of if the pipe would fail, but when." And this wasn't just a story about San Bruno or just about Pacific Gas and Electric: The rest of our national gas pipeline network is under similar strain.

Our electrical grid is just as famously antiquated. In 2003, the failure of a transmission line in Ohio, which should have inconvenienced a few thousand customers in the Cleveland area, instead produced a massive rolling blackout along the entire Eastern seaboard that affected 55 million people. Why? Because of aging and poorly integrated control equipment—equipment that, nationwide, hasn't improved much since. This is a problem almost everywhere. Our trains, even in the busy Northeast corridor, are second rate, our airports are embarrassments, our dams are leaking, and our bridges are crumbling. Taken as a whole, the average age of our public capital stock has risen from 16 to 23 years over the past four decades, "suggesting great underinvestment in public infrastructure," Mike Mandel says.

The American Society of Civil Engineers agrees. In their most recent report card, they gave our solid waste facilities a C+, our bridges a C, our rail a C-, our energy infrastructure a D+, our dams and schools a D, and our roads, levees, and inland waterways a D-. Nothing got an A or a B.

All of this is common knowledge. What's also common knowledge is that manufactured outrage over the deficit aside, the federal government can currently borrow money for free. Actually, it's even better than that: It can borrow money at negative interest rates. If we want to upgrade our national infrastructure, there's no better time to do it than right now. As Dartmouth professor Matthew Slaughter puts it, "There is a crucial connection between potholes and unemployment." Repairing our infrastructure will put people to work during a long and seemingly unending economic slump; it will provide us with the capital stock we need to compete on the world stage in the future; and it will cost us less now than it ever will again. It's a no-brainer.

All of us have our fantasies about what we'd like President Obama to say in his big speech next week about jobs. Here's mine: ask Congress to appropriate a trillion dollars to be spent on infrastructure upgrades over the next five years. That's it. That's the jobs plan. A trillion dollars to make us into a first-world country again. And as part of the enabling legislation, ask for emergency powers to temporarily streamline the regulatory red tape, interagency approval processes, environmental-impact statements, and labor rules that might otherwise keep the money from being put to work speedily.

Will a Republican Congress agree to do this? Almost certainly not—at first, anyway. But building and repairing infrastructure is no boondoggle. It needs to be done, it needs to be done now, and it would be an easy sell to a public cynical about the government's ability to do anything concrete to help them. Make the case aggressively and you never know. Free money is free money, and even Republican voters like the idea of clean water, safe bridges, pipelines that don't blow up, electrical grids that work, and dams and schools that aren't crumbling.

So that's it. A trillion dollars for infrastructure. That's the plan. Let's do it.

Is Barack Obama's relentless love affair with regulatory overkill choking the life out of America's small business owners? McClatchy's Kevin Hall decided to go out and ask them:

McClatchy reached out to owners of small businesses, many of them mom-and-pop operations, to find out whether they indeed were being choked by regulation, whether uncertainty over taxes affected their hiring plans and whether the health care overhaul was helping or hurting their business.

Their response was surprising. None of the business owners complained about regulation in their particular industries, and most seemed to welcome it.....Rip Daniels [] owns four businesses in Gulfport, Miss.: real estate ventures, a radio station and a boutique hotel/bistro. He said his problem wasn't regulation. "Absolutely, positively not."

....For many small businesses, their chief problem is an old one: navigating the bureaucracy of the Small Business Administration to secure government-backed loans....Other small firms say their problem is simply a lack of customers.

"I think the business climate is so shaky that I would not want to undergo any expansion or outlay capital," said Andy Weingarten, who owns Almar Auto Repair in Charlotte. He's thinking about hiring one more mechanic. Added Barry Grant, the regional president of Meritage Homes Corp., in California, "It starts with jobs....There's an awful lot of people sitting on the fence; they're waiting for a sign."

Well, I guess these responses might be surprising if you subsist on a steady diet of Fox News and Chamber of Commerce press releases. For the rest of us, not so much. The small business owners that Hall talked to complained about the banking system, workers' compensation, the Small Business Administration, insurance, and competition from the internet. And they talked about a lack of customers.

In other words, all the usual stuff that's been around forever, plus a lack of demand because the economy is in lousy shape. Maybe we should consider doing something about this?