Krugman: Nostradamus in a Suit?

I read this when it first appeared and thought his analysis was an extreme worst-case scenario.

Of course, the reason I bother to keep up with Krugman is that his economic insight is always illuminating, even when I disagree with him. This time he gets extra points for seeing into the future. The date on the column is March 17, 2008.

clipped from www.nytimes.com The U.S. savings and loan crisis of the 1980s ended up costing taxpayers 3.2 percent of G.D.P., the equivalent of $450 billion today. Some estimates put the fiscal cost of Japan’s post-bubble cleanup at more than 20 percent of G.D.P. — the equivalent of $3 trillion for the United States. As Bear goes, so will go the rest of the financial system. And if history is any guide, the coming taxpayer-financed bailout will end up costing a lot of money. If these numbers shock you, they should. But the big bailout is coming. The only question is how well it will be managed.

Falling

There have been some spectacular falls in the news lately, and for those into gravity impact porn, the following videos provide ample pleasure.



But another fall, just as painful, is the plummet of those formerly known as working Americans and their wages.

A seattle newspaper analyzed jobs data in Washington state (and here too) to find an unsurprising yet horrifying trend: Jobs that are being created do not pay a living wage.

If this is the case in Washington, hotbed of tech, trade, and transportation, it's probably not better in the rest of the country.

Summary of the summary:

• The fastest growing jobs categories are in retail, hospitality, agriculture and social services, which are at the lowest ends of the pay scale.

• 46% of jobs pay less then $10/hr, and less than 25% of the jobs pay above $15/hr.

• Even if some numbers classify our economy as in recovery, the highest paying sectors — telecom, electronics manufacturing, and air transportation — continue to cut jobs.

What this means is that if you lose your job to cost-cutting by the Board or CEO, you'll make less money if you find a job at all. And that job will probably be in the service sector, not in the field for which you spent the first half of your life preparing.

Don't even think about getting sick, and forget about your career in skateboarding.

Rethinking No-Bid Contracts

First, in the spirit of full disclosure, I'd like to divulge the fact that, until recently, I owned Halliburton stock. I dumped it when the misunderstanding which developed surrounding certain unintended KBR billing overages made me nervous. It's one thing to add extra sand to the concrete, after all Iraq has plenty of sand, but please, no-bid contractors, don't mess with my boys' MREs.

War profiteering has a long noble history in this country, and over the years it has created a lot of millionaires, so when the US marched on Baghdad to get those WMDs, I fought the feeling of being powerless over my own government the only way I knew how: I bought stock in corporations that manufacture weapons or otherwise supply our military.

I reasoned that, since my tax dollars were pouring into these companies I had every right to tap some back out. It's like springtime, when the sap begins to rise in the great sugar maples of North America. That is the time to pound your little metal tube into the xylem. Where is the ethical dilemma in that?

But now it's starting to look like a few bad apples are trying to ruin this war for the rest of us. Critical infrastructure projects built in Iraq by US contractors are "crumbling" even before the "Made in the USA" labels peel off. Could some of our corporate citizens have behaved in an unscrupulous manner? I thought Sarbanes-Oxley was supposed to fix all of that. Perhaps now we can rid ourselves of the onerous accounting burden of this typically liberal-knows-best legislation. It's a pity that Ken Lay isn't alive to see it.

 As for me, I'm about to reinvest the money I made off of Armor Holdings, the little company that cornered the market on up-armoring Humvees,  and I'm starting an export company. [FYI- Humvees are produced by a privately-held company and I couldn't figure out how to buy  their stock.] I'm calling the new venture "Blackbush Trading Company." In 4Q '07 Phase One of the business plan commences, when we lobby Prince Bandar for the exclusive rights to sell Just For Men Gel to the House of Saud. We'll be doing our patriotic best to level out the trade imbalance in viscous black liquids.

Walmart Spy

The notion that government can be run like a corporation has been so successful, as evidenced by FEMA's work in New Orleans and Haliburton's work in Iraq, that it follows that companies start to assume the powers of governments.

So why shouldn't Walmart have it's own intelligence service? This idea is completely consistent with the fact that Walmart's revenues exceed the GDP of several nations and its market power has profound influence on global trade policy.

If this trend continues (and there's no reason to think it won't) we'll likely see the merging of corporate interests and resources. The US government uses private phone companies to spy on Americans, what would prevent Walmart from striking similar deals with communications companies? This is already widely practiced in the fields of banking, finance, and marketing.

One step beyond might be the synergy offered by tapping the increasing power of private security companies such as Blackwater, whose conservative Christian founder boasts of having 20,000 men at his beck and call.

Local zoning boards and consumer groups have a difficult time stopping Walmart now. Just imagine what it would be like if big box stores exercised their 2nd Amendment right to bear arms. The notion of the customer always being right would become as quaint as the Geneva Conventions.

Upload and Downsize

The recently announced layoff's at NBC Universal make it clear that TV content from now on, has got to come cheap. We've seen this coming for a while, but for people making television, we must stop talking about the future of media, and accept that the future has arrived.

By "doing away with scripted programming" in prime time (8-11 pm), NBC sends a message to all of those who produce that old media. If you are among those who write it, light it, act in it, or make any kind of money from it, your jig is up.

NBC will put 700 employes on the street, and they'll be joining 400 axed by Warner Bros.,150 by Paramount, 1100 by MGM, and 650 by Disney, all within the past year. Since Disney reported a 40% jump in quarterly profits after cutting personnel, its hard to argue this is merely a lean time bound to cycle back.

I'm all for studying film history in film schools, but looking backwards is only half the picture. After screening Citizen Kane, let's take a look at some webisodes, mobisodes, and then upload to YouTube.

Empowered Thumb for Suckers

They have interactive television in the UK. Audiences send text messages (SMS) to support contestants, request music videos, express an opinion, or test their quiz smarts. This audience participation also allows a show's presenters to collect money from viewers directly, as opposed to relying solely on commercials.

While multiple time zones make it harder for this trend to fly in the US, more than 500,000 txts, at 49 cents each, were sent to "Big Brother" in a two day period last summer. NBC's "Deal or No Deal" earned enough via SMS to cover the more than $1 million prize money it offers. While voting on the internet is often free of charge, txting via phone means a participant need not leave the couch.

The strangest part of this is that many of those who text message TV shows don't even believe their messages are being counted or read by anybody. There's no verification or regulation, and some I spoke to say the videos they request never come on. It's all just a thumb charade, another illusion of the digital utopia.