Archive for December, 2010


Its not from Europe, though some European states are still quite stressed.

This is a domestic catastrophe in the making. Illinois, California, New York, New Jersey, Michigan: all severely stressed.

States can’t print money. The only thing that they can do is cut services, cut repairs, default on pensions, then default on loans.

A state like Illinois defaulting on its debt is close to as significant in world markets as Greece defaulting on its debts.

The pattern of spending that threatens the federal government mid-term financial stability (social security, medicare) also threaten states’ in the form of medicaid. The second highest state and local expenditures are for education. People will be having less babies for a few years (who can afford them), but five years ago people had lots.

State support for higher education becomes much more limited, which then affects long-term growth prospects.

In the markets, a couple things will happen when the first wave of defaults seems close. Money will move out of municipal and state bond funds, to corporate bonds and equities.

So, governance will receive false indicators from the stock markets that the financial world regards the economy as strong, when what they will really be seeing is a wave in a water bed.

At the same time, interest rates and inflation (both types – monetary and consumer) will increase. In the markets, bank and bond yields will increase.

Shortly, all valuations would experience downward pressure.

Following a couple state and municipal defaults, the inflated stock market bubble would again wither (probably not explode).

The remedy is full employment, even if comes from the federal government guaranteeing every resident a minimum wage job. At least that would provide an income tax revenue flow to the federal government and states, and put purchasing power back in the hands of communities (the basis of future middle class development).

That remedy is more than highly unlikely in the next Congress.

Those are the mechanics of the 2011 double-dip. It might not happen.

Private investers might put their money into productive activity domestically, increasing payrolls and to the extent that the federal government, states and municipalities experience surpluses.

You think?


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I love the evolved Jewish commitment, that of tikkun olam, which I understand has two respects:

  1. The intimate internal commitment of personal depth, sanctity, integrity, balanced mindfulness, humility before/in relation to God
  2. The external commitment to healing of the world, of social relationships, to help others in their need, “to love thy neighbor as thyself”

All the time, every breath, every day, every week, every month, every year, every generation, every life.

In Jewish thought, there is the concept of the “Jewish soul” as special, even of special obligation, which on the surface seems to be a trivial racial privilege (not earned, but by birth). There is a more expansive way of relating to the concept of a Jewish soul than just that privilege.

In accounting theory (auditing), there is the concept of “substance over form”. In auditing, the concept is an attitude of skepticism that asks specific questions about whether a written lease is really a long-term financing agreement for example, with the consequences that rather than the form of the transaction defining a current expense, the substance of the transaction is the gradual payment down of a long-term debt. The IRS uses the term “facts and circumstances” to describe the same inquiry.

Spiritually though, I ask “what is really occurring?” So, for example, when Jews use the term “adonai” to refer to ONE/God, and Muslims use the term “Allah”, I don’t conclude that Allah is a false god, an idol. If the substance of their relation is the same then they are referring to the same.

Similarly with the term “Jewish soul”. What I call my “Jewish soul” is the part of me that seeks to heal, to maintain and improve relations, health, etc. So, those that express that part of themselves, and beyond what can be thought of an exchange, I describe to myself as having a kindred soul, a member of the “brit”, the conspiracy to transform the world to goodness.

I know people that think that the only scope of that mending the world happens in political relations, say in making peace, or in realizing justice in the world. But, I see the scope of that instinct/obligation to include all facets of life from the most intimate to most remote, of husband to wife, brother to brother, friend to friend, fair business exchange, governance, avoiding war, really literally “all my relations”.

So, I observe that almost everyone that I’ve met in my life has some element, in some degree, of the urge to make things whole, that it is a human characteristic, a native one, an instinct.

(In discussion with my local rabbi, he informs me that Jewish tradition does speak of the 10 lost tribes, that its not just in Indiana Jones movies, which says to me that anyone could be racially a Jew – mother’s mother’s mother’s mother, etc. It reminds me of the story in many traditions of great saints or even messiah hiding in the guise of a simple person, a stranger, a poor person, an ignorant person. An opportunity. A test of our sincerity.)

So, I read shacharit, mincha and maariv daily. Right now in me, the experience fans the flames of my universalistic interpretation of tikkun olam. I am reminded often (three times/day) of my real purpose, the sensitivities that serve that purpose are exercised, and I am made confident that if I sincerely try to do it, that I also land on my feet emotionally and economically.

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I’ve started praying regularly, Jewish prayer, three times per day per rabbinic instruction and guidance.

Its changed me, for the good.

It gives scope to my expansive and imaginative side, and at the same time reinforces the sober promise of living well and kindly and confidently in the actual world.

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I got tired of the passivity of waiting.

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I’m unemployed. I try to do as much volunteer work as I can, keep up my professional knowledge, network, etc. But, I’m still unemployed.

There are a lot of us, and a lot of us my age (mid 50’s).

And we’re quiet. We’re scared of creating a bad rep, you know as trouble-makers, especially when there are dozens applying for the same jobs as us, even with our extensive experience, and excellent skills.

So, we lie low.

But, we’re out there, quietly consuming our home equity, our retirement savings, giving up our second cars, giving up supporting our children’s college education, embarrisingly receiving unemployment benefits, health care subsidies, even food stamps.

If it goes on long enough, some of us will become homeless, and leave abandoned homes in otherwise convivial neighborhoods.

Maybe its our own individual faults for losing long-term jobs. Maybe its our own individual faults for not saving more so that we can retire this early. Maybe its our own collective faults for getting cocky during good times, borrowing, speculating.

9.6% for last three months, over 50% of that 9.6% unemployed for more than six months. Double that if you include those working part-time and/or working jobs without benefits, and those who have just given up looking.

Those of us that are working are holding our money close to our vest. We’re paying our mortgages, taxes, food, necessities, and going out to dinner occassionally. But, we’re not starting new projects, not getting much personal services.

NOONE is yet advocating for federally  guaranteed employment (even at minimum wage). NOONE is yet advocating for large scale income redistribution. NOONE is speaking of revolution (thankfully).

Give it a few years. New England winters are cold (and we still mostly have poorly insulated houses).

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In today’s New York Times, there is an interesting discussion of some of the themes articulated in the Obama administration’s bi-partison deficit reduction panel. They are at odds, and have not concluded a recommendation. (That is their job, to propose a recommendation!!!! Everybody already knows the conflicting issues. They were hired to do adult work, not teenage.)


I actually agree with the theme of this, that the goal of economy is to improve welfare, not necessarily to improve numbers. To my mind, this is “objectively” confirmed by indexes of individuals’, families’, communities’, regions’, macro-regions’ assessment (a number) of their relative welfare applying Maslow’s heirarchy of needs as a guide.

There is no published and consented measurement yet. (“Published” will be easy, “consented” not so easy.)

But that score is the bottom line. I believe that it is obvious that a thousand dollars earned and received by someone making $20,000/year generates more social welfare than a thousand dollars earned and received by someone making $2,000,000/year. For the person making $20,000/year, that increment represents 5% of their livelihood, and the difference between desparation and struggle. For the individual making $2,000,000/year, the incremental $1000 represents monopoly money.

So, I believe that relatively equal distribution of income and wealth is on its own terms a critical factor in the effectiveness of an economy to deliver social welfare. (That is not a statement of fairness, but of effectiveness.)

Similarly, to the extent that equal distribution of income and wealth results from unearned transfer in society as a whole, that is likely to be inflationary in financial terms, and not sufficiently encouraging of productive work in moral terms.

Public expenditure that does not compensate for value contributed, for work or exchange, is in fact a dissolution of value, even if it results in improved net social welfare. So, I actually oppose payment of extended unemployment insurance, and favor instead a guaranteed minimum wage socially productive job for anyone willing to work.

I don’t favor permanent artificial supports for the value of real estate, of commodities. If applied at all, government programs and tax features should gradually seek to frankly reduce the value of real estate to an affordable level for the prevailing wages in the region. So, I favor gradually eliminating the mortgage home interest deduction (in that it causes inflation in the value of homes). I favor repeal of the $250,000/$500,000 capital gain exclusion on primary residences as it also causes inflation in the value of homes.

On the issue at hand, I believe that it is too generous to offer tax breaks to anyone currently, including Obama’s proposed middle class tax cut. I believe that with the exception of the alternative minimum tax set point, the Bush tax cuts (tax rates, favored capital gains and dividends rates, and estate taxes) should be restored to prior levels.

That is the best that we will get out of the current and future Congress, and should be happy with it.

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