The recession will end in July, give or take a month or two.
Yup, I have finally figured it out, and this prediction will not likely be retracted.
On December 12, 2008, I posted that the recession would end on June 17th, meaning really June of this year.
http://flyingpinkunicorns.blogspot.com/2008/12/june-17-th-2009.html
My thinking was that as of June the recession would have been going on longer than any since World War II, and that a fair bit of the bloodletting had already took place.
Alas, on February 8, I retracted that prediction, fearing the banks were in truly horrible shape, and that it would take months, at a bare minimum, to even begin to clean them up.
http://flyingpinkunicorns.blogspot.com/2009/02/i-was-wrong.html
I guess I lost my nerve.
A few weeks back, the administration released the results of the so-called stress tests, indicating what would happen to the banks if unemployment went over 10% (a stressful situation for banks' balance sheets). The results indicated that the banks were in MUCH better shape than we had thought. Sure there were a few, notably Bank of America, which needed more capital. It was decided that 10 large banks needed a total of $75 billion more in capital, with Bank of America needing $33.9 billion.
In the few days following the results of the stress tests, several banks raised billions in capital, which would have been impossible late last year due to the fear in the financial markets about the banks. This was a loud (but largely unnoticed) vote of confidence in the banking system.
Anyway, the recent unemployment numbers have been godawful. The number of first time claims for unemployment, dropped by 13,000 last week, but were still at 623,000, a terrible number. That's the sort of number you'd expect when the economy was deep in recession. However, unemployment is what is referred to as a lagging indicator. That is, when business first starts getting better, you force your current employees to do a little more. Only when it keeps getting better do you finally take the plunge and hire new people. So even after the economy begins growing, everyone, including me, expects that unemployment will get worse. We will certainly see 10% before 2009 is over, and could conceivably see 11% early next year. But the worst is very very likely over. Barring a huge new shock in the banking system, the less bad news we've been hearing about the credit markets, coupled with more federal stimulus money, rock-bottom interest rates and the small Obama tax cuts will cause the economy to begin growing very soon. Almost certainly during the Fall, and probably during the Summer. Do hold the champagne. The mere fact of growth of GDP, in and of itself, doesn't mean too much for the great majority of people (though it does help the federal budget). But this time it may mean a little bit. I'm a big believer that people and businesses don't react to numbers that much, they react to conditions on the ground. But hearing a positive GDP number will almost certainly give business and consumer confidence a boost. And such a number is very possible for the quarter which runs from July- September of this year.
If I had to predict, (guess, really), I'd guess that the recovery is for real, but not vigorous until early to mid 2010. Figure that unemployment will begin to fall by about May 2010, and fall sharply at that. Given that by May 2010 it will be about 10.5% I suspect, it can fall very fast without worrying anyone that the economy will overheat and cause inflation. In about April-May 2010 the fed can begin draining the economy of the extra money it created in 2008 and 2009, and begin raising interest rates. The day I can advocate for that in my blog will be a good day indeed, for all of us.
Thursday, May 28, 2009
As you all likely know, congress is seriously considering major health care reforms. In 1993-94, the Clinton administration created a body headed by then first lady Hillary to draft up a complex plan. The administration drafted it, and intended to stick as much of it as possible down the democratic congress' throat. The democrats gagged, and, in the face of the terrifying couple of Harry and Louise (google ads, Harry and Louise, health care) passed nothing at all. The GOP took control of both houses of congress in 1994, denied there was a serious health care problem that needed fixing, and the rest is history. Painful, expensive, life shattering history for millions of Americans who lack health insurance, or who find that when they need it most their insurance company slow pays their doctor, denies claims, denies authorizations for tests, demands pre-notification before an emergency room admission (presumably you should have known you would be rear-ended) and so on along the litany of things wrong with our health care system. Oh yeah, we spend nearly 50% more PER PERSON than any other country in the world (with the tiny exception of Switzerland, who we spend more than anyway) and we get outcomes that are slightly worse than our peer countries (Canada, France, the UK, Germany, Japan). I always thought conservatives believed in cost-benefit analysis. Well, our system costs more and generates slightly worse outcomes. Sounds like it needs fixing....
Anyway, the point of this post is to jolt you, my readers, into DOING SOMETHING. The burning issue of health care reform in the last few weeks is whether the Obama administration will compromise on what is known as a public option. Liberal and lefty democrats favor a single payer system, like Canada or France, whereby the government is the primary (or only) purchaser of health care. This is socialized medicine, which the right has made a dirty word, on a par with communist, terrorist, or gay married person. A bogeyman. Anyway, the democrats are, sadly, NOT proposing any such option, which would, among many other things, put the health insurance industry out of business. Instead, the mantra these days is that if you like your private insurance (and many Americans justifiably do) you can keep it, largely unaltered. But, if you don't like it, or you don't have private insurance, a PUBLIC OPTION allows you to buy into some form of government run or regulated option, such as Medicare.
Imho, a public option is CRUCIAL if health care reform is to really deliver any significant benefits to America. In fact, I would state that the issue of the public option is by far the most significant issue facing the congress and president these days. The economy will soon recover (more on that in a post coming soon), the shape of energy reform is becoming clear, but we could choose to omit a public option for health care and simply let a big opportunity to reform a part of our economy which badly needs reform, and allow millions of uninsured Americans to stay uninsured.
Howard Dean has created a web site that asks everyone to sign a petition supporting a public option for health care. I have signed this petition and I urge all of you to do the same.
http://standwithdrdean.com/
Anyway, the point of this post is to jolt you, my readers, into DOING SOMETHING. The burning issue of health care reform in the last few weeks is whether the Obama administration will compromise on what is known as a public option. Liberal and lefty democrats favor a single payer system, like Canada or France, whereby the government is the primary (or only) purchaser of health care. This is socialized medicine, which the right has made a dirty word, on a par with communist, terrorist, or gay married person. A bogeyman. Anyway, the democrats are, sadly, NOT proposing any such option, which would, among many other things, put the health insurance industry out of business. Instead, the mantra these days is that if you like your private insurance (and many Americans justifiably do) you can keep it, largely unaltered. But, if you don't like it, or you don't have private insurance, a PUBLIC OPTION allows you to buy into some form of government run or regulated option, such as Medicare.
Imho, a public option is CRUCIAL if health care reform is to really deliver any significant benefits to America. In fact, I would state that the issue of the public option is by far the most significant issue facing the congress and president these days. The economy will soon recover (more on that in a post coming soon), the shape of energy reform is becoming clear, but we could choose to omit a public option for health care and simply let a big opportunity to reform a part of our economy which badly needs reform, and allow millions of uninsured Americans to stay uninsured.
Howard Dean has created a web site that asks everyone to sign a petition supporting a public option for health care. I have signed this petition and I urge all of you to do the same.
http://standwithdrdean.com/
Thursday, May 07, 2009
My thoughts on Afghanistan/Pakistan
I begin with the assumption that the Taliban would get KILLED in a free and fair country-wide election. That is, although they have real pockets of support among the Pashtuns on the border, they are not a genuinely popular movement, as Mao's communists were, and so many successful revolutionaries were. They were wildly unpopular, by all accounts, the first time around.
I'm no Afghan expert, but I'm told they don't have a ton of support. Remember, Al Queda in Iraq looked like they had real Sunni support, until the Sunni leaders turned on their asses and asked the infidels, ie. US, to help kill them, b/c they horribly overplayed their hand. The Taliban was a foreign import, rather than a genuine Afghan movement. They were really installed by Pakistan's intelligence service (the ISI) as a way to stabalize and have a tad of control over their northern neighbor. Control didn't quite happen, but a modicum of stability (vis-a-vis Pakistan) did. Prior to the installation of the Taliban, various factions vying for control over Afghanistan took their battles, literally, to the streets of Pakistan. They set off car bombs and did other damage. The Pakistani army and intelligence services (and people) were NOT amused.
The Taliban are not natural leaders of Afghanistan in any way, shape or form, and are not viewed that way by basically any non-Pashtuns, and not really by many Pashtuns either as I understand it. They were accepted by many, especially in the beginning, because they brought an end to the chaos and fighting. Once the Afghan people got a taste of the Taliban, they were ready to throw them out.
Why do we care whether Hamid Karzi or the Taliban control Afghanistan? Afghanistan is one of the very poorest countries on earth. Even though it is nearly 100% Muslim, your average Muslim in another country doesn't begin to care about it (as they might Iraq, Egypt, and other countries of significance). Their only exports are poppy seeds and instability. They have no oil. On the other hand, they are strategically located, and are vital to the future of Pakistan. So they do matter.
As we all know, Bin Ladin had completely free reign in Afghanistan prior to 9-11. The Taliban ran things day to day, but Bin Ladin did as he pleased. So its perfectly fair to say that the Taliban attacked us. But would they dare do it again if they somehow regained power? Probably not. The best reason to be willing to spend lives and oodles of money to defeat the Taliban lies in Pakistan. Although Pakistan is poor as well, it has circa 180 million people, nearly all Muslim, most of a modern army, and many dozen nuclear weapons. Bin Ladin followers taking over Pakistan (as many have dreamt of for years) would be a HUGE disaster for American national security. In my view, a seriously first order problem. Andrew thinks that even in this godawful eventuality, we could rely on MAD (mutually assured destruction) to prevent them from getting too uppity. I don't. Religious nutjobs are just not nearly as predictable as the Soviets were. Besides, I'm not willing to bet New York on it. I'm highly confident that India feels the same way. Sure, Pakistan is their enemy. But the Pakistani regime mostly plays within defined bounds. (The terror attacks last year in Mumbai (formerly Bombay), which killed 173 people and were huge front page news worldwide were a glaring exception, but India knows perfectly well that Pakistan didn't orchestrate the attacks. Whether Al Queda (or the Taliban) would similarly confront India within a known parameter of permissible activity is another matter entirely. That's a question which India would greatly prefer not to have to answer.
I've made a leap that I should explain. There are several areas of Pakistan, near the Afghan border, which are in virtual open revolt against the Pakistan government. These are sometimes referred to as the Tribal areas, which is only one part of Pakistan that is in near revolt. It is in these border areas (including but not limited to the Swat Valley) where Bin Ladin and the rest of the remaining Al Queda leadership are thought to be hiding, and it is from these areas where the Taliban is launching their attacks across the border into Afghanistan. The Pakistani government is none too pleased at these developments. Although a cease fire was controversially signed between Pakistan and some of the rebel elements back in February, the Pakistani army has moved in in force in recent days.
http://www.nytimes.com/2009/05/08/world/asia/08pstan.html?ref=asia
Pakistan fears that the Taliban types, with the aid of Al Queda types, could be a grave threat to their (always weak) government. So they're pushing back hard in certain areas.
So what does Pakistan think of the Taliban war in Afghanistan? What with the rebellion going on near the border and all, and the army and the intelligence services being the only institutions in Pakistan worth a NYC subway ride, I doubt seriously they're going to see it in their long term interests for the Taliban to WIN in Afghanistan. For them to EXIST, maybe. Keeps the US interested, keeps our billions flowing into Pakistan, keeps us from following our foreign policy where it wants to go, which is a wholehearted embrace of India, for trade reasons, as a counterweight to China, and a counterweight to possible Islamic radicalism coming from Pakistan or Sri Lanka. (Was that the longest sentence you ever read?)
That's where gravity is (strongly) pulling the US foreign policy. Fear of Bin Ladinists controlling Pakistan's nukes are pulling in the other direction. Both the army and the ISI realize this, and are playing a bit of a dangerous double game, but they don't see it in their interests to order the army to turn border areas into rubble. They've, however, gone from playing patty cake with the rebels to playing a bit rough, and from the US perspective, that will just about do. I think the Pakistan/Afghan problem is approaching a sort of equilibrium. Pakistan sees the rearming of the Taliban and the chaos following in Afghanistan and sees a more than mini rebellion by very similar types in the north of Pakistan, with the aid of Al Queda. They've looked in the crystal ball and just cringed. So the army under MUSHARRAF preferred to play patty cake, while the army under weak civilian leadership is starting to crack heads. These people aren't Saddam's sycophant idiots. They have more than 1/2 a clue, the army does. And while they may not crack down hard enough to WIN (by which I mean crush the rebellion utterly) they will, I humbly predict, crack down hard enough not to lose (in Pakistan). Which is really more than enough from their perspective. India can tolerate this, the US can tolerate this, and at the very very VERY end of the day it may be that even the TALIBAN can tolerate this. Leverage from the US on the Afghan side of the border can badly squeeze an already somewhat squeezed Taliban until they slowly whither away into dust. That, in broad outline, is my Plan. I think it has a high chance of "success" and a low chance of bad failure (Al Queda types controlling swaths of Pakistan or, god forbid, the Pakistani military and with it its nuclear arsenal). It is for this reason that I support the escalation of the effort in Afghanistan-- not so much because its worth that much American money and blood to see who rules Afghanistan, but because it is worth lots of American treasure to ensure that the rebel types, aided and assisted by (and part and parcel of) the Taliban (and aided by Al Queda) don't rule Pakistan.
I begin with the assumption that the Taliban would get KILLED in a free and fair country-wide election. That is, although they have real pockets of support among the Pashtuns on the border, they are not a genuinely popular movement, as Mao's communists were, and so many successful revolutionaries were. They were wildly unpopular, by all accounts, the first time around.
I'm no Afghan expert, but I'm told they don't have a ton of support. Remember, Al Queda in Iraq looked like they had real Sunni support, until the Sunni leaders turned on their asses and asked the infidels, ie. US, to help kill them, b/c they horribly overplayed their hand. The Taliban was a foreign import, rather than a genuine Afghan movement. They were really installed by Pakistan's intelligence service (the ISI) as a way to stabalize and have a tad of control over their northern neighbor. Control didn't quite happen, but a modicum of stability (vis-a-vis Pakistan) did. Prior to the installation of the Taliban, various factions vying for control over Afghanistan took their battles, literally, to the streets of Pakistan. They set off car bombs and did other damage. The Pakistani army and intelligence services (and people) were NOT amused.
The Taliban are not natural leaders of Afghanistan in any way, shape or form, and are not viewed that way by basically any non-Pashtuns, and not really by many Pashtuns either as I understand it. They were accepted by many, especially in the beginning, because they brought an end to the chaos and fighting. Once the Afghan people got a taste of the Taliban, they were ready to throw them out.
Why do we care whether Hamid Karzi or the Taliban control Afghanistan? Afghanistan is one of the very poorest countries on earth. Even though it is nearly 100% Muslim, your average Muslim in another country doesn't begin to care about it (as they might Iraq, Egypt, and other countries of significance). Their only exports are poppy seeds and instability. They have no oil. On the other hand, they are strategically located, and are vital to the future of Pakistan. So they do matter.
As we all know, Bin Ladin had completely free reign in Afghanistan prior to 9-11. The Taliban ran things day to day, but Bin Ladin did as he pleased. So its perfectly fair to say that the Taliban attacked us. But would they dare do it again if they somehow regained power? Probably not. The best reason to be willing to spend lives and oodles of money to defeat the Taliban lies in Pakistan. Although Pakistan is poor as well, it has circa 180 million people, nearly all Muslim, most of a modern army, and many dozen nuclear weapons. Bin Ladin followers taking over Pakistan (as many have dreamt of for years) would be a HUGE disaster for American national security. In my view, a seriously first order problem. Andrew thinks that even in this godawful eventuality, we could rely on MAD (mutually assured destruction) to prevent them from getting too uppity. I don't. Religious nutjobs are just not nearly as predictable as the Soviets were. Besides, I'm not willing to bet New York on it. I'm highly confident that India feels the same way. Sure, Pakistan is their enemy. But the Pakistani regime mostly plays within defined bounds. (The terror attacks last year in Mumbai (formerly Bombay), which killed 173 people and were huge front page news worldwide were a glaring exception, but India knows perfectly well that Pakistan didn't orchestrate the attacks. Whether Al Queda (or the Taliban) would similarly confront India within a known parameter of permissible activity is another matter entirely. That's a question which India would greatly prefer not to have to answer.
I've made a leap that I should explain. There are several areas of Pakistan, near the Afghan border, which are in virtual open revolt against the Pakistan government. These are sometimes referred to as the Tribal areas, which is only one part of Pakistan that is in near revolt. It is in these border areas (including but not limited to the Swat Valley) where Bin Ladin and the rest of the remaining Al Queda leadership are thought to be hiding, and it is from these areas where the Taliban is launching their attacks across the border into Afghanistan. The Pakistani government is none too pleased at these developments. Although a cease fire was controversially signed between Pakistan and some of the rebel elements back in February, the Pakistani army has moved in in force in recent days.
http://www.nytimes.com/2009/05/08/world/asia/08pstan.html?ref=asia
Pakistan fears that the Taliban types, with the aid of Al Queda types, could be a grave threat to their (always weak) government. So they're pushing back hard in certain areas.
So what does Pakistan think of the Taliban war in Afghanistan? What with the rebellion going on near the border and all, and the army and the intelligence services being the only institutions in Pakistan worth a NYC subway ride, I doubt seriously they're going to see it in their long term interests for the Taliban to WIN in Afghanistan. For them to EXIST, maybe. Keeps the US interested, keeps our billions flowing into Pakistan, keeps us from following our foreign policy where it wants to go, which is a wholehearted embrace of India, for trade reasons, as a counterweight to China, and a counterweight to possible Islamic radicalism coming from Pakistan or Sri Lanka. (Was that the longest sentence you ever read?)
That's where gravity is (strongly) pulling the US foreign policy. Fear of Bin Ladinists controlling Pakistan's nukes are pulling in the other direction. Both the army and the ISI realize this, and are playing a bit of a dangerous double game, but they don't see it in their interests to order the army to turn border areas into rubble. They've, however, gone from playing patty cake with the rebels to playing a bit rough, and from the US perspective, that will just about do. I think the Pakistan/Afghan problem is approaching a sort of equilibrium. Pakistan sees the rearming of the Taliban and the chaos following in Afghanistan and sees a more than mini rebellion by very similar types in the north of Pakistan, with the aid of Al Queda. They've looked in the crystal ball and just cringed. So the army under MUSHARRAF preferred to play patty cake, while the army under weak civilian leadership is starting to crack heads. These people aren't Saddam's sycophant idiots. They have more than 1/2 a clue, the army does. And while they may not crack down hard enough to WIN (by which I mean crush the rebellion utterly) they will, I humbly predict, crack down hard enough not to lose (in Pakistan). Which is really more than enough from their perspective. India can tolerate this, the US can tolerate this, and at the very very VERY end of the day it may be that even the TALIBAN can tolerate this. Leverage from the US on the Afghan side of the border can badly squeeze an already somewhat squeezed Taliban until they slowly whither away into dust. That, in broad outline, is my Plan. I think it has a high chance of "success" and a low chance of bad failure (Al Queda types controlling swaths of Pakistan or, god forbid, the Pakistani military and with it its nuclear arsenal). It is for this reason that I support the escalation of the effort in Afghanistan-- not so much because its worth that much American money and blood to see who rules Afghanistan, but because it is worth lots of American treasure to ensure that the rebel types, aided and assisted by (and part and parcel of) the Taliban (and aided by Al Queda) don't rule Pakistan.
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