In recents posts (here and here) I've commented on Wisconsin's favorite son and conservative philosopher, Paul Ryan, R-WI. Now, to my profound shock, the Daily Beast (here) has labelled Rep. Ryan the 5th most ignorant politician of the year (Michelle Bachman, R-MN is first and Sarah Palin 4th, see my comment on Sarah Palin's cleavage here) while Keith Olberrmann (in the video above) has labelled Rep. Ryan one of the "Worst Persons In The World!".
Will the pain being inflicted on Wisconsin never stop?
In the aftermath of the Subprime Mortgage Crisis, concern for the environment has been pretty much swept off the table. When was the last time you saw a headline about climate change? The problem hasn't gone away, it's only our attention that has shifted.
A subtle subtext of Prof. William Cronon's run-in with the Wisconsin Republican Party (here) is that (1) Professor Cronon teaches environmental history and (2) the radical right wing sees environmentalism as something inspired by the Devil (see the video above). Professor Cronon's interest in conservative, right-wing groups is certainly motivated by his environmental concerns.
In his blog (here), Professor Cronon suggests that we all need to be more concerned about what's happening in the conservative movement. For example, if you are a public employee or an environmentalist or both, as is Professor Cronon, the activities of conservative think tanks may actually have an effect your job, your income and the world you live in. He suggests studying the following groups:
For a more complete list see Right Wing Watch (here) and Source Watch (here). To be completely fair, balanced and even handed (or if you can only take so much from the right wing in one day), here's a list of dangerous environmental organizations to monitor:
The Global Footprint Network (GFN) http://www.footprintnetwork.org/ investigates how much "nature" we have, how much we use (the ecological footprint) and who uses the most.
The World Wildlife Fund (WWF) http://www.worldwildlife.org/ They publish the Living Planet Report, the Living Planet Index and GFN's Ecological Footprint index (here).
William Cronon is a historian at the University of Wisconsin. His speciality is environmental history and he, in fact, can be credited with inventing the discipline (watch a brief video from PBS where he discusses the National Parks above).
A few semesters ago I took a class from Bill Cronon. It was a real "lecture" course, the kind that is generally considered too boring for today's plugged in, tech distracted students. The class was given in a large lecture hall, was always packed with students sitting in the aisles and not a single student in the class had a cell phone or computer out during the lecture. It's not that Bill prohibited technology but rather that the students hung on every word of a gifted lecturer (my students, on the other hand, warned me never to speak for more than 15 minutes!).
Now, evidently, Bill Cronon has had enough of Wisconsin politics (one sympathizes). He recently started a blog, the Scholar as Citizen (here), wrote an Op Ed for the New York Times discussing the ongoing radical break with Wisconsin political tradition (here) and immediately was attacked by the Republican party who slapped him with a FOIA request for all his emails dealing with Governor Scott Walker, etc.
What prompted the attack? Prof. Cronon is looking into (here) conservative groups such as the American Legislative Exchange Council (ALEC), the State Policy Network (SPN), the MacIver Institute, the Wisconsin Policy Research Institute (WPRI) and their funding sources (the Koch brothers, etc.). Prof. Cronon is studying these groups because they are having an important impact on US politics and because the groups seem not to have been investigated extensively by the popular press.
Bill Cronon is being the historian and the Republican Party is, I guess, being the Republican Party, the party of Nixon, Watergate and Dirty Tricks.
The first graphic on the left, from the USGS, shows the main shock and aftershocks. The second graph of the 1995 Kobe earthquake shows that Japan sits at the intersection of three tectonic plates, the Pacific Plate, the Philippine Plate and the Eurasian Plate. What is of particular concern is that the Honshu quake might have destabilized the Philippine Plate and made it more earthquake prone.
The concern is that the world's largest city, Tokyo, sits at the intersection of these three plates.
Al Kranken, D-MN, gave a little-noticed but insightful speech on the Senate floor in December (you can read the entire speech here or listen to the video above). His dot points were:
One lesson of the last election was not to give tax breaks to millionaires
To solve the Subprime Mortgage the US government has been pressuring banks to write off "tens of billions" worth of mortgage debt. Yesterday, the NY Times reported (here) that Bank of America (BoA) CEO Brian T. Moynihan was pushing back saying the idea is unworkable and unfair to borrowers who pay their mortgages and, more importantly, to investors who hold the mortgages. It's interesting to compare Mr. Moynihan's "push back" against the government with his strategy (stated in the video above) for increasing returns on BAC stock and the company's role in acquiring Lehman Brothers at the bottom of the financial crisis.
Mr. Moynihan has another problem (in addition to digesting nonperforming acquisitions) which is working off the bubble of nonperforming mortgages on the books of BoA, the nation's biggest mortgage servicer. Terry Laughlin, the BoA executive who handles delinquent or default mortgages says that dealing with underwater borrowers that have negative equity in their homes "is an unsolvable" problem on "... a very slippery slope."
Here's a "theoretical" proposal for dealing with reducing home loans. The crucial issues is to decide how much to write the mortgage down. It would be unfair to write the mortgage down to the level that the borrower can afford to pay since the borrower may be able to afford very, very little. Forcing borrowers to pay the full "bubble" price of the home also seems unfair since those values were unrealistic.
The graphic above shows the dynamic attractor for home prices (the Case-Shiller Composite US index) as a dashed line with the actual home price values displayed as a solid line. Comparing the two lines shows that from 1990 to around 2001, home prices were somewhat below their dynamic attractor. After 2001, the "bubble" is clearly evident. And, during 2010, home prices returned to their long-run dynamic attractor.
My proposal is simply to value home prices, for the purpose of mortgage modification, at the long-run attractor value. Banks and their investors who acquired mortgages after 2001 will loose some money. Maybe next time they will realize that purchasing inflated assets during a housing bubble is a bad idea. Some borrowers will not be able to pay their loans even at 2010 prices. They will have to go through foreclosure or a short sale.
Of course, this is a theoretical idea. When we get down to valuing a specific mortgage, guesses would have to be made about the value of a specific home. To do this an assessor would have to look at the home in light of comparable home sales and the relationship of the local market to the appropriate regional or national composite Case-Shiller index. Models could also be developed for use by the assessor, but ultimately a judgement has to be made as is always the case with home valuations.
THEORY: Housing prices as traced by the Case-Shiller index are best described using a business-as-usual model: P(t) = a + b P(t-1). For whatever reason (good or bad) housing prices are not strongly linked to performance in the US or the World economy. They are also not a random walk. One would think that the US economy model, P(t) = a + b P(t-1) + C E(t-1) where E is the state of the US economy, would provide a better dynamic attractor for housing prices. It might, but for present purposes the BAU model will be just as good and easier to understand.
Austerity protests in Wisconsin have partially involved the question of whether state and federal employees are paid too much. Are recent article in the NY Times (here) reviews research by the Bureau of Economic Analysis comparing private salary and benefits with those paid to public employees. It's not an easy question to answer.
Looking at the graph above (the lead graphic in the NY Times article), however, it's possible that we are asking the wrong question. Notice that private and public compensation diverges around 1980, the beginning of neoliberalism (think Ronald Reagan) and globalization. What this graph suggests to me is that private sector compensation, as a result of these two trends, is too low!
Public sector jobs cannot be outsource and public sector workers have been more successful in retaining union affiliations and protection. All the discussion about public sector compensation assumes that markets have magically set private sector compensation at the right level.
Globalizing labor markets are driving employee compensation down to subsistence levels and that's great for management bonuses and Republican party political contributions. It's not so great for workers or for aggregate demand.
THEORY: If disposable income decreases, consumption decreases which decreases aggregate demand, Y = I + C + G + BOP.
I use my blogs to make informal comments on policy topics related to my research interests in computer simulation of the US Health Care System, the US Economy, the US Stock Market, the US Financial System, the Wisconsin Dane County regional economy and the World System. I am retired from the University of Wisconsin -- Madison. I have taught Statistics and Computer Science and also served on the UW's HIPAA Task Force and the Bioterrorism Task Force. I have also been a member of my local planning commission, a jazz guitarist and a golfer, so some of that may find its way into the blogs.
