For 80% of Americans, the US is in a depression

More stores across the U.S. that offer deeply-discounted products are seeing their sales decline after years of growth amid America’s “Great Recession” — and one analyst said on Monday it’s another sign of even deeper downturn.

“I think what’s going on in those stores is that we are in a depression for 80 percent of Americans,” top retail analyst Howard Davidowitz told KNX 1070.

America’s three largest discount chains — Dollar General Corp., Family Dollar Stores Inc. and Dollar Tree Inc. — all recently missed their quarterly earnings targets.

Read it all at Washington's Blog, Top Retail Analyst: "I Think What’s Going On ... Is That We Are In A Depression For 80 Percent Of Americans"

Get ready for the second leg down.

Should economists be good, or be good Libertarians?

The world's largest association of economists is considering ethics guidelines after outrage about undisclosed conflicts of interest, but only a handful of its 18,000 members have bothered to offer any input.

The American Economic Association earlier this year charged a five-person panel with looking into ethics and economics -- in part a response to the 2010 documentary "Inside Job" that vilified a number of big-name economists for arguing in favor of deregulation while on Wall Street's payroll.

The film also notably skewered former Federal Reserve Governor Frederic Mishkin, who wrote a glowing paper about Iceland's financial system in 2006 -- for which he was paid by the Icelandic Chamber of Commerce. Two years later, the country's financial system collapsed.

So what is the consensus among the economists? Turns out that they don't want to violate their Libertarian principles.

Card said it is possible the AEA's conflict of interest guidelines will be written along similar lines but said any code would be difficult to enforce.

"We are very modest about the possibility of actually policing badly-intended people," he said. "How can you figure out who got paid by who if they don't want you to know?"

Card added that the committee is reluctant to be too prescriptive."

"Economists have lots of flaws, but there is a general belief that economists don't like to tell other people what to do. This particular committee is made up of a broad group of people but no one who is a tell-other-people-what-to-do type of person."

Economists display little interest in ethics code

Geithner calls spending cuts what they really are: tax increases

On Face the Nation yesterday, Treasury Secretary Geithner said that the proposed cuts in Medicare would reduce medical coverage for seniors by a total of $6,500 per year. He called that "the same thing as a tax increase."

Finally, someone high up in the Administration characterized spending cuts as what they really are: the fiscal equivalent of tax increases. The only difference being, who they affect. Tax increases fall primarily on upper income people whereas spending cuts (tax increases) are borne by the middle and lower income earners.

So the hypocrisy of Republicans should have been exposed. While Republicans stand united against tax increases (for the wealthy), they are advocating tax increases for the middle class and poor.

"There's No Recovery Because the Government Made it Official Policy Not to Prosecute Fraud"

Washington's Blog: There's No Recovery Because the Government Made it Official Policy Not to Prosecute Fraud

Fraud caused the Great Depression and it has caused the current financial crisis. But fraud is not not being prosecuted, and so it will occur again and again, and prevent a sustainable economic recovery.

Numerous economists have been saying this for years.

Not enough attention is being paid to this. Of course, the situation is highly complex and there were man causal and contributory factors. But the proximate cause of the Great Depression and the Global Financial Crisis (GFC) was Ponzi finance, typical at the culmination of a financial cycle according to Hyman Minsky's financial instability hypotheses. So far, much too little attention has been paid to this and and as a result the crisis is lingering and far from resolved.

MMT is well aware of this. MMT economist and developer L. Randall Wary was a PhD student of Hyman Minsky, for example. William K. Black was one of the earliest and loudest voices warning about massive control fraud."

Owing to capture, those responsible for oversight were suborned, Black charges. Owing to the same influence, politicians conveniently lost the plot and erected strawmen to attack. The result is a problem that continues to fester.

UPDATE: Randy Wray explains the gory details:

Lessons We Should Have Learned from the Global Financial Crisis

But that is easy to overlook in Washington/Wall Street since the biggest financial institutions escaped with barely a scratch, and have returned to the same practices and rewards that caused the GFC. By hook and by crook, Wall Street also escaped re-regulation as the flaccid Dodd-Frank Act avoided any fundamental reform. In any case, the Republicans have made clear that they will not provide new funding to regulatory agencies, so even the weak rules in the Act will never get enforced. And, so far (fingers crossed!) none of the big Wall Street crooks has been prosecuted for high crimes. Yes there have been some fines and civil cases, and a few lesser criminals like Bernie Madoff were sacrificed, but all the big banksters are not only free—they are still running their criminal organizations (called “chartered banks” in polite conversation), advising the White House, and gearing up to fund the next presidential campaign.

All of that is to say that financial reform is deader than Elvis. Nothing can be done until the next Wall Street-induced crash. But I am an eternal optimist—the crash will come soon—and so it is time to enumerate the lessons we should have learned from the GFC so as to prepare the reforms that should have been adopted.

Rodger Malcolm Mitchell: Understanding Debt

Rodger Malcolm Mitchell at Monetary Sovereignty: Why bank lending leads to recessions. A counter-intuitive finding.

In summary, federal deficit spending is good for the economy, always good, endlessly good (up to the point of inflation). Private and local government spending/borrowing also is good, but not endlessly. Unlike the federal government, the private and local-government sectors eventually reach a point where debt is unaffordable and unsustainable.

To prevent recessions, the government continuously must provide stimulus spending, then provide added stimulus spending to offset the periodic reduction of money creation by the private sector.

These data call into question the popular belief that encouraging bank lending stimulates the economy. While short-term effects may be positive, long-term bank lending seems to lead to recessions, as servicing loans becomes ever more onerous for the monetarily non-sovereign sectors. In contrast, Federal deficit spending easily is serviced by the government, and therefore is preferable to private borrowing as a stimulus.

Mitchell demonstrates how this is true using the evidence of charts. Take a look.

The point of sex: parasite evasion

Telegraph: Scientists discover the point of sex

Now researchers have discovered that animals reproduce together, rather than simply cloning themselves, because it helps them to ward off parasites.

The findings support the evolutionary theory that blending of two animals' genomes creates an offspring with a new genetic code which may make it more resistant to attack, experts said.

Cross-fertilisation helps creatures stay a step ahead in the continuous "arms race" with parasites, which are forever evolving to try and infect them.

Biologists have described the situation as "Running with the Red Queen" in reference to the character in Lewis Carroll's Through the Looking-Glass, who tells Alice: "It takes all the running you can do, to keep in the same place."

Interesting article. Now how do we apply this knowledge to economics and finance to evade economic and financial parasites infecting our body politic?

"Saving money" to reduce the deficit by redefining inflation indexing

Washington's Blog: The "Debt Compromise" ... Another Pass for the Rich and a Fleecing for Everyone Else

Bruce Krasting:

Those making Less Than $100k would get hit by the highest percentage. Those that make $500k-1mm do pay 0.1% more, but the really fat cats making over a Mil don’t feel it at all.

Fortunately, this time the AARP is on the case.

Tim Duy: "No way to put lipstick on this pig"

Tim Duy at Fed Watch is perplexed:

The employment report polishes off what was already a depressing week. The turn of events in the budget negotiations was deeply distressing. It just seemed like it should be impossible to imagine that budget cutting is the order of the day when unemployment is over 9%, 10-year Treasuries hover near 3%, and a Democrat is in the White House. Yet possible it is.

The extent to which our leadership seems determined to follow in the path of the Japanese is absolutely stunning. My impression of the last two decades is that Japanese policymakers were never able to keep their eyes on the weak economy, instead always eager to turn their attention back to "normalizing" policy – raising interest rates, raising taxes, cutting spending. Our leadership suffers from the same obsession.

The employment report should be a wake up call. A slap in the face. A bucket of cold water poured over your head. But it won’t. I suspect it will be seen as further evidence that stimulus is pointless, that austerity is the only solution.

By trying to avoid becoming the next Greece, the US is becoming the next Japan.

Bachmann & Goolsbee On the Economy

U.S. Rep. and Presidential candidate Michelle Bachmann was interviewed on CNBC this morning right after the lackluster employment report came out from the Labor Dept.

Of course she is out of the MMT paradigm, but she shows how easy it is to score political points against the President on the issue of the economy.

Later CNBC had outgoing Obama Administration economic policy advisor Austan Goolsbee on for an interview, video below:

Unfortunately Goolsbee also is out of the MMT paradigm, and there is really not much difference between what Goolsbee comes up with here and what Rep. Bachmann came up with in her interview. They often sound the same here.

Both are unable to propose any real solutions to the current problem of lack of employment growth in the U.S. because both are economic morons foolishly concerned about the debt and the fiscal deficit in our current environment of a domestic output and demand shortage. This leaves fiscal policy options off the table for now for both political parties.

As both parties have managed to somehow back themselves into a political corner against an apparently new "third rail" of politics, the debt and deficit, I have to think that political pressure will again build on Fed Chairman Bernanke to "do something" to help foster employment growth through what has proven to be an impotent and probably damaging monetary policy.

Mike Konczal on July Jobs

Mike Konczal dissects the jobs umbers and concludes:

There’s no silver lining in today’s job numbers. The discussion needs to shift away immediately from deficit reduction to jobs growth in terms of public works, tax breaks for workers and getting to the bottom of the foreclosure crisis and shadow housing inventory.

Here are the gory details: The July Jobs Numbers: There is No Silver Lining

The MMT prescription is a Job Guarantee aka employer of last resort or employment assurance program, a suspension of the payroll tax, and block grants for the states to prevent more layoffs, as well as financial reform and enforcement, and we need it now.

Mr. President, why are you wasting time on the debt and deficit pseudo-problem when the actual problem is idle real resources due to deficient demand? Failure to deal with the actual problem will just feed the pseudo-problem.

Marshall Auerback jumps in: Time to Panic (II)

Today’s unemployment data suggests that we are experiencing something far worse than a mere “bump in the road”, as our President described it last month. In fact, if last month was the time to panic, as Stephanie Kelton argued here, then today’s data should create real palpitations in the White House. This isn’t just a “bump,” but a fully-fledged New York City style pot hole.

Warren Mosler: "The problem remains a massive lack of aggregate demand." Valance Weekly Economic Reports

Throwing the middle class and poor under the bus

Apparently the White House has decided against using the 14th Amendment to protect the U.S. from default or extortion by the Republican Party:

" In addition to his warnings about the cost of a default, officials said, Mr. Geithner told the lawmakers the White House did not believe it had the authority, under the Constitution, to continue issuing debt if it reached the debt ceiling. Nobody in the room disputed Mr. Geithner’s bleak assessment, the officials said".

Bloomberg: Libor manipulated by US banks?

Chicago Trading Firm's Lawsuit Claims Banks Conspired To Manipulate Libor

A Chicago trading firm accused Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), UBS AG (UBSN) and Citigroup Inc. (C) of conspiring to manipulate the London interbank offered rate.

The banks drove down Libor to generate billions of dollars in profits from swaps, loans, interest rate derivatives and other financial instruments whose value depended on the rate, Eldorado Trading Group LLC said in a complaint filed July 5 in federal court in Newark, New Jersey. (h/t Mish Shedlock)

This has been out there for awhile, but this is the first actual official complaint, to my knowledge. Thrown in on top of everything else, this is making Wall Street look like a Mafia subsidiary.

Yves Smith schools Brad DeLong on the "liquidity trap" that doesn't exist

The Sorrow and the Pity of Economists (Like DeLong) Not Learning from Their Mistakes

Yves shows how DeLong's notion of the liquidity trap is untenable, citing a number of MMT economists is support of her argument — Marshal Auerback, Scott Fullwiler, Stephanie Kelton, Bill Mitchell, Rob Parenteau, and Randy Wray. This post definitely elevates MMT and is worth reading for that, even for those that are already familiar with the refutation of liquidity traps.

GOP Sen. Grassley: 14th Amendment option possible

14th Amendment Option May Be Legit, Says Leading Senate Republican

Sen. Chuck Grassley (R-Iowa) said on Thursday that the Constitution may trump the debt ceiling, allowing the administration a way out of the default impasse.

Negotiators are considering gutting the social safety net in exchange for a vote to lift the debt ceiling. Grassley, in a conference call with local reporters, said that there may be another way out.

"There’s one thing that hasn’t been talked about yet, and I haven't checked on the constitutionality of it -- and I read the Constitution, but I don’t remember reading this -- but in the 14th amendment, there’s something that says something about the debt of the United States government shall be honored," Grassley said, according to a recording of the call. "The 14th Amendment includes a public debt clause that insists the obligations of the government 'shall not be questioned.'"

No platinum coin talk yet, though, outside of MMT anyway. Cullen Roche at Pragmatic Capitalism explains it: Let’s End This Debt Ceiling Debate With A $1 Oz. $1T Coin, crediting beowulf.

Edward Harrison explains the carry trade and swap lines

The Carry Trade and Fed Swap Lines

Bottom line: the Fed is stuck at permanent zero and that means the carry trade is on. If we did have another panic, those swap lines would be handy because the Fed would again become the global lender of last resort.

Michael Pettis on Debt in China

The problem, as I see it, is that the system has reached the point at which unsustainable increases in debt are necessary to sustain growth.

When is an increase in debt unsustainable?

As I see it there are three things that make increases in debt unsustainable. The first, obviously, is borrowing for consumption. This is what happened in the US and in the peripheral countries of Europe until the 2007-08 crisis, and it is pretty clear that this kind of borrowing cannot go on forever. Why not? Simply because with consumer financing the value of liabilities rises more quickly than the value of assets, and this cannot go on forever unless the borrower has an infinite amount of excess assets….

The second way we can experience an unsustainable increase in debt is when borrowing is used to fund investment that is misallocated or wasted. Whenever the value of liabilities rises more quickly than the value of assets, the increase in debt is by definition unsustainable unless, of course, the borrower has an unlimited amount of excess assets….

The third kind of unsustainable debt increase is caused by a sudden explosion in contingent liabilities. When balance sheets are structured in risky or mismatched ways, an unexpected change in circumstances can cause a sharp change in the relationship between the values of assets and liabilities, and so result in a net surge in indebtedness….

It is important to remember this when thinking about financing risks in China. We often hear analysts argue that because China has little consumer financing and because mortgage margins are high, they don’t have a debt problem. This argument is about as useless as the claim that because China has large reserves it is unlikely to have a financial problem. The limited consumer and mortgage financing in China means that china will not have a US-style financing problem, and the large amount of reserves means that China won’t have a Korean-style financing problem, but no one has ever seriously argued that those are the kinds of risks China faces. What matters is the level of debt, whether or not its growth is sustainable, and the kinds of contingent structures that are embedded. I would argue that all three measures are worrying.

Pettis provides the rationale and data in Incentives and debt

McClatchy-Marist Poll: Majority wants debt reduction over stimulus

I guess we can see where this is going.

Should the federal government concentrate on paying off its debt, even if it comes at the expense of a more robust economic recovery? Or should it focus on stimulating the economy, even if that means running up more costs?

According to a poll published Wednesday, 59 percent of Americans want the government to make national debt reduction its top priority, even if it comes at the expense of kick-starting the economy. Only a third think the focus should be on stimulation....

Among independents, 61 percent favored debt reduction and 32 percent economic stimulus.

Full post: U.S. Recovery Less Important Than Debt Reduction To Americans: Poll

Raw Story: Obama puts Social Security, Medicare cuts on the table

Raw: Sen. DeMint ‘willing’ to cause ‘serious disruptions’ to U.S. economy

Huffington Post: [GOP Senator] Orrin Hatch: The 'Poor' Should Do More To Shrink Debt, Not The Rich (video)

Huffington Post: Entitlement Cuts Opposed By Americans, Poll Finds

The survey of 1,502 adults, conducted nationwide June 15 to 19, finds mixed opinions on the three best known entitlement programs: Social Security, Medicare and Medicaid. When asked separately about each of the three programs, huge majorities (between 77 and 87 percent) say each of the programs has been "good for the country," but less than half (36 to 41 percent) rate the job they do "serving recipients" as excellent or good. Fewer still (15 to 18 percent) give a positive rating to the "current financial condition" of each program. Thus, it should come as little surprise that large majorities say the three programs need "major" rather than minor changes or should be "completely rebuilt."

As the Pew Research report emphasizes, however, "the public’s desire for fundamental change does not mean it supports reductions in the benefits provided by Social Security, Medicare or Medicaid." When asked which is more important, large majorities tell the pollsters that they would rather leave the benefits of these programs as they are now rather than making cuts or expecting beneficiaries to take on more responsibility for their costs.

And when asked simply, "what is more important, taking steps to reduce the budget deficit or keeping Social Security and Medicare benefits as they are," nearly twice as many Americans prefer the status quo (60 percent) to cuts in benefits (32 percent).

Brzezinski warns economic inequality can result in social unrest

Raw Story: Former National Security Advisor Dr. Zbigniew Brzezinski appeared on MSNBC’s Morning Joe Wednesday to discuss how income disparity in the United States could lead to civil unrest.

Visit msnbc.com for breaking news, world news, and news about the economy

Société Générale: A New World Order

When demand overtakes supply

The global economy is in a process of dramatic change. This is not merely due to the increasing influence that the emerging countries have on the international stage, but because the model of the last few decades came to a definitive end as a result of the 2008 financial crisis. Thus, everything, or nearly everything, that has come to characterise the last few decades now needs to be reconsidered. But, what characteristics will define the next era?

Very few past models are still valid. Such a situation has contributed to the extreme uncertainty that currently prevails and it will probably take a certain amount of time to establish with any degree of confidence the economic and financial laws of this next world order. By stepping away from the short term, a certain number of pointers allow us to navigate through this imbroglio, to find some consistency in the period we are going through and to identify the key points that will enable us to understand the long-term issues and to establish what sort of environment these issues imply for the main asset classes. As a result of this analysis, we have made one key observation: the last long cycle, which extended from the middle of the 1980s to the middle of the 2000s, was shaped by an environment that strongly favoured the development of supply; the next era will in all likelihood be dictated by demand issues. Such an abrupt change in the balance of the fundamental economic forces calls for a full redefinition of the economic and financial rules that have been in force since the mid- 1980s. Given the extreme nature of these developments, the transition towards a new regime can be nothing but chaotic and relatively long-winded, but ultimately it will replace the established order....

The report concludes:

The cost of shared growth

While the first phase of development in the emerging markets was above all characterised by an enormous boom in production capacities on a global scale with a correlating increase in competition from all sides, as well as a long period of disinflation and low interest rates, in the next phase, the influence of the emerging world will manifest itself as an explosion in demand and a resurgence of resource shortages. It is now impossible to ignore questions over the sustainability of the current trends. Resources of all kinds are in short supply and the collateral damage projected for the not too distant future is rapidly growing: atmospheric pollution, climate change, health risks, public turmoil, etc. That the forthcoming economic development may not be sustainable over the long term does not mean that the movement won't continue. The underlying structural trends are powerful and they will therefore continue to govern the course of events until their effects ultimately change the situation. It is difficult to say how long the first phase will last. Current projections suggest resource shortages might not really start to bite for 10 or 15 years. This means that the first leg of the long cycle could run until 2025, which is just when widespread population aging should start to have an impact in the emerging countries which could in turn induce a certain number of changes.

These changes have already altered the balance in many areas, by creating a context that has favoured significant shifts in the relative prices of manufactured goods versus services, and commodities versus goods, trends which are ultimately likely to dictate general price levels. However, this is just a beginning - we believe that as these changes play out they will bring new characteristics to the world that are in many ways diametrically opposed to those of the past.

See the full report for data and details: A new world order: When demand overtakes supply. (h/t Zero Hedge)

See also Jeremy Grantham - Time To Wake Up, World. The SG report bears out what Grantham has been saying about the shift in trend.

History Made Today: US Treasury Issues 0.000% 4-week Bills

U.S. Treasury auction results here. I do not believe this has ever been done before in the history of the U.S. Treasury.

Treasury Auctions $24B in 182-Day Securities

Link to auction results for these 182 day securities here. Treasury reports that the auction was at a bid-to-cover-ratio of 5.46, which looks like it may be an all time high for these securities.

Treasury also auctioned $27B of 91 day securities, results here.

These I believe were the first Treasury auctions conducted since the Fed terminated it's Open Market Operations known as QE2. Looks like the auctions today had good interest.

Did anyone see PIMCO's Bill Gross in the media today? Last week he made a bold prediction that nobody would buy Treasury securities since the Fed terminated the QE2. Maybe he meant tomorrow as the Treasury plans to auction $28B of 4 week bills tomorrow. Let's see what happens tomorrow.

UPDATE: It's now tomorrow and the Treasury has sold over $31B of 4-week bills at 0.000%..... where is Bill Gross?

Krugman identifies demand as the problem and recommends a JG of sorts

New York Times: Corporate Cash Con

So here’s what you should answer to anyone defending big giveaways to corporations: Lack of corporate cash is not the problem facing America. Big business already has the money it needs to expand; what it lacks is a reason to expand with consumers still on the ropes and the government slashing spending.

What our economy needs is direct job creation by the government and mortgage-debt relief for stressed consumers. What it very much does not need is a transfer of billions of dollars to corporations that have no intention of hiring anyone except more lobbyists.

[emphasis added]

Privatizing the commons: Water privatization proceeding apace

The UN Is Aiding a Corporate Takeover of Drinking Water

Billions of dollars are being given out to the most ardent promoters of water privatization.

Early last month, pharmaceutical titan Merck became the latest multinational to pledge allegiance to the CEO Water Mandate, the United Nations' public-private initiative "designed to assist companies in the development, implementation and disclosure of water sustainability policies and practices."

But there's darker data beneath that sunny marketing: The CEO Water Mandate has been heavily hammered by the Sierra Club, the Polaris Institute and more for exerting undemocratic corporate control over water resources (PDF) under the banner of the United Nations. It even won a Public Eye Award for flagrant greenwashing from the Swiss non-governmental organization Berne Declaration. Meet the new boss, same as the old boss....

Wolfgang Münchau: Greece getting rolled

Uh oh.

With this construction, the downside to your losses is limited. Depending on how some of the parameters of this agreement evolve, you will probably make a small loss, relative to the par value of your holding. If you are lucky, you might come out positive. You will probably not be lucky. But you will still be better off than if you sold today, or if Greece were to default. More important, the accounting rules allow you to pretend that you are not making any losses at all.

If this was any other field of human activity, you would go to jail if you accepted, let alone made such an indecent offer. [emphasis added]

This structure is still not quite so complex as some of the more elaborate CDOs we have encountered in the global financial crisis. If you take some time to work through the arrows and boxes, you see relatively quickly that this complex structure is not a private sector participation at all. Rather it is a private sector bail-out.

Münchau concludes: "We are not just 'kicking' any old 'can down the road' any more. This is a can of explosives."

See the article and video at The Financial Times: The Greek rollover pact is like a toxic CDO

(h/t Zero Hedge)

UPDATE: Yves Smith weighs in: Partying on the Edge of the Eurozone Volcano

Calculated Risk: Greece Update: S&P says proposed Greece Debt Plan is "likely a Default"

Euro Intelligence: Finns Draw Line In The Sand Of Greek Collateral Requirement

The Finnish parliament, whose powers reign above those of the government in eurozone crisis resolution management, decided to attach a collateral requirement to all future loans to Greece. The document said that a collateral requirement was not a Finnish wish, but a rare case of a Finnish line drawn in the sand. But given the political situation in Greece, a collateral requirement, as part of which creditors would end up with a sizeable chunk of Greek assets, is hardly acceptable. The snag is that under the rules of the EFSF, any decision to disburse new aid requires unanimous support of all member states. It is possible, technically, for Finland to opt out of the scheme, leaving others to foot its relatively small share of the programme. But official are extremely nervous about this, as this may send a dangerous political signal

A proposal by Ron Paul that even Dean Baker likes

Read Dean Baker' analysis here.

An excerpt: "Unlike the debt held by Social Security, the debt held by the Fed is not tied to any specific obligations. The bonds held by the Fed are assets of the Fed. It has no obligations that it must use these assets to meet. There is no one who loses their retirement income if the Fed doesn’t have its bonds. In fact, there is no direct loss of income to anyone associated with the Fed’s destruction of its bonds. This means that if Congress told the Fed to burn the bonds, it would in effect just be destroying a liability that the government had to itself, but it would still reduce the debt subject to the debt ceiling by $1.6 trillion. This would buy the country considerable breathing room before the debt ceiling had to be raised again. President Obama and the Republican congressional leadership could have close to two years to talk about potential spending cuts or tax increases. Maybe they could even talk a little about jobs".

Jean-Claude Juncker: "The sovereignty of Greece will be massively limited."

The Guardian: Greek sell-off 'threat to sovereignty'

Eurogroup chief Juncker urges Treuhand-style privatisation for Greek state sell-off but admits threat to Athens' sovereignty

If there was ever any doubt that sacrificing monetary authority results in loss of national sovereignty, this proves it does.

Rand Paul: Banana Republican

U.S. Senator and Rothbardian Rand Paul wants a balanced budget amendment badly. So much so that he is threatening a filibuster in the Senate in order to gain more attention for this ridiculous idea.

An excerpt: "[W]e will actually vote in favor of raising the debt ceiling next week if we can, but it will be contingent on passing a balanced budget amendment to the Constitution," he said, adding, "I'm not completely without the sense that we may need to raise the debt ceiling. But I will only do it if we have significant budgetary reform, and to me that means you have to balance your budget every year."

Detroit is the new hip?

New York Times: Detroit Pushes Back With Young Muscles

Like the phoenix that rises out of its own ashes, Detroit is back. Affordable rent and a resurgent spirit is drawing young "creatives" — entrepreneurs, artists, and other avant-garde types who want to be au current and in on the action without going impossibly into hock or living dorm-style in places like San Francisco, Los Angeles, New York, or Boston.

The scene might have been run of the mill in Seattle or Williamsburg, Brooklyn, or other urban enclaves that draw the young, the entrepreneurial and the hip. But this was downtown Detroit, far better known in recent years for crime, blight and economic decline.

Recent census figures show that Detroit’s overall population shrank by 25 percent in the last 10 years. But another figure tells a different and more intriguing story: During the same time period, downtown Detroit experienced a 59 percent increase in the number of college-educated residents under the age of 35, nearly 30 percent more than two-thirds of the nation’s 51 largest cities.

These days the word “movement” is often heard to describe the influx of socially aware hipsters and artists now roaming the streets of Detroit. Not unlike Berlin, which was revitalized in the 1990s by young artists migrating there for the cheap studio space, Detroit may have this new generation of what city leaders are calling “creatives” to thank if it comes through its transition from a one-industry.

With these new residents have come the trappings of a thriving youth culture: trendy bars and restaurants that have brought pedestrians back to once-empty streets. Places like the Grand Trunk pub, Raw Cafe, Le Petit Zinc and Avalon Bakery mingle with shops with names like City Bird, Sole Sisters and the Bureau of Urban Living.

Those familiar with past neighborhoods-of-the-moment recognize the mood. “It feels like TriBeCa back in the early days, before double strollers, sidewalk cafes and Whole Foods,” said Amy Moore, 50, a film producer working on three Detroit projects. “There is a buzz here that is real, and the kids drip with talent and commitment, and aren’t spoiled.”

John Harvey: "Why You Should Learn to Love the Deficit"

Why You Should Learn to Love the Deficit: Federal Budget Fallacies

Prof. Harvey corrects the common fallacies heard about why budget deficits are bad.

Lessons of history behind The Welfare State

The vast disparities between rich and poor, the spectacular concentration of wealth amassed by the richest Americans in the previous two generations, and the inability of government policies to mitigate the crisis brought the nation to the edge of class warfare and social disintegration [in the late 19th century].

The specter of a European social order, with societies irredeemably divided between aristocrats and a permanent underclass, seemed to have arrived on U.S. shores. Wealthy Americans began to fear for the stability of the social order.

What force, the wealthy asked in desperation, might mitigate the social chaos and misery, and mute what one public official called “the antagonism between rich and poor”?

Today, new fortunes have been accumulated that rival those of the Gilded Age. Some of that wealth, possessed by people like Charles G. Koch and David H. Koch or Peter G. Peterson, has been used to promote cuts to social spending. Before these opponents and their allies in Congress move forward with the dismantling of the welfare state, however, they might think harder about the reasons such policies were put in place.

Read it all at The Washington Post: What history teaches us about the welfare state.

George Carlin on The American Dream: "It's called a "dream" because you have to be asleep to believe it."