Thursday, November 29, 2012

U.S. Share Of World GDP Has Fallen 32% Since 2001

U.S. Share Of World GDP Has Fallen 32% Since 2001
Mark McHugh of Across the Street outlines America's economic decline--in both real terms and relative to the rest of the world:

The Cost of Kidding Yourself

In Open Thread on Wednesday, November 28, 2012 at 1:34 pm 
Five years ago, every American would have considered a trillion-dollar budget deficit a national tragedy.  If you believe the CNBC parrot show, NOT having a trillion-dollar deficit is now a sure sign of the Apocalypse.  I speak of course of the cleverly dubbed “Fiscal Cliff,” which panicked CNBC apologists are required to mention no less than 5,000 times a day.  We’re told ad nauseam that going over the cliff will drag the US into recession.  Here’s what we’re not told: The US has been in recession 9 of the last 10 years.  It’s in recession this year, and no matter what CNBC’s financial terrorists say or the idiots on Capital Hill decide, it will most certainly be in recession in 2013.
Creating the illusion of economic growth is easy if you can print money.  It’s a prank you can play on an entire country.  Cut the value of the currency in half and the economy’s size will appear to double.  If it doesn’t, you’re in recession (whether you know it or not).   Cavemen probably understood this concept better than America’s best economic minds.
The only way to accurately measure changes in a nation’s economy is to do so relative to the world (see Notes for non-nerds below before protesting).  According to the World Bank, the U.S. represented 31.8% of the world’s economic activity in 2001. By the end of 2011, that share had dropped to 21.6%, meaning America’s slice of the world economy is 32% smaller than it was a decade ago, and getting smaller every day.  Note that America’s housing bubble did nothing to boost the U.S. on the global stage.
As horrific as these results are, they’re better than Japan’s, whose “lost decade” proved only to be prologue for its “lost-er decade.”  Japan’s share of the world economy fell more than 35% from 2001 to 2011 (literally worse than Zimbabwe) and has now shriveled 54% from its peak.  But Japan’s real collapse did not coincide with the bursting of its stock and real estate bubbles in 1990 and 1991 respectively.  The decline actually began in 1995 when policymakers allowed government debt to exceed 90% of GDP (a milestone the U.S. quietly passed in 2010). 

The more they “fixed” it, the more it broke.  17 years later, the only thing Japan has proved is that smart Japanese economists are about as real as Godzilla.  Time and time again, the country has chosen collapse over admitting failure. On November 19, 2012, Bloomberg reported, “The Japanese government will spend 1 trillion yen ($12.3B) on a second round of fiscal stimulus as it tries to revive an economy at risk of sliding into recession.”  It would be funny if it wasn’t so tragic.
The United Kingdom gets third place in the 2001-2011 major economies’ “Race to Oblivion”, although with a less than 3.5% share of world GDP it’s hard to call this a major economy with a straight face anymore.  While the U.K. printed its way to 24% loss in world GDP, France and Brazil both passed the nation where an actual troy pound of sterling silver now costs about 235 “pounds sterling”.  With government debt expected to reach 88.7% of GDP in 2012, once-Great Britain will soon be seated at the kids’ table at economic summits, if it gets invited at all.
All three of these countries are in death spirals for the same reason:  They believe that they have the ability to avoid recession by simply printing their own money.  As America’s 100-year numbskull (and current Federal Reserve Chairman) Ben Bernanke once mused:
“…the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
True dat, Ben….unless there’s “cost” associated with turning the nation’s currency into the world’s laughing stock….
Oh wait, there is.  So just for fun, let’s project the last ten years growth rates forward another ten years:

And there you have the real New World Order (sorry Freemasons).  In ten years China’s economy will be bigger than those of the U.S., Japan, and the U.K. combined.  What are the chances they will drink the same kool-aid we are presently guzzling?  Will they need, or even tolerate, the opinions spewed by our pundits and politicians?  And more importantly, will the U.S. dollar still be the world’s reserve currency?
Being a war-mongering banana republic isn’t all it’s cracked up to be, and despite what CNBC’s fast-money fuckwits may think, the stock market is not America’s report card.  Wall Street is the white elephant that America can’t afford to feed anymore and China doesn’t have the slightest interest in buying (just take a look at the Shanghai Composite).   Continuing to yield to its tantrums will undoubtedly destroy us.
Fun Facts:  Total U.S. GDP growth in the 20th century was $9.93 Trillion, while the  government accumulated $5.5 Trillion in debt.  In the 21st century, the US has borrowed $10.7T and has a grand total of $5.30T in GDP growth.
***
Notes for nerds: Most of the calculations presented were derived from data compiled by the World Bank which can be viewed or downloaded here.   World GDP was set to 100% and each country’s percentage determined simply by dividing by world GDP.   Japan’s debt as a percentage of GDP from Fred (225% was used for 2011).  Estimate of U.K.’s 2012 Debt/GDP from here.  U.S. GDP stats from USgovernmentspending.com (2012 estimate adjusted for 2% growth).  US debt from Debt to the Penny.
Notes for non-nerds:  How much World GDP changes from one year to the next depends entirely on what is being used to measure it.  For example, World GDP expanded by 109% from 2002 to 2011 in USD terms, but contracted (-59%) in terms of gold.  Using the Euro would produce different results (+59%), as would using barrels of oil (you figure it out).  Looking at countries relative to World GDP is an honest measure of their changes.  To say that Japan is still growing (at least in terms of Yen), but everyone else is growing much, much faster in terms of Yen distorts the reality that  Japan is undeniably shrinking relative to the world (no matter what currency is used).

Wednesday, November 28, 2012

SCOTUS: Anti-Eavesdropping Law Violates Free-Speech Rights

SCOTUS: Anti-Eavesdropping Law Violates Free-Speech Rights
From the Chicago Tribune:
The U.S. Supreme Court on Monday declined to hear an appeal of a controversial Illinois law prohibiting people from recording police officers on the job.

By passing on the issue, the justices left in place a federal appeals court ruling that found that the state's anti-eavesdropping law violates free-speech rights when used against people who audiotape police officers.

A temporary injunction issued after that June ruling effectively bars Cook County State's Attorney Anita Alvarez from prosecuting anyone under the current statute. On Monday, the American Civil Liberties Union, which brought the lawsuit against Alvarez, asked a federal judge hearing the case to make the injunction permanent, said Harvey Grossman, legal director of the ACLU of Illinois.

Grossman said he expected that a permanent injunction would set a precedent across Illinois that effectively cripples enforcement of the law.

Alvarez's office will be given a deadline to respond to the ACLU request, but on Monday, Sally Daly, a spokeswoman for Alvarez, said a high court ruling in the case could have provided "prosecutors across Illinois with legal clarification and guidance with respect to the constitutionality and enforcement" of the statute.

Illinois' eavesdropping law is one of the harshest in the country, making audio recording of a law enforcement officer — even while on duty and in public — a felony punishable by up to 15 years in prison.

Public debate over the law had been simmering since last year. In August 2011, a Cook County jury acquitted a woman who had been charged with recording Chicago police internal affairs investigators she believed were trying to dissuade her from filing a sexual harassment complaint against a patrol officer.

Judges in Cook and Crawford counties later declared the law unconstitutional, and the McLean County state's attorney cited flaws in the law when he dropped charges in February against a man accused of recording an officer during a traffic stop.
Alvarez argued that allowing the recording of police would discourage civilians from speaking candidly to officers and could cause problems securing crime scenes or conducting sensitive investigations.

But a federal appeals panel ruled that the law "restricts far more speech than necessary to protect legitimate privacy interests."

Chicago police Superintendent Garry McCarthy has said he would favor a change allowing citizens to tape the police and vice versa.

Meanwhile, several efforts to amend the statute in Springfield have stalled in committee amid heavy lobbying from law enforcement groups in favor of the current law.

Monday, November 26, 2012

TRUE Fiscal Conservatism: Rally Call Of A New GOP?

TRUE Fiscal Conservatism: Rally Call Of A New GOP?
The GOP suffered an embarrassing campaign 2012 and desperately needs to rebrand. The Libertarian Party failed this election season--as it has always failed--to position itself as a viable alternative to the Republican-Democrat paradigm. Younger people are more fiscally-conservative and socially-liberal than older people, and traditional conservatives are aging. Additionally, Hispanics, the fastest growing ethnic demographic, are becoming more secular, and are generally young. What does all of this mean? Hopefully, the advent of a truly fiscally-conservative GOP.

True fiscal conservatism--the rejection of Big Government spending in all of its forms: entitlements and earmarks, but also profligate military spending and expensive "wars" on freedom of the individual and states' rights--could be the rally call that unites a new, stronger Republican Party. If the GOP positioned itself as the party of true fiscal conservatism, it would keep the traditional Republican vote and gain the burgeoning libertarian and all-important Hispanic vote. Taking "non-traditional" fiscally-conservative positions such as ending the War on Drugs and ending military adventurism would attract libertarians by default, but would also attract Hispanics, who are disproportionately negatively-impacted by the War on Drugs and who constitute a large and growing segment of active-duty military personnel. (Active-duty military personnel, who have an aversion to military quagmires, were strong Ron Paul supporters.)

Adopting a position of true fiscal conservatism would be a stretch for the GOP, which became a party of big spending in the Rovian era. And, of course, the Republican establishment would fight tooth-and-nail any shift toward libertarianism. But I believe that true fiscal conservatism could be the rally call that unites a new, stronger party that could win national elections.