Some longer form material for your weekend reading pleasure:

Reinhart & Rogoff: Top Culprit in the Financial Crisis: Human Nature (Barron’s)
• I Really Like That You Like What I Like (NY Magazine)
• 5 Statistics Problems That Will Change The Way You See The World (Atlantic)
• Hayek, Friedman, and the Illusions of Conservative Economics (TNR)
• Has ‘Organic’ Been Oversized? (NYT)
• The Hard Life of an N.F.L. Long Shot (NYT) see also Japan’s ninjas heading for extinction (BBC)
• Stephen Colbert Opens Up About the Deaths of His Dad, Brothers in 1974 Plane Crash (US Weekly)
• Is There a Jewish Gene? (The New York Review of Books)
• Sexbots Will Give Us Longevity Orgasms (Transhumanity) see also LA’s New Porn Law Is The Worst Kind Of Nanny State Bullshit (NSFW Corp)
• Deadhead (The New Yorker)

What are you reading?


The Sequester’s Defense Cuts in One Graph  

Source:  Washington Post

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

18 Responses to “10 Weekend Reads”

  1. Mike in Nola says:

    China Shadow Banking Risks.

    Trusting investors and workers/suppliers getting the short end. Makes the US Bubble look conservative. It’s not emphasized in the article, but it’s not the failure to repay investors that is the only problem; there has to be huge amounts owed to suppliers like the subject of the story that will never be paid. Those defaults will cause a chain reaction throughout the system as the unpaid suppliers don’t pay their suppliers and workers.. Will China be the US of the 1930′s or Japan of the 1990′s-2000′s?

  2. Mike in Nola says:

    Talk about Masters of BS:

    This guy was one of the biggest parts of the post-Katrina disaster. Managed to collect $200k/year for allegedly rebuilding NOLA while he lived in Australia.

  3. ilsm says:

    Sequester’s Defense Cuts:

    The US must look at what is needed, and who has to endure the opportunity costs of perpetual war profiteering.

    Chart highly misleading: in 2010 US devoted 5.4% of GDP to war, while NATO (less US and UK @2.6%) spent 1.6%. Japan is about 1% of GDP, South Korea is was 2.7%.

    The US is not spending money for defense, that would look like the years 1947 and 1948 where defense should be, about $200B a year.

    The baseline of these cuts is higher than needed for the “common defense”.

    “I am not willing to pay for rich men’s war profits with entitlements.”

  4. Greg0658 says:

    Sequester’s Defense Graph .. I don’t get the black line that runs thru .. I went to the story too .. is it spent money with some metric ? real gdp (whatever that means these days) ?
    we budgeted less for Korea & Vietnam and spent more than in the years after? where we budgeted more and didn’t spend it all (I don’t believe that 1) ? wtf is that black line supposed to mean?

  5. ilsm says:


    Chart shows a lot of militarist keynesian stimulus.

    Black line is read against the right hand axis: active duty soldiers, sailors, marines and airman. The only military in world larger in terms of active duty memebers is the Peoples’ Liberation Army, China. The US maintaining another 700,000 or so in reserve and guard status

    It shows that a lot of support and services soldiers have been contracted out as the all volunteer force increased the annual payroll and beneifts of a “volunteer” soldier vis a vis a draftee military.

    Here is one view of the Cost of the Warfare State:

  6. Conan says:

    I like to read what Reinhart & Rogoff have to say. This is an interesting articles of an Interview with Lacy Hunt citing four additional studies to this work.

    One by Bank of International Settlements published The Real Effects of Debt, which confirmed
    Reinhart and Rogoff’s 90% threshold and went on to identify additional limits on corporate
    and household debt

    Another two Swedish economists published Government Size and Growth: a
    Survey and Interpretation of the Evidence, further confirming Reinhart and Rogoff’s results.
    Their key finding was that increasing the size of government by 10% is associated with a 0.5% to 1% lower annual growth rate

    A third study, The Impact of High and Growing Government Debt on Economic Growth: an
    Empirical Investigation for the Euro Area. There is a non-linear impact
    on growth once government debt exceeds 90% to 100% of GDP, the researchers found.
    The study also showed how debt impedes growth – by reducing private savings and public
    investment, lowering productivity, and ultimately increasing long-term interest rates.

    The fourth is Reinhart and Rogoff published another paper, Debt Overhangs, Past and Present, which they co-authored with Vincent Reinhart, Carmen Reinhart’s husband. The trio looked at 26
    advanced economies where the public debt-to-GDP ratio exceeded 90% for at least five
    years. In those cases, economic growth slowed for an average duration of 23 years, and
    GDP came in an average of 25% below what its historical trend would have suggested.

    Lastly remember we can learn a lot from Japan and they had their debt implosion in 1989-1990, so this has been going with them for over two decades going on their third. Debt implosions are different than normal business cycles.

  7. louiswi says:

    Can we at least call it what it is? It is not Defense, it is Offense. Only a fraction of the expenditures are needed for defense.
    Ilsm nails it with his last sentence.

  8. RW says:

    Why We Can’t Take Inflation Hawks Seriously
    “Bottom Line: Inflation hawks continue to operate in a parallel universe.”

  9. franklin411 says:

    It’d be interesting to highlight recessionary periods on that chart of defense cuts…

  10. Greg0658 says:

    thanks ilsm & reading your pdf link:
    wow .. bottom of page 5:
    “The Pentagon’s energy use in a single year could power all U.S. mass transit systems for nearly 14 years. n#16″

    p7 – yep can see it:
    “Firms servicing Pentagon needs, according to Melman, have become indifferent to cost and operate by methods that ordinarily escalate cost and therefore price.” n#22
    interesting examples of note22 thru #29

    “Professors teach what they know. They write textbooks about what they teach. What they know that’s new comes mainly from their own research. It is hardly surprising, then, that military research in the university leads to military-centered undergraduate curricula.” n#36

    “Thus any military innovation with civilian applications may serve to mitigate the harm done to consumer welfare by the existence of a vast defense apparatus, but claims that such applications prove the merit of such an apparatus, or show that the apparatus is actually necessary to consumer welfare, are unfounded.” n#73

    the glazer story at the start .. forgets insurance free money into an area (I know I know :-)

    the eighteen pages was an easy read .. there www – I put the download to good use

  11. James Cameron says:

    It shows that a lot of support and services soldiers have been contracted out as the all volunteer force increased the annual payroll and beneifts of a “volunteer” soldier vis a vis a draftee military.


    Among the largest contributors to internal cost inflation is the military personnel (including health care) account.
    As DoD’s own “Defense Budget Priorities and Choices: January 2012” has noted, “the cost of military
    personnel has grown at an unsustainable rate over the last decade…Within the base budget alone…personnel
    costs increased by nearly 90 percent or about 30 percent above inflation [since 2001], while the number of
    military personnel has increased by only about 3 percent.”

    Operations and maintenance (O&M) costs have similarly ballooned over the past few decades. The
    Congressional Budget Office (CBO) reports in “Long-Term Implications of the 2012 Future Years Defense
    Program” that O&M costs per active-duty service member doubled from $55,000 to $105,000 (in constant 2012
    dollars) between 1980 and 2001. These costs rose to $147,000 in DoD’s 2012 base-budget request and were
    projected to “grow at more than one and one-half times the historical (pre-2001) rate through the Future Years
    Defense Program (FYDP) period, reaching $161,000 in 2016.” While the rate of growth is expected to slow
    beyond 2016, CBO expects per capita O&M costs to reach $209,000 by 2030.

    The Defense Budget’s Double Whammy: Drawing Down While Hollowing Out from Within

    See Figure 2. The WP story is based on this CSIS report. Military personnel and major weapons programs share the problem of unbridled cost inflation.

  12. sellstop says:

    Both political parties fall all over themselves to “take care of our veterans”. It used to be that you got drafted. Did your time. And if you were wounded or lost an arm or leg or your mind, you went home and dealt with it. Maybe some substandard VA care. But the brunt of the cost fell on the individual and the family. Not anymore. As a nation we have developed a mindset that all “sacrifice” must be compensated. Is it “sacrifice” if it is compensated? Especially in an all volunteer situation. I think this phenomenon is the result of the loss in Vietnam, the debacle in the desert trying to rescue the Iran hostages, and the general feeling of guilt at the way returning vets were treated in the 1970′s. We have after 9/11 went overboard in the other direction in our desire to have “heroes”.
    Now it is unpatriotic to say anything unsupporting of the military or military spending.

    In President Hoover’s day he had the Army under the command of General Douglas MacArthur rout the veterans who were camped out near the White House demanding to be compensated for their service during the Spanish-American war. Some were killed. And their camp was burned.
    This thought that I am expressing here is controversial. And adequate compensation for veterans is a cost we will bear in a modern society. Maybe for reasons of cost we should stop policing the world! It is certainly “Big Government” to maintain spending at such a large percent of national GDP.

    Just sayin’,

  13. MikeNY says:

    I am almost hoping we go over the cliff – it’s the best possibility we have to excise some of the cancer of this country’s inveterate, unthinking militarism.

  14. philipat says:

    Those defence cuts, which don’t look all that challenging, still leave US Defence spending at more than the balance of the G-20 combined. What is the US defending against precisely?
    I guarantee that any experience Private Sector CEO would be able to find an additional 10% cut by finding “low-hanging fat” without even begining to address programs and efficiencies. It is the way of Government.

  15. dsawy says:

    BR, thanks for the pointer to the New Yorker piece.