In John Mauldin's latest post John says "And let's see how [Edward] feels after this letter. The following are some general comments.
1. John's blog, and his excellent book, Endgame: The End of the Debt Supercycle and How It Changes Everything, convinces me that significant pain lies ahead. There are no good choices, only bad choices and worse choices.
For example, it would be interesting to see a face-to-face debate between Mauldin and Paul Krugman, the Nobel-prize winning advocate of more deficit spending. Formerly, I believed Krugman's arguments, but I now think Mauldin would win, not because I'm qualified to judge complex financial arguments on their merits (I am not) but because Krugman ignores John's fundamental point, namely that the bond markets are dangerously close to rejecting US debt. It's always a bad sign when one side of a debate chooses to ignore the fundamental points of the other side's arguments. We'll see another example of the principle later on in this post.
2. As a result of the unavoidable pain that is coming, the only prudent course would seem to be to increase taxes and reduce spending. And yes, both measures will tend to contract the economy: that's why there are no good choices left.
We can, and should, debate the relative sizes of the tax increases and spending cuts. And who should pay. I think it obvious that the rich (including me) should pay more than those struggling to put food on the table and pay the mortgage. That this may seem debatable is a sign of just how out of whack our society has become.
I vacation in Naples Florida every year. In the last several years (post 2008) there has been a spate of $40, $50 and $60 million-dollar homes being built on the coast in Naples, presumably financed by the mortgage deduction. Many are being built by the very bankers that caused the mortgage mess. True, eliminating tax breaks for these monstrosities will hurt local builders (and local luxury car dealers), but so what? The US needs tax revenues for better purposes: schools, roads, other infrastructure. This fact does not make me a socialist :-)
I contribute financially to the Straus Military Reform Project. There are many aspects of the US military that should be improved, but the most obvious would be to cancel the F-35 This is a classic boondoggle. Despite propaganda, the F-35 is inferior weapon that will go along way to bankrupting the US. No one knows how much money has already been spent, no one knows what the final cost will be. Winslow Wheeler, the director of the Project, has been a congressional staffer for both Democrats and Republicans. Winslow's writings are a devastating indictment of business as usual at the Pentagon.
3. I come now to the most dubious part of "The Center Cannot Hold", namely the defense of the Keystone XL pipeline. John's arguments appear reasonable, but completely miss the essence of the opposition to the pipeline, namely that it promotes such massive CO2 emissions that it would be "game over" for the attempt to control global warming. When Jim Hansen, a leading climate researcher, chooses to be arrested as a protest against the pipeline, it is a fact that can not, can not, can not be ignored! For more details, just Google "C02 game over".
Ignoring the real controversy behind the pipeline is quite similar to pretending that accounting identities don't exist or don't matter. Again, it is a symptom of our out-of-whack our political process that anthropogenic climate change is under systematic, well-financed attack.
I contribute financially to Peter Sinclair's Climate Denial Crock of the Week. Peter's video blog exposes the hypocrisy of those who, for transparent financial and political purposes, seek to discredit what is, in fact, established, settled science.
Peter's most recent post, shows that the issue is not the so-called "Hockey Stick", but rather the fundamental science that lies beneath. My personal favorite video is The Birth of a Crock, showing just how shameless the climate deniers are.
So John, those are my reactions. It's a pleasure to have even an indirect conversation with you. I hope we will meet soon and become friends. I read your blog as part of my never-ending campaign to find disconfirming evidence for my own views. You have already changed my mind in several respects, and I look forward to learning more from you.
P.S. This blog is moderated because of the vandalism of climate deniers, who have nothing substantive to add, but who nevertheless want to vent their ignorance. I have no tolerance for such behavior.