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We start with three items on the economy.

Spengler takes a dim view of our short term economic prospects and presents an excellent step-by-step explanation of what we are seeing in the markets in reaction to the government’s foolish attempts to help. Below are the beginning and ending summaries.

President Barack Obama may be remembered for permanent depression, the way that Leon Trotsky’s name is linked with permanent revolution. Fiscal stimulus combined with near-zero interest rates have proven to be a toxic cocktail for the United States, the macroeconomic equivalent of barbiturates and alcohol. Keynesian spending creates a deficit that sucks all the available capital out of the grassroots economy and transfers it to the Treasury market. Easy funding terms from the Federal Reserve allow financial institutions to make money in government bonds while shutting off credit to the rest of the economy. It’s classic crowding out, in which the government’s misguided effort to spend its way out of recession pushes the productive economy deeper into the hole.  …

…The parallels between America in 2009 and Japan in 1989 are uncanny. An asset price bubble has collapsed, just before a tsunami of prospective retirements that the asset bubble was supposed to fund. Demand for savings is bottomless, and the government satisfies demands for savings by running a huge deficit and issuing debt. The crippled banking system borrows at an interest rate of zero and buys government securities. And the economy shrivels up and dies.

Japan, though, had one advantage: it knew how to export. There is only one way to drastically increase savings while maintaining full employment, and that is to export. America has neither the export capacity nor the customers. It could get them, but that is a different story. Francesco Sisci and I told it here US’s road to recovery runs through Beijing (Asia Times Online, November 15, 2008).

SeekingAlpha.com writes that despite the stock market gains, the economy does not appear to be recovering. The starting place for their analysis is heavy insider selling.

… For the latest week, ending October 1, 2009, insider selling to buying soared 44:1. Total insider buying was just $11.9MM for the week while insiders continued selling en masse – a staggering total of $532MM in selling. Perhaps most alarming is recent evidence from insiders themselves that confirm why they have been selling. …

…The recent Business Roundtable Survey results showed that 49% of all CEOs expect their sales to be flat or down in the coming 6 months. 51% expect an increase. 79% of all CEOs surveyed expect their capital spending to be flat or down in the coming 6 months. 87% of all CEOs expect to do no hiring in the coming 6 months…

…If you missed the recent interview with Ken Langone I highly recommend you take a few minutes and watch it in its entirety. Langone is an insider amongst insiders. Not only is he one of the co-founders of Home Depot (HD) (one of the companies at the heart of this economic downturn), but he is a board member at Yum! Brands, ChoicePoint, and former board member of the NYSE (NYX) and GE. In the interview Langone was brutally honest about the state of the recovery. Not only does he believe that the government is lying about the recovery, but he says the economy is actually getting worse:

“I’m confused. All of the people that I respect as investors and as people are all scratching their heads saying “we don’t get it”. All the businesses that I talk to – I spend a lot of my time now reaching out to people that are running companies, running businesses – I’m getting it back from everybody: it’s terrible, it’s getting worse, September was worse than August…I think this (rally) is a reflection of the fact that you get nothing in the way of rate of return in the bond market….”

The weekly rail data, weak retail sales, lack of revenue growth, extraordinary job losses and recent downturn in housing data all validate the actions taken by corporate insiders – the rally is not sustainable because the economy is not actually recovering…..

Robert Samuelson spends more time looking in the rear view mirror as he spins the tale of averting catastrophe. He talked with Christina Romer, who chairs the president’s Council of Economic Advisers. She says that government intervention averted a depression, but that the road to recovery is still unclear.

…The anniversary of Lehman Brothers’ bankruptcy in mid-September inspired much commentary that saving the investment bank wouldn’t have averted the crisis. Too many other lenders held bad loans. True. But allowing Lehman to fail almost certainly made the crisis worse. By creating more unknowns — which companies would be rescued, how much were “toxic” securities worth? — Lehman’s bankruptcy converted normal anxieties into extreme fears that triggered panic.

As credit markets froze, stock prices collapsed. By year-end, the Dow Jones industrial average was down 23 percent from its pre-Lehman level and 34 percent from a year earlier. Financial panic poisoned popular psychology. In September 2008, the Conference Board’s index of consumer confidence was 61.4. By February, it was 25.3. Shoppers recoiled from buying cars, appliances and other big-ticket items. Spending on such “durables” dropped at a 12 percent annual rate in 2008′s third quarter and at a 20 percent rate in the fourth. With a slight lag, businesses canned investment projects; that spending fell at a 20 percent rate in the fourth quarter and a 39 percent rate in 2009′s first quarter.

That these huge declines didn’t lead to depression mainly reflects, as Romer argues, countervailing government actions. Private markets for goods, services, labor and securities do mostly self-correct; but panic, driven by the acute fear of the unknown, feeds on itself and disarms these stabilizing tendencies. In this situation, only government can protect the economy as a whole, because most individuals and companies are involved in the self-defeating behavior of self-protection. …

Bobby Jindal, Louisiana governor who was Pickerhead’s first choice for McCain’s running mate has a WaPo Op-Ed on the conservative case for health care reform.

…So here are 10 ideas to increase the affordability and quality of health care. Some of these are buried within various Republican and Democratic plans that have been floated. They offer a path forward toward significant bipartisan reform. These proposals would require insurance companies to do their jobs and spread risk over large populations, restore patients’ power to make their own health-care decisions, and focus our system on quality instead of activity.

– Voluntary purchasing pools: Give individuals and small businesses the opportunities that large businesses and the government have to seek lower insurance costs.

– Portability: As people change jobs or move across state lines, they change insurance plans. By allowing consumers to “own” their policies, insurers would have incentive to make more investments in prevention and in managing chronic conditions. …

– Require coverage of preexisting conditions: Insurance should not be least accessible when it is needed most. Companies should be incentivized to focus on delivering high-quality effective care, not to avoid covering the sick.

– Transparency and payment reform: Consumers have more information when choosing a car or restaurant than when selecting a health-care provider. Provider quality and cost should be plainly available to consumers, and payment systems should be based on outcomes, not volume. Today’s system results in wide variations in treatment instead of the consistent application of best practices. We must reward efficiency and quality. …

WSJ editors explain why Cash for Clunkers did not help the economy.

Remember “cash for clunkers,” the program that subsidized Americans to the tune of nearly $3 billion to buy a new car and destroy an old one? Transportation Secretary Ray LaHood declared in August that, “This is the one stimulus program that seems to be working better than just about any other program.”

If that’s true, heaven help the other programs. Last week U.S. automakers reported that new car sales for September, the first month since the clunker program expired, sank by 25% from a year earlier. Sales at GM and Chrysler fell by 45% and 42%, respectively. Ford was down about 5%. Some 700,000 cars were sold in the summer under the program as buyers received up to $4,500 to buy a new car they would probably have purchased anyway, so all the program seems to have done is steal those sales from the future. Exactly as critics predicted. …

…The basic fallacy of cash for clunkers is that you can somehow create wealth by destroying existing assets that are still productive, in this case cars that still work. Under the program, auto dealers were required to destroy the car engines of trade-ins with a sodium silicate solution, then smash them and send them to the junk yard. As the journalist Henry Hazlitt wrote in his classic, “Economics in One Lesson,” you can’t raise living standards by breaking windows so some people can get jobs repairing them.

In the category of all-time dumb ideas, cash for clunkers rivals the New Deal brainstorm to slaughter pigs to raise pork prices. The people who really belong in the junk yard are the wizards in Washington who peddled this economic malarkey.

Jonah Goldberg defends Glenn Beck against liberal and conservative criticism.

…The conservative criticism has more bite. Many conservatives believe Beck is undermining conservatism with his often goofy style and his sometimes outlandish and paranoia-tinged diatribes. In an ode to conservatives such as William F. Buckley, my friend Charles Murray writes, “Don’t tell me that we have to put up with the Glenn Becks of the world to be successful. Within living memory, the right was successful. The right changed the country for the better — through good arguments made by fine men.” Murray is nostalgic for conservative leaders who were, like Murray himself, soft-spoken intellectuals.

There are problems with such nostalgia. First, there has always been a populist front on the right, even during the “glory days” when Buckley was saying he’d rather be governed by the first 2,000 names in the Boston phonebook than the faculty at Harvard. Moreover, whatever Beck or Limbaugh’s faults, they are more cheerful — and more responsible — warriors than the populist right-wingers of yesteryear. The Tea Partiers may be rowdy and ideologically diffuse, but their goals — like Beck’s — are indisputably libertarian. And from a conservative perspective, popular libertarian uprisings should be preferable to the sort of statist populism so often celebrated on the left.

Most important, popularity is what the intellectuals were fighting for: to create a conservative culture (Americans describe themselves as conservative over liberal 2-1 ). By definition, making conservatism popular means making it less stuffy and intellectual and more accessible. Not only is Beck good at that, he actually gets people to read serious books in ways Buckley never could. Why defenestrate him from the house of conservatism merely to preserve the rarefied air?

Besides, why should conservatives support an unfair double standard? Liberals never see the antics of their more flamboyant celebrities as an indictment of liberalism itself. Perhaps it’s time conservatives adopted a more liberal standard.

In the LA Times, Thomas H. Maugh II reviews the studies, just published in Science, of a recently discovered ancestor of the human species, “Ardi.”

A treasure trove of 4.4-million-year-old fossils from the Ethiopian desert is dramatically overturning widely held ideas about the early evolution of humans and how they came to walk upright, even as it paints a remarkably detailed picture of early life in Africa, researchers reported Thursday.

The centerpiece of the diverse collection of primate, animal and plant fossils is the near-complete skeleton of a human ancestor that demonstrates our earliest forebears looked nothing like a chimpanzee or other large primate, as is now commonly believed. Instead, the findings suggest that the last common ancestor of humans and primates, which existed nearly 2 million years earlier, was a primitive creature that shared few traits with modern-day members of either group.

The findings, analyzed in a large group of studies published Thursday in the journal Science, also indicate that our ancestors began walking upright in woodlands, not on grassy savannas as prior generations of researchers had speculated.

The discovery of the specimen called Ardipithecus ramidus “is one of the most important discoveries for the study of human evolution,” said paleoanthropologist David Pilbeam of Harvard University, who was not involved in the research. “The find itself is extraordinary, as were the enormous labors that went into the reconstruction of a skeleton shattered almost beyond repair,” he said in an e-mailed statement. …

…”These fossils are much more important than Lucy,” the 3.2-million-year-old specimen of Australopithecus afarensis that was found in the Afar desert in the 1970s, said paleoanthropologist Alan Walker of Pennsylvania State University, who was not involved in the research. “The reason is that when Lucy was found, we already knew the major features of Australopithecus from fossils found in the 1940s. . . . These fossils are of a completely unknown creature, and are much stranger and more primitive than Australopithecus.” …

In the WSJ, Frans de Waal looks at one of the theories postulated by the discovery of “Ardi.” The fossil evidence suggests to some that apes as a family, including humans, had peaceful ancestors, and that the aggressive chimpanzees are the aberrant line of our genetic family.

Are humans hard-wired to be ruthlessly competitive or supportive of one another?

The behavior of our ape relatives, known as peaceful vegetarians, once bolstered the view that our actions could not be traced to an impulse to dominate. But in the late 1970s, when chimpanzees were discovered to hunt monkeys and kill each other, they became the poster boys for our violent origins and aggressive instinct. …

…Doubts about this macho origin myth have been on the rise, however, culminating in the announcement this past week of the discovery of a fossil of a 4.4 million year old ancestor that may have been gentler than previously thought. Considered close to the last common ancestor of apes and humans, this ancestral type, named Ardipithecus ramidus (or “Ardi”), had a less protruding mouth equipped with considerably smaller, blunter canine teeth than the chimpanzee’s impressive fangs. This ape’s canines serve as deadly knives, capable of slashing open an enemy’s face and skin, causing either a quick death through blood loss or a slow one through festering infections. Wild chimps have been observed to use this weaponry to lethal effect in territorial combat. But the aggressiveness of chimpanzees obviously loses some of its significance if our ancestors were built quite differently. What if chimps are outliers in an otherwise relatively peaceful lineage?

Consider our other close relatives: gorillas and bonobos. Gorillas are known as gentle giants with a close-knit family life: they rarely kill. Even more striking is the bonobo, which is just as genetically close to us as the chimp. No bonobo has ever been observed to eliminate its own kind, neither in the wild nor in captivity. This slightly built, elegant ape seems to enjoy love and peace to a degree that would put any Woodstock veteran to shame. Bonobos have sometimes been presented as a delightful yet irrelevant side branch of our family tree, but what if they are more representative of our primate background than the blustering chimpanzee? …