Well for one, the old truism that left is for logic and right is for emotion is wrong.

I won't say more here, other than to observe that I am right brain dominated, have become increasingly so as I get older, and I have spent most of my professional life in a field dominated by left brain thinkers (and world).
This alone explains a lot to me.

 
On several of my past posts, I have declared that the US is likely to become more trade protectionist in order to deal with its problems of  long term structural unemployment; whereas it would be better off pursuing a  development agenda as advocated by Jeffrey Sachs. 
  
This week, US policy went completely counter to my prediction, as three long outstanding trade bills were signed with Panama, Columbia, and South Korea.

So have I lost faith in my prediction? No, not all. We are still in the early innings, politically, of the issue of structural unemployment; my own estimate is that the real debate on this issue won’t begin until after the 2012 Presidential election. 

Also, the US politically, like most of us personally, is full of contradictions. Congress is simultaneously trying to pass legislation that would force China to make its currency appreciate so that it terms of trade with the US would worsen.

 Politico had this to say about the new free trade deals:

“Advocates say the deals will result in the export of billions of dollars of U.S. goods and boost hundreds of thousands of American jobs.”

 Really? In the same way free trade with China helped the US manufacturing sector lose 7 million jobs last  decade?

A new study by David Autor, Gordon Hanson, and David Dorn explains the “job creation benefits” of trade with China. 
http://econ-www.mit.edu/files/6613  (right click to download)

 Marginal Revolution summarizes the study:
“The study rated every U.S. county for their manufacturers’ exposure to competition from China, and found that regions most exposed to China tended not only to lose more manufacturing jobs, but also to see overall employment decline. Areas with higher exposure also had larger increases in workers receiving unemployment insurance, food stamps and disability
payments.
 
The authors calculate that the cost to the economy from the increased government payments amounts to one- to two-thirds of the gains from trade with China. In other words, a big portion of the ways trade with China has helped the U.S.—such as by providing inexpensive Chinese goods to consumers—has been wiped out. And that estimate doesn’t include any economic losses experienced by people who lost their jobs.”

The reaility in the US economy is that:
Unemployment for those people with a university degree in the US is 4%

Unemployment for those without a high school education is 16%. 

Ben Bernake has recently weighed in on the issue of structural unemployment:
“Bernanke noted that about 45 percent of the unemployed have been out of work for at least six months.

"This is unheard of," he said in a question-and-answer session after a speech in Cleveland. "This has never happened in the post-war period in the United States. They are losing the skills they had, they are losing their connections, their attachment to the labor force."

He added: "The unemployment situation we have, the job situation, is really a national crisis." Bernanke said the government needs to provide support to help the long-term unemployed retrain for jobs and find work. And he suggested that Congress should take more responsibility.”

Put simply, by signing these trade agreements, congress has put in place policies aimed at providing market access for US corporations allowing them to grow profits and send low skill jobs off shore - while simultaneously providing jobs for the high skilled labour market.

The trade agreements benefit the elites in US society at the expense of the most vulnerable in US society.

Jeffrey Sachs sums it up quite well in the first paragraph of his new book 'The Price of Civilization: Reawakening American Virtue and Prosperity'. 

"At the root of America’s crisis lies a moral crisis: the decline of civic virtue among America’s political and economic elite. A society of markets, laws and elections is not enough if the rich and powerful fail to behave with respect, honesty and compassion towards the rest of society and toward the world. America has developed the world’s most competitive market society but has squandered its civic virtue along the way. Without restoring an ethos of social responsibility there can be no meaningful and sustained recovery. I find myself deeply surprised and unnerved to have to write this book."

 

As I have noted with my students for several years, and more recently on these pages, when Argentina defaulted they paid back 40% of their debt. This amount has then formed the upper estimate of what my threshold for Greek default loan repayment.

Here is a news report that suggests the negotiations for default are coming in exactly at 40%. My thanks to a friend, Brent.  He is the source for many of the links which I cite on this blog.

On another note, I notice that Hussman is also drawing comparisons with Argentina in his analysis of how the Greek story is likely to play out.