California Free Press

The Housing Crisis and Wall Street Shame

by Robert Reich

Sunday, November 29, 2009

One out of four homeowners is now under water, owing more on their homes than the homes are worth. Why? The biggest single factor behind the housing crisis is rising unemployment. According to the latest ABC-Washington Post poll, one out of every three Americans has either lost their job or lives in a household with someone who has lost a job. Today it takes two and sometimes three incomes to buy the groceries and pay the mortgage or the rent. So if one of those incomes is gone, a homeowner can't make the payment.

The scourge of unemployment is splitting America into three groups: (1) the third just mentioned, whose households are in danger of losing their homes and whose kids are surviving on food stamps (that's up to one in four children in America today); (2) the vast majority of Americans who are managing but worried about keeping their jobs and homes; and (3) a small number who are taking home even more winnings than they did in the boom year 2007.

Prominent among category (3) are Wall Street bankers, many of whom are now concluding their most profitable year ever. Goldman Sachs is so flush it's preparing to give out bonuses in a few weeks totaling $17 billion. That will mean eight-figure compensation packages for lots of Goldman executives and traders. JPMorgan Chase is rumored to have a bonus pool of around $5 billion. The three other major Wall Street banks are ratcheting up their compensation packages so their "talent" won't be poached by Goldman or JPMorgan.

Wall Street is booming again in large part because the rest of America -- categories (1) and (2), above -- bailed it out to the tune of $700 billion last year. The Street has repaid some of that but, according to the bailout program's inspector general, much of it is gone forever. For example, the taxpayer money that bailed out giant insurer AIG went directly through AIG to its "counterparties" like Goldman Sachs -- to whom Tim Geithner, according to the inspector general, gave away the store. As Goldman Sachs prepares to dole out some $17 billion to its executives and traders, it's worth noting that Goldman received $13 billion a year ago from the rest of us via AIG and Geithner, no strings attached.

Which brings us back to homeowners who are falling further behind. The $75 billion federal program designed to bribe banks to modify mortgages has been a bust. No one knows the exact number of mortgages that have been modified (that will be reported next month) but housing experts I've talked with say it's a tiny fraction of the number of homeowners in trouble. Seems that the big banks can't be bothered. "Some of the firms ought to be embarrassed," Michael Barr, the assistant Treasury secretary for financial institutions told the New York Times.

Barr says the government will try to use shame as a corrective, publicly naming institutions that have moved too slowly. But the banks have done almost nothing to date. "We've made dramatic improvements, and we continue to try to get better," says a spokesman for JPMorgan Chase, but as a practical matter JPMorgan has done squat.

Shame? If we've learned anything over the last year, it's that Wall Street has none. Ten months ago Wall Street lobbyists beat back a proposal to give bankruptcy judges the right to amend mortgages in order to pressure lenders to reduce principle owed, just like Wall Street lobbyists are now beating back tough regulations to prevent the Street from causing another meltdown.

Shame? For Wall Street, it all comes down to PR, at minimal cost. Goldman Sachs, attempting to preempt a firestorm of public outrage when it dispenses its $17 billion of bonuses, is setting up a crudely conceived $500 million PR program to help Main Street.

Shame won't work. Only political muscle and courage will. Congress and the Obama administration should give homeowners the right to go to a bankruptcy judge and have their mortgages modified.

And while they're at it, resurrect the Glass-Steagall Act that used to separate investment from commercial banking, so Wall Street can't continue to use other people's money to gamble.

Finally, before Goldman hands out $17 billion in bonuses, claw back the $13 billion Goldman took from AIG and the rest of us and add it to the pool of money going for mortgage relief.

posted by Robert Reich | 9:25 AM

The War in Afghanistan Should Be Fully Funded by a Tax Increase

Now that there is such concern about government programs adding to the deficit, it should be mandatory that the war in Afghanistan be fully funded by a war tax. There was never a peep from conservatives when Reagan quadrupled the national debt from $1 trillion, when he entered office, to $4 trillion when he left. There was never a peep from conservatives when Bush Jr added $5 trillion to the national debt by giving tax breaks to the rich, starting wars in Iraq and Afghanistan and a prescription drug benefit that was a giveaway to the pharmaceutical corporations. In fact the only President in the last 30 years to run budget surpluses was a Democrat, Bill Clinton. In addition to running up a $5 trillion deficit, Bush Jr ran the economy off a cliff and then handed it over to Barack Obama.

And all of a sudden conservatives are up in arms about the deficits and debts. Not only did Bush Jr add $5 trillion to the national debt, he borrowed most of that money from the Communist government of China. How come conservatives aren't up in arms about that? Because they are total hypocrites, that's why. They want lower taxes, but they want more war, and they want the government to borrow the money for that. However, they don't want the government to borrow any money for any program that might benefit the American people. They don't want the government to borrow money to spend on infrastructure that's been neglected for 30 years. They don't want the government to borrow money to spend on health care or start a jobs program such as the Civil Conservation Corps, a domestic Peace Corps that FDR used to great effect in combating the Great Depression. They only want the government to borrow money to spend on war.

Congress ought to pass a bill that says every increase in the Federal budget needs to be paid for and that includes war spending. Right now the US spends more on its military industrial complex and war machine than the rest of the world combined. And for what? There's no functioning Al Quaeda in Afghanistan. Are we suppposed to invade every country where some group of ragtags goes and hangs up a banner saying "We're Al Quaeda and We're Here"? It's patently ridiculous. We're spending ourselves into oblivion while neglecting infrastructure and the needs of the American people. The train has already left the station on alternative renewable energy. And where is the US? Well, never having gotten aboard, that's where.

While Canada didn't have one bank failure during this economic catastrophe, the US is still shuttng down banks at an alarming rate on a daily basis. The US has more people unemployed than the entire population of Canada. While the US is bombing civilians in Afghanistan, China is going in and silently buying up assets and natural resources while never having to fire a shot. This is utterly stupid on the part of the US. We're creating enemies all over the world, while China is being a perfect example of a well-behaved capitalist country. Their leadership, while authoritarian, can at least operate effectively in the world in the interest of China and its citizens. Meanwhile, the US, in an exercise of colossal futility, spends months and months trying to pass a bowdlerized and watered down health care bill. It's a tribute to the ineffectiveness and futility of the American political system. Other countries, like Taiwan for example, just make an assessment of the best health care systems in the world and then just go ahead and pick one with slight alterations. The US lets lobbyists swarm Washington and beseige citizens with misleading ads resulting in an abortion of a health care bill that takes forever to pass and longer than forever to go into effect. What are these people thinking? At this rate, the rest of the developed and developing world will tuck the US empire into its grave after the shortest run in history.

The US is doing everything in its power to become a backwater of history: namely, wasting blood and treasure on useless, pointless wars, borrowing money like a drunken sailor at a payday loan store, letting lobbyists legislate in the interests of corporations, neglecting infrastructure, spreading the culture of individual greed, outsourcing its jobs, a Congress that takes forever to get anything done and then they're a dollar short and a day late. The list goes on and on.

China is eating our lunch. Europe is eating our lunch. India is eating our lunch. And it's all because these  countries are investing a minuscule amount in their militarys compared to the US, while the US goes around the world creating enemies. These other countries are using the tools of captalism and friendly cooperation to create friends instead. China is building infrastructure in Afghanistan thereby winning friends. We're there dropping bombs on wedding parties and occupying their country thereby creating enemies. It doesn't take a lot of smarts to figure out who will be the winner there.

And the US is entangling itself in the most ridiculous contradictions. The logic seems to be we want lower taxes, but we don't want to add a penny to the deficit, but we don't want to pay for war, and we want more war in order to make the world safe for what?

War Spending Sucking America Dry

Friday, Nov 27, 2009 18:01 PST

How dare you criticize wasteful defense spending!

So you think it's only terrorist-appeasing lefties who are down on Pentagon profligacy? Think again

 

By David Sirota

 

Pop quiz -- name the political leader who said the following:

"We must be willing to pull the plug before sinking more dollars into weapons that do not provide what our warriors need."

Now name the leader who said this:

"(W)e cannot track $2.3 trillion in (Pentagon spending) ... We maintain 20 to 25 percent more base infrastructure than we need to support our forces, at an annual waste to taxpayers of some $3 billion to $4 billion ... There are those who will oppose every effort to save taxpayers' money ... Well, fine, if there's to be a struggle, so be it."

I'm willing to bet many self-described "conservatives" guessed Ralph Nader and Dennis Kucinich. I would make that wager based on the enraged response to my recent column about government data showing that our waste-ridden, $600-billion-a-year defense budget will cost about seven times more than the healthcare legislation currently before Congress.

In e-mails, letters and Web site comments, right-wingers didn't vent anger at Pentagon profligacy, but at the criticism of Pentagon profligacy -- as if brazenly throwing away billions on outdated weapons systems and obsolete military programs is now a "conservative" value. Notably, the vitriol didn't include contrary numbers disproving the figures I referenced (none exists) -- the responses just used Fox News-ish slogans like "the cost of freedom" to deride all criticism of Pentagon spending as unpatriotic ultraliberalism.

Of course, if that's true, then Stephen Colbert's refrain that "reality has a well-known liberal bias" is now less a laugh line than a devastatingly accurate commentary on the deranged terms of America's political discourse. I say that because here are some objective, nonpartisan, non-ideological facts:

• The 2010 Pentagon budget means "every man, woman and child in the United States will spend more than $2,700 on (defense) programs and agencies next year," reports the Cato Institute. "By way of comparison, the average Japanese spends less than $330; the average German about $520; China's per capita spending is less than $100."
• "(The Pentagon budget) dwarfs the combined defense budgets of U.S. allies and potential U.S. enemies alike," reports Hearst Newspapers.
• "President (Obama) is on track to spend more on defense, in real dollars, than any other president has in one term of office since World War II," reports National Journal's Government Executive magazine.
• In 2000, the Pentagon admitted it has lost -- yes, lost -- $2.3 trillion. In 2003, the San Francisco Chronicle reported that a subsequent Department of Defense study said it was only $1 trillion. To put such numbers in perspective, contemplate what those sums could finance. $1 trillion, for instance, could pay the total cost of universal healthcare for the long haul. $2.3 trillion would cover universal healthcare plus the bank bailout plus the stimulus package.

Obviously -- obviously! -- these points are no cause for alarm and certainly no cause for defense spending reductions, right? All they must prove is that the archconservative Cato Institute, William Randolph Hearst's newspaper chain, National Journal employees and Pentagon officials are secretly America-hating liberals. And -- obviously! -- so are two of the most aggressive neoconservative hawks ever to hold government office, Sen. John McCain and Defense Secretary Donald Rumsfeld. After all, they’re the ones who issued those scathing statements about wasteful defense spending in the pop quiz above. That means they’re actually terrorist-appeasing lefties, right?

Really, how could anyone other than traitorous communists see the data and then consider backing the mildest Pentagon spending cuts? I mean, come on -- in a country whose paranoid conservative movement now makes a dead-serious ideology out of Stephen Colbert wisecracks, how dare any red-blooded American even think of pondering basic budgetary facts?

© 2009 Creators.com 

Frontline: The Card Game

About the deceptive practices of the credit card industry:

 Watch the full program online here.

Taxing the Speculators

Published on Friday, November 27, 2009 by the New York Times

 

by Paul Krugman

Should we use taxes to deter financial speculation? Yes, say top British officials, who oversee the City of London, one of the world's two great banking centers. Other European governments agree - and they're right.

Unfortunately, United States officials - especially Timothy Geithner, the Treasury secretary - are dead set against the proposal. Let's hope they reconsider: a financial transactions tax is an idea whose time has come.

The dispute began back in August, when Adair Turner, Britain's top financial regulator, called for a tax on financial transactions as a way to discourage "socially useless" activities. Gordon Brown, the British prime minister, picked up on his proposal, which he presented at the Group of 20 meeting of leading economies this month.

Why is this a good idea? The Turner-Brown proposal is a modern version of an idea originally floated in 1972 by the late James Tobin, the Nobel-winning Yale economist. Tobin argued that currency speculation - money moving internationally to bet on fluctuations in exchange rates - was having a disruptive effect on the world economy. To reduce these disruptions, he called for a small tax on every exchange of currencies.

Such a tax would be a trivial expense for people engaged in foreign trade or long-term investment; but it would be a major disincentive for people trying to make a fast buck (or euro, or yen) by outguessing the markets over the course of a few days or weeks. It would, as Tobin said, "throw some sand in the well-greased wheels" of speculation.

Tobin's idea went nowhere at the time. Later, much to his dismay, it became a favorite hobbyhorse of the anti-globalization left. But the Turner-Brown proposal, which would apply a "Tobin tax" to all financial transactions - not just those involving foreign currency - is very much in Tobin's spirit. It would be a trivial expense for long-term investors, but it would deter much of the churning that now takes place in our hyperactive financial markets.

This would be a bad thing if financial hyperactivity were productive. But after the debacle of the past two years, there's broad agreement - I'm tempted to say, agreement on the part of almost everyone not on the financial industry's payroll - with Mr. Turner's assertion that a lot of what Wall Street and the City do is "socially useless." And a transactions tax could generate substantial revenue, helping alleviate fears about government deficits. What's not to like?

The main argument made by opponents of a financial transactions tax is that it would be unworkable, because traders would find ways to avoid it. Some also argue that it wouldn't do anything to deter the socially damaging behavior that caused our current crisis. But neither claim stands up to scrutiny.

On the claim that financial transactions can't be taxed: modern trading is a highly centralized affair. Take, for example, Tobin's original proposal to tax foreign exchange trades. How can you do this, when currency traders are located all over the world? The answer is, while traders are all over the place, a majority of their transactions are settled - i.e., payment is made - at a single London-based institution. This centralization keeps the cost of transactions low, which is what makes the huge volume of wheeling and dealing possible. It also, however, makes these transactions relatively easy to identify and tax.

What about the claim that a financial transactions tax doesn't address the real problem? It's true that a transactions tax wouldn't have stopped lenders from making bad loans, or gullible investors from buying toxic waste backed by those loans.

But bad investments aren't the whole story of the crisis. What turned those bad investments into catastrophe was the financial system's excessive reliance on short-term money.

As Gary Gorton and Andrew Metrick of Yale have shown, by 2007 the United States banking system had become crucially dependent on "repo" transactions, in which financial institutions sell assets to investors while promising to buy them back after a short period - often a single day. Losses in subprime and other assets triggered a banking crisis because they undermined this system - there was a "run on repo."

And a financial transactions tax, by discouraging reliance on ultra-short-run financing, would have made such a run much less likely. So contrary to what the skeptics say, such a tax would have helped prevent the current crisis - and could help us avoid a future replay.

Would a Tobin tax solve all our problems? Of course not. But it could be part of the process of shrinking our bloated financial sector. On this, as on other issues, the Obama administration needs to free its mind from Wall Street's thrall.

© 2009 New York Times

Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. Krugman was the 2008 recipient of the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, and his most recent, The Return of Depression Economics. 

The Future of America: the Privatization of Water

Bailed-Out AIG Forcing Poor to Choose Between Running Water and Food

By Yasha Levine, AlterNet. Posted November 26, 2009.

Thanks to AIG, some of the poorest residents of rural Kentucky learned you can always be made poorer by corporate villains.

What are we getting in return for the bailout? So far, predatory credit card rates, exorbitant bank fees and obscene Wall Street bonuses. But we're being robbed in other, sneakier ways, too. It seems that taxpayers in the poorest, most vulnerable parts of the county are getting plundered by the same institutions they bailed out. One example is AIG's underhanded fleecing of residents of rural Kentucky.

Middlesboro and Clinton are two tiny, impoverished towns in southern Kentucky with a combined population of 12,000. In 2008, Middlesboro's per capita income was $13,189 a year, only a few hundred dollars more than the average worker earned in third-world Mexico. That is if they were lucky to even get a job. Real unemployment hovers somewhere around 30%, and the state is so broke that half the people eligible for unemployment benefits can't receive them. Life may be tough and most people live in poverty, but that doesn't mean they can't be made a little poorer. That's the lesson locals learned after bailed-out insurance villain AIG took over their water utility and instantly raised rates to squeeze an extra $1 million in profits out of its new customers, forcing some to consider choosing between running water and food.

The towns are so rural, their residents have yet to be touched by the Internet revolution. Forget comment sections or forum threads. In Clinton, you have to track down actual hand-written notes that residents filed with city hall to read their complaints about the rate increase. Luckily, city officials were nice enough to scan some of them.

Here's one, dated August 8, 2009:

My husband and I are on a fixed income and with everything going up in price this would be very a very large burden on us as well as most of the citizens of Clinton. Our town is mostly of people like us and this would be such a hardship for us. A 50.8% raise is outrageous on anything. Please do not let this happen. It would mean the difference in bringing buying food and medicine or paying a high water bill to make someone else's life easier.

Here is how the AIG takeover went down: In 2005, flush with cash from its shady dealings in the mortgage derivatives market, AIG announced that it was in the process of acquiring Utilities Inc., a holding company that controlled scores of small water utilities across 17 different states. With just 300,000 customers, the company wasn't huge, but it boasted of being the largest privately held water utility in the country.

"We have long considered water infrastructure as an attractive investment opportunity and an excellent complement to [our] existing energy infrastructure portfolio. Utilities Inc. is a leader in this industry and we are pleased that [we have] the opportunity to acquire this business,” AIG Chairman and CEO Win J. Neuger gloated in a press release.

AIG had reason to be pleased with its purchase. Water utilities are one hell of a profitable business, with international corporations easily making a 20 to 30% profit margin, according to a 2007 report by Food and Water Watch. In the US, federal regulations limit profits to 10%, a pesky rule that companies easily subvert by shuffling their income around and “investing” it in side businesses. These kinds of returns would be the envy of the pharmaceutical and oil industries. How do water companies do it? According to Food and Water Watch, they charge 50% more for services than public utilities and pocket the difference, thereby unleashing the potential of the free market.

People who have been ripped off by bailed-out banks' schemes to trick late fees out of their customers will recognize what Utilities Inc. did to the people of Middlesboro and Clinton. In the summer of 2008, as AIG was teetering and desperate for funds, it "upgraded" its billing system, and suddenly a slew of late fee charges hit the struggling locals.

Residents had been getting their water bills like clockwork for as long as anyone could remember, but confusion and disorder set in as soon as Utilities rolled out its new and improved billing system. Monthly statements started coming late or didn't come in for months at a time. People were double-billed and double-penalized for bills that never arrived. One month, a bill would include sewer fees, the next month it wouldn't—and you'd be charged if didn't catch the omission. It's obvious the new invoice system was designed for pure harassment, creating chaos and reaping the rewards of the late fees it generated.

Internally, Utilities referred to their revamp of the billing system as "Project Phoenix." It sounded eerily similar to the CIA's "Phoenix Program," which was designed to terrorize, kill and torture uppity Vietnamese villagers into submission during the Vietnam War. One month after Project Phoenix started wreaking havoc on locals, AIG collapsed and took the first of over $150 billion in taxpayer bailout funds. That meant Project Phoenix could still go on terrorizing locals—which it did.

Here is how a local newspaper described the new billing program in Clinton in March, 2008:

It wasn’t until the summer of 2008 that the new bills began to arrive and from Day One, they were messed up. Few customers here in Clinton [called] the water company because they got multiple bills. One business thought it got a break when its bill went down somewhat, only to discover that the bill hadn’t included sewer costs. This went on for several months. Finally, the [sewer bill] showed up – due in full – on one bill. Requests to spread out the payment fell on deaf ears. . . . Some of us were so confused by the bills, we paid them every time they came in. . . . Fears of bad credit reports and shut offs kept most customers paying whenever a bill arrived.

To make it harder for Clinton residents to file complaints, AIG closed the utility's local office as soon as it took over the company. Pleas made by phone were rejected.

Local citizens are angry, upset and fearful. Many senior citizens on fixed incomes are already stretched past the breaking point. Others living below the poverty line without hope of getting a job are worried about how to pay another rising utility bill.

Customers we’ve talked to “want to do something,” but say they cannot afford to file to intervene in the case. The trip to Frankfort is daunting and expensive. Some dare not leave the jobs or businesses they have for the time it would take to travel and attend a hearing in Frankfort.

In November 2008, right as AIG was recieving the second installment of its bailout and the economy was in a free-fall, AIG's water utility notified Middlesbro and Clinton residents that it would be raising rates by 51%. It would mean more than $750,000 in additional revenue a year, just from 8,000 customers. The money wouldn't be used to fund infrastructure improvements—none had been made and none were planned. No, according to a company spokesman, the utility was trying to recoup money it had invested in its "improved" billing system, in effect forcing the victims of the billing system to pay for their own fleecing. 

It seems Utilities was quite honest about explaining that a good chunk of the $750,000 would be transferred straight into the pockets of its investors, according to the West Kentucky Journal of Politics and Issues.

[Another] reason came from [the] company's financial expert, Pauline M. Ahern, who opined that a rate increase will allow [the utility] to “earn a range of common equity cost ratio of 11.60% to 12.10%.” In the present market, that is an attractive return on investment.

One million dollars may not seem like much these days, but it sure meant a lot to the poverty-stricken residents of Middlesbro and Clinton. There were quite a few bleak handwritten statements filed with Clinton's city hall during a public hearing on the water rates increase. It makes sense to quote them to get a feel for the level of despair that exists in rural communities like this all over the United States.

Here's one from August 8, 2009:

I get $675.00 a month, if they raise the water, or utilities, I can't pay them. I would have to go without water, etc. or gas. I'm disabled and I can't walk. Raising the utilities hurt a lot of people here in Clinton. Not just me but everyone. As it is I can't pay the water bills because its high. But I pay what I can.

And here is another from August 12, 2009:

I feel that a rate increase of 50.8% will add a heavy burden on our small rural community. Our citizin [sic] that lives in our city are on Social Security, have full time jobs that pay barely minimum wage or are working as many as 3 part time jobs to make their monthly budget.

And another from May, 2009:

“I always have a high bills [sic] to pay. I pay what I can. I am on disable. [sic] I try not to use too much water. But yet I have a high water bill. If the bill goes up, I will be lucky to pay them $10.00 instead of $80.00.

In the end, Kentucky's regulatory commission reduced the water rate increase from 50.1% to 30%. How long before they try raise the rate again? Or until the energy company decides to follow suit? It's hard to say. But one thing is for certain: AIG's takeover shows again that the American people were screwed by the bailed-out billionaires, who, instead of showing gratitude or willingness to reciprocate, have been preying upon the most vulnerable Americans like they are 15th century barons soaking the peasants.

And as our cities and states start leasing out and selling public infrastructure to pay off their municipal debts, we can expect banks to gain more control of public wealth. Middlesbro and Clinton are a glimpse into the future of post-privatized America.

Still Doing God’s Work on Wall Street

Published on Wednesday, November 25, 2009 by TruthDig.com

by Robert Scheer

Jail, anyone? Perhaps that's too harsh, and at any rate premature, but is anyone ever going to be held accountable for the behind-the-scenes sweetheart deals that passed tens of billions of taxpayer dollars through the AIG shell game to the very banks that caused the financial meltdown? Or for the many other acts of double-dealing that left one out of three American homeowners owing much more than their houses were worth while the folks who swindled them were rewarded with hundreds of billions in public money?

Undoubtedly not, since the same folks who are most culpable wrote the laws that made this, and the other scams at the heart of the banking collapse, perfectly legal. And guess what? They're back at work in the government, writing the new laws that will, they claim, prevent us from being had once again. As a telling example of that process at work, check the official response of the Department of Treasury to the devastating report by the special inspector general for the Troubled Asset Relief Program (TARP), Neil M. Barofsky, titled "Factors Affecting Efforts to Limit Payments to AIG Counterparties." The main factor was that Timothy Geithner followed the lead of Goldman Sachs CEO Lloyd "I'm Doing God's Work" Blankfein in crowding the lifeboats with bankers.

Geithner, now treasury secretary, was previously the president of the Federal Reserve Bank of New York (FRBNY), where he negotiated the deal to pay Goldman Sachs and the other top banks in full to cover their bad bets on securitized mortgages. Barofsky's report concluded that Geithner's scheme represented a "backdoor bailout" for the financial hustlers at the center of the market fiasco. Noting that Geithner denies that was his intention, the report states, "Irrespective of their stated intent, however, there is no question that the effect of FRBNY's decisions-indeed, the very design of the federal assistance to AIG-was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG's counterparties."

Not surprisingly, the Treasury Department that Geithner now heads defended his actions in not forcing "haircuts" on the full dollar-for-dollar payoff by AIG to the banks while he was at the New York Fed: "The government could not unilaterally impose haircuts on creditors, and it would not have been appropriate for the government to pressure counterparties to accept haircuts by threatening to retaliate in some way through its regulatory power."

Nonsense, argues Eliot Spitzer, who as New York attorney general was way ahead of the curve in challenging Wall Street arrogance. Writing in Slate on Monday, Spitzer points out: "Pressuring Goldman and the other counterparties to offer concessions would have forced them to absorb the consequences of making suspect deals with an insurance company that was essentially a Ponzi scheme."

The Ponzi scheme was based on the collateralized debt obligations (CDOs) in which the bankers traded and which AIG had insured with the credit default swaps (CDSs) that they sold but failed to back with adequate funding. Now Geithner's Treasury concedes that AIG "should never have been allowed to escape tough, consolidated supervision." But none of AIG's scams were regulated, nor were any of the others at the center of the larger financial debacle, because of laws pushed through Congress by Geithner's boss, Lawrence Summers, when they both were in the Clinton administration. Specifically, they prevented regulation of those opaque CDOs and CDSs that would come to derail the world's economy.

As the inspector general's report stated: "In 2000, the [Clinton administration-backed] Commodity Futures Modernization Act (CFMA) ... barred the regulation of credit default swaps and other derivatives." Why did the financial geniuses of the Clinton administration seek to prevent that obviously needed regulation? Because the Clintonistas believed the Wall Street guys knew what they were doing and that what was good for them was good for us lesser folk. As Summers, who is the top economic adviser in the Obama White House, put it in congressional testimony back then: "The parties to these kinds of contracts are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies."

Sounds nonsensical today: The inspector general's report notes that AIG, because of the deregulatory law that Summers and Geithner pushed through, was "able to sell swaps on $72 billion worth of CDOs to counterparties without holding reserves that a regulated insurance company would be required to maintain." But why, then, is Summers once again running the show with Geithner when both have made careers of exhibiting total contempt for the public interest? Because there is no accountability for the high rollers of finance, no matter who happens to be president. 

© 2009 TruthDig.com

Robert Scheer is editor of Truthdig.com and a regular columnist for The San Francisco Chronicle.

God Bless Nancy Pelosi for Broaching the Unthinkable: A War Tax!

Nancy Pelosi has broached a heretofore almost unmentionable subject - that the US should actually pay for its wars instead of just adding the cost of them to the deficit and hence the national debt. Barack Obama has proposed sending 34,000 more troops to Afghanistan at a cost of $1 million per troop per year. At a time when Congress fusses over a few billion dollars for health care and has the Congressional Budget Office "score" every alternative health care reform bill, the novel idea of actually paying for war raises its ugly head thanks to Nancy Pelosi. What a refreshing breath of fresh air!  

Speaker of the House and California Democratic Congresswoman Nancy Pelosi is keeping the door open for the possibility of a war tax to help for the war in Afghanistan. Digital Journal reported last week that three Democrats introduced a new tax that would go directly to the war in Afghanistan called “Share the Sacrifice Act.” On Tuesday, House Speaker Nancy Pelosi kept the door open to a proposal by key Democrats to institute a war surtax to help pay for the war in Afghanistan, according to CNN. While she was quite vague on the subject, she issued her concerns among fellow Congressional Democrats and economic writers in a conference call about the costs of the war, “But let me say that there is serious unrest in our Caucus about can we afford this war?" In addition to Appropriations Committee Chairman Wisconsin Congressman Dave Obey, Defense Appropriations Subcommittee John Murtha of Pennsylvania and Connecticut Democratic Caucus Chairman John Larsen, several other Democratic leaders have co-sponsored the bill such as New York Democratic Congressman Charlie Rangel and Massachusetts Democratic Congressman Barney Frank. Michigan Democratic Senator Carl Levin, Chairman of the Senate Armed Services Committee recently said he has endorsed the idea to pay for the war. The Chicago Tribune reports Obey iterated that he feels the war in Afghanistan will cost over $1 trillion over the next ten years, “Now, the president is being asked to consider an enlarged counterinsurgency effort in Afghanistan. ... But unlike the health care bill, that would not be paid for. We believe that's wrong." The Los Angeles Times notes that the government would instigate a 1 per cent surtax on people earning less than $150,000 and it would affect people making as little as $22,000. Military personnel who have been enlisted in the armed forces since September 11, 2001 and their families would be exempt from the surtax. According to CNN, President Barack Obama will make a formal announcement on his United States troop strategy in Afghanistan on Tuesday at the US Military Academy at West Point, New York, which the White House spokesperson Robert Gibbs confirmed.

Conservatives are all up in arms because Obama is running a deficit. Where were they when Reagan quadrupled the national debt from $1 trillion to $4 trillion? Where were they when Bush Sr added another trillion to the debt. And where were they when Bush Jr added $5 trillion to the national debt by giving tax breaks to the rich, not paying for the Medicare prescription drug benefit, which was a giveaway to the drug corporations, and not paying for the wars in Iraq and Afghanistan? In fact the only President in the last 30 years that actually ran budget surpluses was Bill Clinton, a Democrat.

So conservatives and tea baggers where was your outrage when "conservative" Presidents ran the economy into the ground by running up huge deficits? Then Bush Jr handed Obama a crisis of astronomical proportions which cried out for deficit spending and now he gets criticized for that. If we are not going to hand huge debts to our children, then we should actually pay for war. It's as simple as that. We're asking our young people to sacrifice for the sake of war by giving their lives or being maimed for life. Where's the sacrifice on the part of everyday Americans not in the armed services? Nancy Pelosi is right to call them on this. They are all for pay as you go except when it comes to war. Then we must write a blank check. When it comes to something that might actually benefit the American people like health care reform, they get all up in arms about adding a penny to the deficit. When it comes to war, they're all for borrow and spend. In fact Republican Presidents for the last 30 years have been the biggest borrow and spenders of all time resulting in the economic fiasco that we're now experiencing. It's time to tax and spend ... FOR WAR!!

To boot Republicans and conservatives have been responsible for outsourcing our good jobs to China and India with the result that we've built up huge trade deficits with China, a Communist country. To be fair Clinton had his hand in this also with the passage of NAFTA and CAFTA, but it was at the behest of Republicans and conservatives. It turns out that Ross Perot was right about that "giant sucking sound" sucking our jobs to Mexico, China - wherever labor was cheaper. But conservatives don't seem concerned about the fact that the US is now in hock to a communist country. Nevertheless, they're all up in arms about socialism. God forbid that we should become like our European NATO allies and become socialistic. It's OK to be in debt to communists, but we can't afford to go down the road of countries we're most closely allied with. Give me a break! These conservatives and tea baggers completely have their heads up their collective asses! Their case is so riddled with contradictions that it is hard to find even a grain of truth or integrity in their protestations.

Nancy Pelosi at least has the balls to consider doing the right thing. If they are going to hold Obama's feet to the fire and insist that every last band-aid be paid for when it comes to health care, it's only right and consistent to insist on the same logic when it comes to war. Therefore, a war tax is highly in order. Then we'll see how much conservatives like war when they find out their taxes will be raised to actually pay for it. Shared sacrifice, yeah, what a refreshing idea!

Mankind Using Earth's Resources at Alarming Rate

Published on Tuesday, November 24, 2009 by Agence France Presse

 

WASHINGTON - Humanity would need five Earths to produce the resources needed if everyone lived as profligately as Americans, according to a report issued Tuesday.

NASA image shows Planet Earth in one of the most up-to-date images of the world to date. Humanity would need five Earths to produce the resources needed if everyone lived as profligately as Americans, according to a report issued Tuesday.(AFP/HO/NASA/File)

As it is, humanity each year uses resources equivalent to nearly one-and-a-half Earths to meet its needs, said the report by Global Footprint Network, an international think tank.

"We are demanding nature's services -- using resources and creating CO2 emissions -- at a rate 44 percent faster than what nature can regenerate and reabsorb," the document said.

"That means it takes the Earth just under 18 months to produce the ecological services humanity needs in one year," it said.

And if humankind continues to use natural resources and produce waste at the current rate, "we will require the resources of two planets to meet our demands by the early 2030s," a gluttonous level of ecological spending that may cause major ecosystem collapse, the report said.

Global Footprint Network calculated the ecological footprint -- the amount of land and sea needed to produce the resources a population consumes and absorb its carbon dioxide emissions -- of more than 100 countries and of the entire globe.

The think-tank worked out how many resources the planet has, how much humans use, and who is using what.

Back in 1961, the entire planet used just over slightly more than half of Earth's biocapacity.

Today, 80 percent of countries use more biocapacity than is available within their borders. They import resources from abroad, deplete their own stocks and fill "waste sinks," such as the atmosphere and ocean, with carbon dioxide.

The average American has an ecological footprint of nine global hectares (23 acres), or the equivalent of 17 US football fields.

The average European's footprint is half that size, but still too big to be sustainable in the long term.

At the other end of the scale are impoverished countries like Malawi, Haiti, Nepal or Bangladesh, where the footprints are around half a global hectare, or 1.25 acres -- often not even enough to provide for basic food, shelter and sanitation, the report said.

But there are relatively easy measures that can be taken to slow the rot.

"In most high-income, industrialized countries like the US and European countries, the biggest part of the ecological footprint is the carbon footprint," Nicole Freeling, a spokeswoman for the Global Footprint Network, told AFP.

"One of the biggest things such a country can do to reduce its ecological footprint is to manage energy more efficiently and effectively -- for example, by investing in renewable energy and clean tech on the one hand, and resource-efficient infrastructure and compact urban development on the other," she said.

Changing consumption habits can also reduce the global footprint.

"While people living at or below subsistence levels may need to increase their consumption to move out of poverty, more affluent people can reduce consumption and still improve their quality of life," Freeling said.

© 2009 AFP

15 Signs American Society Is Coming Apart at the Seams

By David DeGraw, Amped Status. Posted November 21, 2009.

Are we nearing a tipping point as rapacious elites push a heavily armed populace too far?

 

Editor's note: The following is an edited excerpt from the Amped Status report, "The Critical Unraveling of U.S. Society."

The economic elite have launched an attack on the U.S. public and society is unraveling at an increased rate. You may have missed it in the mainstream news media, but statistical societal indicators are reading red across the board. Let’s look at the top 15 statistics that prove we are under attack.

1) The inequality of wealth in the United States is soaring to an unprecedented level. The U.S. already had the highest inequality of wealth in the industrialized world prior to the financial crisis. Since the crisis, which has hit the middle class and poor much harder than the top 1 percent, the gap between the top 1 percent and the remaining 99 percent of the U.S. population has grown to a record high.

2) As the stock market went over the 10,000 mark and just surged to a 13-month high, the three big banks that took taxpayer money and benefited the most from the government bailout have just set a new global economic record by issuing $30 billion in annual bonuses this year, “up 60 percent from last year.” Bloomberg reported: “Goldman Sachs, the most profitable securities firm in Wall Street history, had a record profit in the first nine months of this year and set aside $16.7 billion for compensation expenses.” Goldman Sachs is on pace for the best year in the firm’s history, and it is also benefiting by only paying 1 percent in taxes.

3) The profits of the economic elite are “now underwritten by taxpayers with $23.7 trillion worth of national wealth."

As the looting is occurring at the top, the U.S. middle class is just beginning to collapse.

4) Workers between the ages of 55 to 60, who have worked for 20 to 29 years, have lost an average of 25 percent off their 401k. During the same time period, the wealth of the 400 richest Americans went up by $30 billion, bringing their total combined wealth to $1.57 trillion.

5) Home foreclosure filings "hit a record high in the third quarter (of 2009)… They were the worst three months of all time… 937,840 homes received a foreclosure letter" in this three-month period; “3.4 million homes are expected to enter foreclosure by year’s end, with some experts estimating that next year will be even worse.”

President Obama has enacted a $75 billion taxpayer funded program that has been a spectacular failure in stemming the foreclosure crisis and has proven to be another massive waste of billions of taxpayer dollars.

6) 25 million people are unemployed or underemployed.

This means we have 25 million people who urgently need to increase their income, and they’re quickly running out of options. The unemployment rate is expected to rise further and remain high for several years. “The president’s chief economic adviser warned that the nation’s unemployment rate could stay ‘unacceptably high’ for years to come."

The New York Times reports: "Americans now confront a job market that is bleaker than ever in the current recession, and employment prospects are still getting worse. Job seekers now outnumber openings six to one, the worst ratio since the government began tracking….” As this ratio continues to grow, it will lead to a further reduction in wages -- average worker wages have seen a sharp decline over the past year.

Economist Nouriel Roubini, a man who accurately predicted our current crisis, just reported on unemployment stating: “Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening…. So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.”

7) As the few elite banks thrive, there have been 123 U.S. bank failures thus far this year. Recently, three banks that the government declared “healthy” and gave taxpayer money, have folded. The Wall Street Journal reports: “U.S. regulators have seized or threatened at least 27 banks that got capital infusions from the Troubled Asset Relief Program, including some lenders government officials knew were troubled when they awarded the money. The troubles put taxpayers at risk of losing as much as $5.1 billion invested in the banks since TARP was launched in October 2008.”

8) As bankruptcies surge across the board, 10 U.S. states are on the verge of bankruptcy, with several ready to declare a financial state of emergency. California, Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin are all “barreling toward economic disaster, raising the likelihood of higher taxes, more government layoffs and deep cuts in services."

9) This is occurring at a time when the “federal budget deficit for the fiscal year that just ended was $1.4 trillion, nearly a trillion dollars greater than the year before."  In total, "U.S. public debt topped $12 trillion for the first time in history… The public debt topped $10 trillion in September 2008. The debt is quickly approaching the statutory limit of $12.104 trillion, meaning Congress would have to raise the ceiling to prevent a shutdown of government operations."

Economist Dean Baker explains the risk of running such a large deficit: "The debt limit must be increased at regular intervals in order to allow the government to function normally because the government is currently operating at a deficit. If the debt limit is not passed, then at some point the government will not be able to pay workers and contractors. It won’t be able to send out Social Security checks or make payments for Medicaid and unemployment insurance to state governments. And, it will not be able to make interest payments on government bonds, effectively defaulting on the national debt."

Needless to say, all of this will make life drastically more difficult for American citizens. As the middle class continues on the path of economic decline, the number of citizens living in poverty has already hit an all-time high.

10) Although the government’s official figure tries to low-ball the number, 47.4 million U.S. citizens live in poverty, and the U.S. poverty rate is the highest in the industrialized world.

Predictably, homelessness is rising at an increased rate as well. "The U.S. government does not tally the numbers but interested organizations say that more than 3 million people were homeless at some point over the past year…. The fastest growing segment of the homeless population is families with children.”

Children have been hit especially hard by the economic crisis:

11) * 50 percent of U.S. children, one out of every two children, will need to use food stamps to eat.

One out of every two children in the United States of America will need to use a food stamp… to EAT!

If you didn’t think starvation was a serious threat in the U.S., just read this new Washington Post report: “The nation’s economic crisis has catapulted the number of Americans who lack enough food to the highest level since the government has been keeping track, according to a new federal report, which shows that nearly 50 million people — including almost one child in four — struggled last year to get enough to eat… Several independent advocates and policy experts on hunger said that they had been bracing for the latest report to show deepening shortages, but that they were nevertheless astonished by how much the problem has worsened. 'This is unthinkable. It’s like we are living in a Third World country,' said Vicki Escarra, president of Feeding America."

The United States Department of Agriculture released these findings in a study that was completed in December 2008, which means these numbers don’t take into account the millions more unemployed throughout 2009. The numbers of people living in poverty and struggling to eat has seen a significant increase since then.

This a national tragedy. But it gets much worse.

12) In 2008, according to the Census Bureau, the number of U.S. citizens without health care grew to a record 46.3 million. “The new figures, however, understate the severity of the economic downturn because a large portion of the nation’s job losses and unemployment rate increases occurred after the Census survey data was collected in March as part of the annual Current Population Survey."

13) Lack of health insurance has caused 45,000 preventable U.S. citizen deaths in the past year. The American Journal of Medicine recently released a study that stated, “Nearly two out of three bankruptcies stem from medical bills, and even people with health insurance face financial disaster if they experience a serious illness.”

A Johns Hopkins Children’s Center study reported that 17,000 children have died due to lack of health care. You can also add in a recent report that revealed that 2,266 U.S. veterans have died in 2008 due to lack of insurance.

The 50 million now uninsured and the 45,000 preventable deaths per year statistics are expected to drastically rise over the next few years. As the Senate continues to strip meaningful amendments from a health care bill that wouldn’t even take effect until 2013, it has become clear that, despite the media hype, the health care bill is going to fall far short of meaningful reform and continue to rig the game in favor of large insurance company profits at the expense of the U.S. population. With the highest cost healthcare in the world, current trends will continue and much needed change is not on the horizon.

Never before has the United States had so many citizens with so little means, little to no income and heavy debt. Debt and costs of living have now shackled U.S. citizens just as they have shackled people throughout the world. The economic hit men have now hit the United States as well and millions of American citizens are now effectively sentenced to a slow death.

Economic Imperial blowback has hit the mainland.

And the clock is ticking louder by the day…

And here’s two more facts for you:

14) The gun and ammunition manufacturing industry in the United States has over 200 companies producing billions of dollars in annual revenues. This huge manufacturing base cannot fulfill demand quickly enough. The demand for guns and ammunition has hit a record high and the gun industry cannot produce enough bullets to keep up with orders.

Americans are arming themselves to the teeth!

15) In the past year, 100 new armed militia groups have been formed, as militia members have doubled in numbers. Federal authorities are gravely concerned about the “uptick in militia activities." One federal authority recently said, “All it’s lacking is a spark. I think it’s only a matter of time before you see threats and violence."

So let’s break down these numbers.

You have a population of 50 million people who are in desperate need of money, they most likely have no health insurance and can’t afford to get health care or help of any kind. Part of this population probably also has loved ones who can’t get life sustaining medical treatments, or loved ones who have already died due to lack of costly medical treatment. The clock is ticking loud for these people and they are running out of options fast, and time delayed is time closer to death.

While the richest 1 percent have never had it so good, a significant percentage of the U.S. population now has firsthand experience in this. Millions upon millions of Americans are poor, broke, struggling, starving, desperate… and armed.

We are sitting on a powder keg!

We are now witnessing the critical unraveling of U.S. society.

You can read the rest of the report here.

 

 

An Economy Driven by Happiness Rather Than Growth

Gross National Happiness

Posted by Ellen Ratner on November 23, 2009 | ShareThis

When I first read about gross national happiness in one of those unusual/weird news columns, I thought the idea of a country measuring happiness of its citizens was a complete joke. That was then, but a few weeks ago I changed my mind after visiting the landlocked country of Bhutan. It was then that I was introduced to the concept, and I don’t think it is much of a joke anymore.

The fourth king introduced the idea of gross national happiness in 1972. At that time, Bhutan was an absolute monarchy. Later, the king abdicated in favor of his son and voluntarily made his country a constitutional monarchy – no bloodshed, no coups, just a peaceful transition to democracy.

The king was a very forward-looking man, and based on the principle of gross national happiness, true development of human society takes place when material and spiritual advancement complement and reinforce each other. The king believed that every change must be developed and evaluated to ensure that it will lead to happiness, not just development, and that it is important to harmonize economic progress with the spiritual and emotional wellbeing of the people.

Bhutan takes modernization quite seriously and did not legalize television until this new century. However, they are not backward in any way when it comes to very modern hotels, Internet and filmmaking projects for students. They have moved from a closed kingdom to a modern country in very short order by what they call the four pillars of gross national happiness.

In her book, “Facts about Bhutan,” Lily Wangchhuk explains the four pillars. Equitable and sustainable socioeconomic development includes making sure that any development does not ruin the environment and that service delivery such as health and education is also based on equality so that all sections of society get equal delivery. The second pillar is preservation and promotion of culture, which includes strengthening the family and community, tolerance and cooperation, altruism, compassion and dignity, which they believe impact a low crime rate. It also includes the preservation of the culture, which includes centuries-old practices and rituals. The third pillar is conservation of the environment and is based on the Buddhist philosophy that human beings and nature are inseparable from each other. They believe that nature is a partner in existence and might have been one’s parents, friends, etc., in one’s timeless existence. It is one of the top three countries in the world that has more than one-fourth of its land as a protected area. The fourth pillar is good governance which means real involvement on a local level for all levels of government. They have decentralized choices and have created block committees to plan and oversee development. Neither central committees here nor even the national Congress makes all the decisions.

Bhutan could be a case study in any graduate school of government. It doesn’t just talk about gross national happiness, it measures it. Only 3.7 percent of its population reports being unhappy and it measures its happiness with other countries on something that is known as the “Happy Planet Index,” a product of a think-tank created to improve quality of life and to offer innovative solutions to national and international problems. It was created as part of “The Other Economic Summit,” which formed to address issues such as international debt which was not addressed at the G-20 and G-7 summits. According to the ranking of the Happy Planet Index, Bhutan ranks in the top 10 nations worldwide and is the happiest nation in South Asia.

What I noticed when I was in Bhutan is that everyone feels they have a stake in their country and the wellbeing of others and not in the way of big-brother communism. It is genuine, and people believe that they impact the daily lives of others. It is subtle but is reflected in all aspects of citizens’ lives. Imagine if we suddenly made laws in this country that were the results of concern for people’s happiness. Imagine how the “debate” in the Senate would have changed on Saturday night with that perspective.

Bhutan is not a country that is interested in just reaping the happiness for itself; it’s interested in spreading it throughout the globe. This week there is a conference in Brazil, its fifth International Conference on Gross National Happiness with topics such as holistic management of people and the financial crises as well as economic democracy. Bhutan aims to take its concept to the world and will attempt to get other governments to pay attention to what can make citizens happy in the long haul. I just wish that our Congress had spent the weekend at the conference instead of talking at each other in the Senate on health care; it would have been more fruitful.

November 23, 2009

Krugman Illuminates the Financial Crisis and What Should Have Been Done

Published on Friday, November 20, 2009 by The New York Times

The Big Squander

by Paul Krugman

Earlier this week, the inspector general for the Troubled Asset Relief Program, a k a, the bank bailout fund, released his report on the 2008 rescue of the American International Group, the insurer. The gist of the report is that government officials made no serious attempt to extract concessions from bankers, even though these bankers received huge benefits from the rescue. And more than money was lost. By making what was in effect a multibillion-dollar gift to Wall Street, policy makers undermined their own credibility - and put the broader economy at risk.

For the A.I.G. rescue was part of a pattern: Throughout the financial crisis key officials - most notably Timothy Geithner, who was president of the New York Fed in 2008 and is now Treasury secretary - have shied away from doing anything that might rattle Wall Street. And the bitter paradox is that this play-it-safe approach has ended up undermining prospects for economic recovery. For the job of fixing the broken economy is far from done - yet finishing the job has become nearly impossible now that the public has lost faith in the government's efforts, viewing them as little more than handouts to the people who got us into this mess.

About the A.I.G. affair: During the bubble years, many financial companies created the illusion of financial soundness by buying credit-default swaps from A.I.G. - basically, insurance policies in which A.I.G. promised to make up the difference if borrowers defaulted on their debts. It was an illusion because the insurer didn't have remotely enough money to make good on its promises if things went bad. And sure enough, things went bad.

So why protect bankers from the consequences of their errors? Well, by the time A.I.G.'s hollowness became apparent, the world financial system was on the edge of collapse and officials judged - probably correctly - that letting A.I.G. go bankrupt would push the financial system over that edge. So A.I.G. was effectively nationalized; its promises became taxpayer liabilities.

But was there any way to limit those liabilities? After all, banks would have suffered huge losses if A.I.G. had been allowed to fail. So it seemed only fair for them to bear part of the cost of the bailout, which they could have done by accepting a "haircut" on the amounts A.I.G. owed them. Indeed, the government asked them to do just that. But they said no - and that was the end of the story. Taxpayers not only ended up honoring foolish promises made by other people, they ended up doing so at 100 cents on the dollar.

Could things have been different? Some commentators argue that government officials had no way to force the banks to accept a haircut - either they let A.I.G. go bankrupt, which they weren't ready to do, or they had to honor its contracts as written.

But this seems like a naïve view of how Wall Street works. Major financial firms are a small club, with a shared interest in sustaining the system; ever since the days of J.P. Morgan, it has been common in times of crisis to call on the big players to forgo short-term profits for the industry's common good. Back in 1998, it was a consortium of private bankers - not the government - that put up the funds to rescue the hedge fund Long Term Capital Management.

Furthermore, big financial firms have a long-term relationship, both with the government and with each other, and can pay a price if they act selfishly in times of crisis. Bear Stearns, the investment bank, earned itself a lot of ill will by refusing to participate in that 1998 rescue, and it's widely believed that this ill will played a major factor in the demise of Bear Stearns itself, 10 years later.

So officials could have called on bankers to offer a better deal, for their own sake, and simultaneously threatened to name and shame those who balked. It was their choice not to do that, just as it was their choice not to push for more control over bailed-out banks in early 2009.

And, as I said, these seemingly safe choices have now placed the economy in grave danger.

For the economy is still in deep trouble and needs much more government help. Unemployment is in double-digits; we desperately need more government spending on job creation. Banks are still weak, and credit is still tight; we desperately need more government aid to the financial sector. But try to talk to an ordinary voter about this, and the response you're likely to get is: "No way. All they'll do is hand out more money to Wall Street."

So here's the real tragedy of the botched bailout: Government officials, perhaps influenced by spending too much time with bankers, forgot that if you want to govern effectively you have retain the trust of the people. And by treating the financial industry - which got us into this mess in the first place - with kid gloves, they have squandered that trust.

© 2009 The New York Times

Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. Krugman was the 2008 recipient of the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, and his most recent, The Return of Depression Economics. 

Obama Determined to Conduct Himself with Dignity Despite Republican Attempts to Utterly Destroy Him

Although this guy nails it, please see following comment which is my somewhat mitigating take on this article and the Obama Presidency.

Published on Saturday, November 21, 2009 by CommonDreams.org

A Show About Nothing: The Placeholder Presidency of Barack Obama

by David Michael Green

Hey, remember Seinfeld?  Remember how it billed itself as a "show about nothing", and how, in fact, that's what it was? 

I think we're at the point now where it's become inescapable that the Obama presidency is also a show about nothing. 

It's the same as Seinfeld.  Except for two things. 

First, unlike Seinfeld, it bills itself as a show about something, if not everything (remember Mr. Bigtime Change from just last year?). 

And, second, the nothingness of the Obama administration is not very goddam funny, thanks just the same. 

Consider the following crop of headlines, all from the New York Times, and all published in just the last week alone: 

"49 Million Americans Report a Lack of Food" 

"N.A.A.C.P. Prods Obama on Job Losses" 

"The Drug Industry Cashes In" 

"3 Democrats Could Block Health Bill In Senate" 

"Another Standoff May Be Looming On Abortion Issue" 

"Obama Hobbled in Fight Against Climate Change" 

"Leaders Will Delay Agreement On Climate" 

"Obama Backers Fear Opportunities to Reshape Judiciary Are Slipping Away" 

"Guantánamo Won't Close by January, Obama Says" 

"China Holds Firm On Major Issues In Obama's Visit" 

"As Weight of a Relationship Tilts East, Obama Opts for Nuance and Deference"

"Israel Moves Ahead on Plans to Expand Settlement in Disputed Part of Jerusalem" 

"Kurdish Legislators Threaten Boycott of Iraq Election" 

"High Costs Weigh On Troop Debate For Afghan War" 

If you get a sense from this list that the man holding the most powerful position on the planet is bound and determined to be an object of action, rather than a proactive force on the historical stage, there's a good reason for that feeling.  That appears to be precisely his intention. 

At a time of significant peril to the country and the world, this president will not act. 

And he certainly will not act in any way that is remotely controversial.  In normal times, that list would cover just about everything.  In our era, however, where rabid regressives have entirely lost even a remote satellite uplink to reality, and have devoted themselves to destroying Obama's presidency at any cost, there is nothing that a president who is worried about ruffling feathers could actually do about anything.  If he salutes the fallen returning to Dover Air Force Base, they excoriate him.  If he shows a scrap of politeness bowing to the Japanese emperor, they eviscerate him.  If he claims he was born in America, they call him a liar for it. 

That seems to be fine with Obama.  He seems quite content to be a placeholder president, just as Bill Clinton was before him.  And, you know what?  Placeholder presidents can be just fine.  If you're living in the nineteenth century, that is.  They've even been survivable recently, though the scale of blown opportunity can be jaw-dropping.  Just the same, every time I find myself cringing at the thought of Bill Clinton's eight year self-reverential celebration of all things Bill Clinton, I can always rescue myself by remembering how much worse things there are than indifference in the White House.  At last, I have finally discovered a reason, however slim, to be grateful to Mr. Bush and Mr. Cheney.  Thanks for the perspective, fellas. 

This president, however, doesn't have the luxury he seems so intent on taking.  He came to office at a time of multiple crises.  2009 sure as hell isn't 1997.  It isn't even 1993.  It's a lot worse, and on multiple fronts. 

In fairness to Obama (a sentiment which I'm finding increasingly difficult to muster up as the first year of his presidency segues into the second), many of the problems represented in the headlines catalogued above are America's problems, not necessarily his, per se.  They would, that is, have greeted any new president inaugurated last January, and lots of them are going to take years or decades to go away under the best of circumstances, assuming they ever do.  But that's also the point - he is the president, and he is supposed to be fighting to improve his country's situation.  In case after case, however, he appears instead to be sitting aloof on top of his mountain, evidently admiring his admiration.  The problems aren't necessarily of his making, but the absence of credible solutions to those problems very much is.

To be even more generous to this president, these aren't, generally, just any random national problems that he inherited, either.  They are chiefly the product of America's insane and disastrous experiment with regressivism these last three decades.  They are, in short, Reagan's and Bush's gift to Barack.  But again, while he's not responsible for his inheritance, he is responsible for what he does with it.  And what this fool has done with it is to turn it into a Seinfeld sitcom.  That is to say, nothing.  He not only doesn't identify the paternity of this bastard child for all to see, he won't even speak up as the very same people who left him this plate of swill have the gall to blame him for it and seek the destruction of his presidency at every turn. 

There is, of course, a certain profound richness to the notion of these regresso-bots critiquing Obama from the day he walked in the door.  "He's spending outrageous amounts of money!", they fervently decry.  What, you mean like the last guy did, the one who doubled the national debt from $5.5 trillion to $11 trillion?  What, you mean because spending huge sums is the only possible way to clean up the economic meltdown and myriad other disasters bequeathed to him?  What, because it ain't cheap to pay for two sprawling unfinished wars, banking system rescues, a car industry gone off the cliff, unemployment insurance for millions and a drowned city? 

But enough with the fairness doctrine already.  These caveats don't begin to mitigate the epic disaster of the Obama sclerosis.  This guy isn't just a deer caught in headlights, he's Bambi on the 50 yard-line, under the klieg lights of a national stadium.  He's Mr. Bill.  No, strike that.  He's Mr. Bill's nerdy little nephew, Kirby Herbert Pollywog Bill.  He's a beetle walking across a school yard, where a hundred bored sixth-graders are standing and staring at their feet during an outdoor assembly.  He's a tenth inning hanging tired arm curve ball with an angry Babe Ruth at the plate.  He's Neville Chamberlain and Spongebob SquarePants' love-child.  Suffering from an anemic blood disorder.  Republicans just live for this sort of Democrat - which is to say, nowadays, practically every Democrat.  They eat them for breakfast.  And, as much as I loathe Republicans - rather like I feel about, say, botulism - I mostly don't blame them. 

And, as much as it pains me ever to find myself agreeing with a regressoid, Edward Whelan, president of the right-wing Ethics and Public Policy Center, was right when, expressing his surprise that the Obama administration has made so few nominations to fill open positions in the federal judiciary, he noted:  "On judges as on so much else, this administration seems to be much less competent than both its supporters and critics expected".  Hear, hear. 

Count me in on that one.  I didn't know what kind of politics these guys would have, but I felt real confident that they'd be damn good at those politics, whatever they were.  And not without good reason did I come to that conclusion.  Obama is obviously smart, and he ran a near-perfect campaign, just as he had to, in order to win the presidency against long odds. 

And, you know, it may even be the case that these guys would be good at their politics.  But, apparently, we're never going to find out, since they don't seem capable of trying.  When they're not busy, as they are so much of the time, aping the regressive policies of Bush and Cheney, they're working hard at hardly working.  Folding cards, blowing opportunities, missing deadlines, breaking promises.  It's hard work putting on a show about nothing, lemme tell ya!  Think of all the liberal judges they failed to appoint just today alone!  Think of all the prisoners they haven't transferred from Guantánamo!  Think of all the egg they have to wipe off their faces as they get spanked by Israeli prime ministers, Big Pharma CEOs and punky members of their own party alike!  Think of all the women whose reproductive rights they have to sell out in order to get their Aid To Corporations With Dependent Billions legislation through Congress!  Imagine the number of American children and grandchildren who must be saddled with a load of debt and a climate like Venus, just so Obama can receive his Daily Minimum Allowance of ass-whuppin' every day! 

Nah, man.  It can't be easy takin' it easy.  I thought George W. Bush's act would be a hard one to follow.  That little puke took 1020 days of vacation during his eight years serving as Cheney's marionette.  That was more than one-third of his presidency, and it far exceeded the time taken by any other president.  Who could top that?! 

Obama's smarter than Bush, though (and how tough is that?).  He's figured out how to take vacation while on the job.  And so he has.  All around him serious crises for the country and the world rage across the landscape, demanding attention.  But Barack remains in comfortable contemplation, never breaking a sweat.  On a good day he might share with us some of his famously stirring oratory, filled with broad platitudes about niceness and bipartisanship.  On a really good day we'll get half-measures, poorly communicated, to deal with full problems.  But on most days, alas, we just get an undiluted shot of Goldman Sachs, Big Pharma and every other corporate plutocrat working directly out of the Oval Office. 

Why is Obama such a do-nothing dud?  Does he feel for financially strapped Americans to the point of doing his own permanent staycation in the White House, the better to model his empathy for them?  Does his personality simply prevent him from doing anything that some person or another might object to?  Is he yet another tool of Wall Street, whose only difference from George Bush is stylistic?  Did some guy in a black suit and sunglasses pull him aside after the election, and say, "Okay, so you're the president now.  You'll be following our instructions from here on out, in exchange for which we're gonna let you live."? 

I don't know what his deal is.  But I do know that this presidency is catastrophic for progressive ideas, and likely as well for the remaining shards of American democracy itself. 

As to the former, our values and solutions are being ridiculously associated with this fundamentally conservative administration, and ironically repudiated right along with its mounting failures.  This is yet another marketing masterstroke by the regressive right, a group of folks whose politics are so obscene that they've been forced to become geniuses at slinging bullshit.  They remind me of nothing so much as the poor fat kid in junior high who had to learn to use humor to keep from getting pummeled every day after school, and grew up to become a famous comedian as an adult.  But, whatever.  The upshot is that Obama is going down in flames (or would be, except that his muted implosion is careful even to lack that much cinematic drama), and progressivism will be tarred for years and decades because of that.  Our politics will be blamed for committing a crime, when they were actually in another country (literally) at the time. 

As for American democracy, I think it likely that the elections of 2010 and 2012 will mark continuations and indeed extensions of the pattern from 2006 and 2008.  The condition of the country sucks.  People want change.  But, unless something dramatic happens, they continue to only have two choices - the party in power, or the other party.  In 2010 and 2012 the incumbents will be the pathetic Democrats, and the only real alternative will be the just recently comatose Republicans, newly revived courtesy of Barack Obama, Harry Reid and Nancy Pelosi. 

Since we can expect the GOP monsters to win those elections handily under such conditions, the question becomes, what will that party stand for, and who will represent it?  Here, the signs are especially bad.  From New York to Florida to Alaska to all across the radio dial, the GOP is doing the impossible these days.  It is actually becoming more regressive, more repressive, more narrow, more stupid, more greedy and more vicious.  It's hard to imagine they could surpass their current personal bests in the pathology decathlon, but indeed they are. 

Meanwhile, my guess is that the winner of the GOP nomination in 2012 will be the winner of the presidency that fall, just as the real contest in 2008 was to win the Democratic nomination. 

My guess is that that person is now running around the country plugging her book. 

And my guess is that the next go-round of Reaganism/Bushism will make the last one look like a friendly game of gin rummy by comparison. 

They will almost certainly have to pull the plug on any remaining vestige of democracy at that point, since their policies will be utterly useless in addressing people's mounting concerns and their growing impatience. 

Get your passport renewed. 

Mexico might be a good alternative.  The weather is nice and warm. 

And, evidently, the money is good.  At least compared to what the very sick Uncle Sam's got going on his hospital ward. 

Here's one more indicative (and quite real) headline to add to the list above.  No offense to my amigos south of the border, but you can file this puppy under "Y", for "You Know The Show Is Over When..." 

"Money Starts to Trickle North as Mexicans Help Out Relatives"

David Michael Green is a professor of political science at Hofstra University in New York. He is delighted to receive readers' reactions to his articles (mailto:[email protected]), but regrets that time constraints do not always allow him to respond. More of his work can be found at his website, www.regressiveantidote.net.

Harry Reid, and What Happened to the Public Option

by Robert Reich

Thursday, November 19, 2009

First there was Medicare for all 300 million of us. But that was a non-starter because private insurers and Big Pharma wouldn't hear of it, and Republicans and "centrists" thought it was too much like what they have up in Canada -- which, by the way, cost Canadians only 10 percent of their GDP and covers every Canadian. (Our current system of private for-profit insurers costs 16 percent of GDP and leaves out 45 million people.)

So the compromise was to give all Americans the option of buying into a "Medicare-like plan" that competed with private insurers. Who could be against freedom of choice? Fully 70 percent of Americans polled supported the idea. Open to all Americans, such a plan would have the scale and authority to negotiate low prices with drug companies and other providers, and force private insurers to provide better service at lower costs. But private insurers and Big Pharma wouldn't hear of it, and Republicans and "centrists" thought it would end up too much like what they have up in Canada.

So the compromise was to give the public option only to Americans who wouldn't be covered either by their employers or by Medicaid. And give them coverage pegged to Medicare rates. But private insurers and ... you know the rest.

So the compromise that ended up in the House bill is to have a mere public option, open only to the 6 million Americans not otherwise covered. The Congressional Budget Office warns this shrunken public option will have no real bargaining leverage and would attract mainly people who need lots of medical care to begin with. So it will actually cost more than it saves.

But even the House's shrunken and costly little public option is too much for private insurers, Big Pharma, Republicans, and "centrists" in the Senate. So Harry Reid has proposed an even tinier public option, which states can decide not to offer their citizens. According to the CBO, it would attract no more than 4 million Americans.

It's a token public option, an ersatz public option, a fleeting gesture toward the idea of a public option, so small and desiccated as to be barely worth mentioning except for the fact that it still (gasp) contains the word "public."

And yet Joe Lieberman and Ben Nelson mumble darkly that they may not even vote to allow debate on the floor of the Senate about the bill if it contains this paltry public option. And Republicans predict a "holy war."

But what more can possibly be compromised? Take away the word "public?" Make it available to only twelve people?

Our private, for-profit health insurance system, designed to fatten the profits of private health insurers and Big Pharma, is about to be turned over to ... our private, for-profit health care system. Except that now private health insurers and Big Pharma will be getting some 30 million additional customers, paid for by the rest of us.

Upbeat policy wonks and political spinners who tend to see only portions of cups that are full will point out some good things: no pre-existing conditions, insurance exchanges, 30 million more Americans covered. But in reality, the cup is 90 percent empty. Most of us will remain stuck with little or no choice -- dependent on private insurers who care only about the bottom line, who deny our claims, who charge us more and more for co-payments and deductibles, who bury us in forms, who don't take our calls.

I'm still not giving up. I want every Senator who's not in the pocket of the private insurers or Big Pharma to introduce and vote for a "Ted Kennedy Medicare for All" amendment to whatever bill Reid takes to the floor. And if this fails, a "Ted Kennedy Real Public Option for All" amendment. Let every Senate Democratic who doesn't have the guts to vote for either of them be known and counted.

posted by Robert Reich | 7:58 AM

The Great Disconnect Between Stocks and Jobs

by Robert Reich

Wednesday, November 18, 2009

How can the stock market hit new highs at the same time unemployment is hitting new highs? Simple. The market is up because corporate earnings are up. Corporate earnings are up because companies are cutting costs. And the biggest single cost they’re cutting is their payrolls. So they let people go and, presto, their balance sheets look better and their stock prices rise.

In the old-fashioned kind of recession decades ago, big companies laid off people with the expectation of rehiring them when the economy turned up. Then a few recessions back, companies started laying off people for good, never rehiring them even when the economy recovered.

In the Great Recession of 2008-2009, companies are going a step further. They’re using this sharp downturn to cut payrolls even below where they were when times were good. Outsourcing abroad, setting up shop in China and elsewhere, contracting out, replacing people with software and automated machines – they're doing whatever it takes to get payrolls down so earnings bounce up.

Caterpillar earned $404 million in the third quarter, or 64 cents a share. Analysts had expected only 5 cents. Caterpillar’s stock is up 165 percent since March. How did Caterpillar do it? Not by selling more bulldozers. It did it by cutting over 37,000 jobs.

The result, overall, is an asset-based recovery, not a Main Street recovery. Yes, the economy is growing again, but the surge in productivity is a mirage. Worker output per hour is skyrocketing because companies are generating almost as much output with fewer workers and fewer hours.

The Fed, meanwhile, has become an enabler to all this, making it as cheap as possible for companies to axe their employees. Money costs so little these days it’s easy to substitute capital for labor. It’s also easy to buy up foreign assets with cheap American money. And it’s now blissfully easy for Wall Street to borrow money almost free and buy all sorts of interests in foreign assets, especially commodities. That's why we're seeing the prices of foreign commodities and other assets go through the roof.

At the same time, the Treasury continues to be fixated on keeping banks afloat. The Administration's mortgage mitigation efforts are lagging. Small businesses are starved of credit. The White House has announced a "jobs summit," which is better than nothing but not nearly as good as pushiing immediately for a larger stimulus, a new jobs tax credit, and a WPA-style jobs program.

The Fed and the Teasury have, in effect, placed a huge bet on a recovery driven by asset prices. That’s a bad bet. The great disconnect between the stock market and jobs is pushing stock prices way out of line with the real economy. This isn't sustainable.

No economy can recover without consumers. Yet American consumers, who constitute 70 percent of the U.S. economy, are facing mounting job losses as well as pay cuts. They’re in no mood to buy and won’t be for some time.

Where is this heading? No place good. Without a major shift in policy -- both at the Fed and in the White House -- the economics point to a big stock-market correction and a double dip. The politics point to substantial losses for Democrats next year.

posted by Robert Reich | 7:42 AM

Why Major Hassan Acting Alone is More Ominous Than a Conspiracy

When President Kennedy was assassinated, government authoritires hastened to assure us that the gunman, Lee Harvey Oswald, was a random nut acting alone. There was no conspiracy. Now they're attempting to do the same thing with Major Hassan, only it's not reassuring. Here's why.

If any random person can wreak havoc on a grouip of American citizens anywhere in the world including in the heart of a military installation located in the American heartland, then invading countries with the full force of the American military in order to track down the "terrorists" is a futile effort. Potentially, they're everywhere including right here. They are not localized to Afghanistan or Pakistan or Yemen or Somalia.

And Major Hassan was not just your average random nut. He was a co-religionist of the people the American military just happens to be tracking down. All the people the US military are fighting just happen to be Muslims. Major Hassan just happens to be a Muslim. Major Hassan just happens to have resented the fact that the US is fighting and killing Muslims.

The larger implications are that Muslims located anywhere in the world just might decide to take exception to the fact that the US is fighting and killing Muslims. It would have been more reassuring if Hassan were taking direct orders from Osama bin Laden. Then we can say 'it's that bin Laden again. We need to track down and kill bin Laden and stamp out al Quaida.' But there was no conspiracy. There were no orders given that Major Hassan carried out. This means that any random nut Muslim could potentially do the same thing. And in all fairness any random nut right wing true blue American can gun down abortion doctors or blow up a Federal building. There are random nuts of the right, the left, the religious oriented and probably a few other categories. Is it too much to ask that the FBI be sophisticated enough to realiuze that there are a whole variety of random nuts?

And all our efforts to distinguish between "good" Muslims and "bad" Muslims are in vain. All our efforts to localize and therefore rationalize large scale military involvement are in vain. The myth of al Quaida as a localized "enemy" has been stripped away. So then what are we doing in Afghanistan supporting a corrupt government? There have been more homegrown plots that have been thankfully thwarted lately than Osama directed plots. Muslims located anywhere in the world are rightfully incensed that the US is attacking their co-religionists and invading Islamic countries around the world. Remember that Osama's original grievance with the US was that we established a military base on the "holy" ground of Saudi Arabia. A military solution involving land invasions by US armies is totally futile as a solution to this problem. We can be attacked by anyone anywhere, and Muslims are the most likely attackers because they have the biggest grievances. Not to mention that there are a billion people in the world on the verge of starvation according to the UN. Each of these is a potential suicide attacker of the US and its interests and people around the world simply out of resentment.

Hassan was essentially a suicide bomber only he used guns instead of a bomb and despite his best efforts he was not able to commit suicide. There is no difference as to the outcome whether or not Hassan strapped on a suicide vest or used handguns. In fact he had expressed some admiration for suicide bombers. He had also exchanged emails with a radical cleric who, nevertheless, apparently had not "ordered" Hassan to do what he did. One wonders did Osama bin Laden really "order" the 9/11 hijackers to do what they did or did he only express admiration for what they did. This quest to get bin Laden - is it really worth the hundreds of billions of dollars that we've already spent? Remember Osama's strategy was to "bleed us dry" financially. So far he has been very successful. When a $10. IED in Afghanistan can blow up a "buffalo" that costs US taxpayers millions of dollars, this gives new meaning to the words 'asymetric warfare.'

For the military-industrial complex's sake, it would have been better if Hassan had not acted alone. Then we could have tracked down his "network" and killed them. This would have been a raison d'etre for more military spending and more large scale military action. As it is, it seems that the military and intelligence assets once again failed to connect the dots that would have prevented Hassan's actions, and that could have been done without spending another cent. A couple of phone calls would have sufficed. Once again the FBI has been caught flatfooted. It seems that they and the military were just too stupid to realize that, despite all the warning signs, they had a jihadist right in their midst. It's political correctness gone amuck. And our invasion and occupation of Islamic countries is only fueling the anger of Muslims in our midst.

While the Congress agonizes over the cost of the health care bill and has the CBO score every version and revision of it, no one seems to care about having the CBO score the cost of war. For each additional troop Obama sends to Afghanistan, there will be an additional cost of $1 million a year to the US taxpayers. So 40,000 troops will cost us an additional $40 billion. So CBO and Congress, SCORE THAT!

And it turns out that the FBI knew Hassan was a terrorist (they had intercepted emails with the radical cleric discussing "under the radar" money transfers) so in another epic failure to "connect the dots" we have 9/11 deja vu all over again. It's a 9/11 redux. The FBI and the military establishment not only has egg on its face, they have their collective heads up their asses as it turns out. Our $500 billion military-industrial complex is a big boondoggle which - surprise, surprise - does not even protect our country. Our borders and ports remain unprotected. Our electrical grid is subject to hacking. Meanwhile we are squandering our money on overseas military adventurism. If there is any lesson in the Major Hassan debacle, it is that the money should be spent here at home protecting our own citizens and borders.

American and European Values

John,

You correctly say we must fix our values first .... related to many things I might add. This is the thrust of my earlier writings about merging the "I" (Individual or Me Interests) with the "We" (Community or Common Interests) in our society .... that for so long have been guiding Europe with the binding human value, "We are all in this life together." This outlook does not translate into a loss of liberty and freedom or "patent 'socialism"  for Europeans as so many Americans are automatically inclined or  programmed to think .... particularly whenever judging the role government plays or may play in fundamental change affecting the betterment of the whole society. Our discourse -- rather than being trapped by pure rote dogma -- requires a willingness to pause long and look at ourselves in the mirror and ask what are we doing and saying to each other .... a self-examination and shared critical spirit that Europeans are quite comfortable engaging .... a cultural inheritance of "I am because we are," an integral unifying value Europeans have evolved to universally respect.

Our US overlapping Federal  vs. 50-State government systems form a dynamic complexity of varied and constantly changing political colors, different economic well-being, different laws and social services, different taxes and constitutional restrictions on raising taxes and limiting budget deficits .... all creating challenging, conflicting pressures on overall system harmony, continuity, and even-handedness in these rapidly changing times.

In confronting this reality, we Americans seem unable to have an objective, open, reasoned discussion of the obvious breakdowns afflicting our social-economic model and ultimately our common good. We can't seem to exploit nor merge the best of our conservative and liberal traditions. Discussion of almost anything descends to a culture of winning the argument or issue at all sacrifice of truth and logic, exacerbated by blanket ideological name calling (often expressed in ugly tones and demeaning barbs), e.g., "socialism, big government, disregard for the poor and common folk, tax and spend, loss of liberty and freedom, wild defense spending hawks, trickle down benefits, death panels for Grandma under a public health care option," etc., etc.. We are stuck in this deep cliche liberal-conservative purity test dialectic whereby any new idea coming forward is immediately politically degraded and labeled as not passing passing one's conjured up ideological litmus test.

This cultural pattern has been making a mockery of our creativity, constructive compromise, civil cooperation and common sense values in approaching serious internal and external problems .... where in these modern, complex times a healthy sensible balance between the "I and WE" aspects of our co-existence is a sine qua non.  Until this culturally unproductive dialectic and ineffective policy making changes, we will remain prisoners of our purist ideological values, fears and greed .... and of the propagandistic pundits promoting them.
Regards,
Frank Thomas   

US Losing Industrial Edge

John,

Just a couple of notes:  At the Dubai Air show just over, AIRBUS received 5 times more plane orders than Boeing! Why?  Is this an omen of the beginning of a  EU advanced products resurge over US products? Germany has already overtaken the US in solar panel technology and sales. All the advanced train transport systems being ordered for NY city are coming from Siemens Germany. The US is rapidly falling behind in many areas of industrial product, transport and alternate energy product design knowhow to Europe. I'm a little worried when I hear Exxon carrying soothing TV advertisements about their sudden exciting discovery of ALGAE as a prime source of fossil fuel. Europe, and especially Holland, has been on the reserach forefront of this alternate fuel source development for many years. Exxon's initiative reminds me of GM's initiative on electric engines over 20 years ago -- an initiative they deliberately and slowly controlled, hesitated on and eventually cancelled to stay with conventional fuels for oversized vehicles. Exxon's goals may be the same .... discouraging the entrepreneurail alternative energy developer forces to buy time for their enriching conventional fuel business with the Arabs.  

Opel has announced that 10,000 employee jobs must be eliminated in Europe or 20% of the current 50,000 GM-Opel workforce in Europe. About 50% or 25,000 GM workers are employed in German production facilities. I plan to keep close tabs for you of what happens here to compare the final social arrangements for Opel Germany workers adversely affected by summary dismissal compared to the thousands of GM US workers released recently in Michigan.
Best,
Frank

Mondragon: An Alternative to Capitalism

Mondragon is the largest cooperative corporation in the Basque region of Spain and the seventh largest Spanish corporation overall. It's slogan is "Humanity at Work." It has almost 100,000 employees and has an international presence with subsidiaries abroad. It is involved in finance, retail, manufacturing, university and technical education among other sectors. It's values are based on cooperation and social responsibility.

Here's a video about the Mondragon Corporation:

MONDRAGON Corporation 2009 from MONDRAGON Corporation on Vimeo.

 

UN Investigator Accuses US of Shameful Neglect of Homeless

Published on Friday, November 13, 2009 by The Guardian/UK

UN special rapporteur says wealthy US ignoring deepening homeless crisis while pumping billions into bank rescues

by Chris McGreal in Los Angeles

A United Nations special investigator who was blocked from visiting the US by the Bush administration has accused the American government of pouring billions of dollars into rescuing banks and big business while treating as "invisible" a deepening homeless crisis.

Raquel Rolnik, the UN special rapporteur for the right to adequate housing, who has just completed a seven-city tour of America, said it was shameful that a country as wealthy as the US was not spending more money on lifting its citizens out of homelessness and substandard, overcrowded housing. 

A homeless man sleeps against a wall in Los Angeles January 26, 2009. (REUTERS/Lucy Nicholson)

"The housing crisis is invisible for many in the US," she said. "I learned through this visit that real affordable housing and poverty is something that hasn't been dealt with as an issue. Even if we talk about the financial crisis and government stepping in in order to promote economic recovery, there is no such help for the homeless."

She added: "I think those who are suffering the most in this whole situation are the very poor, the low-income population. The burden is disproportionately on them and it's of course disproportionately on African-Americans, on Latinos and immigrant communities, and on Native Americans."

Rolnik toured Chicago, New York, Washington, Los Angeles and Wilkes-Barre, a Pennsylvania town where this year the first four sheriff sales – public auctions of seized property – in the county included 598 foreclosed properties. She also visited a Native American reservation.

The US government does not tally the numbers but interested organisations say that more than 3 million people were homeless at some point over the past year. The fastest growing segment of the homeless population is families with children, often single parents. On any given night in Los Angeles, about 17,000 parents and children are homeless. Most will be found a place in a shelter but many single men and women are forced to sleep on the streets. 

Los Angeles, which is described as the homeless capital of America, has endured an 18-fold increase in housing foreclosures. Evictions from owned and rented homes have risen about tenfold, with 62,400 people forced out last year in Los Angeles county.

Welfare payments are not enough to meet the rent, let alone food and other necessities. A single person on welfare living in Los Angeles receives $221 (£133) a month – an amount that hasn't changed in a decade. The rent for one room is typically nearly double that. 

Rolnik said that while she saw difficult conditions in all the places she visited, the worst was on the Native American reservation of Pine Ridge in South Dakota.

"You see total hopelessness, despair, very bad conditions. Nothing I have seen in other cities compared to the physical condition of the housing at Pine Ridge. Nothing compared to the overcrowding. They're not visible, they're isolated, they're far away. They're just lost," she said.

Rolnik says that one of the greatest matters of shame is that the US has the resources to provide decent housing for everyone.

"In the US, it's feasible to provide adequate housing for all. You have a lot of money, a lot of dollars available. You have a lot of expertise. This is a perfect setting to really embrace housing as a human right," she said.

Rolnik has given a verbal report to the US state department, which has a month to respond to her observations. She will submit a final written report to the UN human rights council early next year.

© Guardian News and Media Limited 2009

An Open Letter to Harry Reid on Controlling Health Care Costs

by Robert Reich

Friday, November 13, 2009

Dear Senator,

I know you're in a tough spot. It would be bad enough if you only had to get Ben Nelson, Evan Bayh, Mary Landrieu, and Blanche Lincoln on board, but anyone who has to kiss Joe Lieberman's derriere deserves a congressional medal of honor.

But Harry, you really need to take on future health-care costs. The House bill fails to do this. The public option in the House bill is open only to people without employer-provided health insurance. That will be too small a number to have bargaining clout to get good deals from drug companies and medical providers. And it will mainly attract people who have more expensive medical needs, which is why the Congressional Budget Office decided it would cost more than it would save.

You also know a public insurance option that's open to everyone would cut future health costs dramatically by imposing real competition on private for-profit insurance plans. That's why the private insurers hate the idea. Even if states were allowed to opt out of this robust public option, the big states would almost certainly opt in, giving it the scale needed to negotiate great deals from drug companies and medical providers. This would put pressure on any state that opted out because their citizens would soon discover they're paying far more.

In addition to the House's weak public option, the deals the White House and Max Baucus made with the drug companies and the AMA will force Americans to pay even more. If, on the other hand, Medicare were allowed to negotiate lower drug prices, biotech drugs weren't granted a twelve-years monopoly, and doctors had to accept Medicare reimbursements in line with legislation enacted years ago, Americans would save billions.

You know all this but you're also trying to get 60 votes in order get any bill to the floor. You have my sympathies, but unless you get these reforms into the final Senate bill you're not really helping most Americans afford future health care.

So what do you do?

First, try for the "reconciliation" process, which requires only 51 votes. Every one of the reforms I mention above would fit under the Byrd rule.

If that doesn't work, wrap these reforms together -- a public option open to everyone (allow states to opt out of this if they dare), Medicare-negotiated drug benefits, no 12-year monopoly for new drugs, and a major squeeze on Medicare reimbursements for doctors -- and have CBO score the savings. I guarantee you, the number will be large. Then you should dare anyone, Democrat or Republican, to vote against saving Americans so much money in years ahead. How is Ben Nelson going to face voters in Nebraska who would have to pay, say, 20 percent more for health care in the future if Nelson refuses to go along?

If neither of these tactics work, then take whatever bill you must to the Senate floor. But then introduce this reform package as the very first amendment to the bill. Call it the "Ted Kennedy Amendment for Helping Middle Class Families Afford Health Care," and whip the hell out of the Democrats. Get the President to help you. Surely Joe Biden will. If you can't get 51 votes out of Dems for this, publish the list of Dems who vote against it, strip them of their committee chairs or sub-chairs, and make sure the Democratic Senate Campaign Committee gives them zilch when they're up for re-election.

Nobody promised you this would be easy, Harry. But, hell, why are you there, anyway? Your responsibility isn't just to pass whatever will muster 60 votes and that the President and Dems can later call "health care reform." It's to do the right thing by the American people and bring down future health-care costs. Don't cave in to Lieberman or Nelson or the drug companies or the private insurers or the AMA or anyone else. Lead the charge.

All best.

posted by Robert Reich | 6:16 AM

The Inverse Relationship Between Wall Street and Job Creation

The conventional wisdom says that, if you save Wall Street, this will help the mainstream economy. Only the conventional wisdom is wrong. The Obama administration saved Wall Street, and now job creation, that proverbial "lagging indicator," continues to lag behind. Why? Because the conventional wisdom is wrong, and the Obama administration economic advisors should have been smart enough to realize this, but, alas, they weren't. For some time now Wall Street has cheered whenever a corporation has cut jobs - not when they've added them - because cutting jobs decreases costs and increases profits. Private equity funds buy up companies and the first thing they do is to cut jobs. Cutting jobs has become almost synonymous with increasing profits. So why did the Obama administration think that bailing out the Wall Street banks to the tune of trillions of dollars was going to cut unemployment, was going to put people back to work? Why did they think that bringing the economy out of recession was going to put people back to work? Because that's the old paradigm. GDP growth equals more jobs.

But we've had a jobless recovery. In fact as GDP has started increasing again, so have job losses. Obama advisors are rubbing their heads trying to figure out why there has been an inverse relationship between GDP growth and job creation. It's not hard to figure out if you realize that cutting jobs increases profits and adding them decreases profits. Profits go up when high priced American workers are replaced with either low priced foreign workers or computerized robots and automated production lines. Automation kills jobs just as the agricultural combine eliminated the need for so many farm workers. In fact the elimination of farm workers due to the invention of agricultural machinery was partly responsible for the Great Depression. Any time you have "labor saving inventions" you have labor eliminating inventions and thus job elimination. This only stands to reason. Thus superfluous workers - tenant farmers in our example - are no longer needed.

Dennis Kucinich has said the following:

Recent rises in unemployment indicate a widening separation between the finance economy and the real economy. The finance economy considers the health of Wall Street, rising corporate profits, and banks’ hoarding of cash, much of it from taxpayers, as sign of an economic recovery. However in the real economy—in which most Americans live—the recession is not over. Rising unemployment, business failures, bankruptcies and foreclosures are still hammering Main Street.

What the Obama administration has failed to do is to have a bottom up approach to job creation. Their big mistake was to think that by bailing out the banks and the large corporations such as GM that these large corporations would hire workers. Instead they fired workers and used the bailout money to buy and install labor saving (and hence job reducing) computers, robots and automatons. They automated their production lines instead of hiring back workers. GM used the money to build plants in China where not only is hired labor cheaper, but also there is a burgeoning consumer market. The demand for automobiles in China is probably more promising than the tapped out demand in the US. Just as American laborers have been replaced by foreign laborers, American consumers can and will be replaced by foreign consumers.

Captains of industry well understand that the American consumer cannot continue to prop up retail sales. That's why they are starting to change their focus to emerging consumer markets. "Free trade" facilitates this. Having access to the growing Chinese consumer market for cell phones and automobiles is a fair exchange for the Chinese having access to the American market for toys and cheap trinkets. America becomes a low tech consumer market produced for by low wage foreign labor. China becomes a high tech market produced for by American corporations using cheaper Chinese labor. In addition the cost of health care is socialized in foreign markets and corporations don't have to pay for it thereby making foreign workers even cheaper to hire than American workers for whom health care insurance must be provided even under the new health reform bill.

For all the above reasons the US labor market has been decimated. Necessary labor for increased production has been decreased. Productivity is skyrocketing not because the American laborer is doing more work per hour but because he is being replaced by automated machines that are far more productive than he ever was or could hope to be. The myth that labor is responsible for increased productivity and thus should get higher wages is exploded as CEOs realize that machines are responsible for increased productivity and they own the machines. Human labor has nothing to do with it and thus is left out of the loop.  

Corporations will not necessarily hire even if they have access to credit. Instead they will replace labor with automated devices. If Obama wants to increase the number of jobs, the way to do it is not to give money and favors to Wall Street and the corporations. The way to do it is to hire workers directly for jobs that private enterprise won't do because there is no profit in it or to let contracts to private enterprise with the express proviso that they hire so many workers as a condition of the contract. The provision of jobs by the private sector won't just happen. Infrastructure repair, mass transit and the creation of a green economy are good candidates for government involvement in job creation either through direct investment or public/private partnerships.

AIG's CEO Telecommutes from Villa on Adriatic Sea

AIG CEO Robert Benmosche is threatening to quit because he's not getting his way with regards to executive pay and perks. His $10 million is not good enough. He prefers to "telecommute" from his villa on the Adriatic Sea where he's overseeing his wine production. Let's see this guy is getting paid $5000. an hour to oversee his vineyards on the Adriatic Sea! C'mon. Then he complains about it? He's more interested in the sugar content of his grapes than he is in doing his job at AIG. These guys not only take their money offshore in order to avoid paying taxes. They even take their homes, mansions and villas offshore! I say get rid of him. He doesn't deserve his $5000. an hour job if he doesn't even show up for work. These guys are pigs at the trough. He probably already got his swine flu shot though ahead of pregnant women and children. It's sickening!

From the New York Times:

According to the people, the former MetLife CEO is frustrated with the constraints of leading a company majority-owned by the government, the paper said. The Journal said Benmosche has complained to AIG's board about the outcome of the Treasury Department's pay review which slashed pay for a number of AIG executives by 91 percent from 2008. WSJ:

Last week, Mr. Benmosche and other AIG board members met with Mr. Feinberg in New York. During the three-hour meeting, board members discussed difficulties of complying with pay policies and retaining talent at the company. Mr. Benmosche's frustrations "hit a crescendo," said a person familiar with the matter. "Bob feels he is in an impossible situation," the person added.

When the credit crisis hit last year, the U.S. government rescued AIG from the brink of collapse with a loan bailout package worth up to $182.5 billion in exchange for an 80 percent stake in the insurer. It is one of seven big companies the Treasury Department ordered to cut top executives' salary and bonuses in half, starting this month. Under the plan, cash salaries for the top 25 highest-paid executives will be limited in most cases to $500,000 and, in most cases, perks will be capped at $25,000.

For the already struggling companies, the plan has introduced concerns about so-called brain drain, as the executives targeted by "pay czar" Kenneth Feinberg rank among the most talented and productive at their companies.

Benmosche took over from Edward Liddy in August, making him AIG's third CEO in less than a year. Under a package approved by Feinberg over the summer, the AIG CEO will get compensation of about $10.5 million. Benmosche will take home just $3 million per year in cash. The rest of the CEO's pay package is divided between stock options ($4 million) and a performance bonus ($3.5 million).

Benmosche spent his first couple of weeks on the job telecommutingfrom his villa on the Adriatic Sea as he oversaw wine production at his vineyard. The New York Daily News:

Wearing flip-flops, khaki shorts and a green polo shirt, the new chief executive of bailed-out insurer American International Group Inc. says he's getting a lot of work done from his massive villa overlooking the Adriatic.

"People criticize me for being on vacation. I actually started work a week before I was actually supposed to."

In Septbember, The AIG board reportedly refused Benmosche's request to use a company-owned jet for private use, saying use of the plane for purposes other than company business would require an exemption from the U.S. Treasury.

Benmosche has criticized New York Attorney General Andrew Cuomo as being "incredibly wrong" for drawing attention to $165 million in retention bonuses given to AIG employees. Bloomberg:

"What he did is so unbelievably wrong," Benmosche said during the Aug. 11 remarks, according to a record obtained by Bloomberg. "He doesn't deserve to be in government, and he surely shouldn't be the attorney general of the state of New York. What he did is criminal. You don't create lynch mobs to go out to people's homes and do the things he did."

Last week, AIG said it was profitable for the second straight quarter as its core insurance operations continue to stabilize, and reported that the amount of its government financial assistance dropped by 4 percent during the period.

Its results got a lift from the increasing value of investments it still holds that soured last year and helped drive it to the brink of collapse. But Benmosche has warned that earnings will remain choppy as the company executes its restructuring plan. AIG is spinning off two major life insurance businesses – American International Assurance Co., or AIA, and American Life Insurance Co., also known as ALICO – as it looks to repay the government.

Goldman Sachs Execs Get Swine Flu Vaccine Before Pregnant Women

Not only does Goldman have the nerve to hand out $30 billion in bonuses, but now they are pushing pregnant women out of line in order to cover their asses against the swine flu. Not only do the rich get richer, but the poor get sicker. The "talent" must get the best of everything including taxpayer bailouts if something goes terribly wrong. This is sickening!

Check out the following article:

Goldman Sachs has been criticised for vaccinating its employees against swine flu despite a national shortage

By Seth Jacobson

FIRST POSTED NOVEMBER 6, 2009

Hot on the heels of outrage at their bonus packages and the aftermath of the banking bail-out, Wall Street titans Goldman Sachs and Citigroup have provoked widespread public anger yet again - for issuing swine flu vaccine to their employees despite a shortage of the antiviral treatment in the United States.

To date, the government-funded H1N1 vaccine has been issued to organisations such as hospitals and universities, which contain large concentrations of the most at-risk Americans - namely pregnant women, the obese, children, those suffering from certain chronic health conditions and people who work with them. Institutions with sensitive national roles, such as the Federal Reserve Bank, have also received doses.

But public health officials in New York have also made the vaccine available to any body that possesses its own medical staff - such as certain Wall St institutions.

Unfortunately the decision to issue the vaccine to financial institutions who are currently public enemy number one in most Americans' minds - and the slightly unwise decision on the part of the companies to accept them - has stoked the ire of many.

Senator Chris Dodd of Connecticut told the Associated Press that "vaccines should go to people who need them most, not people who happen to work on Wall Street". Center for Disease Control director Dr Thomas Frieden spoke of his concern that the sight of Wall St bankers receiving the vaccine ahead of other Americans could "undermine the credibility of the program".

Union leader John VanDeventer voiced the ire of millions when he wrote on the Service Employees International Union website: "Wall Street banks have already taken so much from us. They've taken trillions of our tax dollars. They've taken away people's homes who are struggling to pay the bills. But they should not be allowed to take away our health and well-being."

The US has been slow to issue the vaccine due to manufacturing delays, but since the beginning of October more than 36m doses have been distributed. And while Goldman Sachs and Citigroup have played into the hands of their critics, some banks have spotted an opportunity to improve public relations. Morgan Stanley received vaccines too, but on learning of a shortage in New York City, they turned their doses over to local hospitals. 

Gorbachev’s Sermon on the Mount

Published on Wednesday, November 11, 2009 by TruthDig.com

by Robert Scheer

"Blessed are the peacemakers, for they shall be called the children of God." That biblical quotation certainly applies to Mikhail Gorbachev, a man not honored enough for the example he set and whose past practices and recent cautions about Afghanistan should be heeded by Barack Obama. Or, on a secular note, if the Sermon on the Mount doesn't cut it for you, take German Chancellor Angela Merkel's praise for the former Soviet leader at the ceremony marking the fall of the Berlin Wall, which he helped destroy: "You courageously allowed things to happen, and that was much more than we could have expected." 

The hero's reception granted Gorbachev when he accompanied the German leader across the Bornholmer Street bridge to mark the 20th anniversary of the end of the city's division was credit long overdue. As The New York Times reported: "More than 1,000 people lined the bridge Monday night under gray skies and a steady drizzle to hear the chancellor speak, but their loudest cheers came when she thanked Mr. Gorbachev for the reforming attitude he brought to the Soviet leadership that helped make the events of that historic night possible." The crowd, chanting "Gorby, Gorby, Gorby," understood that he had done something unique for a world leader: He admitted the error of his system's ways and radically reversed its course.

The surrender of immense political power, personal as well as international in scope, is something we never expect from leaders, but Gorbachev set a model of self-sacrifice for a larger purpose that one wishes others would follow. How rare in history for a leader of such great standing to surrender his position, along with its abundance of personal perquisites, for the larger common good. How unexpected for the leader of a military colossus to turn swords into plowshares.

That is what Gorbachev did, beginning with his bold outreach to Western leaders including Ronald Reagan and Margaret Thatcher, prompting the latter to say, "I like Mr. Gorbachev; we can do business together." The British prime minister influenced President Reagan to take a similarly open stance, and when Gorbachev reciprocated, the Cold War effectively came to an end. Gorbachev's words were followed by actions, beginning with suspension of the scheduled deployment of intermediate-range nuclear weapons. That was followed with an even bolder proposal to cut both the Soviet and U.S. nuclear arsenals by half and then act to eliminate them altogether. Most important for the current moment was Gorbachev's decisive moves to reduce the Soviet troop presence in Afghanistan, followed by his 1988 announcement of the full withdrawal of troops from that country.

Gorbachev drew on his experience in a CNN interview Sunday during which he again played the part of peacemaker, urging Obama to pull troops out of Afghanistan. "I think that our experience deserves attention," the former Soviet president said. He recommended that the U.S., in the hope of bringing an end to "the long suffering of the [Afghan] people," focus on "dialogue" and that "withdrawal from Afghanistan should be the goal."

Unfortunately, it seems from media leaks that President Obama is moving in the opposite direction. The speculation now is that he will increase U.S. forces by a number slightly less than the 40,000 that Gen. Stanley McChrystal has requested, a decision that would make no sense at all. If the goal is, as McChrystal's report defined it, to rebuild Afghan civil society from the ground up, something on the order of the half-million troops that were dispatched to Vietnam will be required. But that cannot be done without a draft, and we all know that outcome would not be politically acceptable to either the Democratic or Republican party.

Nor is such nation-building advisable, even if the American public and the treasury would support it. Our war in Afghanistan is no more warranted than the one the Soviets waged. Ironically, they were opposing Muslim fanatics we supplied with Stinger rockets and whose descendants we now blame for terrorism. In the name of fighting Soviet imperialism, our CIA recruited the worst of the worst and called them freedom fighters until we renamed them terrorists. We got it terribly wrong then, and yet we still insist that we know what we are doing in that country.

When Gorbachev came to power he, like Obama, inherited a war that was not in the interest of his nation. If the response of a Soviet dictator was to end it, might we not be justified in expecting the enlightened president of a democratic society to do the same?

© 2009 TruthDig.com

Robert Scheer is editor of Truthdig.com and a regular columnist for The San Francisco Chronicle.

Beyond GDP

Joseph Stiglitz on GDP

Economic Democracy

This was a lecture given last week by Union Theological Seminary and Colombia University professor, Dr. Gary Dorrien. In it, he lays out an alternative yet pragmatic model to the current neoliberal capitalismThis was a lecture given last week by Union Theological Seminary and Colombia University professor, Dr. Gary Dorrien. In it, he lays out an alternative yet pragmatic model to the current neoliberal capitalism.

 

 

More on the Purpose of the Universe

by Frank Thomas

I am one with you on your ideal definition of the purpose of the Universe. I share your conclusion that we have modern-day predators that are a constant source of division and unrest in our US universe. They just take on more advanced, arrogant means of deception and tools to oppress the willing and the passive. That's why our Founding Fathers were unanimous on insisting that  "a government of, by, and for the people shall not perish from this earth." The wise men recognized that those governing as well as those governed are not angels and must be "checked and balanced" against their worst instincts. For they understood how power corrupts and narrows the areas of man's concern for the collective. And true to expectations, over the last 230 years we have witnessed how one political ideology becomes the predator of the other and vice-versa to the sacrifice of balanced, creative government policies and programs nourishing the whole body politic.

For example, modern predator forces have escalated the financialization of our society to recurring bubbles, now imprisoning millions in financial misery and even penury. Yet there is every indication that the same predator forces are now reinstituting the financialization speculative process with a new generation of exotic, casino products .... legitimized by current modest reform regulations and comforting illusions of more transaction transparency. Our government's mild regulatory reforms will only lay the conditions for another "too big to fail" finance-led economic expansion. Similarly, other formidable threats receive mild attention including a mushrooming cultural cancer -- the rising exploitation, joblessness, and under-education of workers.

The "predator state" indirectly still seems to favor financial capital as the main economic "fix" through big capital bailouts, socializing oligopolic financial institution losses, investing billions in stimulus packages to counter a deep, prolonged economic stagnation .... all, of course, ballooning the Federal Deficit and National Debt while strong deleveraging/job outsourcing/automation forces and resultant stagnant wage forces continue to restrain GDP and job growth. The speculative momentum paradigm of financial capital may well soon be converging on us again. Business Week recently focused on new bubble/inducing financial instruments that financial predators are prepäring for the privileged few. For example, Business Week reports:

"In recent months, such banks as Bank of America, Citigroup, and JPMorgan Chase have introduced new-fangled corporate credit lines tied to complicated and volatile derivatives .... Some of Wall Street's latest innovations give reason to pause .... Lenders typically tie corporate credit lines to short-term interest rates. But now, JPMorgan Chase and Bank of America, among others, are linking credit lines both to short-term rates and credit default swaps (CDSs). The latter are the volatile and complicated derivatives that are supposed to operate as 'insurance' by paying off the owners if a company defaults on its debt. In these new arrangements, when the price of the CD rises  -- generally a sign the market thinks the company's health is deteriorating -- the cost of the loan increases, too. The result:  the weaker the company, the higher the interest rates it must pay, which hurts the company further. Managers must now deal with two layers of volatility -- both short-term rates and the credit default swaps, whose prices can spike for reasons outside their control."

Business Week mentions other new speculative instruments being introduced, such as "structured notes" or a form of derivative aimed at small investors, offering "teaser rates" -- virtually guaranteeing high returns for small investors for a few years followed by "huge potential losses" after that. (see "Old Banks, New Tricks," Business Week, August 17, 2009).

So now we have the familiar tragic comedy (strangling our political system) of the Right accusing the "predator" Democrats of Tax and Spend and Deficit/Debt mortgaging our children's future at a time when a do nothing approach by the federal government as a last resort  -- while states cut teacher/police/firemen/social-worker jobs by the thousands -- would skyrocket our Tax and Spend/Deficit/Debt/Jobless situation much more than now is happening.  At the same time, we have the Left accusing the "predator" Republicans as being solely responsible for the last eight year mini-depression financial crisis when Democrats said or did little while it was occuring .... while Clinton's Administration actually participated in the deregulation process in the 90s. This, combined with Bush Jr.'s deregulation euphoria, also helped to explode the financial industry fiascos now crippling our economy.

The result is that objective, common sense reasoning over governmental policy making has been bushwhacked for the last 30 years by political conservative/liberal predator dog- fighting strengthened by an unmobilized Left .... all leading to minimal, crisis-reactive attention to deeper underlying breakdowns/obsolescence in our social-economic model. This has all made the middle-class  (bottom 80% of households) easy prey of the upper class (top 10% of households) as the social/stratification between the Haves and Have Nots inexorably reaches destabilizing proportions. As you have said, stock prices rise again as corporate profits go up by predatory slashing of jobs .... compare this to Japan's 5% unemployment because everyone takes a big 20/30% wage cut to maximize employment levels. Their economy is now recovering. Ours is still suffering from a serious lack of job generation.

This unbalanced, inequitable situation has been cemented by the ultimate political-economic system predator .... the lobbyist and corporate funding industry, successfully corrupting and blackmailing our political representatives as well as many of our prime news networks. Sadly, our democracy has long been bought by special interests. As I've said before, in the Netherlands (and in most advanced European countries) company and individual contributions to political elections are strictly limited to very small sums to political parties only and no funds allowed directly to political candidates by firms. Lobbyists cannot provide one cent to a politician in Holland and are prohibited from lobbying politicians directly.

Until we address effectively this toxic, systemic dysfunction in our political system, I see the no real change in the advantaged playing field for predators to undermine the interests of the common man in our democracy.

Change Wall Street Can Believe In

Published on Monday, November 9, 2009 by CommonDreams.org

by Holly Sklar

Wall Street is doing to America what private equity firms did to Simmons Bedding and many other productive companies. Taking control with borrowed money, stripping assets, slashing jobs and cashing out.

Taxpayer bailouts saved Wall Street from choking on its own greed. Now, as the Wall Street Journal reports, "Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high."

$140 billion is more than the combined budgets of the U.S. Departments of Commerce, Education, Energy, Housing and Urban Development, the National Science Foundation and the Environmental Protection Agency.

Typical workers, meanwhile, make less today adjusting for inflation than they did in the 1970s. Wall Street rewarded CEOs who cut employee wages and benefits and offshored manufacturing, services, and research and development; feasted on Bush's tax cuts; turned mortgages into loan sharking; and vacuumed up home equity, college funds, retirement funds and other private and public investments into their rigged casino.

Goldman Sachs, for example, "peddled billions of dollars in shaky securities tied to subprime mortgages on unsuspecting pension funds, insurance companies and other investors when it concluded that the housing bubble would burst," McClatchy reports in a new investigative series.

The Great Depression gave way to the New Deal. The Great Recession has become the Great Ripoff.

The TARP inspector general's latest report to Congress says, "The firms that were 'too big to fail' ... are in many cases bigger still, many as a result of Government-supported and -sponsored mergers and acquisitions; the inherently conflicted rating agencies that failed to warn of the risks leading up to the financial crisis are still just as conflicted; and the recent rebound in big bank stock prices risks removing the urgency of dealing with the system's fundamental problems."

Enabled by the Bush and Obama administrations, the megabanks are lending less and gambling more -- using taxpayer money to pay bonuses, float a new stock market bubble and make even riskier bets.

The U.S. Treasury and Federal Reserve have become Wall Street's ATMs, while unemployment, foreclosures and homelessness rise, states slash public services, and small businesses are starved of credit.

Outside the TARP, trillions of dollars are flowing to the banksters in the form of near-zero interest loans, bond guarantees and extreme leverage for toxic assets. You can follow the money at www.nomiprins.com. Nomi Prins, a former managing director at Goldman Sachs, is author of "It Takes a Pillage."

The megabanks are not too big to fail. They're too big and irresponsible to exist.

Just months after taking office in 1933, President Roosevelt signed into law the Glass-Steagall Act, which separated the commercial banking of savings, checking and loans from investment banks doing underwriting and speculative trading. The former got depositor insurance, not the latter.

Glass-Steagall lasted until Citigroup and other power players killed it in 1999 through the Financial Services Modernization Act, taking us back to the pre-New Deal casino economy on steroids. Now former Citigroup CEO John Reed has joined the growing call to split commercial banking and investment.

In 2000, Congress passed the Commodity Futures Modernization Act, ignoring the warnings of Commodity Futures Trading Commission head Brooksley Born who said that unregulated trading in derivatives could "threaten our regulated markets or, indeed, our economy."

By 2002, the four largest bank holding companies -- Bank of America, JP Morgan Chase, Wells Fargo and Citigroup -- had 27 percent of FDIC-insured bank assets. Now, reports the Economic Policy Institute, they have nearly half. They overlap with the biggest derivatives dealers -- JP Morgan, Goldman Sachs, Bank of America, Morgan Stanley and Citigroup.

The government heavily subsidizes the megabanks, but it's the small banks that provide higher savings interest, lower fees, lower loan and credit card rates, and do much of the lending to small business, who in turn create most new jobs.

Behind their Main Street rhetoric, Congress and the Obama administration have so far been the change Wall Street can believe in. The administration and Federal Reserve are loaded with revolving door Wall Streeters and their proteges. Campaign donors and lobbyists are working Congress to minimize and distort reform.

Make your voices heard. We need to enact tough regulations and bust the banks who busted our economy -- before they do it again.

© 2009 McClatchy-Tribune News Service

Holly Sklar is co-author of "Raise the Floor: Wages and Policies That Work for All of Us" and "A Just Minimum Wage: Good for Workers, Business and Our Future." She can be reached at [email protected].

Chemicals in Our Food, and Bodies

Published on Sunday, November 8, 2009 by the New York Times

by Nicholas D. Kristof

Your body is probably home to a chemical called bisphenol A, or BPA. It's a synthetic estrogen that United States factories now use in everything from plastics to epoxies - to the tune of six pounds per American per year. That's a lot of estrogen.

More than 92 percent of Americans have BPA in their urine, and scientists have linked it - though not conclusively - to everything from breast cancer to obesity, from attention deficit disorder to genital abnormalities in boys and girls alike.

Now it turns out it's in our food.

Consumer Reports magazine tested an array of brand-name canned foods for a report in its December issue and found BPA in almost all of them. The magazine says that relatively high levels turned up, for example, in Progresso vegetable soup, Campbell's condensed chicken noodle soup, and Del Monte Blue Lake cut green beans.

The magazine also says it found BPA in the canned liquid version of Similac Advance infant formula (but not in the powdered version) and in canned Nestlé Juicy Juice (but not in the juice boxes). The BPA in the food probably came from an interior coating used in many cans.

Should we be alarmed?

The chemical industry doesn't think so. Steven Hentges of the American Chemistry Council dismissed the testing, noting that Americans absorb quantities of BPA at levels that government regulators have found to be safe. Mr. Hentges also pointed to a new study indicating that BPA exposure did not cause abnormalities in the reproductive health of rats.

But more than 200 other studies have shown links between low doses of BPA and adverse health effects, according to the Breast Cancer Fund, which is trying to ban the chemical from food and beverage containers.

"The vast majority of independent scientists - those not working for industry - are concerned about early-life low-dose exposures to BPA," said Janet Gray, a Vassar College professor who is science adviser to the Breast Cancer Fund.

Published journal articles have found that BPA given to pregnant rats or mice can cause malformed genitals in their offspring, as well as reduced sperm count among males. For example, a European journal found that male mice exposed to BPA were less likely to make females pregnant, and the Journal of Occupational Health found that male rats administered BPA had less sperm production and lower testicular weight.

This year, the journal Environmental Health Perspectives found that pregnant mice exposed to BPA had babies with abnormalities in the cervix, uterus and vagina. Reproductive Toxicology found that even low-level exposure to BPA led to the mouse equivalent of early puberty for females. And an array of animal studies link prenatal BPA exposure to breast cancer and prostate cancer.

While most of the studies are on animals, the Journal of the American Medical Association reported last year that humans with higher levels of BPA in their blood have "an increased prevalence of cardiovascular disease, diabetes and liver-enzyme abnormalities." Another published study found that women with higher levels of BPA in their blood had more miscarriages.

Scholars have noted some increasing reports of boys born with malformed genitals, girls who begin puberty at age 6 or 8 or even earlier, breast cancer in women and men alike, and declining sperm counts among men. The Endocrine Society, an association of endocrinologists, warned this year that these kinds of abnormalities may be a consequence of the rise of endocrine-disrupting chemicals, and it specifically called on regulators to re-evaluate BPA.

Last year, Canada became the first country to conclude that BPA can be hazardous to humans, and Massachusetts issued a public health advisory in August warning against any exposure to BPA by pregnant or breast-feeding women or by children under the age of 2.

The Food and Drug Administration, which in the past has relied largely on industry studies - and has generally been asleep at the wheel - is studying the issue again. Bills are also pending in Congress to ban BPA from food and beverage containers.

"When you have 92 percent of the American population exposed to a chemical, this is not one where you want to be wrong," said Dr. Ted Schettler of the Science and Environmental Health Network. "Are we going to quibble over individual rodent studies, or are we going to act?"

While the evidence isn't conclusive, it justifies precautions. In my family, we're cutting down on the use of those plastic containers that contain BPA to store or microwave food, and I'm drinking water out of a metal bottle now. In my reporting around the world, I've come to terms with the threats from warlords, bandits and tarantulas. But endocrine disrupting chemicals - they give me the willies.

© 2009 New York Times

The Purpose of the Universe

First, I want to make it clear, I only speculate about the purpose of the universe. I don't in fact know what the purpose is or if there in fact is one, but I have as much right as anyone to use my intelligence to speculate or guess what that purpose is. Who knows, I might even be right, although I don't think there is a way to prove anyone is right, but it's an interesting exercise to think about what that purpose might be, and maybe being right is not all that important.

So here is my guess. The purpose of the universe is to see if it's possible to organize individuated life forms is such a way as to maximize collective and individual happiness. This might not even be possible. War and conflict seem to be the history of the human race. Would it even be possible for human cultures and societies to live in peace and abundance without conflict and war? I think it is possible, and, if so, that outcome may be why the universe was created. This presupposes that there was a Creator of the universe, and that Creator had a purpose in mind when He created the universe. It seems that an individuated universe, a universe that produces individuals whether animate or inanimate, would be the necessary baseline for this purpose to be carried out or not over time.

There are a number of reasons to believe that my speculated purpose is not really the case or could not really be the case. If the purpose of evolution is the survival of the fittest, this has nothing to do with creating a society which maximizes happiness. The happiest society might not be the fittest to survive society, and, therefore, my purpose conflicts with the purpose of evolution. But this might be explained away as follows. In the early days of life on earth, millions of years ago, evolution was directed by a survival of the fittest ethic. This was the situation due to the fact that no life forms had yet evolved with large enough brains to restrain predation. There was in essence anarchy among existing life forms. Great predators roamed the earth devouring everything in their path. After some cataclysmic events which caused the extinction of some of these predators, human beings evolved. One might ask 'why did predators evolve in the first place if the purpose of life is to end up with a society in which there was maximum happiness?'. Predators are only interested in providing happiness for themselves which is produced partly at least by preying on their victims.

Here I have a qualm with the current theory of evolution which assumes random genetic mutations followed by natural selection. I speculate that the course of evolution can be driven by the subconscious minds of the individuals involved. For instance, when humans split off from chimps some 6 million years ago because their pelvis tilted so that humans could walk upright better, I assume that the subconscious mind or minds of the chimps figured out that there was some advantages to walking upright. Of course, the same would have to be true for predators. Their subconscious minds could have had something to do with evolving sharper teeth and more powerful jaws. In the days before creatures with large enough brains to have some kind of organization of society, the law of the jungle or survival of the fittest would prevail. If several large brained species evolved contemporaneously, it would be hard to visualize how they would not be in conflict. However, once one of them had attained dominance as homo sapiens has today, it is hard to visualize how a smaller brained predator could ever dominate since humans have developed weapons that could seek out and destroy the dinosaurs, for example, or any other smaller brained predatory species.

So the problem becomes how can human beings get along without descending into conflict, war and predation upon each other. It is easy to imagine how this might work. Sharing of natural and man made resources could lead to the elimination of wars and conflicts over resources. Court systems can separate out from society the most egregious predators. Democratic voting can lead to equality in decision making which might eliminate conflicts over arbitrary decisions imposed by others. Cultural evolution could solve most of the problems and dilemmas humans face including organizing human society in a fair and just way that could tend to maximize happiness. At least at this point in history an argument could be made that the stage has been set for the final stage which would be to harmonize human society within itself and with the planet in general. Predators of other species no longer exist, and predation within the human species, although it still exists, has been circumscribed to a considerable extent. Biological evolution within the human species could lead to more empathetic and less selfish humans or cultural evolution could lead to further restraints on predatory behavior and more elegant social structures.

For whatever reason the survival of the fittest ethic did not lead to the dominance of earth's historic greatest predators whether reptilian or mammalian. What did happen was that a less fit being was allowed to evolve to the point that its large brain gave it dominance over all smaller brained creatures whether predatory or not. Humans at least have the chance to evolve more harmonious social structures which might lead to peace on earth and sharing of resources. Such a society might then represent the accomplishment of the purpose of the universe which might be living in a harmonious balance among all earth's creatures and resources. This process might well be occurring in other parts of the universe simultaneously and not just here on earth. In any case the problem of many identical life forms living harmoniously without major conflicts seems to be the major problem confronting us today.

"Restless Vagina Syndrome": Big Pharma's Newest Fake Disease

By Terry J. Allen, In These Times. Posted November 3, 2009.

The pharmaceutical industry wants you to think that if you don't have sex like a porn star, you're in need of their drugs.

It’s not your fault, ladies (and certainly not your partner’s), that you don’t orgasm every time you have intercourse, or that you lack the libido of a 17-year-old boy. You have a disease: female sexual dysfunction (FSD), and the pharmaceutical industry wants to help.

You are among the "43 percent of American women [who] experience some degree of impaired sexual function," according to a Journal of the American Medical Association article. The FDA’s evolving definition of FSD includes decreased desire or arousal, sexual pain and orgasm difficulties -- but only if the woman feels "personal distress" about it.

So, convincing women to feel distress is a key component of the drug company strategy to market a multi-billion-dollar pill that will cure billions of women of what may not ail them.

By promoting the belief that "normal" women have explosive sex all the time, BigPharma helped launch the disease. However, the FDA has yet to approve a treatment for women who fall short. Until then, they could try the Orgasmatron: a dial-a-delight spinal implant that rarely works -- and risks infection and paralysis. Or, for $60/month, pop LexaFem pills -- containing (how-could-it-not-work) "horny goat weed extract" in order to "feel like a real woman today." Its website promises, "You won’t ever feel unhappy again with LexaFem in your arsenal."

But the big swinging dicks of global FSD marketing (and off-label marketing) are Pfizer -- whose stop-gap strategy is selling women Viagra based on the fact that it works for men, and Procter & Gamble (P&G), which, using the same logic, has put its money on testosterone.

Viagra’s failure in trial after trial to work on women has not stopped doctors from writing 1.4 million off-label prescriptions. FSD is "a classic example of starting with some preconceived, and non-evidence based diagnostic categorization for women’s sexual dysfunctions, based on the male model," said John Bancroft, director of the Kinsey Institute, in an interview with BMJ (British Medical Journal).

No drug follows the male model more literally than testosterone. Despite FDA refusal to approve P&G’s testosterone patch Intrinsa, U.S. doctors wrote 2 million off-label testosterone prescriptions in 2007. Like Pfizer’s little blue pill, the Intrinsa patch doesn’t really work for women. No wonder: Researchers don’t even know what constitutes a "normal" female testosterone level, and women with low levels of the hormone are as likely as those with high levels to be happy with their sex lives. And as filmmaker Liz Canner shows in her excellent new documentary Orgasm, Inc., (www.orgasminc.org), testosterone is usually teamed with estrogen, which increases risks for stroke, cancers and dementia.

The companies and clinics that narrow the range of sexual normality to porn industry standards suffer their own disease. Symptoms include: a compulsion to concoct illnesses and then develop drugs to treat them, and vice versa. Either way, the syndrome is typically accompanied by a rash of conflicts of interest.

A Pfizer survey in Malaysia found that Malay women are even more diseased than their American counterparts, with "69.6 percent experiencing some form of FSD," according to the Journal of Sexual Medicine, which also published an industry-supported supplement on FSD. Journal editor and urologist Irwin Goldstein denies a conflict of interest. "Science is science," he says. "It comes down to the bottom line. What the data shows, the data shows." Actually, no. Drug company-funded studies are more likely than independent studies to find the new drug superior to the old. Perhaps the bottom line Dr. Goldstein refers to is his income as a paid consultant for drug companies, including P&G and Pfizer.

Goldstein established an FSD clinic with Dr. Jennifer Berman, who now heads a Beverly Hills clinic and appears on Oprah. As one of the health professionals on a 1998 panel that received financial sponsorship from eight pharmaceutical companies, she helped define female sexual dysfunction. Some 22 drug companies, including Pfizer, had financial ties to 18 of the 19 authors of that panel’s report, the BMJ revealed.

"Maybe the best approach is not ineffective, over-hyped drugs with nasty side effects, but an end to disease mongering and a strong dose of comprehensive sex education," says filmmaker Canner. Her film hits female erogenous zones that pharmaceutical fixes can’t find: your brain and your funny bone. 
 

The 10 Weirdest, Grossest Ingredients in Processed Food

WebEcoist. Posted October 30, 2009.

Which of your favorite dessert snacks contains beef fat? How about beaver anal glands? Find out below.

Find more great content at WebEcoist.

Everyone now knows that processed and fast foods are not the bastions of nutrition, but that shouldn’t make these ingredients found inside them any less revolting. This list sends a clear message: when a packaged food contains more than five ingredients and includes some that are difficult to pronounce, stay away. Make a b-line straight to the organics aisle and go for vegan meals or vegetarian recipes instead.

1. Fertilizer in Subway Sandwich Rolls

While chemical fertilizers inevitably make it into our produce in trace amounts, you would not expect it to be a common food additive. However, ammonium sulfate can be found inside many brands of bread, including Subway’s. The chemical provides nitrogen for the yeast, creating a more consistent product.

2. Beaver Anal Glands in Raspberry Candy

The anal glands of a beaver, conveniently euphemized as castoreum, are a common ingredient in perfumes and colognes but are also sometimes used to -- believe it or not -- enhance the flavor of raspberry candies and sweets.

3. Beef Fat in All Hostess Products

While this may not bother the most ardent omnivore, others are shocked to discover that their favorite childhood treats contain straight-up beef fat. The ingredient comes included a list of other oils that may or may not be used, so it is always a gamble! It is enough to make some of us want to go vegan.

4. Crushed Bugs as Red Food Coloring

After killing thousands at a time, the dried insects are boiled to produce a liquid solution that can be turned to a dye using a variety of treatments. Some people worry that the coloring -- often called carmine or carminic acid -- could be listed as a “natural color,” disguising the fact that there are bugs in the product.

5. Beetle Juice in Sprinkles and Candies

You know that shiny coating on candies like Skittles? Or the sprinkles on cupcakes and ice cream sundaes? Well, they get that glaze from the secretions of the female lac beetle. The substance is also known as shellac and commonly used as a wood varnish.

6. Sheep Secretions in Bubble Gum

The oils inside sheep’s wool are collected to create the goopy substance called lanolin. From there, it ends up in chewing gum (sometimes under the guise of “gum base”), but also is used to create vitamin D3 supplements.

7. Human Hair and/or Duck Feathers in Bread

What’s in your morning bagel? If you get it from Noah’s Bagels, it contains either human hair or duck feathers, and it’s your guess as to which. The substance, called L-cysteine or cystine, is used as a dough conditioner to produce a specific consistency. While artificial cysteine is available, it is cost prohibitive and mostly used to create kosher and halal products.

8. Coal Tar in Red-Colored Candy

Coal tar is listed as number 199 on the United Nations list of “dangerous goods,” but that doesn’t stop people from using it in food. The coloring Allura Red AC is derived from coal tar and is commonly found in red-colored candies, sodas and other sweets.

9. Calf Stomach in Many Cheeses

In the UK, all cheeses are labeled as either suitable or not suitable for vegetarians because in Britain -- and everywhere else — many cheeses are made using rennet, which is the fourth stomach of a young cow. In the United States and most other countries, people are left to guess about the stomach-content of their cheese.

10. Sand in Wendy’s Chili

Sand is hidden in Wendy’s chili as a name you might remember from high school chemistry class: silicon dioxide. Apparently they use sand as an “anti-caking agent,” perhaps to make sure the chili can last for days and days over a heater. Skip it, cook yourself a quick vegetarian meal instead this Thanksgiving.

This article was originally published on WebEcoist.

Making Money Off of Money

Something economists don't talk about is how private institutions actually create money. The myth is that the Federal Reserve is the only institution that can create money by setting interest rates. The Fed supposedly has this form of control over the monetary system, but it's a lot of blarney. Private institutions create money by a variety of mechanisms. This is referred to as the financialization of the economy. Nothing new of material value is created, but games are played with money that creates money, and, once created, all that money is up for grabs. Here are a few of the mechanisms.

The no down payment mortgage. This encourages speculation in real estate driving up the price of houses. Hence much wealth is created. Wealth is created when the equity in your house goes up. If one year your house is worth $200,000. and the next year it's worth $400,000., then $200,000. of wealth has been created, not by the Federal Reserve tweaking interest rates but by the private sector. You can immediately go to the bank, take out a home equity loan, take out the $200,000. and spend it. It's still the same old house. Nothing of material value has been added or created, but a mechanism in the financial system has created wealth. Of course, this is also referred to as a bubble, and the bubble can burst sending the value of your house back to where it was and leaving you $200,000. in debt.

The issuance of stock and stock options. Any corporation can decide at any time to issue stock. This is tantamount to creating money out of thin air. That stock is just sold into the market. This sale may diminish the existing stock price just as the printing of money can cause inflation, but so what if the demand for that stock is high. Then the company can give the money made from that issuance of new stock to whomever it pleases like the CEO, for instance. Stock options also create money out of thin air, but for that matter, the bidding up of a stock's price creates money out of thin air since nothing on the ground has changed. Presumably, those in charge of running the business are doing their best to produce the best widgets and are earning revenues that way, but this has little to do with the value of its stock. The stock price in a sense is just another derivative, a financial instrument that bears merely a tangential relationship with the underlying economic reality which is the production and sale of widgets.

Then we get to the heavy duty derivatives such as short selling, credit default swaps, asset backed securities, collateralized debt obligations etc. Derivatives in general represent the creation of money by the private sector. During the recent economic crisis it was estimated that there were outstanding hundreds of trillions of dollars in credit default swaps. This money was not created by the Federal Reserve. It was created by private bankers, hedge funds and other devotees of exotic financial instruments. All derivatives are essentially bets. So not only is money created. It is also offered up for betting. When these bets go bad on a massive scale, we have the financial meltdown we recently experienced. But the problem in the first place is that private institutions are allowed to create money.

Leveraging creates money. When a bank leverages its funds 100 to 1 instead of a more conservative 30 to 1, that means it can lend out - and receive interest on - that much more money. And interest in itself represents the making of money off of money. It's an expansion of the money supply that has nothing to do with the expansion or contraction of money by the Federal Reserve. Supposedly, the Fed sets interest rates which are reflected in the whole economy. But consider credit cards. They set the interest rate wherever they want to irregardless of the Fed rate. Right now the Fed rate is zero, while some credit card companies are charging 30%.

These are only some of the ways the private sector creates money and wealth and makes money, not from creating, producing and selling a product or service, but off of money itself and off of placing bets on money. The financialization of the economy which has created a casino economy leads to violent boom and bust cycles and places everything of real economic value up for grabs so gamblers can gain control over real economic assets. An example of this is the private equity funds otherwise known as leveraged buyout specialists. They buy out perfectly functioning companies with borrowed money, transfer the debt off their own books and onto the company's books, then eliminate jobs or break up the company into pieces and sell them off, declare special dividends for themselves and otherwise eviscerate the company for their own profit, leaving the company a bankrupt shambles. This happened recently to the venerable Simmons mattress company which had been in business for over 133 years. Employees were left jobless.

Currently, Ford has announced it's profits are up for the third quarter of 2009. Also, coincidentally, it laid off 50,000 or so workers. Interestingly enough, it made it's profits in every continent on earth with the exception of Africa. A big factor in its profits was the profits reported from its financial division. So in other words it made profit from interest charged not from the underlying car itself. Here are two observations. Profits go up as jobs are eliminated and plants are robotized, and profits made in other countries won't be reported and hence paid taxes on in the US. Why should Americans be cheering over this? They are being screwed out of jobs and out of tax revenues.

Countries that don't allow this financial "innovation", which has come about as a result of deregulation of the banking industry, are in much better shape in terms of jobs, real growth and tamping down of boom bust cycles than is the US which continues on its merry quest for short term, stock price driven profits. There has been no real reform of the banking industry which leads me to believe that we will be reliving the current economic malaise again sometime soon even as it continues for the jobless and foreclosed upon.

GM Screws German Government

From Frank Thomas:

When Angela Merkel got on the plane yesterday after addressing the US Congress, she was told about GM's decision to keep Opel. I don't know if you are aware of the short history here, but GM approached the German government some time ago pleading for its help to find a buyer for Opel and German taxpayer financial support for the company in the interim. The German government, represented by their Premier Angela Merkel, accomodated these wishes. It went to work, found a buyer and spent over €1 billion ($1.5 billion) to support the company to date.

What happened yesterday? GM management belatedly comes to its realization of the value of Opel and tells the German government they do not want to sell it. AND, they have the utter gall to ask the German government to invest another $3billion to support the German operation while they (GM) plan to restructure the business ....  inevitably resulting in a huge job loss for Opel-Germany's 25,000  workers! All Germany and Premier Merkel are rightfully outraged!   

Now we are about to see a real virtual reality classic BATTLE between European and American cultures right before your eyes. Already Germany's unionized workers are planning a massive strike which may spread to other Opel operations throughout continental Europe. It's all about the deep concern for workers in Europe compared to the non-chalant dismissal of workers by American firms. It's all about trust in sticking to your word as GM reneges on its committment to the sale of Opel in the first place while being supported by German taxpayer funds until the deal was closed with a new party (with Magna Charta of Canada).

This is something to watch .... as the role of government in society to protect the general welfare of workers is now being execised by diametrically opposite value systems regarding keeping to one's word and looking out for the interests of the working folk.

Stay tuned!
Regards,
Frank

Robert Reich on Stimulus/Jobs

Posted on Robert Reich's Blog

Tuesday, November 03, 2009

How Obama Can Convince Congress to Enact a Larger Stimulus, and Why He Must

The Administration's biggest economic mistake so far was to badly underestimate last January how bad the employment situation would become by Fall. As a result, it low-balled the stimulus -- settling for a plan that, while avoiding even worse job losses, didn't go nearly far enough.

Obama has to return to Congress, seeking a larger stimulus.

Yes, I know. We're already in the gravitational pull of the midterm elections (look at the bizarre attention given to gubernatorial elections in New Jersey and Virginia, and even to a congressional election in the 23rd district of New York, as supposed harbingers of voter behavior a year from now!) so it will be even harder to round up the needed votes from Blue Dog Dems fretting over the deficit. And you can forget the Republicans.

And yes, I know: Only about half the current stimulus has been spent, so it will be awkward to make the case that we need a larger one.

But here's the problem. Everything else on the table -- a new jobs tax credit, more loans to small businesses, more help to troubled homeowners, another extension of unemployment insurance, another round of subsidies to first-time home buyers -- are small potatoes relative to the importance and likely effect of a larger stimulus. Some of these initiatives may do some good, but even combined they'll barely make a dent in the growing numbers of jobless Americans.

Meanwhile, the states are slicing their budgets, laying off workers, and ratcheting up taxes. That's because state tax revenues are falling off a cliff, and almost every state is barred by its constitution from running a deficit. That means the states are actively implementing an anti-stimulus plan.

Let's be clear about this. The national rate of unemployment will almost surely hit 10 percent; we'll know Friday whether it already has. This is more a psychological and political threshold than an economic one (it doesn't include everyone who's too discouraged to look for work, or working part time who'd rather be working full time, or working fewer hours in an ostensible full-time job, or otherwise fully employed but being paid less; the Bureau of Labor Statistics' payroll survey, also due Friday, provides a more accurate picture). But it nonetheless represents a degree of hardship this country hasn't seen in decades.

Public approval of Obama’s handling of the economy has slipped to 46 percent in an Oct. 30-Nov. 1 CNN poll, from 59 percent in March. Remember, Obama was elected in part because the public didn't have confidence in McCain's ability to manage the economy. In exit polls last November, almost two-thirds of voters listed the economy as the nation's top issue. If the job numbers don't start moving in the right direction, not only will Obama's poll ratings continue to drop but congressional Dems will all be in trouble.

That should be Obama's selling point to the Blue Dogs. He should tell them the economy needs a bigger stimulus in order to show improved job numbers by the mid-term elections. And he should make sure they understand that they're more politically endangered next November if the the job numbers aren't moving in the right direction by then than if they vote for a larger stimulus now.

posted by Robert Reich | 4:49 PM

Robert Reich on Health Care/Work

Posted on Robert Reich's Blog

Sunday, November 01, 2009

Health Care Reform is Critically Important, But Getting Americans Back to Work is More So

Presidents tend to overcompensate for the errors of their predecessors in the same party and in so doing sow seeds of their own mistakes. Bill Clinton wanted above all to avoid Jimmy Carter's fate -- losing re-election because the economy was heading south on Election Day. So Clinton made a deal with Alan Greenspan to slash the budget deficit and thereby jettison much of his ambitious campaign agenda (that was Greenspan's precondition for lowering interest rates and causing an economic boom in time for the re-election) and then Clinton took direction from Dick Morris, who told him to move to the right. The result: Clinton avoided Carter's failure and won re-election handily. But the Clinton years produced few if any major social reforms. Clinton spent so much of his initial political capital, as well as his time and energy, on deficit reduction that he didn't have enough left to enact health care in 1994.

Barack Obama came to the White House intent on not repeating Clinton's failure to enact universal health care. Did he overlearn the Clinton lesson? Obama seems to have made all the right moves to enact something he can credibly label health-care reform: Rather than spend his political capital elsewhere, he reserved most of it for health care.

I sincerely hope America gets genuine health reform and I hope it's stronger than what's emerging in the Senate. (Whoever voted for Joe Lieberman last time around ought to pray for continued good health.) I worry, though, that Obama's strategy may turn out to be a mistake comparable to Clinton's overemphasis on deficit reduction. Obama's focus on health care rather than jobs, when the economy is still so fragile and unemployment moving toward double digits, could make it appear that the administration has its priorities confused. While affordable health care is critically important to Americans, making a living is more urgent. Yet the administration's efforts to date on this more basic concern have been neither particularly visible nor coherent.

The current rate of unemployment would have been even higher were it not for the federal stimulus package, but the stimulus should have been much larger. Especially with the states still cutting back on spending and raising taxes, the federal stimulus will be barely enough to keep unemployment from hitting 11 percent by the middle of 2010. Yet as the rate of unemployment continued to rise faster and higher than the White House anticipated, Obama could not return to Congress to seek a larger stimulus. He was spending political capital on health care.

The Wall Street bailout, meanwhile, has saved Wall Street but left most regional banks in deep distress. Almost nothing has trickled down. Small businesses still can't get loans. Foreclosures continue to mount largely because jobs continue to vanish and homeowners can't pay their mortgages. Yet at this point, on the eve of a health care bill, it would be difficult for Obama to return to Congress seeking billions more to aid distressed homeowners and small businesses.

While health care reform, if done right, can help American families stay afloat in the economy, the current bills won't offer most Americans any appreciable decline in the cost of their health insurance nor clear improvement in the efficiency or quality of the health care they receive, and those who will benefit won't see the benefits until 2014 at the earliest. All this is partly a result of Obama's sharpest break from Clinton -- whose ambitious health care plan drew immediate fire from Big Pharma, the American Medical Association, and health insurers: The Obama White House bought off the medical-industrial complex by promising it fatter profits, bolstered by tens of millions of new paying customers.

That and other deals cut with industry -- including promises to Big Pharma that Medicare wouldn't use its bargaining clout to reduce drug prices, to the AMA that doctors wouldn't have to face larger cuts in Medicare reimbursement rates, and to private insurers that the White House wouldn't fight hard for a public insurance option -- are likely to make the resulting reform far more costly than it would be otherwise. These extra costs will be borne by those Americans who will be required to buy insurance but won't qualify for federal assistance, along with Medicare beneficiaries who will be paying more and receiving less. These people may not know they're indirectly paying the costs of buying off these industries, but they'll know they're getting shafted (Republicans will be sure to make them aware, even though the GOP has a much longer record of shafting the middle class for the benefit of big business).

The optimist in me says Obama can pivot off a health-care victory and launch some new initiatives that palpably and quickly spur job growth. The realist says there aren't any such initiatives -- at least none that can work fast enough to reverse the tide of unemployment before the midterm elections. Fiddles such as a new jobs tax credit can help but they won't make much of a dent. Even with a larger stimulus, a jobs recovery would still be far off. The tangible benefits of health-care reform are likely to be so elusive in the meantime that the public may become easy prey for demagogues on the right who blame Democrats for the economic insecurities that bedevil the nation next November.

If Obama and the Democrats lose one or both houses of Congress in the midterms, it will be because the president learned only the most superficial lesson of the Clinton years. Health-care reform is critically important. But when one out of six Americans is unemployed or underemployed, getting the nation back to work is more so.

posted by Robert Reich | 4:55 PM

The Role of Government in a Modern Society

by Frank Thomas

1. INTRODUCTION
 

In Thomas Jefferson’s words :  (July 1816)

“Some men look at constitutions with sanctamonious reverence, and deem them like the ark of covenant, too sacred to be touched.

… Laws and institutions must go hand in hand with the progress of the human mind  …. We might as well require a man to wear still the coat which fitted him when a boy, as civilized societies to remain under the regimen of their barbarous ancestors.”

Similarly, James Madison warned it´s in the nature of  humans to ignore the harm, while emphasizing the benefits, their actions may have on others. Every society has rotten apples where power corrupts, in consort with media and politicians playing  upon people´s natural fears of certain economic or government forces working  against them.  

In James Madison´s  words:  (Federalist no. 51, 1788)

“If men were angels, no government would be necessary  …. In framing government which is adminstered by men over men, the great difficulty lies in this:  you must first enable the government to control the governed; and in the next place, oblige it to control itself.”

“The great desideratum (necessity) in Government is, so to modify the sovereignty as that it may be sufficiently neutral between different parts of the society to control one part from invading the rights of another, and at the same time sufficiently controlled itself, from setting up an interest adverse to that of the entire society.”

These words form the debate over government´s role in modern society. Is it a rugged individualism philosophy of, “Too bad, you´re on your own” when faced with urban blight, massive layoffs, destructive automation/ outsourcing of jobs, abusive family environments, no or grossly inadequate health care, drug and gang at-risk youth, decayed infrastructure systems , lack of job training and job development for those made redundant or obsolete?  Is government not the answer but the problem?  Is limited government good government?  

In my opinion, present-day adherents to Adam Smith’s philosophy of government’s limited duties formulated in simple times are blind, standstill retrogressionists …. ignoring our country’s complex transformations requiring new institutional arrangements . In the 19th and 20th centuries, our nation enjoyed its greatest social and economic successes when it took the middle course between the individual and community aspects of our human nature. Presidents Truman and Eisenhower embodied this centrist governing ideal. 

I believe, therefore, we should treasure and perfect the integrated middle course paradigm of balancing legitimate public interests, minimum harm to workers and environment while nurturing a thriving free-market, innovative capitalism. I say this as a small business entrepreneur for most of my working life.  

We easily forget that in Thomas Jefferson´s time, the largest US ‘cities,’ were New York and Philadelphia with populations of 60,000 and 30,000, respectively in 1800  ….  cities the size of just small towns today. Jefferson’s reality was that he lived in a predominantly, self-sufficient agrarian environment. Nevertheless, remarkably, even then he favored a dual concept of minimalist govenment and support for the common man. Would Jefferson have extended his government principles to working people and consumers in a transformed industrial high- tech world with proactive public policies/strategies to maintain public order, stability, equity, a fair-playing field, safety, and societal well-being? 

My answer as a centrist is, Yes. Indeed, he very likely would have encouraged prudent public policies to meet the social-economic issues of daunting scope today that certainly did not exist in his time. Survival of the fittest was not his governmental doctrine; but prudence balanced with social concern for the common man’s welfare were also Jeffersonian prima facie governmental values rarely acknowledged by far right propagandists.   

Over two centuries have passed since Adam Smith outlined his ideal functions of government in 1776:  national defense, administration of law and order, provision of public goods such as infrastructure, basic and applied education. Today, over two centuries later, government’s constitutional responsibility for the public´s general welfare has grown to embrace health care, old-age pensions, unemployment compensation, natural disasters, aid to those afflicted by special problems, strategies to improve education, consumer protections.Such are the basic needs of our modern, complex, technologically interdependent life-style connected by an international internet network of mass communication operating at lightening speed which has less and less touch with human impulses.

Americans have long agreed on government’s role to support a military power, to enforce liberty and property rights among people – so long as the actions of some do not violate or harm the fundamental rights and freedom of others. However, emotional and economic differences continue to distort government’s other given constitutional role to protect citizens against interests/actions adverse to the general welfare.

In Jefferson´s time, there were no drugs, medicines, urban congestion with related crime and social problems, preservation of food and serious obesity related health problems, exponential dependence on energy and resultant environmental pollution, issues of industrial production and rapidly advancing technology, cut-throat product import competition and labor/manufacturing outsourcing practices destroying jobs at a faster pace than new investments and ideas can replace them sofar. Further, in Jefferson’s time there was no need for sensible, regulatory restraint of the complex, uncurtailed excesses of raw capitalism and special interests infringing on the rights/freedoms of others – where constructive, firm reforms of same are systemically being obstructed by insider- money influences rather than forthwith adopted out of concern for the common good and the long view. 

2. WHERE DO WE TO GO FROM HERE ?

 To be continued  ….