California Free Press

Obama’s First Stand

by Robert Reich

Wednesday, November 10, 2010

The President says a Republican proposal to extend the Bush tax cuts to everyone for two years is a “basis for conversation.” I hope this doesn’t mean another Obama cave-in. 

Yes, the President needs to acknowledge the Republican sweep on Election Day. But he can do that by offering his own version of a compromise that’s both economically sensible and politically smart. Instead of limiting the extension to $250,000 of income (the bottom 98 percent of Americans), he should offer to extend it to all incomes under $500,000 (essentially the bottom 99 percent), for two years.

The economics are clear:

First, the top 1 percent spends a much smaller proportion of their income than everyone else, so there’s very little economic stimulus at these lofty heights.

On the other hand, giving the top 1 percent a two-year extension would cost the Treasury $130 billion over two years, thereby blowing a giant hole in efforts to get the deficit under control.

Alternatively, $130 billion would be enough to rehire every teacher, firefighter, and police officer laid off over the last two years and save the jobs of all of them now on the chopping block. Not only are these people critical to our security and the future of our children but, unlike the top 1 percent, they could be expected to spend all of their earnings and thereby stimulate the economy.

Conservative supply-siders who argue the top 1 percent will stop working as hard if they have to return to the 39 percent marginal rate of the Clinton years must be smoking something (probably an expensive grade).

Their incomes of the top are already soaring (Wall Street is reading a 5% boost in bonuses, executive salaries and perks are back on the trajectory they were on before the collapse, and the stock market is booming), so it’s hard to argue much hardship.

Besides, only earnings over $500,000 would be affected because — remember — we’re talking about the marginal tax rate.

In addition, the Clinton years weren’t exactly bad years, economically, for the top 1 percent.

Finally, the Bush tax cuts didn’t trickle down anyway. To the contrary, between 2001 and 2007, the median wage dropped. And Bush’s record on jobs was pitiful.

The politics are even clearer. Over the next two years, Obama must clarify for the nation whose side he’s on and whose side his Republican opponents are on. What better issue to begin with than this one?

The top 1 percent now takes in almost a quarter of all national income (up from 9 percent in the late 1970s), and its political power is evident in everything from hedge-fund and private-equity fund managers who can treat their incomes as capital gains (subject to a 15 percent tax) to multi-million dollar home interest deductions on executive mansions. 

If the President can’t or won’t take a stand now — when he still has a chance to prevail in the upcoming lame-duck Congress — when will he ever?

Noam Chomsky on Mid-Term Elections: Misguided Outrage

From the OB Rag

by Source on November 9, 2010

in Civil Rights & Liberties, Culture, Economy, Election, History, War, Peace & Empire

People rightly want answers, and they are not getting them except from voices that tell tales that have some internal coherence—if you suspend disbelief.

by Noam Chomsky

The U.S. midterm elections register a level of anger, fear and disillusionment in the country like nothing I can recall in my lifetime. Since the Democrats are in power, they bear the brunt of the revulsion over our current socioeconomic and political situation.

More than half the “mainstream Americans” in a Rasmussen poll last month said they view the Tea Party movement favorably—a reflection of the spirit of disenchantment.

The grievances are legitimate. For more than 30 years, real incomes for the majority of the population have stagnated or declined while work hours and insecurity have increased, along with debt. Wealth has accumulated, but in very few pockets, leading to unprecedented inequality.

These consequences mainly spring from the financialization of the economy since the 1970s and the corresponding hollowing-out of domestic production. Spurring the process is the deregulation mania favored by Wall Street and supported by economists mesmerized by efficient-market myths.

People see that the bankers who were largely responsible for the financial crisis and who were saved from bankruptcy by the public are now reveling in record profits and huge bonuses. Meanwhile official unemployment stays at about 10 percent. Manufacturing is at Depression levels: one in six out of work, with good jobs unlikely to return.

People rightly want answers, and they are not getting them except from voices that tell tales that have some internal coherence—if you suspend disbelief and enter into their world of irrationality and deceit.

Ridiculing Tea Party shenanigans is a serious error, however. It is far more appropriate to understand what lies behind the movement’s popular appeal, and to ask ourselves why justly angry people are being mobilized by the extreme right and not by the kind of constructive activism that rose during the Depression, like the CIO (Congress of Industrial Organizations).

Now Tea Party sympathizers are hearing that every institution—government, corporations and the professions—is rotten, and that nothing works.

Amid the joblessness and foreclosures, the Democrats can’t complain about the policies that led to the disaster. President Ronald Reagan and his Republican successors may have been the worst culprits, but the policies began with President Jimmy Carter and accelerated under President Bill Clinton. During the presidential election, Barack Obama’s primary constituency was financial institutions, which have gained remarkable dominance over the economy in the past generation.

That incorrigible 18th-century radical Adam Smith, speaking of England, observed that the principal architects of power were the owners of the society—in his day the merchants and manufacturers—and they made sure that government policy would attend scrupulously to their interests, however “grievous” the impact on the people of England; and worse, on the victims of “the savage injustice of the Europeans” abroad.

A modern and more sophisticated version of Smith’s maxim is political economist Thomas Ferguson’s “investment theory of politics,” which sees elections as occasions when groups of investors coalesce in order to control the state by selecting the architects of policies who will serve their interests.

Ferguson’s theory turns out to be a very good predictor of policy over long periods. That should hardly be surprising. Concentrations of economic power will naturally seek to extend their sway over any political process. The dynamic happens to be extreme in the U.S.

Yet it can be said that the corporate high rollers have a valid defense against charges of “greed” and disregard for the health of the society. Their task is to maximize profit and market share; in fact, that’s their legal obligation. If they don’t fulfill that mandate, they’ll be replaced by someone who will. They also ignore systemic risk: the likelihood that their transactions will harm the economy generally. Such “externalities” are not their concern—not because they are bad people, but for institutional reasons.

When the bubble bursts, the risk-takers can flee to the shelter of the nanny state. Bailouts—a kind of government insurance policy—are among many perverse incentives that magnify market inefficiencies.

“There is growing recognition that our financial system is running a doomsday cycle,” economists Peter Boone and Simon Johnson wrote in the Financial Times in January. “Whenever it fails, we rely on lax money and fiscal policies to bail it out. This response teaches the financial sector: Take large gambles to get paid handsomely, and don’t worry about the costs—they will be paid by taxpayers” through bailouts and other devices, and the financial system “is thus resurrected to gamble again—and to fail again.”

The doomsday metaphor also applies outside the financial world. The American Petroleum Institute, backed by the Chamber of Commerce and the other business lobbies, has intensified its efforts to persuade the public to dismiss concerns about anthropogenic global warming—with considerable success, as polls indicate. Among Republican congressional candidates in the 2010 election, virtually all reject global warming.

The executives behind the propaganda know that global warming is real, and our prospects grim. But the fate of the species is an externality that the executives must ignore, to the extent that market systems prevail. And the public won’t be able to ride to the rescue when the worst-case scenario unfolds.

I am just old enough to remember those chilling and ominous days of Germany’s descent from decency to Nazi barbarism, to borrow the words of Fritz Stern, the distinguished scholar of German history. In a 2005 article, Stern indicates that he has the future of the United States in mind when he reviews “a historic process in which resentment against a disenchanted secular world found deliverance in the ecstatic escape of unreason.”

The world is too complex for history to repeat, but there are nevertheless lessons to keep in mind as we register the consequences of another election cycle. No shortage of tasks waits for those who seek to present an alternative to misguided rage and indignation, helping to organize the countless disaffected and to lead the way to a better future.

Macchiavellian Bipartisanship: How the Right Plays Obama's Outstretched Hand

by John Lawrence

Now bipartisanship has been all the rage in Washington especially as espoused by Barack Obama. He came to Washington to bring people together especially Republicans and Democrats. Only problem is the Republicans don't want to play ball. Nevertheless, President Obama persists in an endeavor reminiscent of the labors of Sisyphus. He keeps pushing the ball of bipartisanship up the hill, extending his hand to Republicans, only to have the ball knocked out of his hands and sent bounding back down the hill. Then the Republicans point to it and say, "If only you would consider bipartisanship..."

What is the purpose of bipartisanship when Mitch McConnell, the Senate minority leader, has said repeatedly that his goal is to see that Obama gets defeated in 2012? Is Obama a masochist? Despite enormous and unfruitful efforts at bipartisanship, Obama got his health bill passed in Congress only to hear Republicans complain that they would have supported it if only it had been more bipartisan. This is where Macchiavelli comes in. The Republicans will work to defeat Obama and any legislation which has his stamp on it and then complain bitterly that the only reason they were against it is that it wasn't bipartisan enough. Proof of this is that no Republican voted for it. Surely if it really was a bipartisan bill at least some Republicans would have voted for it, according to their logic. So they aim to profit from defeating Obama and then use his own prodigious efforts at bipartisanship against him by claiming that the reason for their non-support is that Obama was not bipartisan enough as attested to by the fact that Democrats rammed the bill through without Republican support. Hmmm.

This is a Macchiavellian use of logic. Take your opponents rationale and use it against him. Then let the right wing echo chamber, namely millionaires Rush Limpballs, Glenn Beck, Sean Hannity and Bill O'Reilly amplify the falsehood that Obama is not bipartisan despite his claims of being so. Their anticipated result: that a new poll will show that the public believes that despite Republicans' best efforts to be bipartisan, Obama and his lieutenants, Nancy Pelosi and Harry Reid, are the most non-bipartisan SOBs the US has ever produced. So they take Obama's vaunted and sincere efforts at bipartisanship and turn them against him. Macchiavelli would have been bowled over in amazement at how clever these Republicans are.

The only problem is that this doesn't solve any problems for the American people. America's elected representatives are completely engaged in a game of political one upsmanship especially the Republicans. They could care less about the American people. Their goal is to win and to win big. Their motivation: money. There is lots of money involved in catering to corporations and right wing billionaires like the Koch brothers. Lucrative lobbying jobs await the winners of the political game when they leave Congress to "spend more time with their family." Their Congressional salaries are only catnip; the real deal is cashing in by pleasing their corporate sponsors. They are for all intents and purposes corporate shills. And it is not only Republicans that go this route. Former House Democratic leader Dick Gephardt lobbies for Goldman Sachs, Visa and the coal industry. Former Senate Democratic leader Tom Daschle - Obama's first choice to head Health and Human Services - is an adviser for a lobbying firm that represents Charles Schwab, Comcast, Lockheed Martin, Verizon and a host of other corporate interests.

Progressive Democrats who aren't shills for corporate interests are few and far between, but they do exist: Dennis Kucinich, Barney Frank and Bernie Sanders (actually a democratic socialist who caucuses with the Democrats), to name a few. Here is the complete list. Alan Grayson and Russ Feingold were defeated in the recent election. They will be missed by the Progressive Caucus. With a Democratic party, many of whom are Republican lites and with greed as a motivating factor for Republicans and at least some Democrats, is it any wonder that Macchiavellianism is the order of the day?

So why does Obama persist in his quixotic quest of "helping the American people" when the other side has stated repeatedly that their only interest is in defeating him in 2012 and the American public be damned? They are playing hardball and Obama is lobbing softballs. I think Obama is most interested in maintaining the decorum he seems to think is befitting the President of the United States. He should channel his inner "Give 'em Hell" Harry Truman. Truman had no problem calling Republicans his "enemies." FDR had no problem railing against the "economic royalists." Obama needs to get tough with Republicans or they will completely marginalize him by 2012. Obama can then join the heroic efforts of Democratic ex-Presidents like Bill Clinton and Jimmy Carter who have done great things after leaving office unlike Republican Presidents who have mostly sat on their hands and made weekly trips to the bank to deposit their dividend checks when they weren't playing golf. Obama must look forward to the day when he's out of office and can do good while doing well. After all Clinton makes a princely sum every year giving speeches while having the satisfaction of saving the world with his Clinton Global Initiative.

Obama has shown a certain timidity when it comes to pushing the envelope of the status quo even though that seems to be what's called for at the present time. He made a miscalculation that the economy would recover by election time 2010, and he was proved wrong. He took Larry Summers' advice which was to bail out the banks and the economy would recover on its own and in the process the American people would get bailed out with only slight direct efforts by the government to do so. This turned out clearly not to be the case and Obama's Republican lite-ism clearly did not work. The stimulus program got watered down by the Republicans who insisted on making it mostly about tax cuts which did absolutely no good in creating jobs. So where does he go from here? Obama could, by executive order, create jobs if he should choose to do so. He could delineate a clear Democratic position instead of letting Republican ideology hold sway and then adopting a lite version of it. He could undertake efforts to mute the effects of the right wing media machine which day after day denigrates his efforts. He could continuously point out the folly of trickle down economics. He could take a stand against tax breaks for the rich. There are many things Obama could do. The question is, will he?

 

A Recipe for Fascism

Published on Monday, November 8, 2010 by TruthDig.com

by Chris Hedges

American politics, as the midterm elections demonstrated, have descended into the irrational. On one side stands a corrupt liberal class, bereft of ideas and unable to respond coherently to the collapse of the global economy, the dismantling of our manufacturing sector and the deadly assault on the ecosystem. On the other side stands a mass of increasingly bitter people whose alienation, desperation and rage fuel emotionally driven and incoherent political agendas. It is a recipe for fascism.

More than half of those identified in a poll by the Republican-leaning Rasmussen Reports as "mainstream Americans" now view the tea party favorably. The other half, still grounded in a reality-based world, is passive and apathetic. The liberal class wastes its energy imploring Barack Obama and the Democrats to promote sane measures including job creation programs, regulation as well as criminal proceedings against the financial industry, and an end to our permanent war economy. Those who view the tea party favorably want to tear the governmental edifice down, with the odd exception of the military and the security state, accelerating our plunge into a nation of masters and serfs. The corporate state, unchallenged, continues to turn everything, including human beings and the natural world, into commodities to exploit until exhaustion or collapse.

All sides of the political equation are lackeys for Wall Street. They sanction, through continued deregulation, massive corporate profits and the obscene compensation and bonuses for corporate managers. Most of that money-hundreds of billions of dollars-is funneled upward from the U.S. Treasury. The Sarah Palins and the Glenn Becks use hatred as a mobilizing passion to get the masses, fearful and angry, to call for their own enslavement as well as to deny uncomfortable truths, including global warming. Our dispossessed working class and beleaguered middle class are vulnerable to this manipulation because they can no longer bear the chaos and uncertainty that come with impoverishment, hopelessness and loss of control. They have retreated into a world of illusion, one peddled by right-wing demagogues, which offers a reassuring emotional consistency. This consistency appears to protect them from the turmoil in which they have been forced to live. The propaganda of a Palin or a Beck may insult common sense, but, for a growing number of Americans, common sense has lost its validity.

The liberal class, which remains rooted in a world of fact, rationalizes placating corporate power as the only practical response. It understands the systems of corporate power. It knows the limitations and parameters. And it works within them. The result, however, is the same. The entire spectrum of the political landscape collaborates in the strangulation of our disenfranchised working class, the eroding of state power, the criminal activity of the financial class and the paralysis of our political process.

Commerce cannot be the sole guide of human behavior. This utopian fantasy, embraced by the tea party as well as the liberal elite, defies 3,000 years of economic history. It is a chimera. This ideology has been used to justify the disempowerment of the working class, destroy our manufacturing capacity, and ruthlessly gut social programs that once protected and educated the working and middle class. It has obliterated the traditional liberal notion that societies should be configured around the common good. All social and cultural values are now sacrificed before the altar of the marketplace.

The failure to question the utopian assumptions of globalization has left us in an intellectual vacuum. Regulations, which we have dismantled, were the bulwarks that prevented unobstructed brutality and pillaging by the powerful and protected democracy. It was a heavily regulated economy, as well as labor unions and robust liberal institutions, which made the American working class the envy of the industrialized world. And it was the loss of those unions, along with a failure to protect our manufacturing, which transformed this working class into a permanent underclass clinging to part-time or poorly paid jobs without protection or benefits.

The "inevitability" of globalization has permitted huge pockets of the country to be abandoned economically. It has left tens of millions of Americans in economic ruin. Private charity is now supposed to feed and house the newly minted poor, a job that once, the old liberal class argued, belonged to the government. As John Ralston Saul in "The Collapse of Globalization" points out, "the role of charity should be to fill the cracks of society, the imaginative edges, to go where the public good hasn't yet focused or can't. Dealing with poverty is the basic responsibility of the state." But the state no longer has the interest or the resources to protect us. And the next target slated for elimination is Social Security.

That human society has an ethical foundation that must be maintained by citizens and the state is an anathema to utopian ideologues of all shades. They always demand that we sacrifice human beings for a distant goal. The propagandists of globalization-from Lawrence Summers to Francis Fukuyama to Thomas Friedman-do for globalization and the free market what Vladimir Lenin and Leon Trotsky did for Marxism. They sell us a dream. These elite interpreters of globalism are the vanguard, the elect, the prophets, who alone grasp a great absolute truth and have the right to impose this truth on a captive people no matter what the cost. Human suffering is dismissed as the price to be paid for the coming paradise. The response of these propagandists to the death rattles around them is to continue to speak in globalization's empty rhetoric and use state resources to service a dead system. They lack the vision to offer any alternative. They can function only as systems managers. They will hollow out the state to sustain a casino capitalism that is doomed to fail. And what they offer as a solution is as irrational as the visions of a Christian America harbored by many within the tea party.

We are ruled by huge corporate monopolies that replicate the political and economic power, on a vastly expanded scale, of the old trading companies of the 17th and 18th centuries. Wal-Mart's gross annual revenues of $250 billion are greater than those of most small nation-states. The political theater funded by the corporate state is composed of hypocritical and impotent liberals, the traditional moneyed elite, and a disenfranchised and angry underclass that is being encouraged to lash out at the bankrupt liberal institutions and the government that once protected them. The tea party rabble, to placate their anger, will also be encouraged by their puppet masters to attack helpless minorities, from immigrants to Muslims to homosexuals. All these political courtiers, however, serve the interests of the corporate state and the utopian ideology of globalism. Our social and political ethic can be summed up in the mantra let the market decide. Greed is good. 

The old left-the Wobblies, the Congress of Industrial Workers (CIO), the Socialist and Communist parties, the fiercely independent publications such as Appeal to Reason and The Masses-would have known what to do with the rage of our dispossessed. It used anger at injustice, corporate greed and state repression to mobilize Americans to terrify the power elite on the eve of World War I. This was the time when socialism was not a dirty word in America but a promise embraced by millions who hoped to create a world where everyone would have a chance. The steady destruction of the movements of the left was carefully orchestrated. They fell victim to a mixture of sophisticated forms of government and corporate propaganda, especially during the witch hunts for communists, and overt repression. Their disappearance means we lack the vocabulary of class warfare and the militant organizations, including an independent press, with which to fight back.

We believe, like the Spaniards in the 16th century who pillaged Latin America for gold and silver, that money, usually the product of making and trading goods, is real. The Spanish empire, once the money ran out and it no longer produced anything worth buying, went up in smoke. Today's use in the United States of some $12 trillion in government funds to refinance our class of speculators is a similar form of self-deception. Money markets are still treated, despite the collapse of the global economy, as a legitimate source of trade and wealth creation. The destructive power of financial bubbles, as well as the danger of an unchecked elite, was discovered in ancient Athens and detailed more than a century ago in Emile Zola's novel "Money." But we seem determined to find out this self-destructive force for ourselves. And when the second collapse comes, as come it must, we will revisit wrenching economic and political tragedies forgotten in the mists of history.

© 2010 TruthDig.com

Chris Hedges writes a regular column for Truthdig.com. Hedges graduated from Harvard Divinity School and was for nearly two decades a foreign correspondent for The New York Times. He is the author of many books, including: War Is A Force That Gives Us Meaning, What Every Person Should Know About War, and American Fascists: The Christian Right and the War on America.  His most recent book is Empire of Illusion: The End of Literacy and the Triumph of Spectacle. 

The Myth of Charter Schools

Published on Sunday, November 7, 2010 by The New York Review of Books

by Diane Ravitch

Ordinarily, documentaries about education attract little attention, and seldom, if ever, reach neighborhood movie theaters. Davis Guggenheim's "Waiting for "Superman" is different. It arrived in late September with the biggest publicity splash I have ever seen for a documentary. Not only was it the subject of major stories in Time and New York, but it was featured twice on The Oprah Winfrey Show and was the centerpiece of several days of programming by NBC, including an interview with President Obama.

Two other films expounding the same arguments-The Lottery and The Cartel-were released in the late spring, but they received far less attention than Guggenheim's film. His reputation as the director of the Academy Award-winning An Inconvenient Truth, about global warming, contributed to the anticipation surrounding Waiting for "Superman," but the media frenzy suggested something more. Guggenheim presents the popularized version of an account of American public education that is promoted by some of the nation's most powerful figures and institutions.

The message of these films has become alarmingly familiar: American public education is a failed enterprise. The problem is not money. Public schools already spend too much. Test scores are low because there are so many bad teachers, whose jobs are protected by powerful unions. Students drop out because the schools fail them, but they could accomplish practically anything if they were saved from bad teachers. They would get higher test scores if schools could fire more bad teachers and pay more to good ones. The only hope for the future of our society, especially for poor black and Hispanic children, is escape from public schools, especially to charter schools, which are mostly funded by the government but controlled by private organizations, many of them operating to make a profit.

The Cartel maintains that we must not only create more charter schools, but provide vouchers so that children can flee incompetent public schools and attend private schools. There, we are led to believe, teachers will be caring and highly skilled (unlike the lazy dullards in public schools); the schools will have high expectations and test scores will soar; and all children will succeed academically, regardless of their circumstances. The Lottery echoes the main story line of Waiting for "Superman": it is about children who are desperate to avoid the New York City public schools and eager to win a spot in a shiny new charter school in Harlem.

For many people, these arguments require a willing suspension of disbelief. Most Americans graduated from public schools, and most went from school to college or the workplace without thinking that their school had limited their life chances. There was a time-which now seems distant-when most people assumed that students' performance in school was largely determined by their own efforts and by the circumstances and support of their family, not by their teachers. There were good teachers and mediocre teachers, even bad teachers, but in the end, most public schools offered ample opportunity for education to those willing to pursue it. The annual Gallup poll about education shows that Americans are overwhelmingly dissatisfied with the quality of the nation's schools, but 77 percent of public school parents award their own child's public school a grade of A or B, the highest level of approval since the question was first asked in 1985.

Waiting for "Superman" and the other films appeal to a broad apprehension that the nation is falling behind in global competition. If the economy is a shambles, if poverty persists for significant segments of the population, if American kids are not as serious about their studies as their peers in other nations, the schools must be to blame. At last we have the culprit on which we can pin our anger, our palpable sense that something is very wrong with our society, that we are on the wrong track, and that America is losing the race for global dominance. It is not globalization or deindustrialization or poverty or our coarse popular culture or predatory financial practices that bear responsibility: it's the public schools, their teachers, and their unions.

Obama: Create Jobs by Executive Order

Published on Monday, November 8, 2010 by CommonDreams.org

by Jeanne Mirer and Marjorie Cohn

On May 6, 1935, with the country in the midst of the Great Depression, and with indirect efforts to create jobs having not moved the needle of unemployment rates, President Franklin D. Roosevelt signed Executive Order 7034 and appropriated $4.8 billion for the Works Progress Administration (WPA). The WPA put millions of Americans to work constructing buildings, painting murals to decorate them, and performing plays for audiences that had never before seen a dramatic production. In the process, many were saved from poverty and starvation and the economy began to revive.

Although Congress, as part of the New Deal, had appropriated money specifically for relief, FDR decided to use the money for a direct jobs program by issuing a Presidential executive order. This Executive Order described the agencies to be involved in the program, its structure and procedure for application and allocation of jobs.

The WPA was quickly implemented. By March 1936, 3.4 million people were employed and an average of 2.3 million people worked monthly until the program ended in June 1943. During its existence the WPA employed more than 8,500,000 different persons on 1,410,000 individual projects, and spent about $11 billion. The average yearly salary was $1,100, a living wage at the time. During its 8-year history, the WPA built 651,087 miles of highways, roads, and streets. It constructed, repaired, or improved 124,031 bridges, 125,110 public buildings, 8,192 parks, and 853 airport landing fields.

Today our infrastructure is crumbling, and loss of revenue is forcing many cities and states to cut basic services. About 15 million people have become unemployed since the crisis hit in late 2008; a million and a half of them are construction workers. The need for a direct jobs program is either as great, or even greater than during the Depression.

But, in light of the election results, is such a program possible? Can the President directly create jobs by executive order? The answer is a resounding yes. Remember when the Emergency Economic Stabilization Act of 2008, which created the $700 billion Troubled Assets Relief Program (TARP) was passed, one of the purposes was to preserve homeownership, and promote jobs and economic growth.

Much of the TARP money has been repaid and the administration refers to the profit on the payments. If one assumes an average cost of one job is $50,000, 6 million jobs could be immediately created for $300 billion. 12 million jobs could be created for $600 billion. Because this is already appropriated money, Congressional Republicans could not block it.

This direct job creation would be bold. It would also be highly stimulative. It would not add to the deficit because it is already appropriated money. Furthermore, one third of it would come back immediately in taxes, and more importantly, the growth in demand from this number of added jobs would expand private sector job growth and grow the overall economy.

This bold program would contrast markedly with prior stimulus bills, which were indirect and whose effects have been too slow to manifest themselves. The posture of the Republicans during the last two years has been to prevent the President and Congress from taking bold steps to intervene in the economy to directly create jobs. Then they used the Administration’s failure to take bold steps to create jobs to say the “stimulus did not work.” They turned the very TARP bailouts they supported into a rallying cry against government intervention in the economy to help people and they characterized as “socialism” any government initiatives such as health care. They decried deficits and opposed any sane tax policies to get the deficit going in the other direction.

By keeping progress in job creation slow and blaming the administration for lack of jobs, the high expectations for the Obama administration became deflated. The loss of jobs exacerbated the mortgage crisis, and banks have been encouraged to foreclose rather than restructure mortgages despite the opposite being explicitly called for the Emergency Stabilization Act.

The people who voted for Obama in 2008 voted for the promised hope and change. Many developed buyer’s remorse when what they got was a set of policies which protected Wall Street at the expense of Main Street, big business at the expense of workers, and made unnecessary compromises with the right. The so called “enthusiasm gap” created by Republican obstruction and Administration timidity, produced such a deflation in people’s morale that it acted as an effective form of voter suppression. The election results can be explained in this fashion.

Some have said that it makes no sense that the voters would go in a more rightward direction because the Obama administration was not “left” enough. But the fact is the Obama administration failed to deliver change and also failed to make the case for progressive policies. The election of Democratic incumbents meant only more of the same. And only 9 million of the 23 million young people who voted in 2008, came out in 2010. This undervote made the difference.

Abraham Lincoln once said: “You can fool some of the people all of the time, and all of the people some of the time but you cannot fool all of the people all of the time.” What happened in this election was the right wing was able to fool enough of the people enough of the time to make independents join with rabid right wingers, while at the same time suppressing the progressive electorate.

This country has a lot to do to get its economic house in order. It is heavily dependent on the financial services industry which only promotes speculation and unregulated bubbles. It is largely controlled by the defense industries which have promoted two and possibly more wars. It is beholden to the extractive energy industries, whose owners are funding the “tea party,” thus putting environmental amelioration on indefinite hold. And it is more and more influenced by the prison industrial complex which promotes hostility to immigrants, and takes resources from education and other vital areas. For the last 30 years it has relied on anti-union and anti-worker policies, which has forced the hemorrhaging of high paid manufacturing jobs to low cost countries and driven down wages for U.S. workers which can no longer be papered over with unsustainable debt.

The President cannot solve all these problems overnight, but with a stroke of a pen he can use already appropriated money to create millions of good green jobs, and move down the road to recovery much faster. Any opposition to this from the Republicans will expose their hostility to anyone but the richest members of society, and give the progressive movement ammunition to take the offensive.

Jeanne Mirer, who practices labor and employment law in New York, is president of the International Association of Democratic Lawyers. Marjorie Cohn is a professor at Thomas Jefferson School of Law and past president of the National Lawyers Guild.

How to Restore the American Dream

By Fareed Zakaria Thursday, Oct. 21, 2010, from Time Magazine

The American dream for me, growing up in India in the 1970s, looked something like the opening credits of Dallas. The blockbuster TV series began with a kaleidoscope of big, brassy, sexy images — tracts of open land, shiny skyscrapers, fancy cars, cowboy businessmen and the very dreamy Victoria Principal. We watched bootlegged copies of the show, passed around on old Betamax cassettes. America (certainly the CBS soap-opera version of America) seemed dazzling and larger than life, especially set against the stagnant backdrop of India in the 1970s. Everyone I knew was fascinated by the U.S., whether they admitted it or not. Politicians who denounced the country by day would go home in the evenings and plot to send their kids to college in "the States."

Of course, the 1970s were actually tough times in America — stagflation, malaise, the aftermath of Vietnam and Watergate — but they were brutal in the rest of the world. Hyperinflation racked most third-world countries; coups and martial law were familiar occurrences, even affecting staunchly democratic India, where emergency rule was enforced from 1975 to 1977. Set against this atmosphere of despair, the U.S. looked like a shining city on a hill.

A few years later, when I got to America on a college scholarship, I realized that the real American Dream was somewhat different from Dallas. I visited college friends in their hometowns and was struck by the spacious suburban houses and the gleaming appliances — even when their parents had simple, modest jobs. The modern American Dream, for me, was this general prosperity and well-being for the average person. European civilization had produced the great cathedrals of the world. America had the two-car garage. And this middle-class contentment created a country of optimists. Compared with the fatalism and socialist lethargy that was pervasive in India those days, Americans had a sunny attitude toward life that was utterly refreshing.

But when I travel from America to India these days, as I did recently, it's as if the world has been turned upside down. Indians are brimming with hope and faith in the future. After centuries of stagnation, their economy is on the move, fueling animal spirits and ambition. The whole country feels as if it has been unlocked. Meanwhile, in the U.S., the mood is sour. Americans are glum, dispirited and angry. The middle class, in particular, feels under assault. In a Newsweek poll in September, 63% of Americans said they did not think they would be able to maintain their current standard of living. Perhaps most troubling, Americans are strikingly fatalistic about their prospects. The can-do country is convinced that it can't.

Americans have good reasons to worry. We have just gone through the worst recession since the Great Depression. The light at the end of the tunnel is dim at best. Sixteen months into the recovery, the unemployment rate is higher than it was in the depths of all but one of the postwar recessions. And as government spending is being pared back, the economy is showing new signs of weakness.

Some experts say that in every recession Americans get gloomy and then recover with the economy. This slump is worse than most; so is the mood. Once demand returns, they say, jobs will come back and, with them, optimism. But Americans are far more apprehensive than usual, and their worries seem to go beyond the short-term debate over stimulus vs. deficit reduction. They fear that we are in the midst of not a cyclical downturn but a structural shift, one that poses huge new challenges to the average American job, pressures the average American wage and endangers the average American Dream. The middle class, many Americans have come to believe, is being hollowed out. I think they are right.

Going Global
For a picture of the global economy, look at America's great corporations, which are thriving. IBM, Coca-Cola, PepsiCo, Google, Microsoft, Apple, Intel and Caterpillar are all doing well. And they share a strategy that is becoming standard for success. First, technology has produced massive efficiencies over the past decade. Jack Welch explained the process succinctly on CNBC last September. "Technology has changed the game in jobs," he said. "We had technology bumping around for years in the '80s and '90s, and [we were] trying to make it work. And now it's working ... You couple the habits [of efficiency] from a deep recession [with] an exponential increase in technology, and you're not going to see jobs for a long, long time." Welch gave as an example a company owned by the private-equity firm with which he is affiliated. In 2007 the business had 26,000 employees and generated $12 billion in revenue. It will return to those revenue numbers by 2013 but with only 14,000 employees. "Companies have learned to do more with less," Welch said.

Next, companies have truly gone global. The companies on the S&P 500 generate 46% of their profits outside the U.S., and for many of the biggest American names, the proportion is much higher. You might think of Coca-Cola as the quintessentially American company. In fact it is a vast global enterprise, operating in 206 countries. "We have a factory in Ramallah that employs 2,000 people. We have a factory in Afghanistan. We have factories everywhere," explains Muhtar Kent, the CEO of Coke. Nearly 80% of Coca-Cola's revenue comes from outside the U.S., and an even greater percentage of its employees are in foreign countries. "We are a global company that happens to be headquartered in Atlanta," says Kent.

America's great corporations access global markets, easy credit, new technologies and high-quality labor at a low price. Many have had to cut jobs at home, where demand is weak, and have added them in the emerging markets that are booming. They are not "outsourcing" jobs. That word makes little sense anymore. They simply invest in growth areas and cut back in places where the economy is weak. None of them will ever give up on the American market — it is too large, too profitable and too central to their businesses — but the marginal dollar is more likely to be invested abroad than in the U.S.

Read more: http://www.time.com/time/nation/article/0,8599,2026776,00.html?xid=huffpo-direct#ixzz14m89BgYY

Time for Economic Democracy

Peter Tatchell says democratising economic decision-making is the key to a fairer, more stable economy

by Peter Tatchell

Saturday, October 16th, 2010, from TRIBUNEMAGAZINE.co.uk

Three years after a banking crisis that pushed Britain – and much of the world – into the worst recession for decades, the major political parties still have no policies to prevent a repeat economic meltdown. They have still failed to put in place adequate checks and balances to overcome the structural flaws in the private-ownership, free market system which allowed the credit crunch to occur.

The Labour, Conservative and Liberal Democrat leaderships support the highly centralised, largely unaccountable neo-liberal economic system – a system that allowed irresponsible financial decisions by banks and big businesses. This failure to remedy the causes of the crisis leaves this country vulnerable to more chaos in the future.

A major cause of the near-catastrophe of the past three years is the way economic power and decision-making is organised: highly centralised, exclusive, autocratic, secretive and unaccountable. These factors predispose the economy to risk-taking and recession, as well as being inherently anti-democratic and unfair.

One element of a sounder and more just economy is greater economic democracy, participation, transparency, decentralisation, and accountability. Here are a few suggestions to achieve this transformation.

Make corporate negligence and recklessness an explicit criminal offence, to reign in big business cowboys and ensure more responsible economic management. Bankers and company bosses should not be able to wreck whole economies and squander people’s jobs, pensions and savings with impunity. They ought to be personally liable for damaging corporate decisions, in the same way that doctors and others can be held liable for professional negligence. The threat of legal penalties is likely to result in more prudent corporate governance.

Require medium and large-sized companies with boards of directors to be accountable to their employees and to the wider public by including on their boards employee-elected directors and independent directors to represent the interests of consumers. Similar proposals were included in the
1973 Bullock Report and Labour’s 1976 programme.

Under this system, employee and consumer directors would promote non-corporate interests and act as watchdogs and whistleblowers against corporate irresponsibility. If these directors had been on the board of Northern Rock, I doubt the management would have got away with so many reckless decisions. Having directors who are not driven by the profit-motive also increases the likelihood of company policies that are more socially inclusive and environmentally responsible.

Give trade unions a majority stake in the management of their members’ pension funds, to decentralise and democratise investment decision-making and give it a social and ethical dimension. The nearly £1,000 billion invested in pension funds is a massive counterweight to the economic clout of big business. It could be invested in ways that help make the economy more people-centred and public welfare-oriented. Trade union-controlled pension funds are, for example, less likely to invest in the arms trade and clothing sweatshops. They are more open to investment to meet social needs, including renewable energy, affordable housing and quality public transport.

Retain the current full or part public ownership of the banks that were rescued by the last Government, to ensure they operate in the public interest and use their future profits for the public good. Why should the banks be returned to the private sector when it made such a mess of running them? Publicly-controlled – or remutualised – banks could be the means to fund new social housing and low-interest loans to poorer families and to employee-owned enterprises.

Give employees the legal right to buy-out their companies and turn them into workers co-operatives, with funding coming from the publicly-owned banks. This would weaken the power of big corporations, localise and socialise economic decision-making and give employees incentives for greater productivity. Evidence shows that people employed in workers’ co-operatives tend to have higher output, better job satisfaction and greater social solidarity.

Limit corporate bonuses to a percentage of profits and defer their payment for a decade. This would deter short-term, high-risk investments. It would make bonuses conditional on the long-term success of a business. Only people who made successful, sustainable investment decisions would therefore be rewarded.

Legislate for the progressive transfer of share ownership into trade union-administered employee share funds. This is a variation on the “wage-earner funds” proposed by Rudolf Meidner of the Swedish trade union federation, the LO, in the 1970s. It would obligate all private share capital companies to assign to a union-controlled fund a proportion of their annual profits in the form of a new share issue.

Gradually, probably over many decades, it would give employees, through their unions, a controlling interest in their firms – transforming them into self-governing workers’ co-operatives. The great strength of this scheme is not only its democratic and social justice elements. It also provides incentives and rewards employees for economic success. The more productive and profitable a company, the more shares it has to issue to the employees’ funds and the sooner employees gain a controlling stake.

As well as redistributing wealth and power in favour of employees and the wider public, these reforms would reduce the chances of a re-run of the economic crisis. They would achieve these twin goals by a combination of decentralising economic power, democratising economic decision-making, improving corporate social responsibility and strengthening the accountability of businesses to their staff and consumers.

Most of these policies could be implemented unilaterally by a British government. However, given the globalised economy, they would work most effectively if they were adopted by the European Union. Although still predominantly a big business cartel, there is nothing to stop the EU pioneering this new economic model, if the peoples of Europe elect parties that demand it.

The EU’s massive share of international finance, production and trade would enable it to withstand pressure to conform to the dominant neo-liberal economics of the United States-China axis. In other words, Britain and the EU could lead the way in the structural transformation of autocratic, dog-eat-dog capitalism into a more democratic, co-operative and accountable green socialised economy. Why not?

For more information about Peter Tatchell’s human rights and social justice campaigns: www.petertatchell.net

Fareed Zakaria and the American Dream

John,

Yes, I've been following Fareed Zakaria for some time. He's one of the very few more thoughtful, informed TV journalists who dare come forward with their own conclusions on societal issues ... views that reflect prescient, objective, non-purely ideological and non-poll driven analyses. He has just published a writing in the Times European edition the title of which is, "Restoring the American Dream."

To quote one of his remarks, "The middle-class, many Americans have come to believe, is being hollowed out. I think they are right." He shows revealing trend-statistics graphically presenting well the abject destruction of manufacturing jobs and the dangerous Have-Have-Not concentration of income (as I've done in detail with Tables). For example, he illustrates how real after-tax income for the top 1% shockingly grew 281% vs. 95% for the top 20%, and 16% for the bottom 20% during 1979-2007. His main solutions to our internal breakdowns have also been proposed by others, but he presents his thoughts extremely clearly. He optimistically has not lost faith in the American CAN DO adventuresome spirit, its openness, diversity, dynamism.

His writing ends with a quote from the historian James Truslow Adams who published the Epic of America in 1931. Adams coined the term American Dream and said it was of "a better, richer, happier life for ALL our citizens of every rank, which is the greatest contribution we have made to the thought and welfare of the world. That dream or hope has been present from the start. Ever since we became an independent nation, each generation has seen an uprising of ordinary Americans to save the American Dream from the forces which appear to be overwhelming it."

Fareed concludes: "Today, those forces really do look overwhelming. But challenges like those have been beaten back before -- and can be again."

Zakaria, who was born in India, in his optimism slides over the phenomenon that the current conservative uprising is more about power than elevating the American dream for ALL Americans. We have a politics that doesn't solve or add anything ... a vision-less politics of permanent emptiness that helps bring people down, a politics of permanent lying and name-calling. In the name of freedom and liberty, it's a politics about spreading hate, pointing out black sheep using the socialist (even Nazi) buzz word at will. It's about stirring division and resentment rather than employing civil, creative argumentation.

Furthemore, optimism seems a total stranger in a world of accelerated globalization and technology where people become appendages ... where the real struggle is saving our Judeo-Christian humanistic tradition, founded on elevating people, from being supplanted by a populist culture politisizing the vindictive masses. This of course raises the question: Is populism a tool to diminish the gap between the citizen and politics? A known European philosopher had once a nice answer: "A little bit of populism doesn't exist just like being a little bit pregnant doesn't exist."

We must never start to go this way because there is no way back. In the words of one cultural historian, "History shows that when social-democracies fail, populism and fascism get another chance." If the themes of the ultra right and extreme voices of the Tea Partiers dominate, we shall also lose costly time for the real problems that are here now and that are coming.

Our current flirtation with capitalistic fundamentalism and a me-first and community second society are hardly the values upon which to restore the American Dream especially in this new 21st century where, for so many Americans, uncertainty has become the only certainty.

Best,

Frank Thomas
The Netherlands

Donkey Tears in San Diego – Can Progressives Build a Majority Here?

by Source on November 8, 2010, from OB Rag

in Civil Rights & Liberties, Culture, Election, Organizing, San Diego

San Diego has plenty of progressives. Here, progressives protest a Tea Party rally at the waterfront, February 2010.

By Rocky Neptun

About forty activists, mostly Democrats, gathered last week for breakfast at the office of the San Diego Foundation for Change to lick their wounds, investigate what went wrong and listen to an exciting presentation on possible future progressive election victories.

Lamenting the Republican gains in the mid-term elections, participants, ranging from the chair of the San Diego Democratic Club to the editor of Indian Voices to church groups, power liberals all, spoke of their despair over what many saw as a conservative turn to the electorate. Citing the right-wing control of corporate media, particularly Fox News as the official organ of the Republican Party’s extremist wing, many felt that with plentiful, secret funds they had better advertising resources and a more marketable message.

Others, like Susan Weaver, of the Foundation, suggested that in tough economic times “one of the first causalities is tolerance,” alluding to exploiting cultural themes like immigration and LGBT issues; while others mentioned a pattern of “strategic obstructionism” of legislation by the GOP as well as building a vicious “Obama hatred” movement.

Professor Pat Washington called the election “a disaster for democracy,” while Mark Thompson of PFLAG, mentioned the Tea Party, “there is a revolution going on, where do progressives fit into that?”

Several radicals and non-Democrats at the breakfast focused on the failure of Obama’s promise to work for fundamental change as the key to the election debacle. Pointing to too many compromises, they echoed Norman Solomon of the Progressive Democrats of America, who wrote:

“the mass media echo chamber now insists that Republicans have triumphed because President Obama was guilty of overreach but since its first days, the administration has undermined itself – and the country – with tragic under-reach.”

Others echoed the betrayal of those who in 2008 overwhelmingly supported and voted for change by pointing out Democrats held their base but lost the left and independents. Young people, particularly, making up nearly 30 percent of the Democrat’s sweep in 2008 nationally turned out by less than 10 percent in the 2010 election in what was called an “enthusiasm gap” by LA Times writer Marshall Ganz. In California, the generational walk-away was even more pronounced, with 79% of young people voting for Obama’s challenges, while only 44% dragged themselves to the polls in 2010.

Commenting in an article on “How Obama Lost His Voice…” Ganz pointed out that the President ran as a “transformational” candidate, whose very praxis was about change, but once elected became a “transactional” chief executive, which “is about horse-trading, operating within the routine, maintaining the status quo.”

Are Permanent Progressive Majorities in San Diego Possible?

Echoing community activist Norma Chavez’s suggestion that organizing must be “a year ‘round activity,” John Fanestil, executive director of the San Diego Foundation for Change, gave a report on a pilot project where a number of California foundations are collaborating on a plan to build “civic participation infrastructure.”

While non-partisan, the effort titled “A New Decade, A New Democracy, A New San Diego,” would be a broad-based, community building effort at shaping the “context” in which elections take place by “building a lasting and progressive electorate for the future of San Diego County.”

Drawing on a report “Counting on Change in San Diego: Why California’s Future Begins in San Diego’s Immigrant Communities,” which is available on the Foundation’s website, Fanestil told the political post-mortem gathering rather than lurching from one election to the next, dependent on occasional voters, it was possible to build a permanent, solid progressive bloc by focusing on the over 1 million eligible voters in San Diego County who are not registered.

He mentioned the demographics of color in local elections by pointing out that while whites are only 48 percent of the county’s population, they comprise almost 70 percent of its registered voters and a whopping 83 percent of its elected representatives. By using multi-sectional, multi-racial strategies, Fanestil said that a “progressive election infrastructure” which “would sustain itself across elections” would be dependent on leadership development in the neighborhoods. He called “transactional coalitions” short lived.

He vowed that the Foundation would continue to fund organizations which had a historical relationship with their communities and inspired trust and suggested that these groups would be pivotal in the consortium of California foundations’ funding for the county’s underrepresented electorate.

Rocky Neptun is the Director of the San Diego Renters Union.

On Election Day Voters Cut Off Their Hand to Spite Their Foot

by John Lawrence

I can think of no more apt metaphor for what voters did to themselves than the title of this post. Dissatisfied with the economy, voters voted in a party dedicated to the destruction of the economy as far as the middle class is concerned. They voted for a great economy for Wall Street bankers and billionaires. Obama, despite his failure to get the economy back on track in two years and despite his Republican lite tendencies and seeming inability to take a strong stand, is vastly preferable to the Republicans who now control the House. Obama, who already was governing from the right of center, is continually accused of being a left wing socialist and told by Republicans that he now must move to the right. If he moves to the right any further, he might as well resign from the Democratic party and join the Tea Baggers.

Obama's big mistake was to take the side of the banks and not the side of middle class Americans. Surrounding himself with the likes of Larry Summers and Tim Geithner and eschewing the likes of Paul Krugman and Robert Reich almost predisposed him to giving the banks all they wanted and screwing the middle class. In Obama's defense he did appoint Elizabeth Warren to head the new Consumer Financial Protection Bureau and he did it in such a way that he didn't need Congressional approval which he wouldn't have gotten thanks to Republicans. However, he should have taken a stronger stand against the banks, but he was all caught up in the notion we can't let the banks fail. Why not? Would the world have been worse off with a few less credit default swaps and a few less collateralized debt obligations? Obama, no expert on high finance, was out of his league here and relied on the wrong folks to avert what they determined could have been a catastrophe. History will judge whether it was the right thing to do. I think he should have stood up for the middle class and thrown down the gauntlet to the banks, but what do I know?

Obama can still take a stand for the middle class even at this late date. Even if he doesn't have the political power to get his policies enacted, he can still make it clear what they are and do what he can to protect himself and the country from the oncoming political and economic onslaught which the Republicans are poised to deliver. It makes some political sense too in the fact that, when the economy doesn't improve, the Democrats will have prepared the nation for a clear alternative to Republicanism. Now that he thinks the country is safely away from the cliff of another Great Depression, Obama can surely change course and stop favoring the banks who seem to have weathered the crisis all too well when you consider the size of their bonuses coming up this Christmas. They have not skipped a beat while the middle class has been skewered.

It's time to stand up against the banks. They are illegally dispossessing people of their homes. Obama could take a stand against that. But still Geithner is recommending him not to do so because it might slow down the recovery of the real estate market and also harm the banking community. So real estate as opposed to homes and Wall Street as opposed to Main Street are still the important considerations here. What about the people being evicted from their homes illegally by the banks? What about the jobless and the homeless and the huge increase in homelessness that will be the result of the Republicans' desire to terminate unemployment insurance and any vestige of a social program that might benefit the disadvantaged. Expect food stamps to go next.

Obama knows that the US needs massive investments in infrastructure and those investments would create tons of new jobs. But he dare not take a stand here either because Republicans would accuse him of running the country into even more debt. He needn't run the country into more debt if he pays for the investments in infrastructure with increased taxes on the rich. But he can't go there either as the right wing has demonized tax increases in the minds of the American people even if those tax increases are solely on the rich. Obama will probably cave to Republican pressure not to end the Bush tax cuts for the wealthy. Here he did take a stand, but he needs to follow through and not just say, "I would prefer it if you would go along with my suggestion, but ..." The voters have surely cut off their hand to spite their foot when they agree that tax cuts for the rich must be maintained!

The Democrats are on shifting sand. They can't spend on infrastructure and they can't raise taxes. Well, where can they go from there? Don't tell me that Obama is going to spend the next two years bowing to Republican demands to lower taxes and cut spending programs that benefit the poor and middle class? He already yielded to Republicans on the stimulus program by making so much of it tax cuts which turned out to be worthless insofar as job creation is concerned. He shouldn't waste any more money on tax cuts and he should go down fighting to end the Bush tax cuts for the rich which will add $700 billion to the debt, a fact that the debt cutting Republicans aren't the least bit worried about. Obama needs to point out that they are a bunch of hypocrites. On the one hand they say they want to cut the deficit; on the other they say they want to cut taxes on the rich which will have the result of raising the deficit.

If Obama spends the next two years fending off Republican demands and making a clear and principled stand based on Democratic principles, this might be the best that he could do even if he doesn't get any legislation passed. He has enough legislative accomplishments in his first two years for an entire Presidency. He needs to take a different tack now. The public at least needs to be educated as to where the Democrats stand and this stand has to be pitted against the Republican stand which at least has clarity and simplicity. Democrats can't just stand for Republican lite. The public needs to be educated as to what the stakes really are. And please don't repeat the Clinton scenario of triangulation which is what the Republicans are expecting you to do. Surprise them! Catch them off guard. They are a bunch of idiots anyway. You can surely outsmart them. Just don't fall into their traps. Meanwhile, there is much that Obama can do unilaterally by executive order like ending the War in Afghanistan, for example. He should govern like there's no tomorrow and start operating from first principles and not from expediency.

The Focus Hocus-Pocus

Op-Ed Columnist

By PAUL KRUGMAN

Published: November 4, 2010 by the New York Times

Democrats, declared Evan Bayh in an Op-Ed article on Wednesday in The Times, “overreached by focusing on health care rather than job creation during a severe recession.” Many others have been saying the same thing: the notion that the Obama administration erred by not focusing on the economy is hardening into conventional wisdom.

But I have no idea what, if anything, people mean when they say that. The whole focus on “focus” is, as I see it, an act of intellectual cowardice — a way to criticize President Obama’s record without explaining what you would have done differently.

After all, are people who say that Mr. Obama should have focused on the economy saying that he should have pursued a bigger stimulus package? Are they saying that he should have taken a tougher line with the banks? If not, what are they saying? That he should have walked around with furrowed brow muttering, “I’m focused, I’m focused”?

Mr. Obama’s problem wasn’t lack of focus; it was lack of audacity. At the start of his administration he settled for an economic plan that was far too weak. He compounded this original sin both by pretending that everything was on track and by adopting the rhetoric of his enemies.

The aftermath of major financial crises is almost always terrible: severe crises are typically followed by multiple years of very high unemployment. And when Mr. Obama took office, America had just suffered its worst financial crisis since the 1930s. What the nation needed, given this grim prospect, was a really ambitious recovery plan.

Could Mr. Obama actually have offered such a plan? He might not have been able to get a big plan through Congress, or at least not without using extraordinary political tactics. Still, he could have chosen to be bold — to make Plan A the passage of a truly adequate economic plan, with Plan B being to place blame for the economy’s troubles on Republicans if they succeeded in blocking such a plan.

But he chose a seemingly safer course: a medium-size stimulus package that was clearly not up to the task. And that’s not 20/20 hindsight. In early 2009, many economists, yours truly included, were more or less frantically warning that the administration’s proposals were nowhere near bold enough.

Worse, there was no Plan B. By late 2009, it was already obvious that the worriers had been right, that the program was much too small. Mr. Obama could have gone to the nation and said, “My predecessor left the economy in even worse shape than we realized, and we need further action.” But he didn’t. Instead, he and his officials continued to claim that their original plan was just right, damaging their credibility even further as the economy continued to fall short.

Meanwhile, the administration’s bank-friendly policies and rhetoric — dictated by fear of hurting financial confidence — ended up fueling populist anger, to the benefit of even more bank-friendly Republicans. Mr. Obama added to his problems by effectively conceding the argument over the role of government in a depressed economy.

I felt a sense of despair during Mr. Obama’s first State of the Union address, in which he declared that “families across the country are tightening their belts and making tough decisions. The federal government should do the same.” Not only was this bad economics — right now the government must spend, because the private sector can’t or won’t — it was almost a verbatim repeat of what John Boehner, the soon-to-be House speaker, said when attacking the original stimulus. If the president won’t speak up for his own economic philosophy, who will?

So where, in this story, does “focus” come in? Lack of nerve? Yes. Lack of courage in one’s own convictions? Definitely. Lack of focus? No.

And why would failing to tackle health care have produced a better outcome? The focus people never explain.

Of course, there’s a subtext to the whole line that health reform was a mistake: namely, that Democrats should stop acting like Democrats and go back to being Republicans-lite. Parse what people like Mr. Bayh are saying, and it amounts to demanding that Mr. Obama spend the next two years cringing and admitting that conservatives were right.

There is an alternative: Mr. Obama can take a stand.

For one thing, he still has the ability to engineer significant relief to homeowners, one area where his administration completely dropped the ball during its first two years. Beyond that, Plan B is still available. He can propose real measures to create jobs and aid the unemployed and put Republicans on the spot for standing in the way of the help Americans need.

Would taking such a stand be politically risky? Yes, of course. But Mr. Obama’s economic policy ended up being a political disaster precisely because he tried to play it safe. It’s time for him to try something different.

Republican Majority in House Means That They Get ALL Committee Chairmanships!

John,

You made a great overture on how Obama should respond to the Republican goal to "kill the Democratic agenda at any cost," (publicly stated at different times before and after the election by both McConnell and Boehner) and thus Obama's Presidency. You should publicly disburse this article as broadly as you can (including to Obama's revolving inner circle), and the sooner the better! Obama has to light an inner fire of connection with ordinary Americans using using simple language, not university lectures. America is a culture where the attention span is shrinking daily. Repetitive effective sound bites and simplification backed by actions and a fighting spirit speaking to the ordinary man is the order of the day.

BRAVO! I couldn't agree more with what you say, John. Obama has got to come to grips with fact that American politics has descended to an undemocratic  "winner take all" paradigm where cooperative concern for Mainstreet is an afterthought. A small, but vital, example of the structural breakdowns in our political system is that the winning party can receive 100% of all committee chairmanships  ... even though that same party didn't receive 100% of the vote! Our "to the majority winner all the power and final word" governance system would unequivocably be viewed as a right-wing dictatorship in Europe.

Things have broken down in so many ways with our social-political-economic system, it's almost impossible to know where and how to begin the "fixing."  Lies, distortion, and personal demonization permeate and destroy constructive communication between liberals and conservatives ... drowning out any merging of the best of each group's values and ideas in the interests of all Americans.   

Best wishes,
Frank Thomas
The Netherlands

More on Unlawful Foreclosures

Posted at Keepin' it real by George Mantor

Oct. 1, 2010

Tagged with: foreclosures, halted

Wow! Big news on the foreclosure front. Yesterday, California Attorney General Edmund G. Brown Jr. directed Ally Financial, Inc., formerly known as GMAC, to prove immediately that it is complying with state law or, if it cannot, to cease and desist from foreclosing on California homes. Earlier in the week, GMAC voluntarily halted foreclosures in 23 other states.

All of this occurred after a months old deposition in a foreclosure lawsuit finally made its way into the public view. The deposition proved beyond a shadow of a doubt what I have been saying for months. In many cases, foreclosing entities lack both the legal right and the nominal right to foreclose.

 

By nominal, I mean they suffer no loss on which a claim can be made. The borrower owes them no money. And the original funder was paid off by credit default swaps and tax payer tarp funds so there is no actual creditor who is entitled to anymore payments or the property. By the long held legal principal of subrogation, the borrower may owe little or nothing. The trusts that held the original notes have been dissolved and in all likelihood the notes were destroyed subsequent to that or more probably, shortly after they were originated.

 

That is why they can only produce digitized copies. The purpose of requiring the original note is to determine whom, among all of the parties who passed mortgage notes around like a bong at a frat party, is the actual creditor and to get from them a FULL accounting of all of the monies paid in connection with your loan.

 

The securitization of diced up pools of mortgages has created this and similar problems for all foreclosing entities.  People who have already lost their homes to an unlawful foreclosure will have legal standing to demand them back and buyers of these foreclosed properties will make claims against title companies who have nowhere near the reserves to cover the claims. Stay tuned, this is far from over.

 

Crazy things I was saying a year ago are coming true now. Go back and reread some of my stuff from last fall.

 

Better yet, come to my Workshop where I will share my incites into the latest news and what it might mean for people attempting to get a loan modification, avoid foreclosure or buy a foreclosure or short sale property. The Temecula Library on October 9^th.

 

I will be talking about recent legal developments. Courts are starting to get it and lenders are starting to get nervous.

 

They keep saying that people knew what they were getting into when they signed their loan documents.

 

That’s pure unadulterated bullspit. They never told anyone that the loan they were signing for was based on a 100% over value false appraisal. Nor did they mention that your loan was intended to be part of a pool of loans, which if a certain percent of loans failed they would be paid several times the loan amount for each loan in the pool.

 

Did you know that people who never loaned a dime were buying an insurance policy on your loan betting that at very least it would be part of a pool that was created with features guaranteeing that it would fail?

 

Did you know the meaning of Collateralized Debt Obligation, Credit Default Swap, Mezzanine Tranche, Special Purpose Vehicle, Delaware Statutory Trust, Nominee, or that big lenders were doing away with our age old property records and replacing them with private records and in many cases, no records at all?

 

But to make all of that legalese and obfuscation pay off, the loan pools must fail. The only reason for all of that was to make default way more profitable than loaning money.

 

For servicers, the incentive to default a borrower is so great that borrowers who have never been late are routinely pushed into default simply by the servicer refusing to credit the payment.

 

And the incentive to default borrowers is still in place, so if not you, at least your neighbor. They may get around to you yet.

 

See my blog, come to my workshop, tell a friend. Don’t kid yourself, this is far from over. Our economy cannot recover until we begin to create high value jobs. Absent some huge, and I mean ginormous government works program being created, which I doubt, I can’t see where they are going to come from.

 

Large companies are sitting on piles of cash and have no intention of hiring workers in America.

 

That leaves small business. But the impact of foreclosures and years of vacant store fronts don’t bode well for that happening until our local communities stabilize. For the foreseeable future it appears that layoffs to once recession proof jobs such as teachers and police officers are coming.

 

I have always believed that America is a great country not because of its powerful military but because it was a place of opportunity for people who were ambitious.

At the moment, America’s promise has been choked off by a handful of insiders who diverted our wealth to them. The joke may yet to turn out to be on them. Here in San Diego, where a lot of wealth resides, we cannot afford to fix our potholes and I understand that many financiers have had to forego their Bugattis and Maybachs in favor of more durable vehicles such as the Dartz Prombron Monaco Red Diamond Edition.

At $1.5 million, the price of combining luxury and durability doesn’t come cheap, but according to its promotion it’s,

“Perfect for the urban warrior, this bulletproof SUV is an upgrade from the original 8.1 liter GM V8-powered Dartz Kombat T98.

Debuting at the 2010 Top Marques Monaco show, the most expensive SUV in the world will feature ruby red matte paint, gold-plated bulletproof windows, 22″ Kremlin Red Star bulletproof wheels, tungsten exhaust and a coating of Kevlar.

The badges and dials are made with white gold, diamonds and rubies. It also features a special Vertu mobile phone with an “alert” button and a Rogue Acoustic Audio System. Best of all, the interior is lined with whale penis leather!”

 

While bullet proofing is included, apparently rust proof undercoating is extra but the interior makes it worth it, don’t you think.

 

In the meantime, more families will lose their homes to fuel this level of luxury.

 

By spreading the truth about what happened to our prosperity and sharing strategies to bring real change, we can all make a difference in shaping the America we want for future generations.

 

Introduce people to my blog. If you know anyone who is being affected by this, have them contact me. Everyone’s story is important and I have learned about patterns of conduct because people from all over the country write to me.

Mortgage Modifications May Lead to Foreclosure

By JACOB ADELMAN

The Associated Press

updated 11/7/2010 7:31:54 PM ET 2010-11-08T00:31:54, from msnbc

 
Esperanza Casco who's home in Long Beach was recently foreclosed, speaks at a "Faces of LA's Foreclosure Crisis'' rally in Los Angeles in late October.

Owners thought banks were helping with terms, only to lose their homes

LOS ANGELES — Grocery store owners William and Esperanza Casco were making enough money to stay current on their mortgage, but when JPMorgan Chase & Co. offered a plan that reduced their payments, they figured they could use the extra cash and signed up.

The Cascos say they never missed a subsequent payment, so they were horrified when the bank decided the smaller payments weren't enough and foreclosed on their modest Long Beach home.

Their story is echoed across the country by people who claim — some in lawsuits — that banks didn't live up to their end of the deal when they agreed to trial mortgage modifications.

The suits add to a feeling among many struggling homeowners that they're getting little help from the part of the government's $700 billion Wall Street rescue that aimed to help them directly.

Indeed, Treasury statistics show that only about one-third of the nearly 1.4 million homeowners accepted into the government's payment reduction program over the past year have had their reductions made permanent.

"It is extremely unfair that someone like me and my wife who have owned our home for 17 years and never missed a payment could end up in foreclosure," Casco, 47, said in Spanish through an interpreter.

Chase spokesman Gary Kishner was unable to comment on whether Cascos had been current on their payments but insisted the bank had treated the couple fairly.

"We worked with the borrower to give him as many opportunities as possible to qualify for a modification," he said. "However, they were not able to do so and therefore we were forced to foreclose on the property."

Several federal lawsuits filed in Boston accuse major lenders of breach of contract under the government's Home Affordable Modification Program, in which banks agreed to participate as part of the bank bailout.

The lawsuits say the banks agreed under HAMP to grant permanent mortgage modifications to borrowers who make all payments during trial modifications.

Attorney Shennan Alexandra Kavanagh said several of the plaintiffs lost their homes after their payments reverted to their original sums that they were unable to pay. She said she believes tens of thousands of borrowers in Massachusetts alone could be covered by the suits if they get class-action status.

One of the lawsuits, against Bank of America Corp., was consolidated earlier this month with similar complaints in five other states, Kavanagh said.

Bank of America spokeswoman Shirley Norton said in an e-mail that the lender will continue aggressively defending itself against the cases.

More lawsuits have been filed against other lenders elsewhere.

In San Francisco, the Housing and Economic Rights Advocates legal services group sued Chase, accusing the New York bank of profiting from collecting payments during long trial modifications that ultimately end in foreclosure.

"They're participating in the crisis they had helped to foment by refusing to honor loan modifications they had already agreed to," said attorney James C. Sturdevant, whose firm is assisting in the lawsuit.

Chase's Kishner said he could not comment on the pending litigation.

Joseph R. Mason, a professor at Louisiana State University's business school who has written widely on the subprime lending debacle, said he suspects the loan modification disputes are a legacy of the federal government's rush to stem the flow of foreclosures before it had adequate plans in place.

"These policymakers said, just go out and do this and don't let us worry about the details," he said. "These details are now what are coming to the fore in these modification cases."

Laurie Maggiano, policy director at the Treasury Department's Homeownership Preservation Office, said banks were encouraged to offer trial modifications based on interviews with borrowers about their incomes and expenses while they sorted out the paperwork to qualify for permanently reduced payments.

The banks were under no obligation to make trial modifications permanent until this June, when new regulations stopped loan servicers from offering the trials based on stated income, Maggiano said.

Now, incomes and other details are being fully vetted before trial periods, and borrowers are preapproved for a permanent modification as long as they make three trial period payments, she said.

She also said banks are only obliged to grant modifications if the investors who hold the mortgages also benefit from the modification, as mandated by the October 2008 legislation approving the bailout.

Those explanations provide little comfort to the Cascos.

"I think that banks are playing games with us," William Casco said.

Casco said his monthly mortgage payments to Washington Mutual Inc. went up to $2,765 when he refinanced his home in 2006 to pay for a new a meat counter at his store in the industrial Los Angeles suburb of South Gate.

Chase was in the process of acquiring Washington Mutual in January 2009 when Casco said it sent a note telling him he qualified for a lower forbearance rate. The El Salvador native sent the tax returns and business documents the bank was requesting.

His payment was reduced to $1,250, where it remained for several months until Chase told him to apply for a trial loan modification.

Again, Casco said, he sent Chase the documentation they requested. His payment rose to $2,363 in June, then returned to the forbearance rate in October.

Casco said he continued paying what he was asked until August 2010, when Chase told his family that they were $50,000 behind on their payments and put them into foreclosure.

The home has since been sold and Casco is currently fighting eviction. That has him considering joining an existing lawsuit against the bank or seeking support to file a suit on his own.

"I'm determined to do whatever it takes in order to keep my house," he said. "I feel that a great injustice has been done to my family."

Climate Scientists Plan Campaign Against Global Warming Skeptics

By Neela Banerjee, Tribune Washington Bureau

November 8, 2010, from the Los Angeles Times

Reporting from Washington —

Faced with rising political attacks, hundreds of climate scientists are joining a broad campaign to push back against congressional conservatives who have threatened prominent researchers with investigations and vowed to kill regulations to rein in man-made greenhouse gas emissions.

The still-evolving efforts reveal a shift among climate scientists, many of whom have traditionally stayed out of politics and avoided the news media. Many now say they are willing to go toe-to-toe with their critics, some of whom gained new power after the Republicans won control of the House in Tuesday's election.

On Monday, the American Geophysical Union, the country's largest association of climate scientists, plans to announce that 700 climate scientists have agreed to speak out as experts on questions about global warming and the role of man-made air pollution.

---

CLARIFICATION:
The effort by John Abraham is separate from the Geophysical Union's.

---

John Abraham of St. Thomas University in Minnesota, who last May wrote a widely disseminated response to climate change skeptics, is also pulling together a "climate rapid response team," which includes scientists prepared to go before what they consider potentially hostile audiences on conservative talk radio and television shows.

"This group feels strongly that science and politics can't be divorced and that we need to take bold measures to not only communicate science but also to aggressively engage the denialists and politicians who attack climate science and its scientists," said Scott Mandia, professor of physical sciences at Suffolk County Community College in New York.

"We are taking the fight to them because we are … tired of taking the hits. The notion that truth will prevail is not working. The truth has been out there for the past two decades, and nothing has changed."

During the recent campaigns, skepticism about climate change became a rallying cry for many Republican candidates. Of the more than 100 new GOP members of Congress, 50% are climate change skeptics, according to an analysis of campaign statements by the Center for American Progress, a liberal think tank.

Prominent Republican congressmen such as Darrell Issa of Vista, Joe L. Barton of Texas and F. James Sensenbrenner Jr. of Wisconsin have pledged to investigate the Environmental Protection Agency's regulation of greenhouse gas emissions. They say they also intend to investigate the so-called Climategate scandal, in which thousands of e-mails of leading climate scientists were hacked and released to the public last year.

Climate change skeptics argued that the sniping in some e-mails showed that scientists suppressed research by skeptics and manipulated data. Five independent panels subsequently cleared the researchers involved and validated the science.

"People who ask for and accept taxpayer dollars shouldn't get bent out of shape when asked to account for the money," said James M. Taylor, a senior fellow and a specialist in global warming at the conservative Heartland Institute in Chicago. "The budget is spiraling out of control while government is handing out billions of dollars in grants to climate scientists, many of whom are unabashed activists."

Ongoing public interest in Climategate has prompted the scientists to act.

The American Geophysical Union plan has attracted a large number of scientists in a short time because they are eager to address what they see as climate misinformation, said Jeffrey Taylor, research fellow at the National Center for Atmospheric Research in Colorado and manager of the project.

Still, the scope of the group's work is limited, reflecting the ongoing reluctance among many scientists to venture into politics.

A rapid-response team, however, is willing to delve into politics. In the week that Abraham and others have been marshaling the team, 39 scientists agreed to participate, including Richard Feely, senior scientist with the National Oceanic and Atmospheric Administration; Kevin Trenberth, head of the Climate Analysis Section at the National Center for Atmospheric Research; and Michael Oppenheimer, professor of geosciences and international affairs at Princeton University.

"People who've already dug their heels in, we're not going to change their opinions," Mandia said. "We're trying to reach people who may not have an opinion or opinion based on limited information."

[email protected]

Copyright © 2010, Los Angeles Times

Perspective on the Foreclosure Moratoriums

Posted at Keepin' it real by George Mantor

Oct. 27, 2010

Tagged with: bankstas, forgery, fraud, liars, perjury, rico, robosigner

The recent belated media attention to the problem of unlawful foreclosures continues to purport several falsehoods.

Most glaring among these are the repeated assertions that only people who “deserve it” suffer foreclosure. The message coming from the industry is to blame the victim by asserting that this problem wouldn’t be happening had the homeowners made their payments.

 

Never mind the cruel joke that these are the people that caused high unemployment and the collapse of government services while looting the middle class and paying themselves obscene bonuses. This year is expected to be another record for Wall Street bonuses and foreclosures.

 

Setting aside borrowers who deliberately set out to cheat the system and buy more house then they could afford, what is about to be revealed are the large number of people who have been foreclosed on as part of a systematic fraud, not because they were delinquent.

 

There are thousands of examples of foreclosures on wrong addresses, wrong parties, homes without loans, homes in a modification program, and the homes of people who never missed a payment.  All of that made possible by forged documents and, until recently, with many judges’ support.

 

But wait, in California and 29 other states, there is no judicial or administrative review, allowing anyone to foreclose on any property without proving their entitlement to do so, to anyone.

 

Unless the homeowner files an action in court, the foreclosure will occur uncontested.  Do not believe for one moment that this easy money has gone unnoticed by organized crime.

 

That is why the original voluntary foreclosure moratoriums by GMAC, Chase, and Bank of America were declared in only 23 states.  In those states, there is some form of legal review. These are the states where it was necessary to create new paperwork to satisfy the judge of their right to foreclose.

 

In non-judicial foreclosure states, they had no intention of stopping unlawful foreclosures because they met little resistance.  By pretending to modify the loan or resolve the mistake, they persuade the homeowner that everything will be fine while continuing to foreclosure without further notice.

 

Additionally, most media outlets are quoting some industry insiders as saying that this is just a little “paperwork problem” that can be fixed by filing a few more papers.  They already tried that, and that is how we got here.

 

What finally brought this to light were the depositions by a number of foreclosure mill employees who signed hundreds of thousands of documents in which they declared, “Under penalty of perjury…” and then went on to swear that they had personal knowledge of the facts in an affidavit to the court. The depositions reveal that these “robo signers” had absolutely no knowledge of anything they were swearing to.

 

That isn’t going to go away, except by some sort of judicial fiat that suddenly blesses this conduct retroactively.

 

If we allow forgery and perjury to go unpunished, the courts will cease to be effective.  It will be worth watching to see how this aspect of employee culpability resolves.  Keep in mind that we are talking about hundreds of thousands of willful acts by virtually all mortgage servicers, not a single act by a rogue employee.

 

The lenders say that they will examine their procedures and should be back to foreclosing in two to three weeks.  Which begs the question of how they can provide a thorough review of 5 record breaking years of foreclosure files when they could only spend a few seconds examining them in the first place?

 

And yet, those bogus affidavits are actually irrelevant to the larger issue of what the phony paperwork conceals.  Why would they not just submit proper paperwork in the first place?

 

The answer is that loans that were bundled into pools for the purpose of securitization were never properly transferred.  Real estate law, cumbersome though it may be, requires the physical transfer of documents when an interest in the property changes hands.  This is known as an assignment.

 

But, the notes intended for securitization were never endorsed because they were intended to be the security in multiple pools.

 

Because the assignments were never properly transferred and recorded, the foreclosure mills have tried to go back after the fact and recreate the assignments.

 

To do that, they needed to “create” all of the missing assignments in the securitization chain.

 

That required them to design, write and digitally print fictional documents for what would be at minimum four and possibly hundreds of transfers.  These would then need to be signed (endorsed) by the transferring party after the fact and then the signature would need to be notarized.

 

In some cases, the notaries weren’t yet in existence when the signatures were purported to have been witnessed.  In other cases, the notaries were in states other than where the document was purported to be signed.

 

The “Robo Signers” swore it was all correct and true.

 

Before Wall Street became immune to prosecution, this sort of creation of documents after the fact was considered forgery.

 

So, all of those so called paperwork errors are really after the fact attempts to paper over a slandered title.

 

But, suppose we let them get away with it.  Just call it a technicality like they have and let it slide.  

 

Judges have reasoned that they can’t simply let a nonpaying borrower have a free house, and have ruled that borrowers have no legal standing to challenge the foreclosing entity to prove, through those assignments, that they are the party entitled to foreclose. That will now change.

Here’s where it gets interesting.  Beyond the difficulty in identifying the true creditor is a larger issue of the tax exempt status of the trusts which are purported to hold the notes.

 

Known as REMICS, under the IRS code, in order to enjoy beneficial tax treatment, the trust (1) must be passive and (2) cannot acquire any new assets 90 days following the trust’s creation.  

 

If the notes were never properly assigned to the trust when it was established, then the trust does not actually own the underlying mortgages. If the trusts receive these assignments (assets) at this time, they would have serious tax consequences. In many cases, the trusts have already been dissolved and the parties satisfied with insurance, (credit default swaps) or tarp funds. Thus, there is no legal creditor who could prove standing to foreclose if courts uphold the law.

So, while the judge may be reluctant to give a homeowner a free home, the only other option is to award it to someone who never loaned a dime and doesn’t lose a penny, and ironically, is the party responsible for engineering the entire economic collapse.

And, if that weren’t bad enough, the other consequence of this so called “paperwork problem” is that if it is not known with certainty who owns the mortgage in question, it cannot be released.  If the title company is not satisfied that there is a good release on the old mortgage, it will refuse to insure the new mortgage.

Recent buyers of foreclosures and short sales may have bought into more than they bargained for.  And, because this is about what is missing rather than part of the record, the only conceivable way to know if there is good title is to go to a title company other than the one that insured the buyer’s title and ask for a quote to insure the title in light of these developments. If they can’t track all of the assignments, they will either not insure the title or attempt to exclude or “write around” the missing assignments. The rush, by pretender lenders to foreclose on American homeowners is the final piece of an extraordinary plan.  It is an effort to eliminate the evidence of the greatest financial fraud in history. That is what the next few months will reveal as more and more media are forced to confront the facts. The so called examination by the Bankstas is but another unabashed lie from people with a history of doing nothing but telling lies.

Finally, it is apparent from the email I am receiving that foreclosure sales are going forward despite the self-imposed moratorium.  The reason being given is that these properties were too far along in the process to halt the auction. But, the law is the law and those individuals will have a claim.  Now, it will be interesting to watch as, one by one, homeowners simply stop making their loan payments as they come to realize the significance of these revelations. In those states they will still need a lawyer. The surest way to stop the foreclosure and get to the discovery needed to prove other claims is most likely through a quiet title action. I’m currently digging deep in this area. Please keep in mind that I am not a lawyer and do not give legal advice.This is one of the most complicated and unrewarding areas of practice and few attorneys have any understanding of the complexities.

In the course of more than probably 50 articles on this topic, I have amassed a lot of information that hasn’t made it into print. In that regard, I am prepared to talk in more detail if there are implications for your situation. Hopefully this will be of assistance to you in evaluating lawyers to represent you. Feel free to contact me with your questions. The best way is by email. Give me a synopsis of the question. Then, if we need to talk in more detail we can do that on a land line. My goal, as always, is to educate and inform. If enough people understand the truth, not the nonsense we have been hearing, we can do something about this. Just because a handful of people tried to steal all the money for them is no reason to let them continue or to let them illegally seize what could be as many as 15 million homes when the dust finally clears. Where they will live when their house is gone, how they will work when their job is gone, where they will learn when the school is closed, who will treat them when the clinic is shuttered, and what they will eat are the next wave of problems we will need to address. With what?

Governments at all levels have already spent the taxes that future generations have yet to pay…and there is nothing left. I’m the most upbeat, and positive person you will ever meet, but as a writer and researcher I believe one thing with every fiber of my being…we are headed for some unprecedented change and it won’t be brought about by politicians but by the unintended consequences of their complicity in Wall Streets attempt to steal anything that isn’t tied down.

The most recent announcements by the Bankstas should be seen as a clear signal that they will keep doing this until they are stopped.

The mood at the moment is that little will come of all of the probes and investigations but I do not know of any way that this can continue to be hidden.

Peter Orszag and the Drive to Cut Social Security

Published on Friday, November 5, 2010 by FireDogLake.com

by Dean Baker

Peter Orszag, President Obama’s former budget director, seems determined to cut Social Security. Like most people involved in this quest he is prepared to leave the facts behind and is quick to resort to name calling.

He begins his column by telling readers:

“The budget deficit figured prominently in much of the discussion surrounding yesterday’s election.”

This is partly true since the media tend to prominently feature the views of people who discuss the budget deficit in all contexts, but it is absolutely false insofar as the implication is that the deficit was an important factor in the Democrats’ defeat. All the polls show that high unemployment was the major factor in the Democrats’ loss; the deficit was at most a minor issue.

Orszag goes on to tell readers that progressives should be happy to see Social Security reform on the agenda since:

“the key issue progressives had been concerned about — individual accounts within Social Security — has been definitively won in their favor (for now).”

It might have been helpful if Orszag had used names, since I don’t know any progressives who have this as their “key issue.” The progressives who are most visible on this issue have been concerned about a Social Security benefit that is already small by international standards being made still smaller.  . . .

This issue of accounts divides progressives, since many support some form of government managed saving accounts as a supplement to Social Security. If Social Security is cut and, as a separate matter accounts are established to supplement Social Security income, it is logically identical to an outcome in which a portion of Social Security is explcitly replaced by private accounts. It is not clear whether Orszag is simply confused here or is deliberately trying to mislead readers.

The next item on Orszag’s list of reasons for early cuts is:

“acting now would allow changes to take effect more gradually, cushioning the blow.”

It is important to understand this argument, since it is unlikely that many who do understand it would endorse it. Given the 75-year planning horizon, if we cut benefits for people who are retiring in the near future, then we will have to raise taxes and/or cut benefits less for people who are working/retiring in later years. In other words, if we squeeze some money out of the current cohort of near retirees, we will have to get less money out of people in 2050 and 2060.

Is this a good idea? Well, we know that the vast majority of near retirees will have almost nothing other than Social Security to support themselves in retirement. The reason is that the people who always talk about budget deficits were too ignorant of the economy to recognize the dangers of an $8 trillion housing bubble. Since these people were controlling economic policy, middle class workers saw much of the wealth they had accumulated as home equity or in their 401(k) disappear. In other words, the deficit hawks who want “changes to take effect more gradually” want to kick again the people whose wealth was destroyed due to the incredible economic mismanagement of these deficit hawks.

By contrast, the Social Security projections show that workers and retirees will on average be about 40 percent richer in 2040 than they are today and about 70 percent richer by 2060. Why exactly is it important to cut benefits from retirees in 2015 or 2020 who will have very little income, so that their far richer children and grandchildren end up with an income 50 years from now that is only 69 percent higher net of taxes rather than say 70 percent? Orszag obviously feels this redistribution from the relatively wealthy to the relatively poor is important, but he certainly doesn’t explain why.

Orszag concludes by referring to “the left’s strident opposition to any serious discussion of Social Security reform.” So, the people who disagree with Orszag are “strident.” The name-calling might be more warranted if Orszag had a better argument.

© 2010 FireDogLake.com

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org) and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. 

Foreclosures and Banks' Debt to Society

Published on Saturday, November 6, 2010 by the Guardian/UK

Rewritten bankruptcy provisions reduce indebted homeowners to servitude. What has become of the rule of law in the US?

by Joseph E. Stiglitz

The mortgage debacle in the United States has raised deep questions about "the rule of law", the universally accepted hallmark of an advanced, civilized society. The rule of law is supposed to protect the weak against the strong, and ensure that everyone is treated fairly. In America, in the wake of the subprime mortgage crisis, it has done neither.

Part of the rule of law is security of property rights - if you owe money on your house, for example, the bank can't simply take it away without following the prescribed legal process. But in recent weeks and months, Americans have seen several instances in which individuals have been dispossessed of their houses even when they have no debts.

To some banks, this is just collateral damage: millions of Americans - in addition to the estimated 4 million in 2008 and 2009 - still have to be thrown out of their homes. Indeed, the pace of foreclosures would be set to increase - were it not for government intervention. The procedural shortcuts, incomplete documentation and rampant fraud that accompanied banks' rush to generate millions of bad loans during the housing bubble has, however, complicated the process of cleaning up the ensuing mess.

To many bankers, these are just details to be overlooked. Most people evicted from their homes have not been paying their mortgages, and, in most cases, those who are throwing them out have rightful claims. But Americans are not supposed to believe in justice on average. We don't say that most people imprisoned for life committed a crime worthy of that sentence. The US justice system demands more, and we have imposed procedural safeguards to meet these demands.

But banks want to short-circuit these procedural safeguards. They should not be allowed to do so.

To some, all of this is reminiscent of what happened in Russia, where the rule of law - bankruptcy legislation, in particular - was used as a legal mechanism to replace one group of owners with another. Courts were bought, documents forged, and the process went smoothly. In America, the venality is at a higher level. It is not particular judges that are bought, but the laws themselves, through campaign contributions and lobbying, in what has come to be called "corruption, American-style".

It was widely known that banks and mortgage companies were engaged in predatory lending practices, taking advantage of the least educated and most financially uninformed to make loans that maximized fees and imposed enormous risks on the borrowers. (To be fair, the banks tried to take advantage of the more financially sophisticated as well, as with securities created by Goldman Sachs that were designed to fail.) But banks used all their political muscle to stop states from enacting laws to curtail predatory lending.

When it became clear that people could not pay back what was owed, the rules of the game changed. Bankruptcy laws were amended to introduce a system of "partial indentured servitude". An individual with, say, debts equal to 100% of his income could be forced to hand over to the bank 25% of his gross, pre-tax income for the rest of his life, because the bank could add on, say, 30% interest each year to what a person owed. In the end, a mortgage holder would owe far more than the bank ever received, even though the debtor had worked, in effect, one-quarter time for the bank.

When this new bankruptcy law was passed, no one complained that it interfered with the sanctity of contracts: at the time borrowers incurred their debt, a more humane - and economically rational - bankruptcy law gave them a chance for a fresh start if the burden of debt repayment became too onerous.

That knowledge should have given lenders incentives to make loans only to those who could repay. But lenders perhaps knew that, with the Republicans in control of government, they could make bad loans and then change the law to ensure that they could squeeze the poor.

With one out of four mortgages in the US under water - more owed than the house is worth - there is a growing consensus that the only way to deal with the mess is to write down the value of the principal (what is owed). America has a special procedure for corporate bankruptcy, called Chapter 11, which allows a speedy restructuring by writing down debt, and converting some of it to equity.

It is important to keep enterprises alive as going concerns, in order to preserve jobs and growth. But it is also important to keep families and communities intact. So, America needs a "homeowners' Chapter 11".

Lenders complain that such a law would violate their property rights. But almost all changes in laws and regulations benefit some at the expense of others. When the 2005 bankruptcy law was passed, lenders were the beneficiaries; they didn't worry about how the law affected the rights of debtors.

Growing inequality, combined with a flawed system of campaign finance, risks turning America's legal system into a travesty of justice. Some may still call it the "rule of law", but it would not be a rule of law that protects the weak against the powerful. Rather, it would enable the powerful to exploit the weak.

In today's America, the proud claim of "justice for all" is being replaced by the more modest claim of "justice for those who can afford it". And the number of people who can afford it is rapidly diminishing.

© 2010 Project Syndicate

Joseph E. Stiglitz is University Professor at Columbia University. Among many books, he is the author of Globalization and Its Discontents. He received the Nobel Prize in Economics in 2001 for research on the economics of information. He is the co-author, with Linda Bilmes, of The Three Trillion Dollar War: The True Costs of the Iraq Conflict.  His most recent book is Free Fall: America, Free Markets, and the Sinking of the World Economy.

Extended Unemployment Could Outlast Extended Unemployment Insurance

Published on Friday, November 5, 2010 by The Huffington Post

by Arthur Delaney

WASHINGTON -- The government announced Friday morning that the unemployment situation barely changed in October. The unemployment rate has been stuck above nine percent for a year and a half as nearly 15 million people are out of work. They will remain so for the foreseeable future, according to most estimates.

People who lost their jobs more recently may get less of a cushion than people laid off at the beginning of the recession. That's because Congress may lose its appetite for reauthorizing the extended unemployment insurance it created in 2008 and 2009.

According to the Labor Department, 6.2 million people -- 41.8 percent of all unemployed -- have been out of work for longer than six months. State governments provide jobless benefits for layoff victims for those first six months, and the federal government traditionally picks up the rest during recessions.

To fight the worst recession since the Great Depression, Congress has given the unemployed in hardest-hit states an unprecedented 73 weeks of additional benefits. During the second-worst recession in the early 1980s, Congress provided 55 weeks. It didn't begin to take them away until unemployment dropped to 7.2 percent.

House Speaker Nancy Pelosi (D-Calif.) told HuffPost on Thursday that reauthorizing the 73 weeks is her third priority in the upcoming lame duck session, after dealing with the expiring Bush tax cuts and providing a $250 cost-of-living benefit for Social Security recipients.

But once Congress reconvenes on Nov. 15, Pelosi and Senate Majority Leader Harry Reid (D-Nev.) will have just two weeks before the extended benefits expire at the end of the month. Republicans and conservative Democrats held up the previous reauthorization for nearly two months.

The progressive Economic Policy Institute estimates that keeping extended unemployment benefits through 2011 would create 723,000 jobs at a cost of $65 billion, or 1.7 percent of the White House's projected $3.8 trillion budget for that year. Most economists regard unemployment insurance as among the most economically stimulative fiscal policies.

It will be extremely difficult for lame-duck Democrats to get such a lengthy reauthorization. The previous four efforts each lasted for a few months at a time. If the next reauthorization is similarly short, that means it will come due on the watch of incoming House Speaker John Boehner (R-Ohio), who will probably not be amenable to tens of billions in deficit spending specifically requested by President Obama. Congressional Democrats have refused to compromise on offsetting the cost of unemployment benefits, which are traditionally given an emergency designation.

"Congress doesn't have to be a lame duck -- it can make a huge impact now by renewing for another year the jobless benefit extensions that expire on November 30th," said Christine Owens, director of the National Employment Law Project, in a statement Friday. "If Congress fails to act, two million workers will be cut off next month alone -- in the heart of the holidays -- and any brief stopgaps will still put millions at risk of cut- offs next year. Congress simply cannot pull the plug on families and businesses if it has any realistic intention to turn things around."

There are lots of people who are still unemployed after 99 weeks of benefits (though nobody knows how many). It's unlikely they'll get any more help from Congress.

President Obama said Friday in light of the bleak employment situation that part of his strategy to create jobs includes "extending unemployment benefits to help those hardest hit by the downturn while generating more demand in the economy."

Copyright © 2010 HuffingtonPost.com, Inc.

Obama’s Pathetic Post-Mortem Response

Published on Saturday, November 6, 2010 by The Progressive

by Matthew Rothschild

The President's post-mortem press conference underscores why he lost, and why progressives should no longer invest hope in him.

While he accepted responsibility for the defeat, and while he acknowledged that people were "frustrated" and wanted "their jobs to come back faster," he failed to even mention the massive housing crisis that he has so ineptly handled.

On top of that, he adopted the messaging of the Republicans. He talked about the need to reduce our deficit so we don't "leave our children a legacy of debt" and so we're not "racking up the credit card for the next generation."

Those lines could have come straight out of the mouth of Rand Paul!

And like Rand Paul, he saluted business and the free market: "The reason we've got an unparalleled standard of living in the history of the world is because we've got a free market that is dynamic and entrepreneurial and that free market has to be nurtured and cultivated."

Then he pitied big business.

"You just had a successive set of issues in which I think business took the message that, well, gosh, it seems like we may be always painted as the bad guy," he said. "And so I've got to take responsibility in terms of making sure that I make clear to the business community as well as to the country that the most important thing we can do is to boost and encourage our business sector."

Really??? That's "the most important thing" he has to do? Wow!

He also backpedaled fast on expanding the role of government, conceding without qualification that some people thought "government was getting much more intrusive into people's lives." Amazingly, he said, "I'm sympathetic to folks who looked at it and said this is looking like potential overreach."

Rather than represent an ideological alternative, he tried to blur the ideological lines. "None of the challenges we face lend themselves to simple solutions or bumper-sticker slogans," he said. "Nor are the answers found in any one particular philosophy or ideology."

And just as he did during his long waffle on health care, he said, "I'm eager to hear good ideas wherever they come from."

He repeatedly mentioned the need for "civility" and "consensus" at a time when it's more important than ever to slug out the ideological differences.

He also embraced some of the substance of the Republican Party agenda.

Sounding like John McCain, he endorsed the idea of cutting "earmarks" several times.

He said he wanted to "accelerate depreciation for business," which is about the least efficient way to jumpstart the economy.

He said he wanted to push natural gas.

And he even waved at restarting "our nuclear industry as a means of reducing our dependence on foreign oil and reducing greenhouse gases."

That's his vision?

This is pathetic.

© 2010 The Progressive

The Economy Added 159,000 Private Sector Jobs Last Month, But There Were 457,000 Initial Unemployment Claims Last Week!

by John Lawrence

Pundits are getting all excited about 159,000 private sector jobs added last month but you don't hear a peep about the 457,000 initial unemployment claims for the week ending October 30, an increase of 20,000 from the previous week's revised figure of 437,000 according to the unemployment insurance weekly claims report. The initial unemployment claims represent a lower bound on the people who became unemployed just for the last week in October. It doesn't count the voluntary quits or the people losing their jobs who are not eligible for unemployment insurance which is somewhere around 50%. So someone is lying somewhere. It just doesn't add up. It just doesn't add up. Even if you believe their statistics, only a net of 151,000 non-farm jobs were added last month because 8,000 government jobs were lost. They always paint the rosiest picture. As Robert Reich pointed out, 125,000 new jobs per month are required just to keep up with growth in the labor force.

According to the Employment Situation Summary, since December 2009, employment in the private sector has risen by 1.1 million, but temporary help services has added 451,000 of these jobs since a recent low in September 2009. So roughly half the jobs added in the last year have been temp jobs which do not even qualify for unemployment insurance when those jobs go away. This does not represent any great news for workers who are looking for permanent jobs. Practically no jobs in manufacturing have been added. The jobs being created are mostly in services and retail. Wal-Mart greeters can rejoice; there are plenty of jobs available for you. The layoffs in the government sector have been mainly firemen and policemen at the local level, not the signs of a robust economy. Rather than face the fact that high paying manufacturing jobs are not coming back, the Obama administration continues to think that the job situation will rebound if they just get out of the way and let it happen. This modus operandi is likely to be about as successful as the scene on Saturday Night Live mimicing the Publishers Clearing House rep as she tries to elicit enthusiasm from the supposedly lucky person who has just won a check for $10,000. Despite the presentation of the big check and the bunch of balloons, the lucky person seems singularly unimpressed despite the rep's hopefully contagious, but unavailing, enthusiasm. Having fixed the banking situation, they think that's all they need to do and the economy will recover on its own - just magically - because that's what it's always done. Good luck, Sherlock!

In my blog post, Initial Unemployment Claims and Monthly Employment Situation Data Don't Compute, I point out how the government manipulates statistics to make the employment situation sound better than it really is. The real unemployment rate, if you count all the people the reported unemployment rate fails to count, is at least 17%. Another thing that is happening is that unemployed workers, who are lucky enough to find a job and, therefore, are no longer counted as unemployed, are taking jobs at pay rates far below those of their last job and far below their skill levels. So people who had been used to making $20 -$30 an hour are now working for $8-$10 an hour. Republicans have been railing against unemployment benefits because they think all workers should take whatever jobs are available regardless of their educational or work background. So you have PhDs driving cabs for instance. Unemployment benefits help workers hold out longer in order to find jobs in their own fields rather than take jobs driving cabs or working at Wal-Mart. With the Republican takeover of the House in the recent elections, don't expect additional unemployment benefits to continue.

It's clear that the government is lying about the real employment statistics. Every administration, Republican or Democrat, has an incentive to do so. It's clear that right wing conservatives want former professional and high paid manufacturing workers to take minimum wage jobs in the new service economy or remain unemployed and uncompensated by unemployment insurance. It's clear that it is government policy, despite Obama's efforts to the contrary, to assist corporations big and small to ship jobs overseas. Outsourcing is the order of the day in the global economy. Becoming more educated or highly skilled will not help workers either as other countries with cheaper labor are turning out engineers and scientists every bit the equivalent of American degreed professionals. So US jobs both low and highly skilled will continue to be outsourced. So put that in your pipe and smoke it Bill Gates. You want everyone to get a college diploma so we can compete with the rest of the world? Let's see, a college diploma these days plus a Master's Degree (you can't get anywhere without one of those) will set you back about $100,000. in student loans. Then you're supposed to apply for a job with Microsoft or Hewlett-Packard which can outsource your job to Asia in the blink of an eye leaving you to default on your mortgage and your student loan. It doesn't make a lot of sense to me. The truth is that engineers and scientists in China, India and elsewhere are every bit as professionally qualified as those in the US and they will work for a lot less. So unless Microsoft, HP and others are going to give you an ironclad contract that will guarantee you a job for 30 years with appropriate pay increases, why would you take a chance on a pig in a poke which is what a college degree in present day America represents? The deunionization of America has paved the way for your job to be outsourced. In retrospect, from the worker's point of view, it doesn't seem like such a great idea. Before Ronald Reagan went on the warpath towards unions, 25% of the workforce was unionized; today it's just 7%. So pay beaucoup bucks for a college degree, go to work for a nonunionized shop in the global economy and what do you get? You'll probably be training your own replacement when you're in your fifties. With the retirement age raised to 70 by then, you'll have maybe 20 years of noncompenated unemployment before you can get social security. Not exactly a propitious situation.

And this lack of jobs and hence continuing mortgage and student loan defaults is the reason that people are so dissatisfied with Obama. He continues to effectively cling to the Republican philosophy that only tax cuts for the rich will solve the problem, when it clearly has only made the problem worse, not only for job creation but for Federal government deficits as well! If he would at least put the option on the table that the government might have to provide jobs directly via a 1930s style WPA program, then the Democrats would have an alternative to Republican philosophy, albeit a diametrically opposed one, which is good because the distinction would be absolutely clear. But the problem is Democrats don't have a clear alternative leaving the Republican solution the only one on the table by default. The fact is that the Democrats are afraid to put the option of direct government creation of jobs (especially when the unemployment rate exceeds 5%) on the table because they are afraid of being accused of socialism. They are afraid to put the alternative of direct government intervention in the economy on the table. The Chinese, however, have no such qualms. The Republicans know this; they know they have the only option, no matter how unsuccessful it's proved to be, that's presentable in today's political climate. The US, that champion of free market capitalism, can't be seen providing jobs to the unemployed by direct government intervention in the economy. Neither can it be seen raising money for itself directly by participating in the economy. Socialism, again! So while the Chinese and other governments rack up profits for their governments in sovereign wealth funds, the US is doomed to be an eternal debtor especially in view of the fact that there is continuing pressure to lower taxes which is basically the only method the US government has to raise money.

It wasn't always so. Before Ronald Reagan became President and ushered in the New Age of Republican trickle down economics, tax cutting and union busting, the US was the world's largest creditor nation. Now after 30 years of Reaganomics, the US is the world's largest debtor nation. Doesn't that tell you something about the success of Republican conservative economic philosophy? The US used to be a net importer of raw materials and a net exporter of manufactured, value added goods. Now the opposite is the case. And this downward spiral will continue as long as the current economic philosophy holds sway which says that government should be used to benefit the rich and to hell with everybody else.

How Obama Saved Capitalism and Lost the Midterms

by Timothy Egan

November 2, 2010 from the New York Times

If I were one of the big corporate donors who bankrolled the Republican tide that carried into office more than 50 new Republicans in the House, I would be wary of what you just bought.

For no matter your view of President Obama, he effectively saved capitalism. And for that, he paid a terrible political price.

Suppose you had $100,000 to invest on the day Barack Obama was inaugurated. Why bet on a liberal Democrat? Here’s why: the presidency of George W. Bush produced the worst stock market decline of any president in history. The net worth of American households collapsed as Bush slipped away. And if you needed a loan to buy a house or stay in business, private sector borrowing was dead when he handed over power.

As of election day, Nov. 2, 2010, your $100,000 was worth about $177,000 if invested strictly in the NASDAQ average for the entirety of the Obama administration, and $148,000 if bet on the Standard & Poors 500 major companies. This works out to returns of 77 percent and 48 percent.

But markets, though forward-looking, are not considered accurate measurements of the economy, and the Great Recession skewed the Bush numbers. O.K. How about looking at the big financial institutions that keep the motors of capitalism running — banks and auto companies?

The banking system was resuscitated by $700 billion in bailouts started by Bush (a fact unknown by a majority of Americans), and finished by Obama, with help from the Federal Reserve. It worked. The government is expected to break even on a risky bet to stabilize the global free market system. Had Obama followed the populist instincts of many in his party, the underpinnings of big capitalism could have collapsed. He did this without nationalizing banks, as other Democrats had urged.

Saving the American auto industry, which has been a huge drag on Obama’s political capital, is a monumental achievement that few appreciate, unless you live in Michigan. After getting their taxpayer lifeline from Obama, both General Motors and Chrysler are now making money by making cars. New plants are even scheduled to open. More than 1 million jobs would have disappeared had the domestic auto sector been liquidated.

“An apology is due Barack Obama,” wrote The Economist, which had opposed the $86 billion auto bailout. As for Government Motors: after emerging from bankruptcy, it will go public with a new stock offering in just a few weeks, and the United States government, with its 60 percent share of common stock, stands to make a profit. Yes, an industry was saved, and the government will probably make money on the deal — one of Obama’s signature economic successes.

Interest rates are at record lows. Corporate profits are lighting up boardrooms; it is one of the best years for earnings in a decade.

All of the above is good for capitalism, and should end any serious-minded discussion about Obama the socialist. But more than anything, the fact that the president took on the structural flaws of a broken free enterprise system instead of focusing on things that the average voter could understand explains why his party was routed on Tuesday. Obama got on the wrong side of voter anxiety in a decade of diminished fortunes.

“We have done things that people don’t even know about,” Obama told Jon Stewart. Certainly. The three signature accomplishments of his first two years — a health care law that will make life easier for millions of people, financial reform that attempts to level the playing field with Wall Street, and the $814 billion stimulus package — have all been recast as big government blunders, rejected by the emerging majority.

But each of them, in its way, should strengthen the system. The health law will hold costs down, while giving millions the chance at getting care, according to the nonpartisan Congressional Budget Office. Financial reform seeks to prevent the kind of meltdown that caused the global economic collapse. And the stimulus, though it drastically raised the deficit, saved about 3 million jobs, again according to the CBO. It also gave a majority of taxpayers a one-time cut — even if 90 percent of Americans don’t know that, either.

Of course, nobody gets credit for preventing a plane crash. “It could have been much worse!” is not a rallying cry. And, more telling, despite a meager uptick in job growth this year, the unemployment rate rose from 7.6 percent in the month Obama took office to 9.6 today.

Billions of profits, windfalls in the stock market, a stable banking system — but no jobs.

Of course, the big money interests who benefited from Obama’s initiatives have shown no appreciation. Obama, as a senator, voted against the initial bailout of AIG, the reckless insurance giant. As president, he extended them treasury loans at a time when economists said he must — or risk further meltdown. Their response was to give themselves $165 million in executive bonuses, and funnel money to Republicans this year.

Money flows one way, to power, now held by the party that promises tax cuts and deregulation — which should please big business even more.

President Franklin Roosevelt also saved capitalism, in part by a bank “holiday” in 1933, at a time when the free enterprise system had failed. Unlike Obama, he was rewarded with midterm gains for his own party because a majority liked where he was taking the country. The bank holiday was incidental to a larger public works campaign.

Obama can recast himself as the consumer’s best friend, and welcome the animus of Wall Street. He should hector the companies sitting on piles of cash but not hiring new workers. For those who do hire, and create new jobs, he can offer tax incentives. He should finger the financial giants for refusing to clean up their own mess in the foreclosure crisis. He should point to the long overdue protections for credit card holders that came with reform.

And he should veto, veto, veto any bill that attempts to roll back some of the basic protections for people against the institutions that have so much control over their lives – insurance companies, Wall Street and big oil.

They will whine a fierce storm, the manipulators of great wealth. A war on business, they will claim. Not even close. Obama saved them, and the biggest cost was to him.

America’s Two Economies, and Why One is Recovering and the Other Isn’t.

by Robert Reich

Friday, November 5, 2010

Next time you hear an economist or denizen of Wall Street talk about how the “American economy” is doing these days, watch your wallet.

There are two American economies. One is on the mend. The other is still coming apart.

The one that’s mending is America’s Big Money economy. It’s comprised of Wall Street traders, big investors, and top professionals and corporate executives.

The Big Money economy is doing well these days. That’s partly thanks to Ben Bernanke, whose Fed is keeping interest rates near zero by printing money as fast as it dare. It’s essentially free money to America’s Big Money economy.

Free money can almost always be put to uses that create more of it. Big corporations are buying back their shares of stock, thereby boosting corporate earnings. They’re merging and acquiring other companies.

And they’re going abroad in search of customers.

Thanks to fast-growing China, India, and Brazil, giant American corporations are racking up sales. They’re selling Asian and Latin American consumers everything from cars and cell phones to fancy Internet software and iPads. Forty percent of the S&P 500 biggest corporations are now doing more than 60 percent of their business abroad. And America’s biggest investors are also going abroad to get a nice return on their money.

So don’t worry about America’s Big Money economy. According to a Wall Street Journal survey released Thursday, overall compensation in financial services will rise 5 percent this year, and employees in some businesses like asset management will get increases of 15 percent.

The Dow Jones Industrial Average is back to where it was before the Lehman bankruptcy filing triggered the financial collapse. And profits at America’s largest corporations are heading upward.

But there’s another American economy, and it’s not on the mend. Call it the Average Worker economy.

Last Friday’s jobs report showed 159,000 new private-sector jobs in October. That’s better than previous months. But 125,000 net new jobs are needed just to keep up with the growth of the American labor force. So another way of expressing what happened to jobs in October is to say 24,000 were added over what we need just to stay even.

Yet the American economy has lost 15 million jobs since the start of the Great Recession. And if you add in the growth of the labor force – including everyone too discouraged to look for a job – we’re down about 22 million.

Or to put it another way, we’re still getting nowhere on jobs.

One out of eight breadwinners is still out of work. Most families in the Average Worker economy rely on two breadwinners. So if one out of eight isn’t working, chances are high that family incomes are down compared to what they were three years ago.

And that means the bills aren’t getting paid.

According to a recent Washington Post poll, more than half of all Americans — 53 percent — are worried about making their mortgage payments. This is many more than were worried two years ago, when the Great Recession hit bottom. Then, 37 percent expressed worry.

Delinquency rates on home loans are rising. Distressed sales are up as a percent of total sales.

Most people in the Average Worker economy own few shares of stock, if any. Their equity is in their homes. But with all the delinquencies and distressed sales, the housing market has a glut of homes for sale. As a result, home prices are still dropping. So the net worth of most Americans is still dropping.

And even though interest rates are falling, most people in the Average Worker economy can’t refinance their homes. They can’t get home equity loans. Banks don’t want to lend to the Average Worker economy because people in it are considered bad credit risks. They still owe lots of money, their family incomes are down, and their net worth has fallen.

And according to the Reuters/University of Michigan survey of American consumers, expectations about personal finances are at an all time low.

Inhabitants of the Big Money economy are celebrating Republican wins last week. They figure financial regulations will be rolled back, environmental regulations will be canned, the Bush tax cut will be extended to the top 1 percent, and it will be harder for workers to form unions.

Inhabitants of the Average Worker economy aren’t so sure. The economy has been so bad they’re angry at politicians. They showed their anger at the ballot box. They took it out on incumbents.

But if nothing changes in the Average Worker economy, there will be hell to pay.

America Is Now Officially for Sale

Published on Friday, November 5, 2010 by The Independent/UK

It's the Tea Party spirit distilled: pose as the champion of Joe America, while actually ripping him off

by Johann Hari

The laws and policies of the legislature of the United States of America are now effectively on e-Bay, for sale to the highest bidder. Are you a Wall Street boss who wants to party like it's 2007? Are you a Big Coal baron who wants to burn, baby, burn? Are you an insurance company that wants to be able to kick sick people off your rolls? Meet John Boehner, the most powerful Republican and soon-to-be Speaker of the House. But - of course! - you already have.

Here's an example of how you have worked together. In 1995, the House was going to finally repeal subsidies for growing tobacco, because an addictive cancer-causing drug didn't seem like the most deserving recipient of tax-payers' cash - until Boehner walked the floor of the House handing out checks from tobacco lobbyists to his fellow elected representatives. They changed their minds. The subsidy stayed. Explaining his check-dispensing, Boehner says: "It's gone on here for a long time." So get your bids in: the House is open for business.

To understand what has happened in the mid-term elections, the best guide lies in an unexpected place - the dusty vaults of Hollywood. In 1957, Elia Kazan directed a film called ‘A Face In The Crowd' that read the tea-leaves of the Tea Party back when Sarah Palin was merely a frosty zygote. One morning a poor wandering Arkansas chancer named Larry ‘Lonesome' Rhodes is lying passed out on a jail cell where the local sheriff has detained him overnight. A pretty young radio producer arrives and asks if he'd like to tell her a story to be played on her show where ordinary folks speak to ordinary folks. He sings and rambles and offers corn-poke homilies. The clip is a huge hit - and he is soon given his own show, filled with country music and country wisdom which then shoots off into the stratosphere.

When Lonesome Rhodes becomes one of the biggest stars on US television, he starts receiving offers. Advertisers say that if he endorses their lousy products, they'll shower him with millions. He knows how to sell to ordinary people - and he is pushed to go further. They ask him to sell the political causes that will make them richer too. He starts railing against social security and the old age pension and anything that taxes the rich to help the rest. He uses the tunes and slanguage of working class Americans to get them to emotionally identify with the people who are screwing them over. He's brilliant at it - a gurning hyperactive huckster, saying that support and security for ordinary Americans is a betrayal of America. He makes himself rich by lying to the people he came from.

Fast-forward to 2010. John Boehner came from a poor family of twelve children, and heroically worked three jobs (including as a janitor) to put himself through business school. But when he got to elected office, it turned out that there was alot more money to be reaped from serving the interests of rich people than serving the people he came from. He took money from the insurance companies, and voted to deny healthcare coverage to sick children and to the people who hurried to the World Trade Centre on 9/11 to try to dig people from the wreckage, exposing them to deadly toxins. He took money from defense contractors, and supported every war going. He tirelessly champions the overdog, while hoovering up their cash and flying on their private jets to some of the most luxury resorts in the world.

In the campaign, Boehner said his priority was to "stand up for ordinary Americans" against "the elite", and to "cut the deficit as a matter of urgency." So what has been his first priority as Speaker? To fight furiously to keep the gigantic Bush tax cuts for the elite richest two percent of Americans, even though this alone will add two trillion dollars to the deficit over the next decade. It's very revealing. He immediately dumps on his propaganda causes - ordinary Americans, and the deficit - while slavishly serving his one true cause: serving the interests of rich people like the ones who happen to pay for his campaigns and his jaunts.

This is the story of the modern Republican Party. They use the cultural signifiers of the good people of Middle America to get their emotional identification, meanwhile they pillage Middle America and redistribute its wealth to the rich. Sarah Palin is the queen of this cause. She presents herself as a warrior for hockey moms and Momma Grizzlies, while spreading fictions to stop those very people supporting social programs that could save their lives: remember her claim that Obama's healthcare plan involved setting up "death panels" to execute the old and disabled? Her true slogan is Shill, Baby, Shill.

This is all made easy for Republicans by the fact that most of the Democratic Party slithers in the same trough of corruption, begging from the same billionaires and corporations, and so can deliver only a tiny notch more for ordinary Americans. This makes left-liberal ideas look discredited, when in truth they are largely discarded. To name just one: the very high unemployment in the US has been presented by Republicans as proof that economic stimulus doesn't work. But in reality, Obama's stimulus was appallingly small, and was counter-balanced by the fact that the individual states were slashing spending and laying people off. Once you add the two together, there has been no net stimulus in the US economy at all.

The essence of the Tea Party - and the relevance of ‘A Face In The Crowd' - can be seen most plainly in Glenn Beck. Just over a decade ago, he was a drug-taking, pro-abortion, perpetually drunk DJ on morning radio. One of his famous "pranks" was to ring up the wife of a radio-show rival a few days after she had a miscarriage and taunt her about her loss. But then he stumbled into political commentary. After 9/11, Beck began to articulate a blubbery, blubbering hysteria, calling for the shooting of Michael Moore and the poisoning of Nancy Pelosi. He announced that any government program helping ordinary Americans was a step towards "communism", and prophesied: "The country may not survive Barack Obama? If he does fundamentally transform America, we're done. You don't have to worry about a 2012." He shot up to be the second highest rated show in cable news, and assembled hundreds of thousands to a rally on the Mall. At times seems quite conscious of the manipulation: "They're getting so tired of me saying there's a Marxist in the White House, I gotta take it up a notch," he reportedly said to one private audience.

But a few years ago, he began to do something stranger still. He announced that the US was going to experience hyperinflation and savings would be rendered worthless - so his viewers should transfer their cash into gold. But not just any gold. No: Obama was probably going to seize gold bullion and nationalize it, he warned, so they should buy gold coins. "I think people are running out of options on what, you know, could be worth something at all. You have to think like a German Jew, 1934," he said.

Meanwhile, Beck's program on Fox News is sponsored by a company called Goldline that sells gold coins. As it turned out there is no hyperinflation and no Obama plan to seize bullion. Yet Beck's claims - and constant praise for Goldline - have made him and the company considerably richer. The only people who are worse off are Beck's viewers: the investigative journalist Dana Milbank looked at 2008 and calculated that they would have seen a higher return if they had kept their money in cash than in golden coins. A court in Missouri ruled a few years ago that Goldline pressured a woman in her eighties to invest $230,000 in gold coins actually worth half that sum. The Securities and Exchanges Commission are investigating the company, and Senator Anthony Weiner says Beck and other on-air promoters "are either the worst financial advisors around or knowingly lying to their loyal viewers." It's the Tea Party spirit distilled: pose as the champion of Joe America, while ripping him off.

There is, however, one significant difference from ‘A Face In The Crowd'. At the end of the film - spoiler alert - Lonesome Rhodes is finishing a show and, as the end credits roll and the music swells, he rants against his viewers, believing they can't hear him. But in the control box, a producer deliberately flips a switch. Suddenly millions hear him say: "Those morons out there. I'd give ‘em dog food and make ‘em think it's steak. Good night you stupid idiots. Good night you miserable slobs. They're like a bunch of trained seals - I toss ‘em a fish and they lap it up." John Boehner and Sarah Palin and Glenn Beck are ridiculing their followers just as crudely. Can't somebody at Fox flip the switch?

© 2010 The Independent

Johann Hari is a columnist for the London Independent. He has reported from Iraq, Israel/Palestine, the Congo, the Central African Republic, Venezuela, Peru and the US, and his journalism has appeared in publications all over the world. 

The Republican Recipe for An Anemic Economy Through Election Day 2012

by Robert Reich

Wednesday, November 3, 2010

The real message from voters was “Fix this stinking economy.” But Republicans have no intention of doing so.

With Republicans in control of the House, forget spending increases or tax cuts to stimulate the economy.

Republicans don’t believe in stimulating economies. They think markets eventually clear — once the pain is sufficient. Or in the immortal words of Herbert Hoover’s treasury secretary, millionaire industrialist Andrew Mellon: “Liquidate labor, liquidate stocks, liquidate the farmer, liquidate real estate. It will purge the rottenness out of the system. People will work harder, lead a more moral life.”

Of course, Mellon was dead wrong. Nothing was purged. Instead, the economy sunk into deeper and deeper depression.

So how do we get out of this bog?

By default, all the responsibility is on the Federal Reserve — which announced today (Wednesday) it will pump $600 billion into the economy between now and June to reduce long-term interest rates (“quantitative easing” in Fed-speak).

The Fed thinks lower long-term rates will (1) push more businesses to expand capacity and hire workers; (2) push the dollar downward and make American exports more competitive and therefore generate more jobs; and (3) allow more Americans to refinance their homes at low rates, thereby giving them more cash to spend and thereby stimulate more jobs.

But without an expansionary fiscal policy, the Fed’s goals are pipe dreams.

Lower rates won’t spur businesses to expand capacity and jobs because there aren’t enough consumers to buy additional goods and services.

Lower rates won’t push down the dollar and spur more exports. They’ll only spur more competitive devaluations by other nations determined not to lose export shares and jobs.

And lower rates won’t allow middle-class and working-class Americans to refinance their homes because banks won’t lend to families whose incomes have dropped, whose debts have risen, or who owe more on their homes than the homes are worth. That is, most of us.

Without an expansive fiscal policy that puts more money into the pockets of consumers and gets them out from under their huge debt load, the Fed’s billions will just fuel another stock-market bubble.

It’s already started. Stocks are up even though the rest of the economy is still down because money is already so cheap. Bondholders who can’t get much of any return from their loans are shifting into stocks. Companies are buying back more shares of their own stock. And Wall Street is making more bets in the stock market with money it can borrow at almost zero percent interest.

In other words, with Republicans in charge of the House, the economy remains anemic. It may even succumb to another bubble that bursts.

Could it be that Republicans want to keep the economy this way through Election Day, 2012?

What Obama Should Not Do: Wimp Out to Republicans

by John Lawrence

Obama's demeanor subsequent to the midterm elections has been a disappointment. Does he really have to be so honest as to describe the results as a "shellacking," a quote which was widely reported in the press. The Republicans, meanwhile, are gleefully reporting the election results as a repudiation of Obama's policies and an endoresement of theirs, a pronouncement that is hardly supported by the polls which show that the voters disapparove of Republicans even more than they disapprove of Democrats. What the election results truly show is that the voters are angry and upset about the state of the economy and expressed this by throwing incumbents out. What the results also show is that the electorate is extremely volatile having overwhelmingly voted for Obama and the Democrats two years ago and then overwhelmingly voted against them a few days ago. They could do the same thing in 2012 throwing the bums out again only this time the bums would be Republicans. The lesson is that there should not be too much Democratic handwringing over the election results. They are transitory and ephemeral.

Contrasted with Obama's demeanor and remarks we have Senate Minority Leader Mitch McConnell who goes on television (repeatedly since the news networks aired portions of his speech over and over) to say that he was not going to compromise in any way with Obama, that the "American People" (McConnell's euphemism for right wing Republicans who are the only legitimate American people as far as he's concerned) want the Republican agenda and that unless Obama kowtows to him and the Republicans and does what he says, there will be no cooperation or compromise. So what does Obama do? He calls a meeting of top ranking politicians in an effort towards bipartisanship. You've already tried that, Mr. President - over and over - and the only result is that the Republicans have kicked sand in your face. You've let the bullies run you over. Finally, will you stop with that? You are not gaining the favor of the American public by wimping out to Republicans. At least 50% of the American public doesn't want anything to do with Republican policies. Why don't you finally stand up for that constituency instead of trying to appease people that don't like you. No one is impressed by a wimp. You'll get even more unpopular unless you stand up to Republicans.

When Mitch McConnell has the unmitigated gall to demand that the President of the United States do as he demands or else, you've got to put that turtle faced bastard in his place or at least have your surrogates do it and forcefully. You seem weak if your only response is to appeal for bipartisanship. The Republicans are playing you. They think they've got your number. They think that you're going to turn the other cheek and only look even weaker to the American people. You've got to stand up to McConnell and the rest and say, "You know, I've talked to a lot of the American people and McConnell is dead wrong if he thinks the American people want the health care legislation repealed. McConnell is dead wrong if he thinks the American people want tax breaks for the rich. What the American people want is more jobs and a better economy and Republicans have blocked every attempt by Democrats to make the economy better. And all they want is tax breaks for the rich even though that will add to the deficit, something they say hypocritically they want to bring down. So pipe down McConnell and you too Boehner. You've blocked and obstructed every attempt by Democrats to improve the economy and to create jobs and despite that, in the first two years of my administration, we've still been able to accomplish historical things for the American people and in particular for the American middle class whose side we firmly are on. You Republicans on the other hand have never met a lobbyist for a major corporation that you didn't hasten to do the bidding of." Put them on the defensive. Let them react to you!

And go on like that, Mr. President. If the Republicans want a fight, let them bring it on. What have you got to lose? The American public is not going to reelect you because you've appeased Republicans. That's at least partly what the enthusiasm gap is all about. Nobody can get too enthusiastic about supporting a wimp. Now is the time to stand up for your core constituencies - black people, Hispanics and young people. If you want to have a chance of being reelected you have to start giving them something and not just campaign rhetoric or at least trying to and then daring the Republicans to vote it down. If they do, it's your job to point this out - that it's the Republicans who are standing in the way of helping the American people and you are doing your darnedest to help them. So you have to show some tangible results. Use executive orders, damn it! And you can unilaterally end the war in Afghanistan. Do it without any further screwing around!

In your first two years in office you didn't do a damn thing to help black people directly. I understand that you wanted to be President of all Americans and not show favoritism towards one group. But the time for that is over. Black unemployment is at twice the levels of white unemployment and Hispanic unemployment isn't much better. Now is the time to end wishy washy rhetoric and do your best to help those most in need. No one has ever been better situated to help black people than you are if you should choose to do it and not feel that you have to not offend the Mitch McConnells and John Boehners of the world. And put some teeth into helping out those who are being foreclosed on; stop worrying about the damn banks! Let judges adjust mortgage terms in bankruptcy for chrissake.

Now is the time to diminish the right wing propaganda machine and rev up the left wing talk machine. Rush Limbaugh, Glenn Beck and others have practically turned the US into a fascist nation with their extremist rhetoric. This is exactly the course that Hitler followed; only he was just one man. The right wing talk machine in America is a multi-headed hydra, all of whom are well paid for their efforts. According to Newsweek, Rush Limbaugh makes $58.7 million a year for spewing hate and demonizing you! Glenn Beck makes $33 million. Sean Hannity makes $22 million. Bill O'Reilly makes $20 million. What do you make - $400,000? Something is wrong with America when right wing rhetoricians make millions more than the President, and they see their job as destroying the President. I'm not asking you to abandon your reasonable and truthful approach and become a nut case like they are, but attention has to be paid to counteracting this right wing politico-entertainment media machine based on hateful and inflammatory rhetoric. Don't let their sallies go unresponded to, if not by you, then by your surrogates. And don't think that they aren't drawing millions of Americans into what amounts to a right wing cult, the latest manifestation of which is the Tea Party. You need to have an attack dog of a Press Secretary not the mealy mouthed Robert Gibbs.

Finally, Mr. President, don't let Republicans set the rhetorical agenda and then have you react to it. You should set the agenda, rhetorical and otherwise, and then let the Republicans react to you. You should be proactive and put the Republicans in the position of being reactive, not the other way around. You should take the lead. It should be obvious by now that the Republican agenda is to enfeeble you, to demonize you, to emasculate you and to turn you into a whimpering simpering fool. Don't let them do it, for your sake and for ours. If nothing else, go out fighting. Your approach of being conciliatory and compromising is not winning hearts and minds. When the Republicans like McConnell say it's their way or the highway and that their goal is to defeat you in 2012 so they can repeal all the legislation you worked so hard to enact, you can't just sit there and appeal for bipartisanship! Like Harry Truman, you've got to go out there and give 'em hell!

 

China Accuses US Treasury Secretary of Recommending Communism as Solution to Trade Imbalance!

China and Germany belittle U.S. actions before G20

By Zhou Xin and Annika Breidthardt

BEIJING/BERLIN, Japan | Fri Nov 5, 2010 7:34am EDT

(Reuters) - China rebuffed on Friday a U.S. plan to set target limits for trade imbalances and Germany dubbed the Fed's money-printing policy "clueless," setting the stage for what could be a fractious G20 summit next week.

Washington believes an undervalued yuan is a major cause of economic imbalances and has pressed Beijing, largely in vain, to let the currency rise more swiftly to reflect the strength of what is now the world's second-largest economy.

The waters of the debate have been muddied by the Federal Reserve's decision to buy $600 billion in long-term bonds with new money in an effort to revive the flagging U.S. economy.

Resentment is rumbling worldwide that the initiative will generate even more instability by ramping up currencies against the dollar, inflating asset bubbles and increasing inflation.

"With all due respect, U.S. policy is clueless," German Finance Minister Wolfgang Schaeuble told a conference.

"(The problem) is not a shortage of liquidity. It's not that the Americans haven't pumped enough liquidity into the market and now to say let's pump more into the market is not going to solve their problems."

Policymakers from the world's new economic powerhouses in Latin America and Asia have said they would consider fresh steps to curb capital inflows after the Fed's move.

Zhou Xiaochuan, China's central bank governor, said while Beijing could understand that the Fed was implementing more monetary easing in order to stimulate the U.S. recovery, it may not be a good policy for the global economy.

NO BALANCE

Efforts to reduce imbalances that are destabilizing the global economy will top the agenda of the November 11-12 summit of the Group of 20 forum of leading economies in Seoul.

But China and Germany have now both opposed a plan floated by U.S. Treasury Secretary Timothy Geithner last month to cap current account surpluses and deficits at 4 percent of gross domestic product.

"Of course, we hope to see more balanced current accounts," Chinese Vice-Foreign Minister Cui Tiankai told a news briefing. "But we believe it would not be a good approach to single out this issue and focus all attention on it. The artificial setting of a numerical target cannot but remind us of the days of planned economies." (Ed. Note: What a twist - China accuses US of doing something reminiscent of the bad old days of communism!)

German Economics Minister Rainer Bruederle dismissed the proposal at the time as smacking of old-style central planning.

Cui, China's chief G20 negotiator, also rejected any attempt to set target ranges for the yuan to appreciate.

"That would indeed be asking us to manipulate the ... exchange rate, and it is something that we will of course not do," Cui said.

ASEAN, the 10-nation group of southeast Asian countries, will also raise concerns at the G20 over the U.S. proposals.

"We would like to work with G20 to correct imbalances," Thai Finance Minister Korn Chatikavanij said in the Japanese city of Kyoto where Asia-Pacific finance ministers are meeting.

"But we are concerned that the U.S. plan about current account balances might lead to trade protectionism."

The Asia-Pacific Economic Cooperation (APEC) forum in Kyoto, which Geithner will attend, will also provide an opportunity for emerging economies to voice their views of the Fed's action.

INTEREST RATES

Japan's central bank on Friday gave details of its own asset-purchase programme, announced last month. Worth 5 trillion yen ($62 billion), it is just a tenth the size of the Fed's scheme.

By pointing out the difference in scale, Economics Minister Banri Kaieda suggested that the Bank of Japan might face calls in the future for an expanded scheme.

Cui said he was worried at the prospect of a flood of money pouring into global markets in search of higher yields. As the issuer of the world's main reserve currency, the United States needed to adopt a responsible position.

"They owe us some explanation," he said. "I've seen much concern about the impact of this policy on financial stability in other countries."

An official newspaper said China needed to respond by raising interest rates again following a surprise increase on October 19.

Inflationary pressures prompted both India and Australia to raise interest rates this week.

Thailand's Korn said he accepted that the country's currency, the baht, would appreciate due to strong economic fundamentals, but he wanted to avoid damage from a sudden reversal in speculative money.

"We are willing to take whatever measures when necessary," he told Reuters before the start of a meeting of the APEC finance ministers.

Thailand has imposed a 15 percent withholding tax on interest and capital gains earned by foreign investors on Thai government bonds. Brazil has also taxed foreign buyers of its bonds.

(Writing by Alan Wheatley and Mike Peacock; Editing by Ruth Pitchford)

Reaction to the Election from Holland

by Frank Thomas

John,

My heart goes out to you and all countrymen who are saddened by the inevitable low point in Obama's 2-year Presidency as voters marched en masse to the tunes of other pied pipers. Hopes now rest on the assumption that bipartisanship is not a matter of choice since neither party can now achieve a 2/3 vote majority in the Senate. I'm going short on any bets of this happening!
                                                                                                                                   
Our two parties must now coalesce over the need to reduce a bloated defense budget; to activate a pervasive energy independence policy focused on clean and safe energy sources; to reform cost structures of Medicare and Social Security; to invest in infrastructure, job development, R&D and education; and, yes, to raise tax revenues, e.g., by closing tax-avoidance loopholes. This will never occur without a spirit of compromise and pragmatism in problem-solving as is being demonstrated thus far in the UK's new right and left coalition of David Cameron and Nick Clegg.  Unfortunately, such a spirit has long been absent in our "winner takes all" political system.
                                                                                                                                   
To compound our generic failure in balanced governance, we now have an enraged conservative group entering the governing process having little respect for the already meager social pact of past decades ... a group that chafes at the values of investing in communities; of insuring a well-functioning economy that is positively affecting ecology, health, quality of everyday life, fairness and opportunities for all citizens; of adopting an ethics of care based on empathy and responsibility, both for oneself and others.

Obama has his work cut out for him. Ordinary citizens, including the downtrodden, in our de-industrialized conservative economy -- where power lies in services, finance and with the newly rich entrepreneurs and financiers and where jobs are not being created by established U.S. global firms where shareholder values override employee interests -- are at the mercy of his administration's working with the expanded Republican Congress at a time when jobs, wages, worker retraining, state welfare and societal investments are all under exponential threat in this new (almost hysterical) age of "austerity."

Best regards,
Frank    




          

Fast Track to Inequality

Source: New York Times

By Bob Herbert

November 2, 2010

The clearest explanation yet of the forces that converged over the past three decades or so to undermine the economic well-being of ordinary Americans is contained in the new book, "Winner-Take-All Politics: How Washington Made the Rich Richer - and Turned Its Back on the Middle Class."

The authors, political scientists Jacob Hacker of Yale and Paul Pierson of the University of California, Berkeley, argue persuasively that the economic struggles of the middle and working classes in the U.S. since the late-1970s were not primarily the result of globalization and technological changes but rather a long series of policy changes in government that overwhelmingly favored the very rich.

Those changes were the result of increasingly sophisticated, well-financed and well-organized efforts by the corporate and financial sectors to tilt government policies in their favor, and thus in favor of the very wealthy. From tax laws to deregulation to corporate governance to safety net issues, government action was deliberately shaped to allow those who were already very wealthy to amass an ever increasing share of the nation's economic benefits.

"Over the last generation," the authors write, "more and more of the rewards of growth have gone to the rich and superrich. The rest of America, from the poor through the upper middle class, has fallen further and further behind."

As if to underscore this theme, it was revealed last week (by David Cay Johnston, a Pulitzer Prize-winning former reporter for The New York Times), that the incomes of the very highest earners in the United States, a small group of individuals hauling in more than $50 million annually (sometimes much more), increased fivefold from 2008 to 2009, even as the nation was being rocked by the worst economic downturn since the Great Depression.

Last year was a terrific year for those at the very top. Professors Hacker and Pierson note in their book that investors and executives at the nation's 38 largest companies earned a stunning total of $140 billion - a record. The investment firm Goldman Sachs paid bonuses to its employees that averaged nearly $600,000 per person, its best year since it was founded in 1869.

Something has gone seriously haywire in the distribution of the fruits of the American economy.

This unfortunate shift away from a long period of more widely shared prosperity unfolded steadily, year after year since the late-'70s, whether Democrats or Republicans controlled the levers of power in Washington. "Winner-Take-All Politics" explores the vexing question of how this could have happened in a democracy in which - in theory, at least - the enormous number of voters who are not rich would serve as a check on policies that curtailed their own economic opportunities while at the same time supercharging the benefits of the runaway rich.

The answer becomes clearer when one recognizes, as the book stresses, that politics is largely about organized combat. It's a form of warfare. "It's a contest," said Professor Pierson, "between those who are organized, who can really monitor what government is doing in a very complicated world and bring pressure effectively to bear on politicians. Voters in that kind of system are at a disadvantage when there aren't reliable, organized groups representing them that have clout and can effectively communicate to them what is going on."

The book describes an "organizational revolution" that took place over the past three decades in which big business mobilized on an enormous scale to become much more active in Washington, cultivating politicians in both parties and fighting fiercely to achieve shared political goals. This occurred at the same time that organized labor, the most effective force fighting on behalf of the middle class and other working Americans, was caught in a devastating spiral of decline.

Thus, the counterweight of labor to the ever-increasing political clout of big business was effectively lost.

"We're not arguing that globalization and technological change don't matter," said Professor Hacker. "But they aren't by any means a sufficient explanation for this massive change in the distribution of wealth and income in the U.S. Much more important are the ways in which government has shaped the economy over this period through deregulation, through changes in industrial relations policies affecting labor unions, through corporate governance policies that have allowed C.E.O.'s to basically set their own pay, and so on."

This hyperconcentration of wealth and income, and the overwhelming political clout it has put into the hands of the monied interests, has drastically eroded the capacity of government to respond to the needs of the middle class and others of modest income.

Nothing better illustrates the enormous power that has accrued to this tiny sliver of the population than its continued ability to thrive and prosper despite the Great Recession that was largely the result of their winner-take-all policies, and that has had such a disastrous effect on so many other Americans.

What Obama Should Do: Bypass Congress, Use Executive Power, Go Directly to American People

by John Lawrence

Republicans are gloating over their wins in the House Tuesday. But not so fast Republicans. The Democrats did hold the Senate, and that's a lot to be thankful for. Now Obama has to figure out a strategy that will allow him to move forward without the help of the House (and I use the word "help" euphemistically). The executive branch can do a lot on its own without going through Congress. The worst thing Obama can do is to try to be "bipartisan" or build "consensus." The first two years of his Presidency should have told him that that doesn't work when it comes to winning Republican approval. He should now take on the Republicans, defy them openly, point out their lies and hypocrisy while making whatever progress he can just based on the authority of the Executive branch. Republicans - along with the Fifth Column of Rush Limbaugh and Glenn Beck - will do their best to emasculate him, to enfeeble him, to delegitimize him. Obama should be under no illusions. If he finally stands up for his core beliefs, what's the worst that could happen? He could be voted out in 2012. Isn't it better to go down fighting for what you believe in than to kowtow to the Republicans hoping to curry their favor.

He should start by bringing in a new economic team with the likes of Robert Reich and Paul Krugman. Half the battle is siding with experts who can bolster your theoretical underpinning for what you want to accomplish. The Republicans have the Heritage Foundation, the Cato Institute and the American Enterprise Institute on their side. They will spin out an unbelievable amount of BS in favor of giving tax breaks to the rich and deregulating corporations, the very philosophy that caused the financial collapse and the Great Recession. Republicans are unrepentant. They will try to continue Reaganism and Bushism. They will try to privatize every institution. In short they will try to reverse every piece of legislation Democrats worked so hard to accomplish during the first two years of the Obama administration. And the hollowing out of the middle class will continue. Unemployment will remain high and foreclosures and bankruptcies will continue unabated. Republicans will try to pin the continued joblessness on Obama, and that's why Obama should do everything in his power to create jobs and point out that it is the Republicans who are saying "No" to job creation and stimulus programs.

Here are some of the things Obama can do:

1) End the war in Afghanistan. Obama is reportedly through with this war and wants to get out. Go ahead and do it. He has the power unilaterally as Commander-In-Chief. It's a no brainer. Aside from saving lives, it will save tons of money. Make it clear that those savings will bring down the deficit, something the American people want to see. And put some of those savings into job creation in the non-military sphere.

2) Use executive authority to rein in the banks. This is from Huffington Post:

The president of the United States oversees a massive regulatory apparatus that, when wielded appropriately, can help level the playing field for the middle class. And nowhere it that more necessary right now than in the financial world. The recent financial reform legislation, known as Dodd-Frank, created a Consumer Financial Protection Bureau and gave regulators new authorities they have yet to use. Investigate the war crimes of the Bush administration"Under the Dodd-Frank Act, they have a huge amount of executive power to press banks to give relief to people with underwater mortgages," author and editor Robert Kuttner told The Huffington Post. Regulators could go in and do real audits of the banks, he said, instead of "conspiring in the fiction that a lot of toxic mortgage paper is worth 100 cents on the dollar, when everyone knows it isn't." Those real audits would find many big banks insolvent, allowing the regulators (under the new rules) to dissolve them -- or, at the very least, force them to do such civic-minded things as write-down mortgage principals and increase lending to small businesses. There's also the issue of pursuing possible criminal charges. "You could do an enormous amount with prosecutions in banking," said Robert Borosage, co-director of the Campaign for America's Future. "That would help both politically -- in terms of showing which side you're on -- and in terms of accountability in the financial sector, by curbing the tendency to go back and reopen the casino."

3) Use the Sherman Anti-Trust Law to break up too big to fail banks and other large corporations.

4) Climate change. Again from Huffington Post:

Cap and trade legislation and comprehensive immigration reform are two of the most obvious casualties of the rise to power of House Republicans. But some progressives think Obama could unilaterally make progress in both areas. "I think there will be a lot of action on the executive front," said longtime Washington observer Norman Ornstein, the American Enterprise Institute's house liberal. And at the head of his list is the area of carbon emissions. "The Supreme Court has basically given the EPA the authority to regulate carbon emissions," Ornstein explained. In theory that means Obama could impose a cap and trade system solely by executive authority. "It won't work that way," Ornstein said. But Obama's EPA could go part way, by focusing on regulations for utilities -- or the president could use the threat of EPA action as leverage on getting some kind of energy bill through Congress after all. At his press conference on Wednesday, Obama certainly kept his options open, noting that greenhouse gases are now considered to be under EPA's jurisdiction, then expressing his desire to find some agreement with Republicans. But, he said: "I think it's too early to say whether or not we can make some progress on that front. I think we can." Then he added: "Cap and trade was just one way of skinning the cat; it was not the only way. It was a means, not an end. And I'm going to be looking for other means to address this problem."

5) Immigration. Obama has the authority to end illegal activity on the border whether its the drug war or the illegal transport of material and human cargo. He should use the tools at his disposal. The situation on the border and within Mexico is a greater threat to the US than some ragtags on monkey bars in Waziristan. Let's get real.

6) Downsizing the Pentagon. A big reduction in the deficit and an approach more in accordance with reality. Terrorist bombs can be constructed anywhere and smuggled into the US. Wholesale military invasions of sovereign nations will do nothing to prevent this and are extremely costly. Intelligence operations, cooperation with allies who have been far more hard hit than the US and strengthening Homeland Security will do more to prevent the destructive consequences of terrorism and Obama has it in his authority to do much along these lines without the participation of Congress.

7) Investigate the war crimes of the Bush administration. Now that Republican Darrell Issa has the reins of the Oversight Committee and is set to investigate the hell out of Obama similar to what they did to Clinton with Whitewater and Travelgate, Obama should start investigating the true criminals - the Bush administration. They trampled on the Constitution, lied us into war, tortured detainees and wiretapped without warrants. I don't think there's a statute of limitations on investigating war criminals. If Republicans are going to go after squeaky clean Obama, Obama should go after them not just sit back and take it.

8) Redirect Pentagon and other existing funds for the purpose of job creation. Congress has the power of the purse and is not likely to authorize new funding for job creation, but Obama has power over existing funds and can redirect some of those funds to create WPA style job creation. He should take a page out of FDR's book and rail against the "economic royalists" and Congress. Mount a campaign to defund the Pentagon and fund Civilian Conservation Corps (CCC) style jobs. Get off the kick that every initiative has to be acceptable to Republicans. Don't worry about offending Republicans. Don't pander to Republicans and don't worry about getting reelected. The best way to get reelected is to take a strong "in  your face" stand against the Republicans. Stand up to the Republican bully. Use the executive power of the Presidency.

9) Stepped up enforcement of existing labor laws:

Robert Kuttner recently advocated in the American Prospect on behalf of two presidential measures: Stepped up enforcement of existing labor laws that prohibit such things as phony classifications of workers as temps or contract hires; and the establishment of new rules for government contracting to reward good labor practices and punish scofflaws. Taking a stand on behalf of decent wages for workers, Kuttner said, isn't just good policy. "It also has the virtue of getting him on the side of ordinary people, which he doesn't seem to be too good at the optics of."

In short there is much Obama can do unilaterally as President while the House fulminates and procrastinates and tries to gum up the works. Don't waste time trying to negotiate with the likes of Boehner and McConnell. Let them stew in their own juices. Rev up the left wing political education machine to counter the right wing propaganda and talk machine. Get more progressives on the air and in think tanks. This country has moved so much to the right that the center seems like Republican lite. Obama should abandon Republican lite policies and go for and stand for the middle class. And that means moving the country considerably to the left. And remember that volatile voters are just as likely to throw the Republican bums out in two years as they were to throw the Democrats out this time.

Missing: A Vision of Economic Possibility

Published on Wednesday, November 3, 2010 by YES! Magazine

This election showed us that neither of our two major parties has a credible vision for our economic future. And that's why this is a moment of opportunity.

by David Korten

It is now the morning after. Republicans, as expected, are celebrating a sweeping victory. Democrats are licking their wounds. Meanwhile, record numbers of people are still contending with the hardships of unemployment and foreclosure with no relief in sight. And the nation braces for deepening political gridlock.

It is a moment of opportunity for America to set a new course and for a young President Barack Obama to establish his place in history as a path-breaking leader.

So how does electoral failure and political gridlock create a moment of opportunity?

Neither of our two major parties has a credible vision for the economic future of our nation.

We are a nation consumed by short-term thinking and fragmented political contests centered on narrowly defined issues. Neither of our two major parties has a credible vision for the economic future of our nation.

The Republicans offer only their standard prescription of tax cuts for the rich, a rollback of regulations on predatory corporations, and elimination of the social safety net-a proven prescription for further job loss and devastation of the middle class.

The Democrats have no identifiable program for economic recovery, let alone for adapting our economy to the dramatic demographic, environmental, economic, and political changes that rule out any chance of a return to pre-2008 business as usual.

In an insightful interview, Populist historian Lawrence Goodwyn suggests that this creates a historic opportunity. He observes that bankers have been a dominant ruling power throughout much of our national history and a barrier to realizing the democratic ideal on which our nation was founded. It has not been within the power of any American president to break their hold due to lack of an adequate public understanding of the nature of the problem.

We now have 15 million unemployed people who feel deeply betrayed and upwards of two million homeowners whose homes have been foreclosed-all as a direct consequence of the actions of Wall Street bankers. These same interests used conceptual deception backed by massive political spending to swing the election in favor of right wing extremists devoted to policies that will further decimate the middle class without resolving the pain of the unemployed and the foreclosed.

The deception, which can be maintained only so long, sows the seeds of its own self-destruction. In taking control of the House and leaving the Democrats with only a slim majority in the Senate, Republicans now share responsibility for what is certain to be continued economic failure.

The administration, however, remains in the hands of a now seasoned Democratic president who Goodwyn believes has the potential to rise to the occasion, lead his party to a second term victory, break the power of Wall Street, and actualize the democratic ideal that has for so long eluded us.

It requires, however, a vision of a New Economy that is truly democratic, based on sound market principles, rooted in community values, and accountable to community interests. Economists steeped in the economic models that got us into this mess are not going to provide President Obama with such a vision. He will need to look to the people who are working from the bottom up outside the halls of established power to frame and implement a new economic vision aligned with the values of caring and sharing at the core of authentic spiritual teaching and for which scientists tell us our brains are wired.

This vision is being articulated and popularized by alliances such as the New Economy Working Group and the New Economy Network and implemented by groups such as the Business Alliance for Local Living Economies, the American Independent Business Alliance, Transition Towns, local food movements, and many others. The vision is grounded not in some utopian ideology or theory, but rather on the work and experience of millions of people are already engaged in living the New Economy into being through grassroots actions that flow from their deepest values and aspirations.

The emerging vision calls for a fundamental economic restructuring to put life values ahead of financial values, give the creation of sustainable livelihoods for working people priority over bonuses for Wall Street traders, and root the power to create and allocate money in people and community rather than in Wall Street financial institutions. David Brancaccio has documented impressive examples in a PBS television special titled "Fixing the Future" scheduled to be aired on November 18, 2010.

As awareness grows that no adjustments at the margin of the existing Wall Street-dominated economy will resolve the plights of joblessness and the homelessness, so too does potential political support for fundamental economic restructuring in support of the emerging vision. The political party that responds to this rapidly growing economic and political force will gain a decided advantage in 2012 and beyond.

It is President Obama's opportunity to win a second term and establish his place in history not only as the first African-American president, but as well the president who liberated the nation, our democracy, and the market from the grip of Wall Street. I have drafted a framing presidential economic address ready for delivery by the future president who dares to take on the challenge. Imagine a president delivering this speech. Let us make it happen.

This work is licensed under a Creative Commons License

David Korten is co-founder and board chair of  YES! Magazine, co-chair of the New Economy Working Group, president of the People-Centered Development Forum, and a founding board member of the Business Alliance for Local Living Economies (BALLE). His books include Agenda for a New Economy: From Phantom Wealth to Real Wealth, The Great Turning: From Empire to Earth Community, and the international best seller When Corporations Rule the World.

Extend the Bush Tax Cut to the Bottom 99 Percent, But Not The Top 1 Percent

by Robert Reich

Wednesday, November 3, 2010

Expect the President to be under more pressure to give in to Republican demands that the Bush tax cut be extended to everyone — not just the bottom 98 percent but also the the top 2 percent, earning over $250K.

He should respond by offering this olive branch: Extend the Bush tax cuts to the bottom 99 percent — to families earning less than half a million dollars.

But not to the top 1 percent.

The top 1 percent now gets almost a quarter of the nation’s total income — a larger share than at any time since the 1920s. The top 1 percent have also received about 40 percent of the benefits of the Bush tax cuts.

The “Not for the Top 1 Percent” olive branch will draw a clear line in the sand. If Republicans won’t accept the offer, let them threaten to raise everyone else’s taxes in order to get a sweet deal for their patrons at the very top.

Giving the Keys Back to the Folks Who Crashed the Car

by Jacob S. Hacker and Paul Pierson

Authors, Winner-Take-All Politics: How Washington Made the Rich Richer—And Turned Its Back on the Middle Class

Posted: November 3, 2010 02:11 PM on Huffington Post

After Tuesday's drubbing, Democrats will search for the hidden message of the election. But the message isn't hidden: The decisive blocs of voters that switched from Democrats in 2008 to Republicans in 2010 were angry and disillusioned -- with the economy, with a political system they see as helping banks and CEOs, not ordinary working families, and with both parties, Republicans (exit-poll favorability rating: 41 percent) as well as Democrats (43 percent). They want action to rebalance the economy so it produces jobs and gains for the middle class, not just Wall Street. Unfortunately, they're not going to get it.

That's because these voters have just handed Congress back to a party least likely to heed their call: the party that spent the last two years saying no to Wall Street reform, to an economic recovery package that included major tax cuts, to expanded health insurance and medical cost control, and to extension of the 2001 tax cuts for the middle class; the party that shamelessly courted lobbyists and corporate donors while claiming they were only against reform because it represented a "bailout" of these very same interests.

In exit polls, voters were asked who they blamed for the state of the economy. In order, they blamed banks, then the Bush administration, and only then the current administration. Yet those who blamed banks gave their votes by a wide margin to the GOP. Their votes have made Speaker-to-be John Boehner the second most powerful person in Washington only months after he staged an open rally for bank lobbyists, urging them to block Democrats and their "punk staffers." The rally worked: Wall Street swung toward the Republicans, joining health insurers, big business groups, energy companies, and the rest of the GOP's new money trust.

Midterm election losses are a virtual inevitability for the party of the president. A terrible economy makes them more certain -- and larger. The only thing that would have saved Democrats from big losses this time around was a huge organizational and fundraising edge. Thanks to the Tea Party and billions in outside campaign spending that favored the GOP, the edge was Republicans'.

If there is a hidden message in the election, it's one that we, in our recent book, Winner-Take-All Politics, call the "dirty little secret" of political science: most voters pay little attention to what happens in Washington and have only the vaguest sense of what is happening there. Most are completely unaware of how the filibuster has been used relentlessly to block action on the economy, and a majority mistakenly believes that the astonishingly unpopular TARP legislation passed under Obama, when in fact in was signed by George W. Bush.

We are taught to believe that voters call the shots. And they often do. Yet the vote is a blunt, heavy weapon -- one that voters barraged with negative ads and misleading messages, without strong guidance from grassroots organizations, often wield with little awareness of or regard for the collateral damage that will result. In this case, the damage is likely to be the crippling of goals and policies that most Americans continue to support.

One salient example sums up the whole: Republicans' big gains came with older voters -- in part because they were frightened by GOP attacks on the health care bill. Yet Republican budget blueprints -- from Paul Ryan's "Roadmap for America's Future" to the GOP "Pledge to America" -- mean even bigger cuts in Medicare and the revival of the GOP's mothballed plans for partial privatization of Social Security and Medicare. Ask older Americans whether they would like to trash their cherished programs in return for massive new tax cuts for the richest of the rich, and the answer will be a resounding no. Only on election day, a strong majority of older Americans, in effect, said yes.

In John Steinbeck's Grapes of Wrath, perhaps the most memorable line was uttered by an angry farmer about to lose his home (sound familiar?). Enraged and despairing but unable to pinpoint blame for his terrible loss, he asks, "Who can we shoot?" That's what voters were asking in 2010, and most had no clearer idea than the farmer of where responsibility for their plight lay.

The 2010 election was the political equivalent of the perfect crime: The GOP vigorously took on all reforms designed to rebalance the economy for the long term, tying Washington up in contorted knots, then were rewarded at the polls by voters dissatisfied with an ugly D.C. culture unable to produce economic renewal.

Jacob Hacker and Paul Pierson are the authors of Winner-Take-All Politics: How Washington Made the Rich Richer--And Turned Its Back on the Middle Class

Where the Obama Economic Team Went Wrong

Published on Wednesday, November 3, 2010 by PR Watch.org

Obama Economic Team Passes Out the Kool-Aid

by Mary Bottari

It’s the day before a hotly-contested national election, where it appeared the rabble was well positioned to deliver a colossal spanking to the elites who have too-long ignored their plight, so what does Team Obama do?

They have a press conference to talk about their eagerness to complete the Korea Free Trade Agreement negotiated by President Bush. "The president has long said we want to try and address the outstanding issues regarding the Free Trade Agreement in order to bring it forward for approval," said Mike Froman, Obama’s deputy national security advisor for international economic affairs. “[W]e're going to put every effort into achieving ... an acceptable agreement, a satisfactory agreement, by the time the president comes to Seoul," he told a news conference on Monday.

Are these people nuts?

In case they had not noticed, Democrats across the country were getting hammered on the charge of exporting jobs to China via the stimulus package. It does not matter that the charge is false and that Democrats leapt into action to block U.S. companies who were considering ordering wind turbines from their subsidiaries in China. The republican ads, which ran in key races nationwide, cleverly turned a democratic advantage on fair trade into a republican advantage.

This latest free trade idiocy caps a long list of failures from the White House economic team:

-Failure to treat sustained high-levels of unemployment as the national emergency it is.

-Failure to pass a bank bailout package that placed any tough conditions on the banks.

-Failure to pass a Wall Street reform bill that was big enough or bad enough to make the big banks reign in those infuriating bonuses.

-Failure to put even a single CEO responsible for the financial crisis behind bars.

-Shameful failure to address the housing and foreclosure mess that will soon put one in four families in American underwater with their mortgages.

No wonder the people are voting to throw the bums out.

Much of the blame for the staggering electoral losses has to be laid at the feet of the president's economic team who seems to think that 14 months of near double-digit unemployment is acceptable.

“Their primary misjudgment is they did not understand how serious the downturn would be,” says economist Dean Baker who sounded the warning about the accumulating housing bubble as early as 2002. “Summers, Geithner, Greenspan, Bernanke, none of these guys thought bubbles were a big deal. They expect the economy to bounce back on its own, and if it didn’t, unemployment was not such a big deal either.”

As a consequence, Team Obama's one shot to get the economy going again -- the stimulus/jobs package -- was not big enough. Christina Romer, former head of the Council of Economic Advisers recommended over a trillion dollars in direct job creation funding, but the final package contained about half of that.

"Summers managed to marginalize alternative views on nearly everything … the size and composition of the stimulus, whether and how to discipline the banksters or do a housing refinance,” says Joel Rogers, of the University of Wisconsin-Madison and COWS, the national “high road” strategy center. “He very ably represented Wall Street and the rich against everyone else." But you can’t exactly blame him for success in that. The president declares what economic discussion should be about, and who's in it.

While some will celebrate the people throwing the bums out, the tragedy of course is that the bums-in-waiting advocate policies like tightening spending that is the opposite of what is needed in this type of downturn. Plus, the best of the best – those who have always stood with the people against the big banks, the bailouts and even the Obama economics team, are being swept up in the mob mentality. Wisconsin’s Russ Feingold voted no to every free trade deal, no to the bailouts, no to weak Wall Street reform and no Tim Geithner’s appointment as U.S. Treasury Secretary, but he was beaten by a self-financed tea party millionaire who will advance exactly the pro-free trade, pro-corporate agenda that Wisconsinites abhor.

Pass Out the Pink Slips or Receive One Yourself

If this president does not learn the lesson of this election, he will of course be forced to repeat it.

“In 2008, Obama only won the election because he won the critical states of Ohio, Pennsylvania, Michigan and Wisconsin by differentiating himself from McCain on trade. It's pretty obvious with Dems and GOP nationwide running against the trade status quo and its job offshoring damage, that if Obama flip flops now in favor of more job-killing NAFTA agreements, he will lose those states and end up a one term president,” says trade expert Lori Wallach of Public Citizen’s Global Trade Watch group.

So the pink slips need to go to Summers, Geithner, Froman and the other henchmen of the failed status quo. Even Obama’s new chief of staff, Peter Rouse, who touted an incredibly uninspiring forward agenda of education and free trade in a New York Times magazine profile of Obama, needs to go.

Obama needs a new economics team, one that does not disregard the suffering of families facing unemployment and foreclosure, and one that puts job creation -- not free trade -- at the top of their economic agenda.

© 2010 Center for Media & Democracy

Mary Bottari is the Director of the Center for Media and Democracy's Real Economy Project and editor of their www.BanksterUSA.org site.

What the Voters Voted For and What They Got for Their Money

by John Lawrence

In returning large numbers of Republicans to the House, here's what the voters will get for their efforts:

1) Gridlock mainly. The Republican and Democratic agendas are diametrically opposed - especially the part of the Republican agenda that doesn't want to pass anything that Obama could possibly get any credit for.

2) Tax cuts for the wealthy. Obama will probably compromise and continue the Bush tax cuts for the wealthy. The middle class will not be affected at all by this because Obama was already in favor of continuing the Bush tax cuts for them.

3) $700 billion of more debt which is what the tax cuts for the wealthy will cost.

4) No government expenditures that would help the poor or middle class. Speaker Boehner will not even bring such legislation to the floor.

5) Increased government spending for the military, the Republicans' traditional constituency.

6) Obama vetoes on repealing the health care bill and various other Republican initiatives that would undo much of the good work of the first two years of the Obama administration.

7) Investigations galore. That's the Republican MO. Issa will investigate anything and everything creating a circus of demonization for the Obama administration - remember Travelgate, Whitewater and various and assorted Republican investigations of the Clinton administration?.

8) More tax cuts for the rich paid for by decreasing, underfunding or eliminating social programs such as social security, unemployment insurance, Medicare and public education.

9) Threats to shut the government down if the Republicans don't get their way.

10) Defunding Obama programs already passed into law.

11) No infrastructure rebuilding or creating programs.

12) Tax subsidies for the oil companies and other large corporations while defunding the Environmental Protection Agency.

In short, if the voters think they voted to improve the economy based on Republican initiatives, they are totally mistaken. The Republican way to improve the economy is to give tax breaks to the wealthy. Historically, this has been shown to be a failure insofar as job creation is concerned. It amounts to pandering to the wealthy in the hopes of getting a few crumbs from the table. Neo-feudalism, anyone? Despite Bush's enormous tax giveaways to the wealthy, there was extremely anemic job creation during his tenure. What the voters will get instead is the hastening of job destruction as more corporations are encouraged by Republican policies to ship jobs overseas. The Obama initiative to limit tax breaks for corporations that ship jobs overseas died in the Senate due to a Republican filibuster and nothing like it could ever pass a Republican House. The Democrats in the Senate will be able to filibuster any Republican initiative coming from the House to death if they choose to do so or just to vote it down since they will have the majority, and any Democratic initiative or Obama initiative will not even make it through the House.

In short you have a ghastly mess. What Obama and the Democrats can do is to use the next two years to stake out and clarify their positions in contrast to Republican positions on the economy. They need to reeducate the public. So far most Obama initiatives, despite accusations of socialism, have been Republican lite positions as Obama has tried to be a centrist, despite being accused of being an extremist. In the name of bipartisanship Obama has watered down most initiatives that he eventually got through Congress including health care, the stimulus bill and financial reform. By the time these bills eventually passed, after having been worked over by lobbyists, they were Republican lite bills. However, the right wing talk machine immediately went to work accusing these bills of being socialistic and Obama of being a left wing extremist.

Take the stimulus bill, for example. Caving in to Republicans, Obama made it largely about tax giveaways instead of about infrastructure repair. And there was not even any talk whatsoever of direct government job creation such as a renewed WPA program similar to FDR's during the Great Depression. The tax giveaway part of the stimulus bill did absolutely nothing to create jobs so it was a waste of money. By the voters' voting in Republicans, they guaranteed that this kind of waste of money in the name of job creation will continue and continue to be futile.

Obama, being the conciliatory compromising person he is, will be pushed to the wall with Republican initiatives which go against his grain but it remains to be seen whether he will give in and try to triangulate as Clinton did or stonewall them using the opportunity as a teaching experience for the American people. I favor the latter approach. I think he should become the Educator-in-Chief, staking out the Democratic position because the electorate, being as volatile as it is, will swing back to the Democrats after the ineffectiveness of the Republican controlled House becomes clear. As jobs continue to be exported overseas, the Democrats should make clear that this is Republican policy. As the ineffectiveness of tax cuts to create jobs becomes clear, as if it hasn't already, the Democrats should use this as a teachable situation. And besides I don't think this Republican controlled Congress will even let Obama triangulate because they are dedicated to "No Compromise." Instead they will try to push him to the wall and bring him to his knees - in short to make a fool out of him - which they've been trying their best to do for the last two years even with a Democratic controlled Congress. And if Obama doesn't get reelected in two years, it would be better for him to go out in a blaze of glory, having staked out and stood for his positions, than to have caved in and been humilated by Republicans and the right wing talk machine who will do their best to demonize and demean Obama no matter what he does.

Nothing will get done in the next two years, but that, sad as it is for the American people, is preferable than for Obama to cave in to Republican pressure which will make the situation even worse. Maybe something can be done about deficit reduction, but the Republicans will want to eliminate social programs to reduce the deficit, something Democrats should oppose. Republicans will not want to raise taxes to reduce the deficit or to find new creative ways to increase government revenues or to reduce military expenditures despite the empirical proof that Reagan and Bush tax cuts created much of it in the first place and the military is bloated beyond belief. Preventing terrorism these days has more to do with intercepting packages than it does with launching large scale military operations. You can make a bomb and mail it from any geographical location. You don't need "monkey bar" training in the field for that. My prediction is that Republican initiatives in the next two years, if they are successful, will only make the situation worse as far as the economy is concerned. Obama's only hope is to make his positions and philosophy clear while stonewalling Republican initiatives, and, when nothing much has gotten done in two years, point the finger of blame at the Republicans in the hope that the volatile electorate will again want to throw the bums out - only this time the bums will be Republicans.

San Francisco Bans the Happy Meal

From Huffington Post

First Posted: 11- 2-10 06:25 PM   |   Updated: 11- 2-10 06:43 PM

San Francisco has banned the Happy Meal, on the day of the return of the McRib no less. The San Francisco Board of Supervisors earlier today passed an ordinance requiring meals that included toys with their purchase to meet specific nutritional guidelines. The vote, achieved with a Gavin Newsom veto-proof majority of 8-3, effectively bans the Happy Meal.

Joe Eskenazi at the San Francisco Weekly reports:

 

​It seems the San Francisco Board of Supervisors has accomplished what the Hamburglar never could. They've made off with McDonald's fare.

 

The supes today passed an ordinance that will require meals to meet nutritional guidelines if restaurants wish to include a toy with the food purchase.

More importantly, the supes passed the so-called "Happy Meal Ban" by an 8-3 vote -- meaning it can survive a promised veto from Mayor Gavin Newsom. That's right: San Francisco done banned the Happy Meal. Robble robble.

 

The AP reports:

SAN FRANCISCO (AP) -- For some veggies-hating children, Happy Meals won't be so happy anymore.

San Francisco lawmakers approved legislation Tuesday that would limit toy giveaways in children's meals that have excessive calories, sodium and fat. It also requires servings of fruits or vegetables with each meal.

The city's Board of Supervisors voted unanimously Tuesday to approve the ordinance, which they hope will force fast-food chains such as McDonald's to make their children's meals healthier or stop selling them with toys.

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The measure drew enough support to overcome an expected veto by Mayor Gavin Newsom.

Supervisors say the law would make San Francisco the first major city to take this action to combat childhood obesity.

McDonald's has said the law threatens business and restricts parents' ability to make choices for their children.

Rachel Maddow Lays It Out

 

Earth Will Take 100,000 Years to Recover from Global Warming Say Geologists

Published on Tuesday, November 2, 2010 by The Telegraph/UK

The Earth will take 100,000 years to recover from global warming if mankind continues to pump greenhouse gases into the atmosphere, geologists have warned.

by Louise Gray

A conference organised by the Geological Society in London this week will bring together scientists from around the world to look at how the world coped with climate change in the past.

Professor Jim Zachos, of the University of California, said continuing to pump out greenhouse gases at the current rate will cause a more rapid temperature rise than at any other time in history and could cause "mass extinction of species".(photo by Flickr user AZRainman)

By studying rock sediments from millions of years ago geologists have been able to model how increases in greenhouse gases led to temperature change and extinction of species.

Professor Jim Zachos, of the University of California, said that 55 million years ago volcanic activity caused around 4,500 gigatons of greenhouse gases to be released into the atmosphere over thousands of years.

This caused the planet to warm by 6C (10.8F), forcing whole ecosystems, including early mammals, to adapt, migrate or die out in certain areas.

Prof Zachos said that if the world continues to pump out greenhouse gases at the current rate, around 5,000 gigatons of greenhouse gases will be released into the atmosphere over a few hundred years.

He said this will cause a more rapid temperature rise that at any other time in history and could cause "mass extinction of species".

"The impacts will be pretty severe compared to 55 million years ago in terms of evolution of this planet," he said.

The Geological Society warned that it could take the Earth 100,000 years to recover.

A statement read: "The geological evidence from the 55 million year event and from earlier warming episodes suggests that such an addition [a massive increase in greenhouse gases caused by the activities of mankind] is likely to raise average global temperatures by at least 5 to 6C, and possibly more, and that recovery of the Earth's climate in the absence of mitigation measures could take 100,000 years or more. Numerical models of the climate system support such an interpretation. In the light of the evidence presented here it is reasonable to conclude that emitting further large amounts of carbon dioxide into the atmosphere over time is likely to be unwise, uncomfortable though that fact may be."

© Copyright of Telegraph Media Group Limited 2010

Why the US is About to Incorporate the Worst Aspects of Fascism and Dark Age Thinking

by John Lawrence

If, as according to all predictions, the Republicans win big in today's election, it will be the next thing to a death knell for American democracy. It will be a regression to end all regressions. The Republicans will do everything they can possibly do to bring Obama to his knees and make a fool of him - as if they hadn't been trying to do that all along. Only this time they will have considerably more power to do so.  The US is about to lose its Enlightenment roots and regress to the Dark Ages with a dollop of Fascism thrown in for good measure.

In the Dark Ages everything having to do with reality was made up out of whole cloth. Instead of being based on science which was in short supply, everything was based on portents, signs, dreams. This fictionalized version of reality is what the Republicans are offering us today. They talk about small government even as they work to enlarge government, freedom even as they work to enslave us, fiscal responsibility even as they spend like profligates. In the Dark Ages people believed in leprechauns, elves, unicorns and other mythological creatures which were everyday companions. There was no such thing as a scientific understanding of the universe or everyday life so every type of belief system was up for grabs. We would call this in general a state of ignorance.

Today despite the fact that there is a great deal of scientific understanding of the world around us, right wingers are retreating to a world of mythology and trying their best to inculcate in their followers a belief in a reality which they make up out of whole cloth - a reality in which science is forsaken for a belief in the fact that global warming does not exist, evolution is a bunch of hooey and smaller government will create jobs. When Haley Barbour, a seemingly likable chap, can get on msnbc and say that Bush only added $2 trillion to the national debt, instead of the $5 trillion he really did, and go unchallenged, when politicians can spout outright lies and get away with it, when Sarah Palin can manufacture her fiction about the America that she wants to go back to that never existed, they are all painting a narrative that has nothing to do with reality, nothing to do with facts, nothing to do with a realistic assessment of the situation and everything to do with blowing a smokescreenm that covers up the fact that they represent the cover that allows rich people - themselves and others - to rob us blind. Palin never makes a media appearance unless she is paid for it - mainly by Fox News. Nevertheless, she paints herself as a selfless person just trying to help out and make the country better. Actually, she's making it better for herself - first and foremost.

And the right wing politicians are augmented by the Fifth Column of Glenn Beck, Rush Limbaugh and their associates. They are doing the work that Hitler singlehandedly did in the 1930s. They are channeling American angst and anger into a regressive fury that could lead to an American version of Teutonic fascism. Hitler notably credited his rise to power as due to his extraordinary speaking ability. The Nazi party was a few old timers meeting in a Munich beer hall till Hitler wandered in and started speaking. It was a gift he didn't realize he had until then. Before long they had to rent halls accommodating 10,000 people. It was Hitler's ability to excite the masses and channel German anger into a potent brew that brought about the fascist onslaught that exterminated the Jews and brought on World War II. The US already has the largest military in the world with bases in almost every nation. The military component of fascism is already in place. Bush did his best to start wars everywhere he could based on lies like Hitler did. The US has already gone part way down the road following in Hitler's footsteps. The lies and BS that Limbaugh, Beck et al represent are merely Hitler bifurcated. Instead of one media savvy talking head, we have a monster with two talking heads or three or four - a multi-furcated talking head all spewing fascist fervor whose main goal presently is to bring a black man, Obama, to his knees. They almost did it with Democratic control of both Houses of Congress. What will they be able to accomplish when they control one or both chambers after today's elections?

The mini resumption of Enlightenment thinking which Obama represented is about to go out the window as the US regresses to an angry mob with beliefs made up out of whole cloth that defy reality. As the voters "throw the bums out" they don't realize that they are going from the frying pan into the fire. As they become captivated by speakers whose version of reality has nothing to do with reality but represents a believable fiction similar to the belief in leprechauns, they are ceding power and control to the very people who will not give them economic redress but will continue the job of exporting their jobs overseas and putting them in the position of economic serfdom. If they think Republicans are going to create jobs, they are sadly mistaken. The exodus of jobs in this country to places in the world where labor is dirt cheap will only accelerate under the Republicans who will make sure that American corporations will be given tax breaks to do so.

The ignorance of the Dark Ages was understandable in that people were subject to forces beyond their control which they had no understanding of. This kind of thinking is inexcusable today when there are ample scientific and truthful explanations of reality. Still people would rather believe in a reality made up by right wing politicians out of whole cloth. They would rather believe in the demonizations of progressive figures carried out by right wing media. They would rather cheer for people who want to gut any and all social programs like unemployment insurance, social security, Medicare and even public education. They are voting against their own interests. Throwing the incumbents out in the hopes that things will get better is sheer foolishness when the ones voted in are dedicated to the same principles that created the mess in the first place. And they seem to be good at blaming the other side for the mess they created and getting the public to believe them. Their formula for doing this is multi-furcated fascism brought to you by the right wing media combined with Dark Age thinking perpetrated by conservative politicians. When they control the strongest military apparatus in the world and have been able to whip the masses into a frenzy of anger, watch out world!

Why Obama Should Learn the Lesson of 1936, not 1996

by Robert Reich

Monday, November 1, 2010

Which lesson will the President learn — that of Clinton in 1996, or FDR in 1936? The choice will determine his strategy over the next two years. Hopefully, he’ll find 1936 more relevant.

Obama shouldn’t be fooled into thinking Bill Clinton was reelected in 1996 because he moved to the center. I was there. Clinton was reelected because by then the economy had come roaring back to life.

The 1996 election was about little else. Dick Morris, Clinton’s pollster and chief political advisor (who effectively took over the White House policymaking apparatus shortly after Newt Gingrich and the Republicans took over Congress in 1995), instructed the President to say only “the economy’s booming and you ain’t seen anything yet.”  

President Obama won’t have that luxury in 2012. In all likelihood, the economy will still be anemic. It’s now growing at the rate of no more than 2 percent a year – far too slow to bring down the jobless rate. Even now, sales are slowing. Business revenues are slowing. Home sales are down. Home prices are down. Foreclosures are increasing.

For the next two years Republicans will try to paint Obama as a big-government liberal out of touch with America, who’s responsible for the continuing bad economy.

Obama won’t be able to win this argument by moving to the center — seeking to paint himself as a smaller-government moderate. This only confirms the Republican’s views that the central issue is size of government, that it’s been too large, and the economy can improve only if it’s smaller.

On the Republican playing field, Republicans always win.

Obama’s best hope of reelection will be to reframe the debate, making the central issue the power of big businesses and Wall Street to gain economic advantage at the expense of the rest of us. This is the Democratic playing field, and it’s more relevant today than at any time since the 1930s.

The top 1 percent of Americans, by income, is now taking home almost a quarter of all income, and accounting for almost 40 percent of all wealth. Meanwhile, large numbers of Americans are losing their homes because banks won’t let them reorganize their mortgages under bankruptcy. And corporations continue to lay off (and not rehire) even larger numbers.

With Republicans controlling more of Congress, their pending votes against extended unemployment benefits, jobs bills, and work programs will more sharply reveal whose side they’re on. Their attempt to extort extended tax cuts for the wealthy by threatening tax increases on the middle class will offer even more evidence. As will their refusal to disclose their sources of campaign funding.

The relevant political lesson isn’t Bill Clinton in 1996. It’s Franklin D. Roosevelt in 1936.

By the election of 1936 the Great Depression was entering its eighth year. Roosevelt had already been President for four of them. Yet he won the biggest electoral victory since the start of the two-party system in the 1850s. How?

FDR shifted the debate from what he failed to accomplish to the irresponsibility of his opponents. Again and again he let the public know whose side he was on, and whose side they were on. Republicans stood for “business and financial monopoly, speculation, and reckless banking,” he said over and over.

And he made it clear they wanted to prevent him from helping ordinary Americans. “Never before have these forces been so united against one candidate as they stand today,” he thundered. “They are unanimous in their hate for me – and I welcome their hatred.”

The 2012 economy won’t be as bad as the 1936 economy, hopefully. But it won’t be nearly as good as the 1996 economy. For a president running in 2012, 1936 is the more relevant.

Robert Reich Plugs Book, "Aftershock," on The Colbert Report

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Colbert Report Full Episodes 2010 Election March to Keep Fear Alive

 

If You Want More Debt Vote Republican

Published on Sunday, October 31, 2010 by CommonDreams.org

by Robert Freeman

One of the most successful deceits of the past thirty years is that Republicans are the party of "fiscal discipline." In fact, Republicans are the party of fiscal wreckage. Simply put, Republicans love deficits and debt. They have buried the country with them. They expand them with orgiastic fervor every time they get the chance. Until we come to grips with this simple truth we will never gain control of our fiscal destiny.

In 1980 the national debt stood at $1 trillion. Over the prior 204 years, the nation paid for the Revolutionary War, the Civil War, the build-out of an entire continent, the First World War, the Great Depression, the Second World War, Korea, Vietnam, and the better part of the Cold War. And through all that, we still only borrowed $1 trillion.

But over the next 12 years of relative peace and prosperity, Republicans Ronald Reagan and George H.W. Bush would quadruple the national debt, to $4 trillion. They did it by dramatically lowering taxes on the wealthy and furiously expanding government spending. This isn't even economics, it's arithmetic: bring in less income while spending more money, and the result is debt. Mountains of it.

Bill Clinton reversed the Republicans' destructive formula, raising taxes on the rich and cutting spending to 17.4% of GDP, a level not seen in 30 years. The result was the longest economic expansion in American history. More than 20 million jobs were created, another record, while the stock market tripled. Most importantly, Clinton produced the first budget surpluses since 1969, handing George W. Bush a $140 billion surplus.

Bush immediately returned to the tried-and-true deficit producing policies of Reagan and his father. He lowered taxes on the wealthy through a $1.6 trillion giveaway in which 50% of the gains went to the top 1% of income earners, his "base" as he called them. And he expanded spending to 20% of GDP by initiating two wars, lying to pass a $600 billion giveaway to the pharmaceutical industry, and more.

Again, bring in less income, spend more, and the result is debt. Under Bush's catastrophic economic stewardship, the national debt more than doubled, from $5.6 trillion to over $12 trillion while producing the greatest economic collapse since the Great Depression.

A Republican has occupied the White House for 26 of the past 40 years. Not once in any of those years has any Republican president mustered a single balanced budget. So, the fact that Republicans love deficits and debt and expand them whenever they get the chance is not an ideological or political construct. It is the empirical, manifest conclusion of their own policies and actions. Those are the facts.

Less well understood is why this is so. But like the record itself, it is important that Americans know why it is that Republicans love debt. The reasons are two-fold and straightforward.

The first and most important reason Republicans love debt is that they make more money when there's more debt outstanding. The wealthy, after all, are lenders. They would prefer everybody-governments, companies, individuals-be up to their eyeballs in debt. That way they can charge everybody obscenely high rates of interest, as they do the desperately poor who use payday lending facilities with interest rates in the hundreds of percent a year.

The wealthy will collect almost $4 trillion in interest payments in the U.S. this year-27% of the entire $15 trillion GDP going to pay interest! And that's a time of extreme slack in the economy. As the economy recovers and demand for borrowed money increases, rates will rise. Imagine the obscene interest the country will be forced to pay on its $14 trillion national debt when the U.S. government itself becomes a payday borrower!

Which points to the second reason Republicans love debt. At some point it becomes so onerous it will bankrupt the government. This will make it impossible for the government to carry out its essential functions. It will have to sell off assets to its creditors, just as it is doing now, to raise money.

The same wealthy interests who caused the nation to go bankrupt will then buy up public resources at pennies on the dollar. That's how foreclosure sales work. They will then sell the services from those resources back to the public at monopoly rates. We see this around the country where thousands of cities and dozens of states are already selling off essential assets in exchange for a one-time infusion of cash.

Arizona selling off its state-house. Michigan selling the bridge to Canada. States across the country selling their toll-roads, airports, prisons, water systems, parks, even police and fire departments. School districts selling their schools in the guise of making them "charters" when in fact, they are franchised corporate education providers: McSchools.

Privatization of everything is the goal, with no public sector. You can do it when you have bankrupted the government. This is Republican nirvana: the rich paying essentially no taxes; extracting trillions of dollars in interest payments from captive, maxed-out borrowers, public and private; and owning all the public resources (in addition to all of the private resources which they already own). How much better can it get?

The second advantage of bankrupting the government (at least from the vantage of Republicans), is regulatory. It leaves no institutional force in society capable of standing up to the concentrated power of big capital.

This is what made the recent financial meltdown possible: regulation had been gutted, allowing the predators to run amok through the economy. It is what enabled the catastrophic oil spill in the Gulf of Mexico: little or no regulation on the oil companies.

What Republicans want in the private sphere is untrammeled dominion over desperate workers. In the public sphere, they want the ability to cow the government to do its bidding and to transfer all governmental operations to private hands. Bankrupting the government through onerous debts is the surest way to do both, for who, then, can stand up for the interests of the public? Or for democracy, for that matter?

Republicans have gotten so good at drowning the country in debt they even baked it into Obama's administration. According to the non-partisan Congressional Budget Office, almost ninety percent of Obama's deficits are due to policies and events initiated by George W. Bush: massive tax cuts for the rich; two unendable wars; and-once again-the greatest economic collapse since the Great Depression. Without these albatrosses Obama's budget would be almost in balance.

Republicans want nothing to do with policies that actually reduce deficits. If they did, they would have mustered more than a façade of concern over the past 40 years. But they haven't. And the most insufferable part of it all is their unctuous posturing about "fiscal discipline." It's like Heidi Fleiss posing as a model of moral probity, all the better to sucker more two-faced Johns into her bordello.

It was Cicero, in 45 B.C., who laid out the simplest formula in history for understanding such matters. They are the two most powerful words in political forensics: "Qui Bono?" Who benefits? When we answer this question and look at their record, we learn everything we need to know about Republicans and debt. All the rest of the posing is a sham. It's a shame the Democrats don't have the backbone to call this truth for what it is.

Robert Freeman writes on economics, history and education. His earlier pieces, "The Five Circles of Economic Hell," and “The U.S. is Facing a Weimar Moment,” were also published on CommonDreams.  He can reached at [email protected].

China Snookers the West in Pretending Not to be an Economic Powerhouse

by John Lawrence

Recently China overtook Japan to become the world's second largest economy. Yet some western observers notably Steven Hill consider China to be a still developing economy. How can this be possible that at one and the same time China has become an economic powerhouse but yet is still developing? This is the paradox of China. The truth of the matter can be found in China's huge population of about 1.3 billion people. There is a split between the urban rich and the rural poor. The urban areas are relatively wealthy and well developed, but the rural areas are relatively poor. Approximately half of China's population is engaged in subsistence farming. These are the people that are "living" on a couple of dollars a day" while the urban areas boast many millionaires and billionaires. In 2009 China had the world's fastest growing group of millionaires, an elite club that rose 31 percent from 2008 to encompass 477,000 people. This growth led China to overtake Britain as the world's fourth largest home to rich people.

So China is a paradox but not an enigma. There are a lot of poor as defined by their contribution to GDP and a lot of rich as defined by their contribution to the market economy. A lot of China's rural farmers migrate to urban areas during certain times of the year to participate in the market economy. The rest of the year they are subsistence farmers. What subsistence farming means is that they are largely self-sufficient in terms of producing enouch to provide for their needs without participating in the market or cash economy. They are, therefore, only poor in the definition of those who only consider wealth as measured by the exchange of goods and services. To those people self-sufficiency doesn't count. It's not included in GDP. Looked at differently though, China could be considered to have the best of both worlds: a self-sufficient rural population and a wealthy urban population. The world's truly poor are the urbanized, jobless poor who make a living scavenging in garbage dumps. If one can't be a self-sufficient farmer, then one must have a job or be really and truly poor. An urbanized poor person living on a couple of dollars a day is in a vastly different situation than a rural poor person engaged in subsistence agriculture living on a couple of dollars a day. On the one hand, you have the desperately poor who are forced to live in a cash economy in which they are jobless. On the other, you have a population which provides for most of its own needs without participating in the cash economy. For the latter group, whatever cash they do make is a bonus on top of what they can provide for themselves.

So I would argue that far from being an impoversished or underdeveloped nation, China really has the best of both worlds. This is contrasted with the US, for example, where the population is almost entirely urbanized. Only 2% of the population is involved in agriculture. So the rest are "urbanized" in a sense regardless of where they live and are dependent on a job to provide for all their needs. They live almost entirely within a cash economy and are almost completely non-self-sufficient. That's why unemployment is such a big deal in the US. China, on the other hand, is lucky not to have the corporate farms which have taken over the job of food production in the US using a combination of highly productive technology and extremely cheap immigrant labor. From my point of view, China, even though many of the self-subsistent farmers still use the water buffalo, is vastly better off because of the distribution of agriculture over a largely self-sufficient population. And we haven't even considered the wealth of China's government which is an entity above and beyond the Chinese people themselves.

Streven Hill argues the following in his essay, "The China Superpower Hoax":

To understand the “real” China, it is necessary to see it through the double lens of its paradoxical condition as both a major economy and a still-developing country. China is filled with contradictions and serious challenges. When I visited China in August and September of 2008, after the Olympics, the country that I saw, whether in Shanghai, Beijing or the rural areas, was a long, long way from being a global leader in any meaningful sense. Two hundred million people out of a working population of nearly 800 million are migrants, chafing at their lowly status and rotten wages. Inequality is rampant. Returning from the rural areas—where the vast majority of Chinese still live—to cities is like a form of time travel, moving from feudal conditions where plowing is still done by water buffalo to a land of impressively jutting skyscrapers.

It's true that "inequality is rampant," but China would be much worse off if it had an entirely urbanized economy with little subsistence farming and the vast majority of the poor living in garbage dumps which is the way it is in many countries as detailed in Mike Davis' book, "Planet of Slums". Davis is writing precisely about the urban poor as opposed to the self-subsistence farmers who are only poor in the sense of being virtual non-participants in the market economy. And Steven Hill doesn't even stop to consider the autonomous wealth and power of China's government. To start with, the US government is indebted to the Chinese government to the tune of $772 billion as of May 2009. It has only increased since then. The US is running a trade deficit with China of approximatyely $60 billion per month. This represents a structural indebtedness of the US to China. The US as a whole has a national debt of $13.7 trillion. The China Investment Corporation is a sovereign wealth fund which has $332 billion with which to invest around the world. China is buying up natural resources and cutting deals around the world while the US lavishes its money - more than the rest of the world spends on its military establishments combined - on a military establishment that has military bases throughout the world. The notion of a sovereign wealth fund is beyond the pale of debate within the US where the only discussion is around how much debt is acceptable.

And that's just the beginning of Chinese government wealth. The People's Republic of China has US $2.5 trillion in currency reserves. With the US' growing indebtedness to China, China has really become the US' banker. (See "Uncle Sam, Your Banker Will See You Now.") US goading of China regarding revaluing its currency falls on deaf ears because China can argue that it's still a developing country (with all those self-subsistent farmers they can have it both ways), and, besides, China holds the financial power over the US due to the fact that the US is dependent on China for huge sums of money to pay its bills. China is the creditor nation despite having a lot of poor people while the US is the debtor nation with a middle class rapidly becoming poor.

China's huge governmental wealth puts it in a position to make huge investments in infrastructure. In 2008 China put $586 billion into infrastructure development including high speed rail, airport development and broad band infrastructure. According to press reports:

"The statement said the spending would focus on 10 areas. They included picking up the pace of spending on low-cost housing - an urgent need in many parts of the country - as well as increased spending on rural infrastructure.

"Money will also be poured into new railways, roads and airports. Spending on health and education will be increased, as well as on environmental protection and technology."

Despite the American Infrastructure and Reinvestment Act, it has allocated a relative paltry sum to infrastructure development. James Carlini said:

A $700 billion bailout package would have been enough to do many of these large infrastructure initiatives in the U.S. Listening to reports of non-deserving executive bonuses, hunting trips, junkets to resorts, and acquisitions coming out of the bailout money in the U.S., it sounds like the Chinese have a better handle on national initiatives and how to prioritize building lasting infrastructure.

China is stepping up to the plate as it allocates resources to clean up the environment and provide a social safety net for its citizens. It is not there yet, but the trend is for rapid development in many directions simultaneously. They are putting their money into economic development while the US puts its money into the military-industrial complex. Meanwhile, the US dithers, not able to get its act together or agree on anything. With no national industrial policy, immense debt and a political system seemingly invented to create gridlock, the US goes backwards while China goes forward. While the US regresses, China is not standing still. If Republicans take over Congress, we'll see a shredding of what little safety net the US has. What now seems like an almost pathetic attempt to institute a national health care plan is likely to be repealed or gutted. All public services are in jeopardy as states and municipalities struggle with huge budget deficits. Is this what 234 years of democracy has wrought?