Derivatives Reform Suffers Midnight Mangling

Submitted by Mary Bottari on June 25, 2010 - 11:48am.

The last day was a long one in the House-Senate conference committee on financial reform. The conferees had been at it since 9:00 a.m. and were rumpled and weary. Big bank lobbyists packed the conference room and trailed out into the hallways. As the clocked ticked into the wee hours, the chances for meaningful financial reform dimmed. At issue was the strong and controversial crack-down on derivatives trading authored by Senate Agriculture Committee Chair Blanche Lincoln (D-Arkansas).

Taxpayers Still Back Reckless Wall Street Trading

At about midnight, House Agriculture Chairman U.S. Representative Collin Peterson (D-Minnesota) offered an amendment to the Lincoln provision to require big banks to spin off (or push out) their derivatives desks into a separately capitalized affiliate. The Lincoln measure was geared toward ending taxpayer supports (FDIC insurance, Federal Reserve monies) for Wall Street gambling.

Governments Move to Cut Spending, in 1930s Echo

By DAVID LEONHARDT

The world’s rich countries are now conducting a dangerous experiment. They are repeating an economic policy out of the 1930s — starting to cut spending and raise taxes before a recovery is assured — and hoping today’s situation is different enough to assure a different outcome.

In effect, policy makers are betting that the private sector can make up for the withdrawal of stimulus over the next couple of years. If they’re right, they will have made a head start on closing their enormous budget deficits. If they’re wrong, they may set off a vicious new cycle, in which public spending cuts weaken the world economy and beget new private spending cuts.

On Tuesday, pessimism seemed the better bet. Stocks fell around the world, over worries about economic growth.

Longer term, though, it’s still impossible to know which prediction will turn out to be right. You can find good evidence to support either one.

The Political Path for Progressives in the Face of Rabid Right-Wing Resistance

By Robert L. Borosage, Campaign for America's Future
Posted on June 28, 2010, Printed on June 30, 2010
http://www.alternet.org/story/147361/

“Change don’t come easy.”

Barely more than a year in office, the Obama presidency seems besieged. The oil spill in the Gulf of Mexico, a worsening catastrophe, casts a haunting pall. A jobs bill, even when cribbed, is torpedoed by members of the president’s own party in Congress. Entrenched interests delay and dilute vital reforms. On the right, a furious reaction builds. Former Republican Speaker Newt Gingrich rallies conservatives against the “secular socialist Obama machine.” Pundits predict Republicans will benefit from their strategy of obstruction and make significant gains in the fall elections.

Will reaction block renewal? Will a politics of hate overcome the politics of hope? Will the Gulf oil disaster become a metaphor for government too incapacitated or too compromised to address the challenges we face?

A Financial Crisis, Not A Deficit Crisis

By James Galbraith

Created 06/30/2010 - 12:58pm

What caused the deficits and rising public debt? The answer comes in two parts: present deficits and projected future deficits.

Overwhelmingly, the present deficits are caused by the financial crisis. The financial crisis – the fall in asset (especially housing) values, and withdrawal of bank lending to business and households – has meant a sharp decline in economic activity, and therefore a sharp decrease in tax revenues and an increase in automatic payments for unemployment insurance and the like.

According to a new International Monetary Fund staff analysis, fully half of the large increase in budget deficits in major economies around the world is due to collapsing tax revenues, and a further large share to low (often negative) growth in relation to interest payments on existing debt. Less than 10 percent is due to increased discretionary public expenditure, as in stimulus packages.

What Is Goldman Sachs Thinking?

By Simon Johnson

The next financial boom seems likely to be centered on lending to emerging markets. Sam Finkelstein, head of emerging markets debt at Goldman Sachs Asset Management, summed up the prevailing market view – and no doubt talked up his own positions – with a prominent quote in Monday’s Financial Times (p.13, front of the Companies and Markets section):

“Debt-to-GDP ratios in the developed world are about double those in emerging markets and they’re growing. This makes emerging markets interesting because you’re pick up incremental spread [higher interest rates compared with developed world rates], and in return you’re actually taking less macroeconomic risk.”

This is a dangerous view for three reasons.

Financial Regulation

There is much to applaud in the financial regulatory reform bill announced last Friday by House and Senate negotiators. It would limit some of the riskiest activities of banks and regulate the multitrillion-dollar market in over-the-counter derivatives. It would give federal regulators the tools, if they need them, to shut failing large banks and financial firms instead of bailing them out.

In significant ways, the bill would also protect Americans directly. Consumers would be shielded from many forms of abusive and predatory lending, and investors could be empowered to influence corporate boards that have long been impervious to shareholder concerns.

The bill is a considerable accomplishment. It is the final version. Congress should pass it quickly.

At the same time — and in the months and years ahead — lawmakers must acknowledge the bill’s shortcomings and be prepared to take corrective action. Many of the bill’s provisions come with exceptions or exemptions that could, in practice, swallow the new rules.

Why Should We Trust the IMF?

The IMF is shouting about the need for austerity today, but it was strangely quiet during the build-up of the bubble that got us here

by Dean Baker

Is advice from the IMF better than advice from a drunk in the street? That is the question that people around the world should be asking as the International Monetary Fund dishes out its prescription for austerity. The IMF programme calls for cutbacks in government support for healthcare, pensions, and a wide range of other public services. It also calls for weakening labour market regulations that provide workers with job security.

These recommendations are being given in a context where the world economy is suffering from a massive shortfall of demand. In other words, tens of millions of people are unemployed right now because there is not enough spending to keep them employed. The IMF's programme is almost certain to reduce spending further leading to even larger shortfalls in demand and more unemployment.

Report: US warships stationed off Iranian coast

By Daniel Tencer
Sunday, June 27th, 2010 -- 4:22 pm

As unconfirmed reports of an imminent Israeli strike on Iran's nuclear facilities pick up steam in the Middle Eastern media, a US-based strategic intelligence company has released a chart showing US naval carriers massing near Iranian waters.

The chart, published by Stratfor and obtained by the Zero Hedge financial blog, shows that over the last few weeks a naval carrier -- the USS Harry S Truman -- has been positioned in the north Indian Ocean, not far from the Strait of Hormuz, which leads into the Persian Gulf. The carrier joins the USS Dwight D. Eisenhower, which was already located in the area. The chart is dated June 23, 2010.

In Praise of Bureaucrats

By Sara Robinson

Created 06/28/2010 - 5:56pm

Brad Johnson at The Wonk Room calls out the "Climate Peacocks" in Congress [1] who are ostentatiously shaking their tailfeathers in mock outrage over the very idea that the Environmental Protection Agency might actually act as agents of environmental protection:

Earlier this month, 47 senators — every Republican and six Democrats — voted for Sen. Lisa Murkowski’s (R-AK) resolution to overturn the Environmental Protection Agency’s scientific global warming endangerment finding, finalized after years of delay in following a Supreme Court mandate to obey the language of the Clean Air Act.

Twenty of Murkowski’s supporters claimed they voted to reject science in order to preserve the “balance of power” between the legislative and executive branch. They said that they had to overturn the EPA’s scientific finding because setting pollution limits should instead be the job of the elected members of Congress. Sen. Mike Enzi (R-WY) even said he voted for Murkowski to “ensure that Congress keeps its responsibility to establish our nation’s environmental regulations.”

Wall Street Congratulates Washington: A Job Well Done

Monday 28 June 2010

by: Dean Baker, t r u t h o u t | Op-Ed

New York Times columnist Thomas Friedman is well known for pretentious columns that consist of letters that he suggests some prominent person write. I licensed Friedman's literary tool in order to present the following letter from the Wall Street CEOs to the political leadership in Washington.

Dear Friends:

We want you know how much we value the support of the leadership of both political parties in your efforts to ensure that we did not suffer from the crisis that we ourselves created. As you recall, back in the fall of 2008, our banks were flat on their backs. If you had not rushed to our rescue with trillions of dollars in loans and guarantees from the Fed and the Treasury at a time where no sane investor would talk to us, most of us would be among the unemployed today. Instead, our banks are hugely profitable and we're happy to say that bonuses are again hitting record highs.

Sticking the Public With the Bill for the Bankers’ Crisis

by Naomi Klein

My city feels like a crime scene and the criminals are all melting into the night, fleeing the scene. No, I’m not talking about the kids in black who smashed windows and burned cop cars on Saturday.

I’m talking about the heads of state who, on Sunday night, smashed social safety nets and burned good jobs in the middle of a recession. Faced with the effects of a crisis created by the world's wealthiest and most privileged strata, they decided to stick the poorest and most vulnerable people in their countries with the bill.

Families are confused over health-care law's coverage for young adults

By N.C. Aizenman

Washington Post Staff Writer
Sunday, June 27, 2010

It is among the top early selling points of the health-care overhaul -- a new rule that has particular appeal for middle-class, middle-age voters: Young adults who lack health insurance will soon be able to remain on their parents' plans until age 26.

But although Obama administration officials note that the provision will help millions, the benefit is proving less immediate than many families expect.

Paul Krugman: The Third Depression

By PAUL KRUGMAN

Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

Robert Byrd, Respected Voice of the Senate, Dies

By ADAM CLYMER

Robert C. Byrd served 51 years in the United States Senate, longer than anyone else in American history, and with his six years in the House of Representatives, he was the longest-serving member of Congress. But it was how he used that record tenure that made him a pillar of Capitol Hill — fighting, often with florid words, for the primacy of the legislative branch of government and building, always with canny political skills, a modern West Virginia with vast amounts of federal money.

He had become an institution within an institution, as President Obama suggested in a statement of tribute on Monday, hours after Senator Byrd died at the age of 92 in a hospital in Fairfax, Va. Mr. Byrd, his health failing in recent years, had been admitted there late last week, experiencing heat exhaustion and severe dehydration as temperatures in the Washington area approached 100 degrees.

“America has lost a voice of principle and reason,” the president said.

Wall Street Journal Rewrites History to Mislead Readers

by linuxguy

Sun Jun 27, 2010 at 10:02:52 AM PDT

The editorial The Keynesian Dead End provides a good example of how Rupert Murdoch's Wall Street Journal editorial board rewrites history to mislead its readers. They cannot accept the fact that Keynesian Economics Works and that Obama's American Recovery and Reinvestment Act of 2009 has prevented a second Great Depression. When the facts do not support their political position, the Wall Street Journal simply rewrites history or twists statistics to support their agenda.

The Wall Street Journal editorial board writes in The Keynesian Dead End:

Like many bad ideas, the current Keynesian revival began under George W. Bush.

Even the Wall Street Journal knows how toxic George W. Bush is, so they start by associating him with Keynesian.

JP Morgan Responds To Financial Reform: The Poison Pill Strategy

By Simon Johnson

While the financial reform negotiation process grinds to its meaningless conclusion, the real action lies elsewhere – in Jamie Dimon’s executive suite.

Dimon, the head of JP Morgan Chase, is apparently seeking to (a) become more global, (b) move further into emerging markets, and (c) become more like Citigroup.

This is terrific corporate strategy – and very dangerous for the rest of us.

Income Gaps Between Very Rich and Everyone Else More Than Tripled In Last Three Decades, New Data Show

By Arloc Sherman and Chad Stone

June 25, 2010

The gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007 (the period for which these data are available), according to data the Congressional Budget Office (CBO) issued last week. Taken together with prior research, the new data suggest greater income concentration at the top of the income scale than at any time since 1928.

While the recession that began in December 2007 likely reduced the income of the wealthiest Americans substantially and may thereby shrink the income gap between rich and poor households, a similar development that occurred around the bursting of the dot.com bubble and the 2001 recession turned out to be just a speed bump. Incomes at the top more than made up the lost ground from 2003 to 2005.

Wall Street Front Group Celebrates Record Success Electing Radical Pro-Corporate, Pro-BP Candidates

Roll Call’s John McArdle reported this week that the radical Wall Street front group “Club for Growth” is “celebrating” a near perfect winning streak this election cycle so far, especially given the results in run-off elections last Tuesday. The Club is known for running hard-hitting attack ads, especially in Republican primaries, against candidates who would consider raising any form of taxes on the rich or have done anything to hold powerful corporations accountable. Noting the Club’s historic role of purging moderates from the GOP, Rep. Steve LaTourette (R-OH) is quoted in the article calling it the “Spanish Inquisition.”

World Leaders Agree on Timetable for Cutting Deficits

By SEWELL CHAN and JACKIE CALMES

TORONTO — Leaders of the world’s biggest economies agreed on Sunday on a timetable for cutting their deficits and halting the growth of their public debt, despite the Obama administration’s concern that reducing spending too quickly might set back the fragile global recovery.

The Group of 20 countries ended a two-day summit meeting here by endorsing a goal of cutting government deficits in half by 2013 and stabilizing the ratio of public debt to gross domestic product by 2016. Canada’s prime minister, Stephen Harper, had proposed the targets and received the backing of several European leaders.

But to assuage objections from the United States, Japan, India and some other G-20 countries, the timetable was couched as an expectation, rather than as a firm deadline, and a joint statement by the countries explicitly exempted Japan, which is heavily reliant on domestic borrowing, from the targets.

Frank Rich: The 36 Hours That Shook Washington

THE moment he pulled the trigger, there was near-universal agreement that President Obama had done the inevitable thing, the right thing and, best of all, the bold thing. But before we get carried away with relief and elation, let’s not forget what we saw in the tense 36 hours that fell between late Monday night, when word spread of Rolling Stone’s blockbuster article, and high noon Wednesday, when Obama MacArthured his general. That frenzied interlude revealed much about the state of Washington, the Afghanistan war and the Obama presidency — little of it cheering and none of it resolved by the ingenious replacement of Gen. Stanley McChrystal with Gen. David Petraeus, the only militarily and politically bullet-proof alternative.

What we saw was this: 1) Much of the Beltway establishment was blindsided by Michael Hastings’s scoop, an impressive feat of journalism by a Washington outsider who seemed to know more about what was going on in Washington than most insiders did; 2) Obama’s failure to fire McChrystal months ago for both his arrogance and incompetence was a grievous mistake that illuminates a wider management shortfall at the White House; 3) The present strategy has produced no progress in this nearly nine-year-old war, even as the monthly coalition body count has just reached a new high.

If we and the president don’t absorb these revelations and learn from them, the salutary effects of the drama’s denouement, however triumphant for Obama in the short run, will be for naught.

After 41 Years, a Belated Victory for Butter

Friday 25 June 2010

by: David Sirota, t r u t h o u t | Op-Ed

The last time America found itself in a budget debate pitting domestic priorities against war expenditures, Richard Nixon was in the White House and David Obey was the youngest member of Congress -- an antiwar liberal whose insurgent campaign unexpectedly vaulted him into the House seat vacated by the hawkish president's new defense secretary. In those dark days of the late 1960s and early 1970s, as Obey was still learning his way around Washington, it was the guns of Vietnam and the Cold War versus the butter of the Great Society and the War on Poverty -- and despite Obey's protests, guns won the day.

"President Nixon issued a call to counterrevolution at home," summed up Time magazine in 1973, noting that while the Republican administration was increasing the Pentagon budget, it was proposing the "abolition or deep cutting of more than 100 federal grant programs that have benefited the unemployed, students, farmers, veterans, small businessmen, the mentally ill and tenants in federally aided housing."

Hands Off Social Security: There Are Better Ways to Cut the National Debt

Saturday 26 June 2010

by: Robert Weiner and Jonathan Battaglia | The Palm Beach Post | News Analysis

The Social Security Trustees' Annual Report on the program's finances comes out Wednesday, delayed from March by the health bill. It will be turned into a marketing tool by advocates of cutting Social Security to reduce the national debt.

Among those, the president's newly appointed National Commission on Fiscal Reform (the "debt commission") is threatening to strangle the economic lifeblood of seniors by denying the solvency of Social Security and then using the solvent funds for other purposes.

Imagining a Liberal Court

By NOAH FELDMAN

I .THE CRISIS
After decades of stagnation, progressive constitutional thought is reaching a crisis point. Consider that the two great “liberal” justices who retired from the Supreme Court most recently — David Souter in the spring of 2009 and John Paul Stevens a year later — were conservatives. Not only were both appointed by Republican presidents, but both also subscribed loosely to the adage “If it ain’t broke, don’t fix it.” With a handful of exceptions, neither favored identifying new constitutional rights where none existed before. Their status as liberals came from the fact that, as the court on which they served tilted to the right, they held their ground as moderate Republicans, consistently voting to sustain the constitutional rights that were discovered by the Supreme Court before they were on it. To be sure, without their votes, the liberal constitutional legacy of the period stretching roughly from Brown v. Board of Education in 1954 to Roe v. Wade in 1973 would have been reversed. But Souter and Stevens were not independent forces for progressive change in American life.

To a great extent, the crisis of liberal thought on the Supreme Court is a result of liberalism’s success. From the time that Franklin Roosevelt’s appointees came to form a majority on the Supreme Court until the appointees of Richard Nixon and Ronald Reagan came to predominate, liberal constitutional thinking had two major objectives — both of which it largely achieved. First, it sought to give bite to the 14th Amendment’s promise to extend to all persons the equal protection of laws. The Brown decision voiding racial segregation in schools as unconstitutional was the most famous piece of the court’s push for equality. The same ideal was also encompassed in holdings that demanded “one person, one vote” and — more controversially — that upheld affirmative action as consistent with the values of the Constitution.

Why the Taliban is winning in Afghanistan

William Dalrymple

Published 22 June 2010

As Washington and London struggle to prop up a puppet government over which Hamid Karzai has no control, they risk repeating the blood-soaked 19th-century history of Britain’s imperial defeat.

In 1843, shortly after his return from Afghanistan, an army chaplain, Reverend G R Gleig, wrote a memoir about the First Anglo-Afghan War, of which he was one of the very few survivors. It was, he wrote, "a war begun for no wise purpose, carried on with a strange mixture of rashness and timidity, brought to a close after suffering and disaster, without much glory attached either to the government which directed, or the great body of troops which waged it. Not one benefit, political or military, has Britain acquired with this war. Our eventual evacuation of the country resembled the retreat of an army defeated."

It is difficult to imagine the current military adventure in Afghanistan ending quite as badly as the First Afghan War, an abortive ­experiment in Great Game colonialism that slowly descended into what is arguably the greatest military humiliation ever suffered by the west in the Middle East: an entire army of what was then the most powerful military nation in the world utterly routed and destroyed by poorly equipped tribesmen, at the cost of £15m (well over £1bn in modern currency) and more than 40,000 lives. But nearly ten years on from Nato's invasion of Afghanistan, there are increasing signs that Britain's fourth war in the country could end with as few political gains as the first three and, like them, terminate in an embarrassing withdrawal after a humiliating defeat, with Afghanistan yet again left in tribal chaos and quite possibly ruled by the same government that the war was launched to overthrow.

Myths & Facts About "Myth & Facts About AmericaSpeaks"

By Richard Eskow

Created 06/25/2010 - 8:47pm

The organizers of AmericaSpeaks, tomorrow's "town hall meeting"/media event designed to focus attention on budget-cutting, have issued a document called "Myths & Facts About AmericSpeaks: Our Budget, Our Economy [1]." A number of excellent pieces have already been written about the slanted point of view in their materials, which are designed to manipulate attendees into advocated cuts in the social safety net. This document, however, warrants a response of its own.

The organizers present five alleged "myths," together with what they claim are the "facts." They've clearly been stung by the eloquence and visibility of their critics, but they to respond convincingly. A fair-minded review of their "myths" and "facts" led to the following assessment: Their response includes some real facts and a great deal of myth.

Their first statement suggests that there are actually two "myths" about their organization, one from the Left and one from the Right: "AmericaSpeaks: Our Budget, Our Economy is either (a) a liberal effort to raise taxes, or (b) a conservative effort to cut Social Security." This is an example of the false picture organizers have been promoting for weeks. They continue to insist they're getting equal criticism from conservatives and liberals. That's not true.

Across From White House, Coffee With Lobbyists

By ERIC LICHTBLAU

WASHINGTON — There are no Secret Service agents posted next to the barista and no presidential seal on the ceiling, but the Caribou Coffee across the street from the White House has become a favorite meeting spot to conduct Obama administration business.

Here at the Caribou on Pennsylvania Avenue, and a few other nearby coffee shops, White House officials have met hundreds of times over the last 18 months with prominent K Street lobbyists — members of the same industry that President Obama has derided for what he calls its “outsized influence” in the capital.

On the agenda over espressos and lattes, according to more than a dozen lobbyists and political operatives who have taken part in the sessions, have been front-burner issues like Wall Street regulation, health care rules, federal stimulus money, energy policy and climate control — and their impact on the lobbyists’ corporate clients.

But because the discussions are not taking place at 1600 Pennsylvania Avenue, they are not subject to disclosure on the visitors’ log that the White House releases as part of its pledge to be the “most transparent presidential administration in history.”

Newspaper retracts "climategate" story, months too late

By Alex Pareene

Remember "climategate"? Someone hacked and distributed emails from climate scientists from the University of East Anglia. (It was kind of like Weigelgate except the entire Earth is going to die in a fire.) Some of the scientists used words like 'trick" and "hide." Instant scandal: Global warming is made up! A British newspaper has finally gotten around to correcting the record.

It was obvious to anyone who actually bothered to read the stolen "climategate" emails that they didn't actually contain anything particularly scandalous, and they certainly didn't contain anything at all that remotely called into the question the legitimacy of years of science demonstrating the effect of human activity on climate change.

The Dodd-Frank bank reform bill: A deeply flawed success

In a world where incremental progress is all but impossible to achieve, this is what a triumph looks like

By Andrew Leonard

Now that the newly dubbed "Dodd-Frank" bank reform bill is all but complete -- awaiting President Obama's signature, possibly on July 4 -- what are we supposed to think? Is it a good bill? Will it rein in the financial sector? Will the words "Dodd-Frank" ring through the history with the same awesome knell as "Glass-Steagal"?

Let's start with the easy question first. Dodd-Frank is no Glass-Steagal. Glass-Steagal separated commercial and investment banking with one stroke of a giant Chinese meat cleaver -- no ambiguity allowed. Dodd-Frank is the polar opposite, a concatenation of intricate compromises tied up in 2,000 pages of complexity so dense that it willfully defies comprehension. Maybe the most optimistic way to think of this bill is as a stimulus program to create jobs for securities lawyers -- they'll be chewing on it for decades to come.

15,000 Progressive Activists in Detroit: Why No Media or Respect?

By Sally Kohn, AlterNet
Posted on June 26, 2010, Printed on June 26, 2010
http://www.alternet.org/story/147341/

It’s not surprising that the mainstream media is paying little attention to the 15,000-plus community organizers and progressive activists gathered in Detroit, Michigan this week for the second United States Social Forum. After all, the center-left political establishment isn’t paying attention either.

Why is it that the Tea Party -- the right-wing edge of the conservative political sphere -- exerts a gravitational pull on the Republican party and the conservative mainstream while the United States Social Forum and the leaders and groups gathered here, who represent the left of the liberal mainstream, are disregarded as marginal and irrelevant -- that is, if they’re regarded at all?

Paul Krugman: The Renminbi Runaround

Last weekend China announced a change in its currency policy, a move clearly intended to head off pressure from the United States and other countries at this weekend’s G-20 summit meeting. Unfortunately, the new policy doesn’t address the real issue, which is that China has been promoting its exports at the rest of the world’s expense.

In fact, far from representing a step in the right direction, the Chinese announcement was an exercise in bad faith — an attempt to exploit U.S. restraint. To keep the rhetorical temperature down, the Obama administration has used diplomatic language in its efforts to persuade the Chinese government to end its bad behavior. Now the Chinese have responded by seizing on the form of American language to avoid dealing with the substance of American complaints. In short, they’re playing games.

To understand what’s going on, we need to get back to the basics of the situation.

House and Senate in Deal on Financial Overhaul

By EDWARD WYATT and DAVID M. HERSZENHORN

WASHINGTON — An overhaul of the nation’s financial regulatory system, reached after an all-night Congressional horse-trading session, will vastly expand the authority of the federal government over Wall Street in a bid to curb the free-wheeling culture that led to the near collapse of the world economy in 2008.

The deal between House and Senate negotiators, sealed just before sunrise on Friday, imposes new rules on some of the riskiest business practices and exotic investment instruments. It also levies hefty fees on the financial services industry, essentially forcing big banks and hedge funds to pay the projected $20 billion, five-year cost of the new oversight that they will face. And it empowers regulators to liquidate failing financial companies, fundamentally altering the balance between government and industry.

But after weeks of intense lobbying and months of debate, Congress in the end stopped short of prohibiting some of the practices that led to the crisis two years ago, betting instead that a newly empowered regulatory regime can rein in the big financial players without shackling the markets and drying up the flow of credit to businesses.

Mission Accomplished: The Reagan Occupation and the Destruction of the American Middle Class

By BuzzFlash

Created 06/25/2010 - 8:32am

DAVID MICHAEL GREEN FOR BUZZFLASH

Eighty years ago, something occurred in America that was never supposed to happen. An aristocrat came to the presidency and engineered a policy revolution that created a broad and prosperous middle class where it had not existed as such before.

To do this, Franklin Roosevelt and his party had to rewrite the existing rules of wealth redistribution in the United States such that the traditionally fantastically wealthy overclass (which had grown even fatter as the industrialism of the prior century concentrated wealth yet further) would become merely tremendously wealthy from that point forward, in order to leave enough for others to live a decent life.

Needless to say, this rankled the country club set, but, remarkably, they more or less made peace with this development during the early decades of the post-war era, and largely cooperated with the new economic order. So did their political representatives. The Eisenhower administration was the first chance after twenty years of the New Deal to dismantle the newly created American welfare state, and Ike not only refused to take that opportunity, but famously labeled those in his party who wanted to as “stupid."

McChrystal: Gone and Soon Forgotten

Naming Petraeus in his place is a stroke of personnel genius.

By Fred Kaplan
Posted Wednesday, June 23, 2010, at 4:36 PM ET

---

President Barack Obama has accomplished what many might have thought impossible just a few hours earlier. He has fired Gen. Stanley McChrystal, his combat commander in Afghanistan, in such a way that not only will the general go unmissed but his name will likely soon be forgotten.

Obama's decision to replace McChrystal with Gen. David Petraeus is a stroke of brilliance, an unassailable move, politically and strategically.

On a political level, McChrystal has many fans inside Congress and the military, but Petraeus has orders of magnitude more. No one could accuse Obama of compromising the war effort, knowing that Petraeus is stepping in.

On a strategic level, while McChrystal designed the U.S. military policy in Afghanistan, Petraeus is its ur-architect. Petraeus literally wrote the book on counterinsurgency strategy while McChrystal was still running the black-bag hunter-killers of the special-ops command.

Congress Fails to Pass an Extension of Jobless Aid

By DAVID M. HERSZENHORN

WASHINGTON — Legislation to extend unemployment subsidies for hundreds of thousands of Americans who have exhausted their jobless benefits teetered on the edge of collapse on Thursday, as Senate Democrats and Republicans traded bitter accusations about who was to blame for an eight-week impasse.

Senate Republicans and a lone Democrat, Ben Nelson of Nebraska, joined forces to filibuster the bill in a procedural vote on Thursday. Visibly frustrated, the majority leader, Harry Reid, Democrat of Nevada, said he would move on to other business next week because he saw little chance of winning over any Republican votes.

The vote was 57 to 41, with the Democrats falling three short of the 60 votes needed to advance the measure.

“You’ll hear a lot of excuses,” Mr. Reid said at a news conference. “The bottom line is the minority just said no.”

Responding to Republican demands, Mr. Reid on Wednesday night introduced yet another version of the legislation, which also includes important tax changes. But even as he unveiled the new package, aides conceded he did not have the votes.

Once again we must ask: ‘Who governs?’

Robert Skidelsky

Published: June 16 2010 23:47 | Last updated: June 16 2010 23:47

In 1974, Edward Heath asked: “Who governs – government or trade unions?” Five years later British voters delivered a final verdict by electing Margaret Thatcher. The equivalent today would be: “Who governs – government or financial markets?” No clear answer has yet been given, but the question may well define the political battleground for the next five years.

In one sense, next week’s emergency Budget is simply the logical working out of an intellectual theorem. The implicit premise of the coming retrenchment is that market economies are always at, or rapidly return to, full employment. It follows that a stimulus, whether fiscal or monetary, cannot improve on the existing situation. All that increased government spending does is to withdraw money from the private sector; all that printing money does is to cause inflation.

These propositions are a re-run of the famous “Treasury view” of 1929. By contrast, Keynes argued that demand can fall short of supply, and that when this happened, government vice turned into virtue. In a slump, governments should increase, not reduce, their deficits to make up for the deficit in private spending. Any attempt by government to increase its saving (in other words, to balance its budget) would only worsen the slump. This was his “paradox of thrift”. The current stampede to thrift shows that the re-conversion to Keynes in the wake of the financial collapse of 2008 was only skin-deep: the first story remains deeply lodged in the minds of economists and politicians.

The Dollar Might Be Having Problems, But Here's Why We Really Don't Want to Go Back to Gold

By Katherine Sciacchitano, Dollars and Sense
Posted on June 18, 2010, Printed on June 24, 2010
http://www.alternet.org/story/147239/

For more than half a century, the dollar was both a symbol and an instrument of U.S. economic and military power. At the height of the financial crisis in the fall of 2008, the dollar served as a safe haven for investors, and demand for U.S. Treasury bonds (“Treasuries”) spiked. More recently, the United States has faced a vacillating dollar, calls to replace the greenback as the global reserve currency, and an international consensus that it should save more and spend less.

At first glance, circumstances seem to give reason for concern. The U.S. budget deficit is over 10% of GDP. China has begun a long-anticipated move away from Treasuries, threatening to make U.S. government borrowing more expensive. And the adoption of austerity measures in Greece—with a budget deficit barely 3% higher than the United States—hovers as a reminder that the bond market can enforce wage cuts and pension freezes on developed as well as developing countries.

America Cowed: Are We Too Frightened to Forge Our Future?

By Robert Borosage

Created 06/23/2010 - 1:57pm

Americans have grown fearful. Most believe, not surprisingly, that the country is headed in the wrong direction. For the first time ever, most Americans believe their children may not fare as well as they have. We spend nearly as much as the rest of the world combined on our military, chasing phantoms across the world. Conservatives in both parties rail about debt and deficits. They line up to support adding another $33 billion in emergency spending for the misbegotten war in Afghanistan, while blocking the $23 billion needed to forestall the layoff of a staggering 275,000 teachers across the country.

Washington is crazed about debt and deficits, but the real deficit is in fortitude, not finances. Consider the contrast between this country emerging from the Great Depression and World War II and now.

Then our debt was a far greater burden than now—over 120 percent of gross domestic product. The country had suffered a decade long Great Depression and a global war. The troops were coming home, but the entire economy was mobilized for war. Europe and Japan were devastated. And America was led by Harry S. Truman, a former haberdasher, product of the corrupt Pendergast machine in Kansas City.

Republicans kill Senate jobless aid measure

By ANDREW TAYLOR, Associated Press Writer – 1 hr 7 mins ago

WASHINGTON – Republicans on Thursday defeated Democrats' showcase election-year jobs bill, including an extension of weekly unemployment benefits for millions of people out of work more than six months.

The 57-41 vote fell three votes short of the 60 required to crack a GOP filibuster, delivering a major blow to President Barack Obama and Democrats facing big losses of House and Senate seats in the fall election.

The rejected bill would also have provided $16 billion in new aid to states, preserving the jobs of thousands of state and local government workers and providing what White House officials called an insurance policy against a double-dip recession. It also included dozens of tax breaks sought by business lobbyists, and tax increases on domestically produced oil and on investment fund managers.

U.S. scores dead last again in healthcare study

Wed, Jun 23 2010

By Maggie Fox, Health and Science Editor

WASHINGTON (Reuters) - Americans spend twice as much as residents of other developed countries on healthcare, but get lower quality, less efficiency and have the least equitable system, according to a report released on Wednesday.

The United States ranked last when compared to six other countries -- Britain, Canada, Germany, Netherlands, Australia and New Zealand, the Commonwealth Fund report found.

"As an American it just bothers me that with all of our know-how, all of our wealth, that we are not assuring that people who need healthcare can get it," Commonwealth Fund president Karen Davis told reporters in a telephone briefing.

The Incentives Catastrophe

The same policy mistake caused both the Wall Street meltdown and the BP spill.

By Eliot Spitzer
Posted Wednesday, June 23, 2010, at 3:00 PM ET

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Incentives matter. In fact, they determine outcomes. It's obvious, but we usually forget this law until after the fact, after the crisis, when we ask almost naively: "Why did they act that way?" The law of incentives is what links the Wall Street cataclysm and BP's ongoing eco-disaster: In each case, we socialized risk and privatized gain, creating an asymmetry that created an incentive for private actors to accept and create too much risk in their business model, believing that at the end of the day, somebody else would bear the burden of that risk, should it metastasize into a disaster.

Two Visions of Justice

Next week, as the Senate begins hearings to confirm his successor, Justice John Paul Stevens will take his seat at the Supreme Court's bench for the last time. He will leave a Court that has shifted far to the right since he joined 35 years ago. Since Stevens joined the Court, virtually every subsequent appointee has been more conservative than the justice they replaced -- resulting in a conservative bloc of justices who consistently place powerful interests before the law, and a smaller, more moderate bloc that struggles to ensure that the law still applies equally to powerful and powerless alike. Both visions of the Court's role will be on display tonight at a debate between former acting Solicitor General Walter Dellinger and former Bush assistant attorney general Rachel Brand. The event at George Washington University will be hosted by the Center for American Progress, the conservative American Action Forum, and Politico. Where are the courts headed? Today's Progress Report offers a few answers.

General Discharge

Posted on Jun 22, 2010

By Robert Scheer

After the brilliant Rolling Stone article by Michael Hastings, President Barack Obama has no valid option other than to fire Gen. Stanley McChrystal. Not because of the dozen outrageous anti-administration verbal gaffes which have been reported, but rather because this definitive piece on the “Runaway General” establishes the man in charge of the Afghanistan misadventure as an egotistical flake whose half-baked Afghan war-fighting strategy should never have been endorsed in the first place. It is McChrystal’s policy of counterinsurgency (COIN) that must be fired more than the man who exemplifies its irrationality.

It was the 66-page McChrystal Report that provided Obama with the justification for escalating rather than ending the decade-long Afghanistan war: winning the hearts and minds of people who have no intention of opening either to our tender mercies. They don’t like us or trust us and probably think we smell funny and our food tastes awful. Such profound cultural differences are what make the world an interesting place, but the continuing arrogance of centuries of U.S. imperial policy insists that the rest of the world wants to be just like us.

Grayson With Ratigan: Best Interview Ever

by David Swanson

The video embeded at the bottom of this article and posted on the frontpage of http://congressmanwithguts.com may be the best corporate television interview ever. Not the funniest or most entertaining, but the most willing to directly and clearly expose the most forbidden topics and insist on the most needed changes in perspective.

The CongressmanWithGuts website is Congressman Alan Grayson's public and participatory demonstration of a simple fact that should be made known to a few hundred congress members who have not grasped it: If you do what the public wants and reach out to the public, you can raise your own funds and not depend on the Party Leadership to fund your campaigns. This, of course, is what allows you to do what the public, and not the Party Leadership, wants.

The Fate of the Internet. Decided in a Back Room

by Tim Karr

The Wall Street Journal [1] just reported that the Federal Communications Commission is holding "closed-door meetings" with industry to broker a deal on Net Neutrality – the rule that keeps control over the Internet with the people who use it.

Given that the corporations at the table all profit from gaining control over information, the outcome won't be pretty.

The meetings include a small group of industry lobbyists representing the likes of AT&T, Verizon, the National Cable & Telecommunications Association, and Google. They reportedly met for two-and-a-half hours on Monday morning and will convene another meeting today. The goal according to insiders is to "reach consensus" on rules of the road for the Internet.

This is what a failed democracy looks like: After years of avid public support for Net Neutrality – involving millions of people [2] from across the political spectrum – the federal regulator quietly huddles with industry lobbyists to eliminate basic protections and serve Wall Street’s bottom line.

How to impress the bond markets

Instead of beating up on retirees by cutting social security, we can reduce deficits by standing up to powerful interest groups

Dean Baker
guardian.co.uk, Monday 21 June 2010 19.00 BST

The deficit hawks have been pushing the line in recent months that we have to make cuts in social security, along with some revenue increases, in order to reassure the bond markets about the creditworthiness of the US government. According to this argument, by taking tough steps (ie cutting social security benefits) we will have shown the bond markets that we are prepared to do what is necessary to keep our budget deficits within manageable levels.

There is some reason to question the merits of this argument. First off, the deficit hawks don't have an especially good track record in the insight category. Not one person among the leading crusaders was able to see the $8tn housing bubble that wrecked the economy. If they couldn't see something so huge that was right in front of their face, we might wonder about their ability to ascertain anything as amorphous as the sentiment of actors in bond markets.

Furthermore, the fixation on social security is peculiar. The Congressional Budget Office shows the programme can pay all future benefits through the year 2044 with no changes whatsoever. Even after that date the shortfalls are relatively minor. If we instituted a fix in 2030 that is comparable to the one put in place in 1983 it would leave the programme fully solvent out to the 22nd century.

Tomgram: Michael Klare, The Coming Era of Energy Disasters

Posted by Michael Klare at 3:00pm, June 22, 2010.

Isn’t it strange that, no matter how terrible the news from the Gulf, the media still can’t help offering a lurking, BP-influenced narrative of hope? Here’s a recent headline from my hometown paper, for instance: “Signs of Hope as BP Captures Record Oil Amounts.” The piece is based on a BP report that, last Thursday, its woefully inadequate, ill-fitting “top hat” had captured more than 25,000 barrels of the gushing oil -- that is, five times more than it long claimed was spewing from its busted well (25 times more than it originally suggested).

With semi-official estimates in the range of 35,000-60,000 barrels escaping a day (and those numbers regularly on the rise), this represents a strange version of hopeful news. Ominously enough, by the end of July, with a new, larger, “tighter” cap theoretically in place, BP is aiming to capture up to 80,000 barrels a day (that is, 20,000 barrels more than it has publicly acknowledged might possibly be spewing from the floor of the Gulf). In all such articles, the real narrative of hope, however, involves the relief wells, the first of which is now within “200 feet” of the busted well. Usually, the date for one of those wells to plug the leak is given as “early August” or “mid-August” and it’s regularly said that the drilling of those wells is advancing “ahead of schedule.”

Loan Mod Program Still Sputtering, Despite Attempted Fixes

by Paul Kiel, ProPublica - June 22, 2010 11:15 am EDT

New data released Monday by the Treasury Department shows continued delays and disappointment faced by homeowners in the administration’s mortgage modification program [1].

190,000 homeowners remain stuck in trial mods that have lasted over six months, still waiting to hear whether they’ll receive a permanent modification. Most of those homeowners will likely be dropped from the program.

My Father and Alan Greenspan

By Robert Reich - June 21, 2010, 8:31AM

When I was a small boy at the start of the 1950s, my father gave me my first economics lesson. "Bobby," he said with obvious concern, "you and your children and your children's children will be repaying the national debt created by Franklin D. Roosevelt."

I didn't know what a national debt was, but I remember being scared out of my wits.

Dad was wrong, of course. Even though the national debt then was a much higher percentage of the national economy than it is today, it shrank as the economy boomed. My children have never mentioned FDR's debt. My granddaughter (almost 2) will never pay a penny of it.

When Greatness Slips Away

By BOB HERBERT

We’ve blown so many enormous opportunities over the past several years. In the immediate aftermath of Sept. 11, 2001, when most of the world had lined up in support of the United States, President George W. Bush had the chance to lead a vast cooperative, international effort to combat terrorism and lay the groundwork for a more peaceful, more secure world.

He blew it with the invasion of Iraq.

In the tragic aftermath of Hurricane Katrina, we had not just the chance but an obligation to call on our best talent to creatively rebuild the historic city of New Orleans. That could have kick-started a major renovation of the nation’s infrastructure and served as the incubator for a new and desperately needed urban policy. Despite President Bush’s vow of “bold action” during a carefully staged, nationally televised appearance in the French Quarter, we did nothing of the kind.

The collapse of the economy in the Great Recession gave us the starkest, most painful evidence imaginable of the failure of laissez-faire economics and the destructive force of the alliance of big business and government against the interests of ordinary Americans. Radical change was called for. (One thinks of Franklin Roosevelt raging against the “economic royalists” and asserting that “we need to correct, by drastic means if necessary, the faults in our economic system from which we now suffer.”)

Dead On Arrival: Financial Reform Fails

By Simon Johnson

The House-Senate reconciliation process is still underway and some details will still change. But the broad contours of “financial reform” are already completely clear; there are no last minute miracles at this level of politics. The new consumer protection agency for financial products is a good idea and worth supporting – assuming someone sensible is appointed by the president to run it. Yet, at the end of the day, essentially nothing in the entire legislation will reduce the potential for massive system risk as we head into the next credit cycle.

Rough Radio: Bob Ehrlich Hammered By Callers On Oil Politics

Christina Bellantoni | June 21, 2010, 10:47AM

Former Gov. Bob Ehrlich (R-MD) cut the microphones of callers to his talk radio show this weekend after they questioned his stance on oil drilling. Ehrlich is in an electoral rematch with Gov. Martin O'Malley (D) to win back the governor's mansion and, after Democrats tried and failed to force his radio show off the air, they settled on a different approach.

They bought commercial air time on "The Kendel and Bob Ehrlich Show" on WBAL radio to run an attack ad using Ehrlich's own "Drill, baby, drill" words against him. The ad and a series of callers criticizing Ehrlich's time in office began "getting under Ehrlich's skin," according to a Baltimore Sun reporter.

Canada's economy is suddenly the envy of the world

By ROB GILLIES, Associated Press Writer
Sun Jun 20, 4:51 pm ET

TORONTO – Canada thinks it can teach the world a thing or two about dodging financial meltdowns.

The 20 world leaders at an economic summit in Toronto next weekend will find themselves in a country that has avoided a banking crisis where others have floundered, and whose economy grew at a 6.1 percent annual rate in the first three months of this year. The housing market is hot and three-quarters of the 400,000 jobs lost during the recession have been recovered.

World leaders have noticed: President Barack Obama says the U.S. should take note of Canada's banking system, and Britain's Treasury chief is looking to emulate the Ottawa way on cutting deficits.

How a Right-Wing Immigration Lie Went Viral

Meet the ex-Border Patrol agent behind the myth that California has its own Arizona-like immigration law.

By Suzy Khimm | Mon Jun. 21, 2010 3:00 AM PDT

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Did California really pass an immigration law that's just as punitive as Arizona's—but just failed to enforce it? That's the claim currently richocheting around right-wing blogs [1] and Tea Party sites [2]—trickling all the way up to conservative standard-bearers like The Washington Times [3]. The origin of this claim seems to be a viral email [4] sent from retired Border Patrol agent and Arizona resident Harold Beasley, who claims that California has an immigration law on the books that’s almost identical to the Arizona measure. Beasley is partially right, but mostly wrong. The state did pass such as law as part of Proposition 187, a harsh immigration measure that tried to deny any state-sponsored services to illegal immigrants. But the law is no longer enforceable—because the federal courts struck it down over a decade ago.

This important fact hasn't stopped Beasley—and others—from crying hypocrisy. Beasley cites a passage of the California Penal Code, Section 834b, which says that California law enforcement must attempt to verify the immigration status of suspected illegal immigrants and turn them over to the federal authorities for prosecution or deportation. "Wow, is this the pot calling the kettle black?" writes [4] Beasley, according to one version of his viral email. "You are telling Arizona that we are racists and will be racial profiling… You have had the same law for many years and NO ONE has been protesting your law. WHY IS THAT?"

Paul Krugman: Now and Later

Spend now, while the economy remains depressed; save later, once it has recovered. How hard is that to understand?

Very hard, if the current state of political debate is any indication. All around the world, politicians seem determined to do the reverse. They’re eager to shortchange the economy when it needs help, even as they balk at dealing with long-run budget problems.

But maybe a clear explanation of the issues can change some minds. So let’s talk about the long and the short of budget deficits. I’ll focus on the U.S. position, but a similar story can be told for other nations.

At the moment, as you may have noticed, the U.S. government is running a large budget deficit. Much of this deficit, however, is the result of the ongoing economic crisis, which has depressed revenues and required extraordinary expenditures to rescue the financial system. As the crisis abates, things will improve. The Congressional Budget Office, in its analysis of President Obama’s budget proposals, predicts that economic recovery will reduce the annual budget deficit from about 10 percent of G.D.P. this year to about 4 percent of G.D.P. in 2014.

General Franco gave list of Spanish Jews to Nazis

• Register compiled in case dictator joined Axis forces
• Archive find undermines claim Franco helped Jews

Giles Tremlett in Madrid
guardian.co.uk, Sunday 20 June 2010 23.06 BST

It was the list that would have sent thousands more Jews to their deaths in Auschwitz and other extermination camps run by Adolf Hitler's Nazi regime during the second world war, but this time the victims were to be Spaniards.

The Spanish dictator, General Francisco Franco, whose apologists usually claim that he protected Jews, ordered his officials to draw up a list of some 6,000 Jews living in Spain and include them in a secret Jewish archive.

That list was handed over to the Nazi architect of the so-called "final solution", the German SS chief Heinrich Himmler, as the two countries negotiated Spain's possible incorporation into the group of Axis powers that included Italy, according to the El País newspaper today.

The Town That Loved Its Bank

By ANDREW MARTIN

MAYWOOD, Ill.

LIKE many working-class towns in the Midwest, this Chicago suburb has been on the cusp of better times for decades.

Separated by a river and woods from its wealthier neighbors, Oak Park and River Forest, it shares some of their charms: imposing, century-old homes and stately elms and maples draping the streets. But Maywood is decidedly more blue-collar than its neighbors, and its residents are predominantly African-American. Most of its homes are modest bungalows and frame houses that were built for factory workers whose jobs disappeared long ago. Many storefronts are vacant, and there appear to be more churches than viable businesses.

For more than a decade, a silver-haired banker from River Forest named Michael E. Kelly — owner of Park National Bank in the Chicago area and eight others around the country — took an unusual interest in Maywood. He did things most bankers don’t do.

The Constitution Party: Delusional Religious Fanatics Pushing for Christian Tyranny

By Liam Fox, News Junkie Post
Posted on June 20, 2010, Printed on June 21, 2010
http://www.alternet.org/story/147264/

Sharron Angle, Republican nominee for U.S. Senate from Nevada was a member of the Independent American Party, the Nevada affiliate of the Constitution Party, for six years, 1992 through 1998, before becoming a Republican in order to increase her chance of getting elected to office. If the Constitution Party sounds familiar, perhaps it’s because, during the 2008 presidential campaign, Todd Palin was revealed to have belonged, for seven years, to the Alaska Independence Party; Alaska’s Constitution Party affiliate.

The Constitution Party is not simply a political party that supports a strict adherence to the Constitution, as its name might suggest, but rather a party that promotes a very specific reinterpretation of the Constitution, based on founder Howard Phillips’ commitment to Christian Reconstructionism. His son, Doug Phillips, also involved with his father in the Constitution Party, is the founder of Vision Forum, an organization ideologically compatible with the Constitution Party, which describes its motivation as “a zeal for the restoration of Biblical patriarchy.”

How the Democrats got to be the way they are

by: John Emerson

Sat Jun 19, 2010 at 15:13

(More history from John Emerson - promoted by Paul Rosenberg)

The Democratic Party established itself in more or less its present form roughly between 1945 and 1955. The Civil Rights and anti-war movements of the sixties severely challenged the new party orthodoxy, but after 1972 (when many of the pros abandoned McGovern) the old guard took over again. The DLC takeover in 1988 moved the party still further to the right, but the foundations for an anti-populist, anti-progressive Democratic Party were laid immediately after WWII.

The New Coalition

A couple of weeks ago I described how the congressional progressives had at first been the New Deal's biggest supporters, but went into opposition after 1937, so that the New Deal coalition was replaced by the old Grover Cleveland Democratic Party (the South and the urban machines) plus the unions. After 1937 the impending world war (which most Progressives opposed) increasingly dominated politics, and once the war had begun it trumped all domestic concerns, so that the Congressional role became rather limited and the progressives were marginalized.

Reprise: Renormalizing the Wal-Mart world

by: Paul Rosenberg

Sun Jun 20, 2010 at 12:00

[Note]: I'm under the weather today. So here's a reprise diary from late last summer that I think still speaks quite well to the tasks we face.

Wal-Mart is the dominant corporate model of our time, the same way that General Motors was during the New Deal Era. If we want to change the norms that govern our world, it pays to look at Wal-Mart as a way to understand just what those norms are and where they came from. This diary is divided into three parts. In Part 1, I start by talking about a direct look at Wal-Mart. In Part 2, I look at the enabling ideology of Frederich Hayek. In Part 3, I look at the downside of "low prices"

VA quietly giving benefits to Marines exposed to toxic water

Barbara Barrett | McClatchy Newspapers

last updated: June 18, 2010 03:35:59 PM

WASHINGTON — Former Marine Corps Cpl. Peter Devereaux was told about a year ago that he had just two or three years to live.

More than 12 months later, at 48, he still isn't ready to concede that the cancer that's wasting his innards is going to kill him. He swallows his pills and suffers the pain and each afternoon he greets his 12-year-old daughter, Jackie, as she steps off her school bus in North Andover, Mass.

The U.S. Department of the Navy says that more research is needed to connect ailments suffered by Marines such as Devereaux who served at Camp Lejeune and their families who lived there to decades of water contamination at the 156,000-acre base in eastern North Carolina. Meanwhile, however, the Department of Veterans Affairs has quietly begun awarding benefits to a few Marines who were based at Lejeune.

"Right now, I would venture to say that any Camp Lejeune veteran who files a claim now is presumed to have been exposed to the contaminated drinking water," Brad Flohr, the assistant director for policy, compensation and pension service at the VA, told a meeting of affected Marines and family members in April.

In Budget Crisis, States Take Aim at Pension Costs

By MARY WILLIAMS WALSH

Many states are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits.

Illinois raised its retirement age to 67, the highest of any state, and capped public pensions at $106,800 a year. Arizona, New York, Missouri and Mississippi will make people work more years to earn pensions. Virginia is requiring employees to pay into the state pension fund for the first time. New Jersey will not give anyone pension credit unless they work at least 32 hours a week.

“We can’t afford to deny reality or delay action any longer,” said Gov. Pat Quinn of Illinois, adding that his state’s pension cuts, enacted in March, will save some $300 million in the first year alone.

But there is a catch: Nearly all of the cuts so far apply only to workers not yet hired. Though heralded as breakthrough reforms by state officials, the cuts phase in so slowly they are unlikely to save the weakest funds and keep them from running out of money. Some new rules may even hasten the demise of the funds they were meant to protect.

Lawmakers wanted to avoid legal battles or fights with unions, whose members can be influential voters. So they are allowing most public workers across the country to keep building up their pensions at the same rate as ever. The tens of thousands of workers now on Illinois’s payrolls, for instance, will still get to retire at 60 — and some will as young as 55.

Pentagon revives Rumsfeld-era domestic spying unit

By Daniel Tencer
Saturday, June 19th, 2010 -- 7:13 pm

The Pentagon's spy unit has quietly begun to rebuild a database for tracking potential terrorist threats that was shut down after it emerged that it had been collecting information on American anti-war activists.

The Defense Intelligence Agency filed notice this week that it plans to create a new section called Foreign Intelligence and Counterintelligence Operation Records, whose purpose will be to "document intelligence, counterintelligence, counterterrorism and counternarcotic operations relating to the protection of national security."

Frank Rich: Clean the Gulf, Clean House, Clean Their Clock

PRESIDENT Obama is not known for wild pronouncements, so it was startling to hear him liken the gulf oil spill to 9/11. Alas, this bold analogy, made in an interview with Roger Simon of Politico, proved a misleading trailer for the main event. In the president’s prime-time address a few days later, there was still talk of war, but the ammunition was sanded down to bullet points: “a clean energy future,” “a long-term gulf coast restoration plan” and, that most dreaded of perennials, “a national commission.” Such generic placeholders, unanimated by details or deadlines, are Washingtonese for “The buck stops elsewhere.”

The speech’s pans were inevitable, but in truth it was doomed no matter what the words or how cool or faux angry the performance. The president had it right the first time — this is a 9/11 crisis — and only action will do. The sole sentence that really counted on Tuesday night was his prediction that “in the coming weeks and days, these efforts should capture up to 90 percent of the oil leaking out of the well.” He will be judged on whether that’s true. The sole event that mattered last week was his jawboning of BP for a $20 billion down payment of blood money — to be overseen, appropriately enough, by Kenneth Feinberg of the September 11th Victim Compensation Fund.

That action could be a turning point for Obama if he builds on it. And he must. In this 9/11, it’s not just the future of the gulf coast, energy policy or his presidency that’s in jeopardy. What’s also being tarred daily by the gushing oil is the very notion that government can accomplish anything. The current crisis in that faith predates this disaster. In the short history of the Obama White House, two of its most urgent projects, reducing unemployment and pacifying Afghanistan, have yet to yield persuasive results. The dividends on the third, health care reform, won’t be in the mail for years.

It’s Not a Bailout — It’s a Funeral

The following guest post was contributed by Jennifer S. Taub, a Lecturer and Coordinator of the Business Law Program within the Isenberg School of Management at the University of Massachusetts, Amherst (SSRN page here). Previously, she was an Associate General Counsel for Fidelity Investments in Boston and Assistant Vice President for the Fidelity Fixed Income Funds.

In poetry and politics, metaphor matters. Expect some fighting figures of speech on Thursday, when the conference committee takes up the topic of the Orderly Liquidation Fund or “OLF.” Under the proposed financial reform legislation, the OLF is the facility that would hold the money needed by the FDIC to shut down a systemically important, insolvent financial institution before its failure can contaminate other firms and the broader economy. In other words, one purpose of the resolution authority and OLF is to avoid repeating the disorder and disruption of either the Lehman bankruptcy or the AIG bailout.

To be clear, many question whether regulators will have the courage to invoke this provision and pull the plug on a dying bank. Accordingly, the “prevention” measures under discussion in the legislation are critical — these included the swaps desk spinoff, hard leverage caps on financial firms, regulatory oversight over shadow banks and inclusion of off-balance sheet transactions in capital standards, among others.

All evolution, all the time

David Sloan Wilson explains why evolution is of consequence to everyone.

Emma Marris

Endlessly energetic scholar David Sloan Wilson is best known for his work on group selection — the idea that natural selection can operate on traits that improve the success of groups rather than individuals.

As well as running a cross-disciplinary evolutionary studies programme from his home institution of Binghamton University in New York and opening the Evolution Institute think tank to inform public policy, he recently began studying altruism in Binghamton neighbourhoods and is promoting the field of evolutionary religious studies. He took time to talk to Nature at a philosophy of biology conference last week in Madison, Wisconsin, where he spoke about using evolutionary thinking as a tool for good.

Quest for EPA Documents Reveals Deliberate Misclassification By Agency Staff

For the past four years, as executive director of Citizen Action New Mexico, Dave McCoy has been hounding the local and federal government for documents.

McCoy alleges that Sandia National Laboratory’s Mixed Waste Landfill monitoring wells are mismanaged by the New Mexico Environment Department, and that the public water supply is in danger of contamination.

Education Department Pulls Student Debt Collectors Guide off Website

Students who defaulted on a college loan have one less tool to help them negotiate with collections agencies now that the U.S. Education Department pulled a manual for debt collectors off its website.

The department removed the Private Collection Agencies Procedures Manual from its website last month after a U.S. News and World Report blog, College Cash 101, detailed some useful tips from the manual for borrowers who have fallen behind in repaying their federal student loans.

U.S. Lacks Basic Security for e-Passport Manufacturing

Last month, a gunman opened fire on an insurance building in the ancient Thai city of Ayutthaya, piercing the glass windows of the People’s Alliance for Democracy headquarters with 11 millimeter caliber bullets.

A few weeks earlier, bombs made from powerful plastic explosives were detonated near transmission towers in the same city in an unsuccessful effort by terrorists to darken the manufacturing district.

The violent episodes hardly registered in the United States. Few Americans have heard of Ayutthaya, after all, or know of a reason to pay attention to it.

How to Spot a Republican

Posted on Jun 17, 2010

Spotted in the comments of a Crooks and Liars post, this laugher about a woman lost in a hot air balloon has been making its way around the Internet.

BaScOmBe commenting at Crooks and Liars:

A woman in a hot air balloon realized she was lost. She lowered her altitude and spotted a man in a boat below. She shouted to him, “Excuse me, can you help me? I promised a friend I would meet him an hour ago, but I don’t know where I am.”

The man consulted his portable GPS and replied, “You’re in a hot air balloon, approximately 30 feet above ground elevation of 2,346 feet above sea level. You are at 31 degrees, 14.97 minutes north latitude and 100 degrees, 49.09 minutes west longitude.

“She rolled her eyes and said, “You must be an Obama Democrat.”

Deficit Commission Co-Chair: Social Security T-Bills Have "Been Used"

By Dave Johnson

Created 06/18/2010 - 10:50am

t's astonishing, watch the video to see Alan Simpson, Co-Chair of the National Commission on Fiscal Responsibility and Reform ("Deficit Commission") explain that buyers of US T-Bills don't necessarily need to get paid back because the money has "been used"!

Background: In the 1980s the Social Security payroll tax was increased, supposedly to set aside funds to cover the retirement of the post-WWII baby-boomer generation. But this extra revenue was instead used to give huge tax cuts to the wealthiest Americans. (Yes, that's right, they taxed working people and used the money to cut taxes for the rich.) So now that the boomers are retiring the money is needed. They want those bonds paid back now to cover Social Security payments.

The Commission: Now there is the Deficit Commission looking into how to raise money to cover what the government handed out as tax cuts to the rich. Rather than get the money from where the money went, the plutocrats are instead trying to convince people that it would make more sense to just cut Social Security instead, so they don't have to pay it back. The commission is meeting in secret, preparing to recommend cutting Social Security benefits. Hence the nickname for the Commission: "Catfood Commission," because cutting Social Security would force as many as 1.5 million old people into poverty and eating cat food for dinner because it costs less.

Paul Krugman: That ’30s Feeling

BERLIN

Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere, including the United States, where 52 senators voted against extending aid to the unemployed despite the highest rate of long-term joblessness since the 1930s.

Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession. And here in Germany, a few scholars see parallels to the policies of Heinrich Brüning, the chancellor from 1930 to 1932, whose devotion to financial orthodoxy ended up sealing the doom of the Weimar Republic.

But despite these warnings, the deficit hawks are prevailing in most places — and nowhere more than here, where the government has pledged 80 billion euros, almost $100 billion, in tax increases and spending cuts even though the economy continues to operate far below capacity.

Take the political heat out of climate scepticism

18 June 2010 by Roger Harrabin

CLIMATE scepticism is on the rise, boosted in large part by the hacked emails originating from the "climategate" scientists at the University of East Anglia (UEA) in the UK, and by the carelessness of fact checkers for the Intergovernmental Panel on Climate Change.

The damage to the public standing of climate science has been substantial. In the UK in February, a BBC poll of 1001 people found that just 26 per cent believed human-made climate change was an established scientific fact, down from 41 per cent only three months earlier. And in the US, Republicans hope to kill the "American Power Act", sponsored by Senators John Kerry, a Democrat, and Joe Lieberman, who sits as an independent.

Scientist links increase in greenhouse gases to changes in ocean currents

Findings released during the annual Goldschmidt Conference at the University of Tennessee, Knoxville

KNOXVILLE -- By examining 800,000-year-old polar ice, scientists increasingly are learning how the climate has changed since the last ice melt and that carbon dioxide has become more abundant in the Earth's atmosphere.

For two decades, French scientist Jérôme Chappellaz has been examining ice cores collected from deep inside the polar ice caps of Greenland and Antarctica. His studies on the interconnecting air spaces of old snow -- or firn air -- in the ice cores show that the roughly 40 percent increase of carbon dioxide in the atmosphere since the Earth's last deglaciation can be attributed in large part to changes in the circulation and biological activity of the oceanic waters surrounding Antarctica.

Liberals and Obama on the Oil Spill -- continued

By Theda Skocpol - June 16, 2010, 5:53PM

My most recent entry ended up with the extension cut off. Here is more of what I have to say, provoked by the senseless hysteria among liberal commentators, led by MSNBC and HuffPost.

Many liberal pundits are making absolute fools of themselves bashing Obama over the Gulf spill. They are just emoting and have no solutions anyone could try. There is no easy out on this, and the patience to build and support adequate government oversight of industries is the key here, as in many other areas.