By Henry CK Liu
This is the 11th article in a series.
Part 1: The crisis of wealth destruction
Part 2: Banks in crisis: 1929 and 2007
Part 3: The Fed's no-exit strategy
Part 4: Fed's double-edged rescue
Part 5: Too big to save
Part 6: Public debt - prudence and folly
Part 7: Global sovereign debt crisis
Part 8: Greek tragedy
Part 9: Greek crisis, German politics
Part 10:The trillion-dollar failure
For the weaker economies of the eurozone, adopting the euro is comparable to the earlier unhappy dollarization experiment by Argentina, which should have served as a cautionary tale to all national economies linked to the European currency.
Commenting at the onset of the sovereign debt crisis in Greece, Argentine President Cristina Fernandez characterized International Monetary Fund (IMF) "conditionalities" imposed on Greece as being "unfortunately condemned to failure". She spoke from experience, as Argentina was hit by one of the world's biggest sovereign debt defaults in 2001, from which the once prosperous nation still has not fully recovered from IMF "assistance".
Thursday, July 15, 2010
Wednesday, July 14, 2010
Regulators and Risk-Takers
Didn't Big Pharma or the FDA learn anything from the Gulf oil spill or the Wall Street meltdown?
Posted Wednesday, July 14, 2010, at 2:01 PM ET
It's a depressingly familiar story: A company hides enormous risk in its effort to get outsize returns, hoping that if and when the risk metastasizes, somebody else will have to pick up the tab. The name of the company may change, the sector of the economy may differ, but the basic narrative is as predictable as a Hollywood sequel.
Our two recent cataclysms—the financial meltdown of the past several years, and the more recent eco-disaster in the Gulf of Mexico—follow this pattern. The latest version of this story involves Big Pharma. Add GlaxoSmithKline and the Food and Drug Administration to the roster of actors, joining Goldman Sachs, AIG, BP, the Securities and Exchange Commission, the Federal Reserve, and the Minerals Management Service. In all these cases, the regulatory entity responsible for oversight failed to do even a minimally acceptable job of identifying and requiring protection against the risk at hand.
Banks Financing Mexico Gangs Admitted in Wells Fargo Deal
Just before sunset on April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. As soldiers on the ground approached the plane, the crew tried to shoo them away, saying there was a dangerous oil leak. So the troops grew suspicious and searched the jet.
They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.
The Miracle Deficit Cure? Growth.
So far this fiscal year, the federal government is $1 trillion in the red. Why this is good news.
Posted Tuesday, July 13, 2010, at 5:35 PM ET
On Tuesday, the Treasury reported the federal government's receipts and expenses for June. The upshot: Through the first nine months of fiscal 2010 (which started last fall), the federal government has run a $1 trillion deficit.
Deficits hawks will doubtless highlight these numbers as yet another reason why the National Debt Commission must move swiftly to cut social insurance and impose new regressive taxes. I take the opposite view. The fiscal 2010 deficit—$1 trillion and counting—is an encouraging sign.
Let me explain. Federal tax revenues are highly leveraged to economic growth and to the performance of markets, corporations, and rich people. This means they can be volatile. When markets and profits boom, capital gains taxes, payroll and income taxes, and corporate income taxes flow like a mighty stream. As a result, it's not uncommon for tax receipts to rise 6 percent or 7 percent in a year when the economy grows by 3 percent. This volatility works to the downside, too. When the economy contracts and markets crash, capital gains and corporate income tax revenues dry up. For example, corporate income taxes (click here and scroll down to Page 30) fell from $370 billion in fiscal 2007 to $304 billion in fiscal 2008 (down 18 percent), and then plunged to $138 billion in fiscal 2009 (down 55 percent). In fiscal 2009, a period in which the economy shrunk about 2.6 percent, government receipts plummeted 16 percent, from $2.5 trillion to $2.1 trillion. To aggravate matters, some government spending is countercyclical. That means that in good times, when tax receipts are high, less money is spent on stimulus and social welfare benefits. In bad times, when tax receipts are ebbing, more money goes out the door. And that's why surpluses and deficits can materialize out of nowhere.
Paul Krugman: Delusions About Debt Dynamics
Via Mark Thoma, Dean Baker catches Erskine Bowles vastly overstating future federal interest payments. This reminded me of Dan Senor’s similar blooper regarding Japanese interest payments. And I think they have a common cause.
Both Bowles and Senor want to scare us about the short-run deficit (as opposed to longer-run budget concerns). And both are turning to an argument that sounds compelling: debt dynamics. The story goes like this: the more the government borrows, the more interest it has to pay, which requires even more borrowing, and before you know it the debt explodes.
Americans are getting poorer, and it's going to get worse
Tony Pugh | McClatchy Newspapers
last updated: June 18, 2010 06:25:56 PM
WASHINGTON — The early impact of the worst recession since the 1930s pushed median incomes down, forced millions more people into poverty and left more Americans without health care in 2008, according to new annual survey data from the U.S. Census Bureau.
Poor people, working people, blacks, Hispanics and children bore a disproportionate share of the hardship. The new figures, however, likely understate the severity of the economic downturn because a large portion of nation's job losses and unemployment rate increases occurred after the Census survey data was collected in March as part of the annual Current Population Survey.
There’s Just No Pleasing Some Robber Barons
By Robert Scheer
The flight from reason that now marks American public discourse came home for me last Friday when I found myself on public radio debating whether Barack Obama is anti-business. The “news hook” for KCRW’s “Left, Right & Center” show, which I have co-hosted for 15 years, was an absurd spate of charges from Obama’s former big-business allies that he had become their enemy. If only it were so.
One of those who has been complaining is billionaire publisher Mort Zuckerman, who now finds in a White House he once supported “hostility” to the business culture he credits with the country’s greatness. I assume he is not talking about the belated efforts to hold BP accountable for the cost of the oil spill that our pro-drilling president once thought not possible.
And then there was Jeffrey Immelt, CEO of General Electric and once friendly to Obama but now alarmed by new regulations. He was one of the many CEOs cited by Fareed Zakaria in The Washington Post as evidence of “Obama’s CEO problem.” General Electric is a company that got into deep trouble when it stopped worrying about making better light bulbs and came to devote much of its business through GE capital to fancy financial products. With GE having been saved by the taxpayers, one wonders what the conglomerate has to complain about. Or Wall Street donors now stiffing the Democrats and claiming Obama is hostile to them.
How Brokers Became Bookies: The Insidious Transformation of Markets Into Casinos
Tuesday 13 July 2010
by: Ellen Brown, t r u t h o u t | Op-Ed
by: Ellen Brown, t r u t h o u t | Op-Ed
"You all are the house, you're the bookie. [Your clients] are booking their bets with you. I don't know why we need to dress it up. It's a bet." - Sen. Claire McCaskill, Senate Subcommittee investigating Goldman Sachs (Washington Post, April 27, 2010)
Ever since December 2008, the Federal Reserve has held short-term interest rates near zero. This was not only to try to stimulate the housing and credit markets, but also to allow the federal government to increase its debt levels without increasing the interest tab picked up by the taxpayers. The total public US debtinterest bill on the debt actually dropped (from $406 billion to $383 billion), because of this reduction in interest rates. increased by nearly 50 percent from 2006 to the end of 2009 (from about $8.5 trillion to $12.3 trillion), but the
One of the dire unintended consequences of that maneuver, however, was that municipal governments across the country have been saddled with very costly bad derivatives bets. They were persuaded by their Wall Street advisers to buy credit default swaps to protect their loans against interest rates shooting up. Instead, rates proceeded to drop through the floor, a wholly unforeseeable and unnatural market condition caused by rate manipulations by the Fed. Instead of the banks bearing the losses in return for premiums paid by municipal governments, the governments have had to pay massive sums to the banks - to the point of pushing at least one county to the brink of bankruptcy (Jefferson County, Alabama).
Obama’s Embrace of Free Trade, and the Subversion of Democracy
By Roger Bybee
Has President Obama allowed Karl Rove to design a key piece of economic strategy crafted to deeply alienate core Democratic voters four months before the crucial mid-term elections?
The notion is of course absurd, but you have to wonder how Obama's inner
circle of Wall Street-oriented geniuses—and his political advisors—dreamt up the president's new push for expanded exports via new "free-trade" agreements with Colombia, Panama and South Korea.
Has President Obama allowed Karl Rove to design a key piece of economic strategy crafted to deeply alienate core Democratic voters four months before the crucial mid-term elections?
The notion is of course absurd, but you have to wonder how Obama's inner
circle of Wall Street-oriented geniuses—and his political advisors—dreamt up the president's new push for expanded exports via new "free-trade" agreements with Colombia, Panama and South Korea.
It’s Obama’s Empire Now
Posted on Jul 13, 2010
By Stanley Kutler
The American Empire is alive and well—and as expansive as ever. We have established more than 700 military bases across the world, largely encircling the peripheries of Russia and China, which are now central to the Iraq and Afghanistan conflicts. The Cold War in the aftermath of World War II drove the expansion as we searched for security—and markets, to be sure.
Perhaps we now are the largest imperial power the world ever has known. Bagram Air Base in Afghanistan trivializes the once-massive naval and air facility at Cam Ranh Bay during the Vietnam War, and we have developed “permanent” mega-bases in Iraq. We engage in denial, and euphemisms abound. Stumping for the colonial takeover of the Philippines in 1901, Theodore Roosevelt, so fashionable today, insisted that “there is not an imperialist in the country. ... Expansion? Yes. ... Expansion has been the law of our national growth.” Chalmers Johnson reminds us of Democrat Woodrow Wilson’s liberal “idealist imperialism,” which would make the world safe for democracy. (See Johnson’s “The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic” and other works.) Deceit comes from the top.
US government lifts lid on alleged leak to WikiLeaks
The US state department has told the BBC it believes an alleged whistle-blower obtained secret diplomatic data despite being at a field base in Iraq.
Serviceman Bradley Manning, 22, faces two charges related to the illegal transfer and transmission of classified information from a US military network.
The US said he was suspected of downloading from SIPR Net.
He reportedly then passed on the data, including army videos and diplomatic messages, to the WikiLeaks website.
It's All About the Wages -- Our Economy Would Be Fine If Everyone Made Their Fair Share
By Robert Reich, Robert Reich's Blog
Posted on July 13, 2010, Printed on July 14, 2010
http://www.alternet.org/story/147531/
Missing from almost all discussion of America's dizzying rate of unemployment is the brute fact that hourly wages of people with jobs have been dropping, adjusted for inflation. Average weekly earnings rose a bit this spring only because the typical worker put in more hours, but June's decline in average hours pushed weekly paychecks down at an annualized rate of 4.5 percent.
In other words, Americans are keeping their jobs or finding new ones only by accepting lower wages.
Meanwhile, a much smaller group of Americans' earnings are back in the stratosphere: Wall Street traders and executives, hedge-fund and private-equity fund managers, and top corporate executives. As hiring has picked up on the Street, fat salaries are reappearing. Richard Stein, president of Global Sage, an executive search firm, tells the New York Times corporate clients have offered compensation packages of more than $1 million annually to a dozen candidates in just the last few weeks.
The fighting twins
By Henry CK Liu
In monetary economics, the trade deficit and the fiscal deficit are referred to as the "twin deficits", as if they were genetically related twins merely because they both contribute to increases in public debt. Yet these two deficits are genetically opposite and can act like fighting twins to neutralize one another in their adverse economic effects.
A fiscal deficit is created by a government spending in excess of revenue in the domestic economy. The external penalty of a persistent fiscal deficit is the devaluation of the exchange rate of the domestic currency in foreign trade.
In monetary economics, the trade deficit and the fiscal deficit are referred to as the "twin deficits", as if they were genetically related twins merely because they both contribute to increases in public debt. Yet these two deficits are genetically opposite and can act like fighting twins to neutralize one another in their adverse economic effects.
A fiscal deficit is created by a government spending in excess of revenue in the domestic economy. The external penalty of a persistent fiscal deficit is the devaluation of the exchange rate of the domestic currency in foreign trade.
Tuesday, July 13, 2010
Real disposable income is the dominant swing voter ideology
by: Chris Bowers
Tue Jul 13, 2010 at 15:23
One of the main problems facing the Democratic Party on a national level is that it caters to the 20-30% of its elected officials who are primarily center-right when it comes to public policy. (For a list of the ways the party caters to this 20-30%, read my article "BREAKING: I am now a conservative Democrat."). In the upcoming 2010 elections, the net result of this catering is likely to be a a minimal electoral boost for that 20-30% of the party, and a massive electoral setback for the entire party, including that 20-30%.Scientists expected Obama administration to be friendlier
A culture of politics trumping science, many say, persists despite the president's promises. The use of potentially toxic dispersants to fight the gulf oil spill is cited as just one example.
By Tom Hamburger and Kim Geiger, Tribune Washington Bureau
9:42 PM PDT, July 10, 2010
Reporting from Washington
When he ran for president, Barack Obama attacked the George W. Bush administration for putting political concerns ahead of science on such issues as climate change and public health. And during his first weeks in the White House, President Obama ordered his advisors to develop rules to "guarantee scientific integrity throughout the executive branch."
Many government scientists hailed the president's pronouncement. But a year and a half later, no such rules have been issued. Now scientists charge that the Obama administration is not doing enough to reverse a culture that they contend allowed officials to interfere with their work and limit their ability to speak out.
"We are getting complaints from government scientists now at the same rate we were during the Bush administration," said Jeffrey Ruch, an activist lawyer who heads an organization representing scientific whistle-blowers.
Researchers discover a surprising threat to democracy: our brains
It’s one of the great assumptions underlying modern democracy that an informed citizenry is preferable to an uninformed one. “Whenever the people are well-informed, they can be trusted with their own government,” Thomas Jefferson wrote in 1789. This notion, carried down through the years, underlies everything from humble political pamphlets to presidential debates to the very notion of a free press. Mankind may be crooked timber, as Kant put it, uniquely susceptible to ignorance and misinformation, but it’s an article of faith that knowledge is the best remedy. If people are furnished with the facts, they will be clearer thinkers and better citizens. If they are ignorant, facts will enlighten them. If they are mistaken, facts will set them straight.
In the end, truth will out. Won’t it?
Maybe not. Recently, a few political scientists have begun to discover a human tendency deeply discouraging to anyone with faith in the power of information. It’s this: Facts don’t necessarily have the power to change our minds. In fact, quite the opposite. In a series of studies in 2005 and 2006, researchers at the University of Michigan found that when misinformed people, particularly political partisans, were exposed to corrected facts in news stories, they rarely changed their minds. In fact, they often became even more strongly set in their beliefs. Facts, they found, were not curing misinformation. Like an underpowered antibiotic, facts could actually make misinformation even stronger.
Energy efficiency helps homeowners avoid foreclosure
Energy-efficient homes have significantly lower default and delinquency rates than typical homes, according to an internal analysis conducted for a major financial institution last year. Here's yet another reason why it makes no sense that Fannie Mae and Freddie Mac have effectively killed Property Assessed Clean Energy (PACE), a financing tool that has helped make efficiency improvements affordable for thousands of American homeowners.
The Case for a New WPA
Why many are calling for a modern incarnation of the Depression-era program.
posted Jul 12, 2010
The image catches your breath. The look etched on the mother’s face reveals more about the hard lives of migrant workers during the 1930s than any history book. The photo, by Dorothea Lange, is one of the most famous shots in American history and an iconic representation of the Great Depression. Lange captured it while participating in the Farm Security Administration’s photography project, a division of the Works Progress Administration (WPA).
In 1933, when Franklin Roosevelt took office with the promise of government action to relieve destitution, unemployment had reached nearly 25 percent. As part of that commitment, his administration created the WPA, a permanent jobs program that put 8.5 million Americans to work between 1935 and 1943. The WPA was a massive public undertaking that changed the face of a growing nation. In addition to providing jobs to millions, it brought the nation’s transportation system into the 20th century and brought art to people of all classes, leaving the U.S. with a rich legacy of oral history and artistic masterpieces.
Extremist Christians Aim to Create Armed Militias Against "Godless" Federal Government
By Sarah Posner and Julie Ingersoll, Religion Dispatches
Posted on July 12, 2010, Printed on July 13, 2010
http://www.alternet.org/story/147453/
The following is reprinted with permission from
Herb Titus, a lawyer for the far-right Gun Owners of America, is jubilant over last week’s Supreme Court decision in the case McDonald v. City of Chicago, finding that state and local regulation of gun ownership must comport with the Second Amendment right to bear arms.
The decision has also pleased the National Rifle Association, which sees it as ammunition for challenging gun control laws across the country. But for Titus, who thinks the NRA “compromises” on gun rights, the Second Amendment isn’t solely about “firepower,” he says. “You have to see it in its spiritual and providential perspective.”Scary Anti-Iran Talk Is Escalating -- And Weapons May Be Moving Into Position for Attack
By Conn Hallinan, Foreign Policy in Focus
Posted on July 12, 2010, Printed on July 13, 2010
http://www.alternet.org/story/147504/
Dispatches From The Edge
Crazy talk about the Middle East seems to be escalating, backed up by some pretty ominous military deployments. We'll start with the department of scary statements:First up, Shabtai Shavit, former chief of the Israeli spy agency Mossad, speaking June 21 at Bar Ilan University, Tel Aviv on why Israel should launch a pre-emptive strike at Iran: “I am of the opinion that, since there is an ongoing war, since the threat is permanent, since the intention of the enemy in this case is to annihilate you, the right doctrine is one of presumption and not retaliation.”
Second up, Uzi Arad, Israeli prime Minister Benjamin Netanyahu’s national security advisor, speaking before the Jewish Agency in Jerusalem June 22 on his belief that the “international community” would support an Israeli strike at Iran: “I don’t see anyone who questions the legality of this or the legitimacy.”
Monday, July 12, 2010
The Attack of the Real Black Helicopter Gang: The IMF Is Coming for Your Social Security
Monday 12 July 2010
by: Dean Baker, t r u t h o u t | Op-Ed
A few years back, there was a fear in some parts about black UN helicopters that were supposedly taking part in the planning of an invasion of the United States. While there was no foundation for this fear, there is basis for concern about the attack of another international organization, the International Monetary Fund (IMF).
Last week, the IMF told the United States that it needs to start getting its budget deficit down. It put cutting Social Security at the top of the steps that the country should take to achieve deficit reduction. This one is more than a bit outrageous for two reasons.
Paul Krugman: The Feckless Fed
Back in 2002, a professor turned Federal Reserve official by the name of Ben Bernanke gave a widely quoted speech titled “Deflation: Making Sure ‘It’ Doesn’t Happen Here.” Like other economists, myself included, Mr. Bernanke was deeply disturbed by Japan’s stubborn, seemingly incurable deflation, which in turn was “associated with years of painfully slow growth, rising joblessness, and apparently intractable financial problems.” This sort of thing wasn’t supposed to happen to an advanced nation with sophisticated policy makers. Could something similar happen to the United States?
Not to worry, said Mr. Bernanke: the Fed had the tools required to head off an American version of the Japan syndrome, and it would use them if necessary.
Today, Mr. Bernanke is the Fed’s chairman — and his 2002 speech reads like famous last words. We aren’t literally suffering deflation (yet). But inflation is far below the Fed’s preferred rate of 1.7 to 2 percent, and trending steadily lower; it’s a good bet that by some measures we’ll be seeing deflation by sometime next year. Meanwhile, we already have painfully slow growth, very high joblessness, and intractable financial problems. And what is the Fed’s response? It’s debating — with ponderous slowness — whether maybe, possibly, it should consider trying to do something about the situation, one of these days.
Taming Finance in an Age of Austerity
The "innovations" unleashed by modern finance did not lead to higher long-term efficiency, faster growth, or more prosperity for all. Instead, they were designed to circumvent accounting standards and to evade and avoid taxes that are required to finance the public investments in infrastructure and technology - like the Internet - that underlie real growth, not the phantom growth promoted by the financial sector.
The financial sector pontificated not only about how to create a dynamic economy, but also about what to do in the event of a recession (which, according to their ideology, could be caused only by a failure of government, not of markets). Whenever an economy enters recession, revenues fall, and expenditures - say, for unemployment benefits - increase. So deficits grow.
Obama’s Health Care Bill Is Enough to Make You Sick
A close reading of the new health care legislation, which will conveniently take effect in 2014 after the next presidential election, is deeply depressing. The legislation not only mocks the lofty promises made by President Barack Obama, exposing most as lies, but sadly reconfirms that our nation is hostage to unchecked corporate greed and abuse. The simple truth, that single-payer nonprofit health care for all Americans would dramatically reduce costs and save lives, that the for-profit health care system is the problem and must be destroyed, is censored out of the public debate by a media that relies on these corporations as major advertisers and sponsors, as well as a morally bankrupt Democratic Party that is as bought off by corporations as the Republicans.
Big Oil’s Good Deal
No industry enjoys the array of tax breaks and subsidies that the oil and gas industry does. No industry needs them less. For all the damage it has caused, the disastrous oil spill in the Gulf of Mexico may provide the political momentum to end this special treatment.
President Obama’s 2011 budget, proposed before the spill, would eliminate $4 billion in annual tax breaks for oil and gas companies. Bills in both houses introduced after the spill would achieve many of the same results. Industry has spent $340 million on lobbying over the last two years to block these sorts of initiatives, and until recently Congress has been eager to do its bidding. This year could be different.
The White House has proposed eliminating nine tax breaks. Some are modest, all are complicated, but in toto they provide a range of cushy benefits — fast write-offs for upfront drilling expenses, generous depletion allowances, and the like — that are available at virtually every stage of the exploration and production process.
Sunday, July 11, 2010
No Dominion: The Lonely, Dangerous Fight Against Christian Supremacists Inside the Armed Forces
Sunday 11 July 2010
by: Matthew Harwood, t r u t h o u t | Report
In his fight against British imperialism, Mahatma Gandhi described the life cycle of successful civil disobedience: "First they ignore you, then they laugh at you, then they fight you, then you win." Mikey Weinstein, the 55-year-old founder of the Albuquerque, New Mexico-based Military Religious Freedom Foundation (MRFF), likes to quote it, knowing full well he's crossed the line into a bloody-knuckle brawl. Over the past year, Weinstein and his organization have recorded a tremendous string of victories in the fight against Christian supremacists inside the armed forces.
Emmer In Damage Control Mode: Meeting Waiters After Claiming They Made $100K In Tips
Minnesota state Rep. Tom Emmer, the presumptive Republican nominee for governor, appears to be going into damage control mode in the wake of his proposal to lower the minimum wage for waiters by crediting their tips towards the state's wage requirement. He now has a listening tour session coming up this Wednesday, at which he will meet with servers.
Emmer said earlier this week that he would support such an idea, which is common in most other states. Minnesota is one of seven states that do not permit employers to pay less than the standard minimum wage to tipped workers. Federal law permits tipped workers' wages to be as low as $2.13 per hour, absent state regulation to the contrary, with tips given to workers credited against the minimum wage of $7.25 an hour employers are required to pay.
Which is more bizarre: The Iowa GOP platform or the failure of the press to report it?
ASK THIS | July 09, 2010
The platform, claiming to promote moderation, would allow concealed guns in schools, end minimum wage and abortion laws, teach creationism, and impeach ‘activist judges.’ Anybody paying attention? The Iowa press sure doesn't seem to be.
By Herb Strentz
herb.strentz@yahoo.com
The Iowa caucuses are 18 months away, but part of the script for what Iowa Republican activists want is already written.
That script is the 12,000-word, 367-plank platform of the state Republican party, adopted at its June convention and faithful to previous platform themes of “family values,” religious beliefs and downsizing, if not eliminating, the federal government.A Climate Change Corrective
Perhaps now we can put the manufactured controversy known as Climategate behind us and turn to the task of actually doing something about global warming. On Wednesday, a panel in Britain concluded that scientists whose e-mail had been hacked late last year had not, as critics alleged, distorted scientific evidence to prove that global warming was occurring and that human beings were primarily responsible.
It was the fifth such review of hundreds of e-mail exchanges among some of the world’s most prominent climatologists. Some of the e-mail messages, purloined last November, were mean-spirited, others were dismissive of contrarian views, and others revealed a timid reluctance to share data. Climate skeptics pounced on them as evidence of a conspiracy to manipulate research to support predetermined ideas about global warming.
The panel found no such conspiracy. It complained mildly about one poorly explained temperature chart discussed in the e-mail, but otherwise found no reason to dispute the scientists’ “rigor and honesty.” Two earlier panels convened by Britain’s Royal Society and the House of Commons reached essentially the same verdict. And this month, a second panel at Penn State University exonerated Michael Mann, a prominent climatologist and faculty member, of scientific wrongdoing.
Volcker Pushes for Reform, Regretting Past Silence
By LOUIS UCHITELLE
JUST before the Fourth of July weekend, Paul A. Volcker packed his fishing gear and set off for his annual outing to the Canadian wilds to cast for Atlantic salmon.
He left behind a group of legislators in Washington still trying to nail down a controversial attempt to overhaul the nation’s financial regulations in the wake of the country’s most serious economic crisis since the Great Depression.
A well-regarded lion of the regulatory world, Mr. Volcker had endorsed the legislation before he went fishing, but unenthusiastically. If he were a teacher, and not a senior White House adviser and the towering former chairman of the Federal Reserve, he says, he would have given the new rules just an ordinary B — not even a B-plus.
“There is a certain circularity in all this business,” he concedes. “You have a crisis, followed by some kind of reform, for better or worse, and things go well for a while, and then you have another crisis.”
Saturday, July 10, 2010
Tremble, Banks, Tremble
The key to financial recovery: restoring the rule of law on Wall Street.
- James K. Galbraith
- July 9, 2010 | 12:00 am
The financial crisis in America isn't over. It's ongoing, it remains unresolved, and it stands in the way of full economic recovery. The cause, at the deepest level, was a breakdown in the rule of law. And it follows that the first step toward prosperity is to restore the rule of law in the financial sector.
First, there was a stand-down of the financial police. The legal framework for this was laid with the repeal of Glass-Steagall in 1999 and the Commodities Futures Modernization Act of 2000. Meanwhile the Basel II process relaxed international bank supervision, especially permitting the use of proprietary models to value complex assets—an open invitation to biased valuations and accounting frauds.
Disaster Capitalism Hits Europe (and the US is Next)
Eurozone governments and European authorities are using the economy to justify pushing through rightwing policy changes
One thing should be made clear about the situation in the eurozone economies that is not clear at all if we rely on most of the news reports. This is not a situation where countries face a "dilemma" because they have overspent and piled up too much public debt. They do not face "tough choices" that will force them to cut spending and raise taxes while the economy is weak or in recession, in order to "satisfy financial markets".
What is really going on is that powerful interests within these countries - including Spain, Greece, Ireland and Portugal - are taking advantage of the situation to make the changes that they want. Perhaps even more importantly, the European authorities - including the European commission, the European central bank and the IMF - who are holding the purse strings of any bailout funds, are even more committed than the national governments to rightwing policy changes. And they are further removed from any accountability to any electorate.
A Way Forward: Reexamining the Pentagon's Spending Habits
by Frida Berrigan
What is a trillion? It is a big number for sure. The best explanation I have found for this mind-blowing figure is from children's book author David Schwartz. "One million seconds comes out to be about 11½ days. A billion seconds is 32 years. And a trillion seconds is 32,000 years."
What is a trillion dollars? What can you get for that much money?
Friday, July 9, 2010
The Progressive Dictionary: In Defense of "Global" Solutions
By Sara Robinson
Created 07/09/2010 - 12:40pm
What we need is a new Progressive Dictionary.
This dawned on me last week [1] when I spent 1500 words trying to explain that, no, the word "bureaucrat" was not always a swear word that carries dark connotations of suspect parentage; and that yes, once upon a time, we actually did used to hire smart people into the government and expected them to manage our public affairs in the public interest. And (even more bizarrely) we thought this was a good thing, until the conservatives came along and told us that it wasn't.
Writing that column brought home to me just how thoroughly progressives have been gagged and bound by the right wing's 30-year campaign to hijack every word Americans use to describe their political lives. For reasons George Lakoff outlines in the clearest possible terms here [2], we need to get serious about taking this language back. Until it does, we can talk about our ideas all day -- but we literally won't be heard.
In this, the second entry in our reclaimed progressive lexicon, I'd like to pick at another word that leads to all kinds of misunderstandings between left and right. The word this week is "global."
Biggest Defaulters on Mortgages Are the Rich
By DAVID STREITFELD
LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.
The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.
Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.
Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.
“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
Paul Krugman: Pity the Poor C.E.O.’s
Job creation has been disappointing, but first-quarter corporate profits were up 44 percent from a year earlier. Consumers are nervous, but the Dow, which was below 8,000 on the day President Obama was inaugurated, is now over 10,000. In a rational universe, American business would be very happy with Mr. Obama.
But no. All the buzz lately is that the Obama administration is “antibusiness.” And there are widespread claims that fears about taxes, regulation and budget deficits are holding down business spending and blocking economic recovery.
How much truth is there to these claims? None. Business spending is indeed low, but no lower than one would have expected given widespread overcapacity and weak consumer spending. Business leaders are feeling unloved, but giving them a group hug won’t cure what ails the economy.
Zombie K Street Project: The GOP Turns To Lobbyists To Draft Policy Agenda
John Boehner twisted himself into a pretzel this week when he told the Washington Post he had "no idea" whether Republicans would once again attempt to privatize Social Security if they retake the House in November. He couldn't just say "no" -- he followed up with the explanation that he couldn't say because he didn't want to prejudge the outcome of the GOP's voter survey.
"We're not going to prejudge what's going to come out of this listening project," he said.
Turns out that the project also includes soliciting recommendations from representatives of the most powerful business and trade groups in the country -- in other words, it's a "House Republican efforts to produce a new policy agenda with a small group of trade association leaders." Call it the Zombie K Street Project.
Thursday, July 8, 2010
Kabuki Democracy: Why a Progressive Presidency Is Impossible, for Now
Eric Alterman | July 7, 2010
Few progressives would take issue with the argument that, significant accomplishments notwithstanding, the Obama presidency has been a big disappointment. As Mario Cuomo famously observed, candidates campaign in poetry but govern in prose. Still, Obama supporters have been asked to swallow some painfully "prosaic" compromises. In order to pass his healthcare legislation, for instance, Obama was required to specifically repudiate his pledge to prochoice voters to "make preserving women's rights under Roe v. Wade a priority as president." That promise apparently was lost in the same drawer as his insistence that "Any plan I sign must include an insurance exchange...including a public option." Labor unions were among his most fervent and dedicated foot soldiers, as well as the key to any likely progressive political renaissance, and many were no doubt inspired by his pledge "to fight for the passage of the Employee Free Choice Act." Yet that act appears deader than Jimmy Hoffa. Environmentalists were no doubt steeled through the frigid days of New Hampshire canvassing by Obama's promise that "As president, I will set a hard cap on all carbon emissions at a level that scientists say is necessary to curb global warming—an 80 percent reduction by 2050." That goal appears to have gone up the chimney in thick black smoke. And remember when Obama promised, right before the election, to "put in place the common-sense regulations and rules of the road I've been calling for since March—rules that will keep our market free, fair and honest; rules that will restore accountability and responsibility in our corporate boardrooms"? Neither, apparently, does he… Indeed, if one examines the gamut of legislation passed and executive orders issued that relate to the promises made by candidate Obama, one can only wince at the slightly hyperbolic joke made by late night comedian Jimmy Fallon, who quipped that the president's goal appeared to be to "finally deliver on the campaign promises made by John McCain."
None of us know what lies inside the president's heart. It's possible that he fooled gullible progressives during the election into believing he was a left-liberal partisan when in fact he is much closer to a conservative corporate shill. An awful lot of progressives, including two I happen to know who sport Nobel Prizes on their shelves, feel this way, and their perspective cannot be completely discounted. The Beltway view of Obama, meanwhile, posits just the opposite. That view—insistently repeated, for instance, by the Wall Street Journal's nonpartisan, non-ideological news columnist, Gerald Seib—is that the president's problem is that he and his allies in the Democratic Party "just overplayed their hand in the last year and a half, moving policy too far left, sparking an equal and opposite reaction in the rightward direction." And Newt Gingrich, speaking from what is actually considered by these same Beltway types as the responsible center of the Republican Party, calls him "the most radical president in American history" and "potentially, the most dangerous" as he urges his minions to resist the president's "secular, socialist machine."
State Banking, Globally
By Simon Johnson
A standard refrain from U.S. banking industry lobbyists is “you cannot put us at a disadvantage relative to our overseas competitors.” The Obama administration has largely bought into this line and cites it in public and private as one reason for opposing size caps on our largest banks and preventing Congress from raising capital requirements.
The US Treasury puts its faith instead in the Basel Committee on Banking Supervision process, a somewhat murky convocation of bank regulators from various countries that has a weak track record in terms of setting sufficient prudential standards (also the assessment of Dan Tarullo, now an influential Federal Reserve governor; disclosure, I have a part-time position at the Peterson Institute, which published his book). But, the official US reasoning goes, the crisis of 2007-08 was so traumatic, our European counterparts will now want to be more careful.Identifying Suspicious Short Selling, But Not Who’s Behind the Trades
Last weekend, The Wall Street Journal highlighted new academic research [1] showing that investors may be trading on insider information after companies approach hedge funds for loans.
Researchers found that on average, in the five days before companies announce a loan from a hedge fund, the volume of short sales increases by 75 percent as compared with the 60 days before a deal is announced. There was no comparable uptick in betting against companies that borrowed money from commercial banks instead.
Disaster Messaging by the Democrats: It Could be Fatal to America's Future -- By George Lakoff
By BuzzFlash
Created 07/08/2010 - 8:35am
GEORGE LAKOFF FOR BUZZFLASH
Here’s a description the typical situation.
• The Republicans outmessage the Democrats. The Democrats, having no effective response, face disaster: They lose politically, either in electoral support or failure on crucial legislation.
• The Democrats then take polls and do focus groups. The pollsters discover that extremist Republicans control the most common ("mainstream") way of thinking and talking about the given issue.
• The pollsters recommend that Democrats move to the right: adopt conservative Republican language and a less extreme version of conservative policy, along with weakened versions of some Democratic ideas.
Wednesday, July 7, 2010
Two More Candidates for the McChrystal Treatment
Posted on Jul 6, 2010
By Robert Scheer
It’s not working. Time for the president to concede that the economy is at best stagnating and at worst about to take another steep nose dive. I don’t know if we are headed for another Great Depression, as Nobel Prize economist Paul Krugman dared suggest recently, but it is amply clear that the Obama strategy, inherited from George W. Bush, of bailing out Wall Street in the forlorn hope that it would repair the economic damage the fat cats inflicted on the rest of us has not worked.
The housing market remains in dire shape, and with it the nest eggs of Americans who are responding by squelching their appetite for consumption. The Wall Street hustlers were made whole, but not so the people whose home mortgages the banks are foreclosing, or businesses and their customers looking for the credit that the banks had promised to free up.
The president conceded last week that our economy is 8 million jobs in the hole despite his bailout and stimulus program. With deficits running wild, heartless Republicans get to claim that six months more of unemployment insurance to 1.7 million out-of-work people whose benefits have ended is more than we can afford.
Republicans And Democrats Lining Up Behind Major Changes To Social Security
Is there a new, bipartisan consensus forming on Capitol Hill about whether (and how) to scale back Social Security benefits? A surprising number of signs point to "yes" -- and that has many progressives looking ahead a few months to what they believe could become a serious fight.
Several of the most powerful members of the House -- Republicans and Democrats -- have recently voiced real support for the idea of raising the retirement age for people middle-aged and younger as part of a larger plan to reduce long-term deficits, inching closer to what not too long ago was the third rail of American politics.
Police probe death hoaxes
By: Jonathan Allen and Jake Sherman
July 6, 2010 04:55 PM EDT
July 6, 2010 04:55 PM EDT
At least three Democratic senators have been subjects of false reports of their deaths in the past two days, prompting the U.S. Capitol Police to open an investigation into the matter.
Several news outlets received a hoax e-mail news release, announcing the death of Sen. Patrick Leahy (D-Vt.) on Tuesday. Leahy, 70, who participated in July 4 events, is alive and well, according to spokesman David Carle.
Tuesday, July 6, 2010
Unjust Spoils
Robert Reich | June 30, 2010
Wall Street's banditry was the proximate cause of the Great Recession, not its underlying cause. Even if the Street is better controlled in the future (and I have my doubts), the structural reason for the Great Recession still haunts America. That reason is America's surging inequality.
Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation's total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America's total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928—with 23.5 percent of the total.
Each of America's two biggest economic crashes occurred in the year immediately following these twin peaks—in 1929 and 2008. This is no mere coincidence. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don't have enough purchasing power to buy what the economy is capable of producing. America's median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class can boost its purchasing power is to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn't pay their bills, and banks couldn't collect.
Time to Put the Deficit Commission Out of Our Misery
Tuesday 06 July 2010
by: Dean Baker, t r u t h o u t | Op-Ed
It's time to stop wasting the taxpayers' money and shut down President Obama's deficit commission. It is now clear that it has become a national joke.
One of the co-chairs of the commission is former Wyoming Sen. Alan Simpson. Simpson is often touted in the media for his plain-spoken man of the people ways. The media version doesn't quite fit the facts. Simpson worked his way up to the Senate from being the son of a former Wyoming senator.
Republicans Incite Class Warfare—Within the Middle Class
The Republicans have found a new scapegoat for the economy, in addition to illegal immigrants.
The new scapegoat is public sector workers.
Unwilling to blame Bush for the budget deficit, unable to blame Wall Street for wrecking the economy, and incapable of blaming a lack of regulation or capitalism itself for the morass we're in, Republicans are pointing their fingers now at public sector workers.
The teachers, police officers, fire fighters, and other government employees are just making too much money, the Republicans say, regardless of the fact that public sector workers in state after state have been laid off or put on unpaid furloughs.
US climate scientists receive hate mail barrage in wake of UEA scandal
Vitriolic campaign targets American scientists following leak of climate unit emails
• Read the hate emails sent to climate scientists
• Hacked email climate scientists receive death threats
- guardian.co.uk,
Climate scientists in the US say police inaction has left them defenceless in the face of a torrent of death threats and hate mail, leaving them fearing for their lives and one to contemplate arming himself with a handgun.
The scientists say the threats have increased since the furore over leaked emails from the University of East Anglia began last November, and a sample of the hate mail sent in recent months and seen by the Guardian reveals the scale and vitriolic tone of the abuse.
The scientists revealed they have been told to "go gargle razor blades" and have been described as "Nazi climate murderers". Some emails have been sent to them without any attempt by the sender to disguise their identity. Even though the scientists have received advice from the FBI, the local police say they are not able to act due to the near-total tolerance of "freedom of speech" in the US.
Republicans: A Party of Unemployment
From now until 2 November, the Republican party will be the party of unemployment. The logic is straightforward: the more people who are unemployed on election day, the better the prospects for Republicans in the fall election. They expect, with good cause, that voters will hold the Democrats responsible for the state of the economy. Therefore, anything that the Republicans can do to make the economy worse between now and then will help their election prospects.
While it may be bad taste to accuse a major national political party of deliberately wanting to throw people out of jobs, there is no other plausible explanation for the Republicans' behaviour. They have balked at supporting nearly every bill that had any serious hope of creating or keeping jobs, most recently filibustering on bills that provided aid to state and local governments and extending unemployment benefits. The result of the Republicans' actions, unless they are reversed quickly, is that hundreds of thousands more workers will be thrown out of work by the mid-terms.
Health overhaul first provisions start to kick in
By RICARDO ALONSO-ZALDIVAR
The Associated PressMonday, July 5, 2010; 3:38 PM
WASHINGTON -- The first stage of President Barack Obama's health care overhaul is expected to provide coverage to about 1 million uninsured Americans by next year, according to government estimates.
That's a small share of the uninsured, but in a shaky economy, experts say it's notable.
Many others - more than 100 million people - are getting new benefits that improve their existing coverage.
Report: Oceans' demise near irreversible
Moving toward the tipping point
BY LES BLUMENTHAL, McClatchy Newspapers
WASHINGTON -- A sobering new report warns that oceans face a "fundamental and irreversible ecological transformation" not seen in millions of years as greenhouse gases and climate change already have affected temperature, acidity, sea and oxygen levels, the food chain and possibly major currents that could alter global weather.
The report, in Science magazine, doesn't break a lot of new ground, but it brings together dozens of studies that collectively paint a dismal picture of deteriorating ocean health.
Monday, July 5, 2010
Paul Krugman: Punishing the Jobless
By PAUL KRUGMAN
There was a time when everyone took it for granted that unemployment insurance, which normally terminates after 26 weeks, would be extended in times of persistent joblessness. It was, most people agreed, the decent thing to do.
But that was then. Today, American workers face the worst job market since the Great Depression, with five job seekers for every job opening, with the average spell of unemployment now at 35 weeks. Yet the Senate went home for the holiday weekend without extending benefits. How was that possible?
The answer is that we’re facing a coalition of the heartless, the clueless and the confused. Nothing can be done about the first group, and probably not much about the second. But maybe it’s possible to clear up some of the confusion.
America's First Spymaster
Having grown up in eastern Massachusetts not far from Lexington and Concord, I always found the Revolutionary War’s heroes familiar and fascinating, including some whose names are little remembered except by historians.
And my later interest in intelligence activities caused me to focus on one extraordinary patriot in particular, Dr. Joseph Warren, a man who could be viewed as America’s first spymaster, although he was much more than that, a leader as influential in the war’s early days – and as selfless – as any figure to follow him in that long historic struggle.
Though involved with the Sons of Liberty and a member of the Boston Committee of Correspondence, a key body in organizing the revolution, Warren also moved within Boston’s respected society as a physician and surgeon. Indeed, that may have put him in place to recruit one of the most important and still mysterious spies in American history.
In the years leading up to the start of hostilities on April 19, 1775, Warren worked with fellow patriot Paul Revere in constructing a remarkable intelligence network for its time, a loosely knit collection of sympathetic citizens who uncovered information about the British garrisoned in Boston. The network also included riders who could spread alarms quickly through the countryside.
Companies Find Ways to Bypass Ban on Earmarks
By ERIC LIPTON and RON NIXON
TOLEDO, Ohio — Just one day after leaders of the House of Representatives announced a ban on earmarks to profit-making companies, Victoria Kurtz, the vice president for marketing of a small Ohio defense contracting firm, hit on a creative way around it.
To keep the taxpayer money flowing, Ms. Kurtz incorporated what she called the Great Lakes Research Center, a nonprofit organization that just happened to specialize in the same kind of work performed by her own company — and at the same address.
Now, the center — which intends to sell the Pentagon small hollow metal spheres for body armor that the Defense Department has so far declined to buy in large quantities and may never use — has $10.4 million in new earmark requests from Representative Marcy Kaptur, Democrat of Ohio.
The congresswoman, who has received tens of thousands of dollars in campaign contributions from Ms. Kurtz’s family and her business’s lobbyists, thought the quickly hatched nonprofit organization was a convenient solution.
A Radicalized GOP Might Take Over Our Government: Do Voters Realize What's at Stake?
By Steve Benen, Washington Monthly
Posted on July 4, 2010, Printed on July 5, 2010
http://www.alternet.org/story/147423/
Evidence of an "enthusiasm gap" between Democratic and Republican voters is hardly new, though it may prove to be one of the year's most important campaign dynamics. Recently, the trend became even more evident.
Gallup's latest poll measuring partisan enthusiasm not only showed Republicans with a sizable advantage, but found that excitement among GOP voters has reached a level with no modern precedent.
This week's report from the Pew Research Center found a similar partisan landscape: "Fully 56 percent of Republican voters say they are more enthusiastic about voting this year than in previous elections -- the highest percentage of GOP voters expressing increased enthusiasm about voting in midterms dating back to 1994.... The Republican Party now holds about the same advantage in enthusiasm among its party's voters that the Democratic Party held in June 2006 and the GOP had late in the 1994 campaign."
Red State Families vs. Blue State Families: The Family-Values Divide
By Naomi Cahn and June Carbone, Oxford University Press
Posted on July 1, 2010, Printed on July 5, 2010
http://www.alternet.org/story/147399/
Adapted with permission from Red Families vs. Blue Families: Legal Polarization and the Creation of Culture by Naomi Cahn and June Carbone, published by Oxford University Press, Inc. (c) 2010 Oxford University Press.
Families are on the front lines of the culture wars. Controversies over abortion, same-sex marriage, teen pregnancy, singleparenthood, and divorce have all challenged our images of the American family. Some Americans seek a return to the “mom, dad, and apple pie” family of the 1950s, while others embrace all of our families, including single mothers, gay and lesbian parents, and cohabiting couples. These conflicting perspectives on life’s basic choices affect us all—at the national level, in state courts and legislatures, in drafting local ordinances, and in our own families.
In our new book, Red Families vs. Blue Families: Legal Polarization and the Creation of Culture, we go behind the overblown rhetoric and political posturing of the family values conflict. What we have found is that the new information economy is transforming the family—and doing so in ways that create a crisis for marriage-based communities across the country.Sunday, July 4, 2010
Frank Rich: Fourth of July 1776, 1964, 2010
By Frank Rich
ALL men may be created equal, but slavery, America’s original sin of inequality, was left unaddressed in the Declaration of Independence signed 234 years ago today. Of all the countless attempts to dispel that shadow over the nation’s birth, few were more ambitious than the hard-fought bill Lyndon B. Johnson signed into law just in time for another Fourth of July, 46 summers ago.
With the holiday weekend approaching, Johnson summoned the television networks for the signing ceremony on Thursday evening, July 2. The Civil Rights Act of 1964, first proposed more than a year earlier by John F. Kennedy, banished the Jim Crow laws that denied black Americans access to voting booths, public schools and public accommodations. Johnson told the nation we could “eliminate the last vestiges of injustice in our beloved country” with the help of a newly formed “Community Relations Service” and its “advisory committee of distinguished Americans.” Talk about an age of innocence!
4 July, Independence Day: a rum business
Nations' founding myths are just that. The US is no exception, with commerce and corruption alongside highminded heroics
All countries have their special founding myths and legends. And all of them are eminently challengeable. 4 July no less than others. Independence Day is, of course, the special day for the Tea Partyers and Tea Baggers, when they can re-declare independence from their elected president and government, and maybe even free their Medicare from alien government control.
This Sunday, I will be at Tea Party-free barbecue, drinking and watching the fireworks. (The Third Benedict Arnold Appreciation Society annual barbecue is not until the Saturday after.) I used to love Guy Fawkes' night, (known in Boston before the Irish immigration as "Pope's Day") even though I deplore capital punishment and occasionally toast Mr Fawkes as the only man to enter parliament with honourable intentions.
In fact, Congress actually declared independence on 2 July, and then took two days to draw up an explanation of why they did it. And, says William Hogeland, author of the deliciously subversive book Declaration, it was not actually signed until later; while, indeed, many of those who did eventually sign had not even been at the meeting that declared independence, nor drew up the declaration. And showing a spirit that American politicians have shown ever since, some of those who did sign had, in fact, vigorously opposed the whole process.
They Did Their Homework (800 Years of It)
By CATHERINE RAMPELL
THE advertisement warns of speculative financial bubbles. It mocks a group of gullible Frenchmen seduced into a silly, 18th-century investment scheme, noting that the modern shareholder, armed with superior information, can avoid the pitfalls of the past. “How different the position of the investor today!” the ad enthuses.
It ran in The Saturday Evening Post on Sept. 14, 1929. A month later, the stock market crashed.
“Everyone wants to think they’re smarter than the poor souls in developing countries, and smarter than their predecessors,” says Carmen M. Reinhart, an economist at the University of Maryland. “They’re wrong. And we can prove it.”
Like a pair of financial sleuths, Ms. Reinhart and her collaborator from Harvard, Kenneth S. Rogoff, have spent years investigating wreckage scattered across documents from nearly a millennium of economic crises and collapses. They have wandered the basements of rare-book libraries, riffled through monks’ yellowed journals and begged central banks worldwide for centuries-old debt records. And they have manually entered their findings, digit by digit, into one of the biggest spreadsheets you’ve ever seen.
As Oil Industry Fights a Tax, It Reaps Billions From Subsidies
By DAVID KOCIENIEWSKI
When the Deepwater Horizon drilling platform set off the worst oil spill at sea in American history, it was flying the flag of the Marshall Islands. Registering there allowed the rig’s owner to significantly reduce its American taxes.
The owner, Transocean, moved its corporate headquarters from Houston to the Cayman Islands in 1999 and then to Switzerland in 2008, maneuvers that also helped it avoid taxes.
At the same time, BP was reaping sizable tax benefits from leasing the rig. According to a letter sent in June to the Senate Finance Committee, the company used a tax break for the oil industry to write off 70 percent of the rent for Deepwater Horizon — a deduction of more than $225,000 a day since the lease began.
Saturday, July 3, 2010
Social Security Suicide Pact (or, The Folks Back Home on the Old Ant Farm)
By Richard Eskow
Created 07/02/2010 - 12:40am
Must Read:
An Economy for All
Democrats won the news cycle yesterday when they slammed John Boehner for calling the economic crisis an "ant." But winning a news cycle isn't the same as winning an election. A new poll shows that the President and his party risk political suicide if they join in the mad rush to cut Social Security, and a sleight-of-hand move by the House leadership today suggests they're considering it. Cutting benefits may seem clever in Washington, where policymakers sometimes toy with the economy as if it were an ant farm. But here in the ant tunnels where the rest of us live, it's terrible politics and worse policy.
It was Barack Obama, not John Boehner, who appointed Alan Simpson and Erskine Bowles to co-chair the "National Fiscal Commission on Responsibility and Reform." Simpson's a longtime Social Security antagonist who's called retired Americans "greedy geezers [1]" because they don't want their Social Security payments used to fund extravagant tax cuts and military spending. (A video of Simpson's misguided and angry rant [2]drew quite a bit of attention recently.) And Erskine Bowles cut a deal with Newt Gingrich that would have partially privatized Social Security in the 1990's if the Monica Lewinsky scandal hadn't derailed their plans. (He has also revealed what Dean Baker describes as a numerological fascination [3] with using arbitrary numbers as targets.)
By creating this Commission and appointing two commissioners whose views are so far outside the political mainstream, President Obama risks endangering his own future and his party's in pursuit of a misguided policy goal. And a breaking report from Firedoglake [4] indicates that the Commission's set of recommendations - should members agree on one - will be submitted to an up-or-down vote by a lame duck Congress after the November elections, provided that the Senate passes it first. That clattering sound you just heard was the sound of Democrats picking up hara-kiri knives en masse.
Pelosi forces vote on Deficit Commission recommendations
For those of you who may be laboring under the illusion that the whole entire political establishment is NOT going to savage Social Security under the protection of a Democratic president, Nancy Pelosi just proved you wrong.
On Thursday, the House took up the War Supplemental bill. Keep in mind that every vote in the House includes a vote on the Rule — this is the meta-bill that lays on top of the real bill and controls how debate is conducted — for example, how much time is allocated, what amendments are allowed — and also what happens if the underlying bill passes.
Organic farmers better at pest control, study says
by Tom Laskawy
1 Jul 2010 12:24 PM
1 Jul 2010 12:24 PM
Dovetailing nicely with Grist contributor and would-be farmer Steph Larsen’s account of her battle with the hated corn borer, a new study from Washington State University suggests organic growing techniques offer better pest control and larger plants.
But first, let’s be clear: The debate over the benefits of organic versus industrial agriculture is never-ending. No one study will convince everyone that one form of agriculture or another is superior.
Decline in Labor Force Leads to Drop in Unemployment
Friday 02 July 2010
by: Dean Baker | Center for Economic and Policy Research | Report
by: Dean Baker | Center for Economic and Policy Research | Report
The June drop in hours suggests that hiring will slow further.
The Labor Department reported that 652,000 people left the labor force in June, causing the unemployment rate to edge down to 9.5 percent, even as the number of employed reportedly dropped by 301,000. The establishment survey showed a gain of 100,000 jobs, excluding the 225,000 Census workers who lost their jobs in June. The establishment survey also showed declines in both the length of the average workweek and the average hourly wage, providing further concerns about labor market weakness going forward.
The employment-to-population (EPOP) ratio fell to 58.5 percent, reversing gains from the prior three months; although this is still 0.3 percentage points above the low hit in December. This decline was concentrated among men who saw their EPOP fall by 0.3 percentage points, as their unemployment rate edged up from 9.8 to 9.9 percent. The EPOP for women was unchanged, with their unemployment rate falling from 8.1 percent to 7.8 percent.
It's Going to Take a While to Bring Wall St. Under Heel
By William Greider, The Nation
Posted on July 2, 2010, Printed on July 3, 2010
http://www.alternet.org/story/147415/
Hold the applause. The president would like us to celebrate his "Wall Street reform," but the legislation is misnamed. Barack Obama did not set out as president to reform Wall Street in fundamental ways but to restore it. Judging by the largest banks' booming stock prices and executive bonuses, he appears to have succeeded. The leading bankers expressed relief when they saw the reform package Congress cobbled together on June 25. Wall Street, loathed by citizens everywhere, dodged the bullet in Washington.
Congress followed Obama's path and rejected the sterner measures that promised to actually change things. As with healthcare reform, the White House, joined by the Treasury and the Federal Reserve, spent much of its energy opposing more aggressive ideas or bargaining small-bore compromises. The president kept a low profile, saving himself for the victory celebration.
Despite the defeat of real reform, progressives should not despair—the future looks much brighter than the headlines suggest.Advocates Praise Obama's Immigration Speech, Urge Action
By Marcelo Ballve, New America Media
Posted on July 2, 2010, Printed on July 3, 2010
http://www.alternet.org/story/147418/
Editor's note: Below, Marcelo Ballvé reports that immigrants' rights activists received Barack Obama's immigration address warmly. You can also read David Bacon's piece about another group of activists who are sharply critical of the approach Obama endorsed here. Finally, you can read a complete transcript of Obama's remarks here.
President Obama's speech may be too little, too late on immigration. But few have said it better.
Obama's remarks at American University ahead of the July 4 holiday--his first major policy speech devoted solely to this issue--tried to reframe a debate that has grown more contentious than ever with the advent of Arizona's new legislative crackdown on illegal immigration, which will go into effect later this month.
The president compared the immigration system to the health care and financial messes. He said the immigration laws are broken and in need of a major overhaul.
Climategate Continues to Crumble
Score a win for climate science: Penn State University announced today that climate scientist Michael Mann had been cleared of all scientific misconduct charges stemming from the "climategate" emails that had been hacked from Britain's East Anglia University last fall. Here's the release from the folks at State College:
Penn State Professor Michael Mann has been cleared of any wrongdoing, according to a report of the investigation that was released today (July 1). Mann was under investigation for allegations of research impropriety that surfaced last year after thousands of stolen e-mails were published online. The e-mails were obtained from computer servers at the Climatic Research Unit (CRU) of the University of East Anglia in England, one of the main repositories of information about climate change.
The ABCs of Reform
How Washington blew its chance to bring real change to Wall Street.
Posted Thursday, July 1, 2010, at 6:23 PM ET
Even acknowledging the truism that making laws is like making sausage, often leading any observer toward becoming a vegetarian, if not a vegan, some legislation stands out as especially unpleasant. With that in mind, what conclusions can we draw about the financial reregulation bill now making its way through Congress?
First, the bill does virtually nothing to confront the single greatest structural problem we face: the continued growth of too big to fail, or TBTF, institutions. Indeed, over the course of the crisis we have gone in the wrong direction, with the banking industry now more concentrated than it was several years ago. There is no reason to believe that this trend will change or that the federal guarantees of TBTF institutions will be withdrawn.
Friday, July 2, 2010
How the TeleCom Industry Plans to Take Over the Internet in Four Easy Steps
by CommonDreams.org
Have you heard about the battle over the Internet?
It's a power grab that involves lawyers, lobbyists, unscrupulous legislators, phony front groups and the most powerful telecommunications companies in the world.
They've aligned themselves against the rest of us -- the millions of Americans who use the Internet every day, in increasingly inventive ways.
They've opened their wallets to Washington. It's an investment of hundreds of millions of dollars [1] and it's being made right now by AT&T, Comcast and Verizon -- the companies that provide broadband access to the vast majority of Americans.
These companies are chasing the ultimate payout: control, not just of the Internet wires that snake into our homes, but over the information that flows across those wires..
How Goldman Gambled on Starvation
Speculators set up a casino where the chips were the stomachs of millions. What does it say about our system that we can so casually inflict so much pain?
By now, you probably think your opinion of Goldman Sachs and its swarm of Wall Street allies has rock-bottomed at raw loathing. You're wrong. There's more. It turns out that the most destructive of all their recent acts has barely been discussed at all. Here's the rest. This is the story of how some of the richest people in the world - Goldman, Deutsche Bank, the traders at Merrill Lynch, and more - have caused the starvation of some of the poorest people in the world.
It starts with an apparent mystery. At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 per cent, maize by 90 per cent, rice by 320 per cent. In a global jolt of hunger, 200 million people - mostly children - couldn't afford to get food any more, and sank into malnutrition or starvation. There were riots in more than 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, calls it "a silent mass murder", entirely due to "man-made actions."
Washington's Odd Jobs Attitude Why high unemployment is terrible for the economy. By Daniel Gross Posted Friday, July 2, 2010, at 10:15 AM ET Last we
Why high unemployment is terrible for the economy.
Posted Friday, July 2, 2010, at 10:15 AM ET
Last week, I argued that the Federal Reserve doesn't seem to care much about high unemployment. Apparently, very few other people in Washington do, either. That's one way of interpreting the events of the last week. Congress is adjourning without extending unemployment benefits, in large measure due to repeated Republican filibusters. On Thursday, President Obama gave a major address about … immigration reform. All this on the eve of a jobs report that showed the economy lost jobs in June, due largely to the loss of temporary census jobs.
The economy is now presenting a strange dichotomy. The corporate sector has returned to rude health, with improved balance sheets and tons of cash. It has helped lead the recovery. But without the mighty American consumer, who generates 70 percent of economic activity, participating to the fullest degree, the recovery will seem anemic. Without a healthy jobs market, the recession-shocked consumer won't spend.
And yet Washington's response seems to be a collective throwing-up of hands. There are a few things the government can do about persistent long-term unemployment. First, it can lessen the pain it causes by expanding the safety net, extending unemployment-insurance benefits so that the long-term unemployed have a source of cash to help them stay current on rent, mortgage, and credit card bills. Second, it can respond to persistent long-term unemployment by enacting policies aimed at creating and preserving jobs. These can take the form of summer jobs programs, enhanced public works programs, aid to strapped municipalities so they can avoid layoffs, and tax cuts and credits for investment and hiring.
Paul Krugman: Myths of Austerity
When I was young and naïve, I believed that important people took positions based on careful consideration of the options. Now I know better. Much of what Serious People believe rests on prejudices, not analysis. And these prejudices are subject to fads and fashions.
Which brings me to the subject of today’s column. For the last few months, I and others have watched, with amazement and horror, the emergence of a consensus in policy circles in favor of immediate fiscal austerity. That is, somehow it has become conventional wisdom that now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed.
This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination — specifically, on belief in what I’ve come to think of as the invisible bond vigilante and the confidence fairy.
Solar lamp wins award for helping developing countries
The developers of a solar lamp that aims to replace kerosene-burning lights in developing countries have won a prestigious environmental award.
D Light Design says its lanterns, which sell for around $10 (£7), contribute to the reduction of carbon emissions.
One of the runners-up for the Ashden Award for Sustainable Energy was the Rural Energy Foundation (REF) for promoting solar energy in Africa.
More than 70% of sub-Saharan Africa has no access to electricity.
Rethinking Iran-Contra
y Robert Parry
July 1, 2010
July 1, 2010
The conventional view of the Iran-Contra scandal is that it covered the period 1985-86, when President Ronald Reagan became concerned about the fate of American hostages in Lebanon and agreed to secretly sell weapons to Iran’s Islamist government to gain its help in freeing the captives.
Supposedly, the scheme went awry when White House aide Oliver North and other participants got carried away, including North’s decision to divert profits from the arms sales to another one of Reagan’s priorities, the Nicaraguan contra rebels whose CIA assistance had been cut off by Congress.
The Iran-Contra scandal was exposed in fall of 1986 after the shooting down of a North supply plane over Nicaragua and revelations in Lebanon of Reagan’s arms sales to Iran. A White House staff shake-up, including North’s firing, and some wrist-slaps from Congress for Reagan’s alleged inattention to details resolved the scandal, at least that was how Official Washington saw it.
The few dissenters who wouldn’t accept that tidy conclusion – such as Iran-Contra special prosecutor Lawrence Walsh – were mocked and marginalized by the news media, including the Washington Post (which ran an article concluding that Walsh’s consistency in pursuing the scandal was “so un-Washington” and that he would depart as “a perceived loser”).
BP's Hole in the World: The Absurdity of the Fix-It Mentality
By Naomi Klein, The Nation
Posted on June 28, 2010, Printed on July 2, 2010
http://www.alternet.org/story/147348/
Everyone gathered for the town hall meeting had been repeatedly instructed to show civility to the gentlemen from BP and the federal government. These fine folks had made time in their busy schedules to come to a school gymnasium on a Tuesday night in Plaquemines Parish, Louisiana, one of many coastal communities where brown poison was slithering through the marshes, part of what has come to be described as the largest environmental disaster in US history.
"Speak to others the way you would want to be spoken to," the chair of the meeting pleaded one last time before opening the floor for questions.
The Tea Party Is Dangerous: Dispelling 7 Myths That Help Us Avoid Reality About the New Right-Wing Politics
By Adele M. Stan, AlterNet
Posted on June 23, 2010, Printed on July 2, 2010
http://www.alternet.org/story/147307/
Few things are more confounding to liberals and progressives than the rise of the Tea Party movement, and the media’s infatuation with it. Just as we breathed a sigh of relief with the election of Barack Obama as the nation’s 44th president, after eight disastrous years under the reign of Bush the Younger, in swept a furious wave of misanthropic pique.
Really, we shouldn’t have been surprised. Just as a recession hit of unprecedented force, yielding high unemployment, conservatives found themselves sidelined, Obama’s triumph coming on the heels of the Democrats’ congressional victories of 2006. That partisan change would have been enough to make conservatives ornery, but the cultural change represented by the nation’s first African-American president struck fear into the hearts of many -- especially after liberal San Franciscan Nancy Pelosi became the first woman to wield the gavel of the Speaker of the House.
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