Author Archive | susie

The Depression

Bob Herbert just keeps talking about the things no one else seems to notice:

The crippling nature of the joblessness that has moved through the society like a devastating virus has gotten neither the attention nor the response that it warrants. One of the more striking findings of the Pew study was that a college education has not been much of a defense against long-term unemployment.

“Twenty-one percent of unemployed workers with a bachelor’s degree have been without work for a year or longer,” the report found, “compared to 27 percent of unemployed high school graduates and 23 percent of unemployed high school dropouts.”

Whole segments of the U.S. population are being left behind, even as economists are touting modest improvements in some categories of economic data, like the creation of 162,000 jobs in March. Jobless workers who are 55 or older are having a brutal time of it. Thirty percent have been jobless for a year or more.

Blue-collar workers are suffering through a crisis characterized as a “depression” by the Center for Labor Market Studies at Northeastern University in Boston. Blue-collar job losses during the so-called Great Recession surpassed 5.5 million, and many of those jobs will never be seen again. This disastrous situation will not be corrected, as analysts at the center have noted, “by a modest recovery of the U.S. economy over the next few years.”

We need to pay less attention to the Tea Party yahoos and more attention to the very real suffering of individuals and families trapped in an employment crisis that is unprecedented in the post-Depression era. I’ve been in inner-city neighborhoods where residents will tell you that hardly anyone at all is working at a regular job.

Gum On The Shoe

So the unemployment benefits are gone, gone, gone. I send resumes out into a black hole and I even tell myself I understand why I don’t hear back from anyone. After all, I’m overqualified, yet under-qualified. Plus, I’m too old. And I have a skill set no one pays for anymore.

Just this morning, I called Sen. Casey’s office. The young careerist who answered the phone told me no, there were no additional tiers added to the unemployment legislation and as far as he knew, there wouldn’t be.

He talked about it as if he were describing gum on the bottom of his shoe. Ho hum, minor irritant, too bad but oh well! “Maybe the state will add its own state-funded extension,” he said cheerily. I suppressed the urge to tell him to pull his head out of his ass, and instead told him as a constituent, I hoped Senator Casey would do something to help people like me.

“Oh, sure, I’d be happy to pass that message along,” he chirped. And why not? He has a job.

Deficit Sense – or Sense Deficit?

I suppose this is simply too complicated for a lot of people to understand, and that’s why we have so many nutty deficit hawks:

Evaluating deficit numbers isn’t as easy as up-is-good and down-is-bad. In a recession, the deficit is driven as much by the economy as by the government’s decisions. High unemployment means there’s less income to tax. Sagging demand means there’s less in the way of corporate profits to tax. And general economic misery means that programs such as Medicaid and unemployment insurance become much higher because more people need to use them. Deficits are often seen as the product of federal spending, but they’re just as much the result of changes in the broader economy. The government’s balance sheet is tied to, not separate from, the economy.

When the economy improves, the deficit outlook gets better even though the government hasn’t decided to cut spending or raise taxes. But as DeLong’s post suggests, even that’s not so simple: Textbook Keynesian economics suggests you want to run high deficits during recessions because you need to increase demand after individual and business dollars have fled the economy. But if you remove those deficits at the first sign of recovery, you could remove the very factors that are supporting the economy, which could in turn make the recession worse. So lower deficits during a recession could mean a worse economy, and higher deficits might be a sign that the government is willing to do what’s necessary to get the economy back on track.

The Casino Economy

Richard Trumka in the Wall St. Journal:

The Simmons Bedding Company, manufacturer of the famous Beautyrest mattresses, has finally been flipped one time too many. This story carries an important message for financial reform, now under consideration in the U.S. Senate.

Sold seven times in 20 years from one private investment firm to another, last fall the 133-year-old company filed for bankruptcy and laid off 1,000 workers. Simmons is a textbook example of a dangerous trend in which brand-name companies are turned into gambling chips by leveraged buyout (“private equity”) dealmakers. And it’s a prime example of why the Senate must directly challenge private equity’s wealth extraction business model in order to rein in the casino economy.

Private-equity funds are leveraged private pools of capital that benefit from extensive tax subsidies. They are unregulated and shrouded in secrecy, and they extract big profits while the companies, their employees and many of their investors lose. In the Simmons case, the leveraged buyout firm that brought the company to bankruptcy walked away with $77 million in profits on top of hundreds of millions of dollars in special dividends. The Wall Street investment banks that arranged the deals pulled down big money, too. Meanwhile, a thousand employees lost their livelihoods, the company’s bondholders lost more than $500 million, and a value-creating American company was in effect pawned for cash.

Simmons is hardly the exception. Linens ‘n Things, KB Toys and Mervyns are all brand-name companies that went bankrupt because they could not keep up with the debt burdens that resulted from leveraged buyouts. In fact, of the 163 nonfinancial companies that went bankrupt last year, nearly half were backed by leveraged buyout firms.

You can add the Philadelphia Daily News to that number.

Under current law, private investment vehicles—hedge funds, leveraged-buyout and venture-capital funds—function with virtually no oversight. Despite managing trillions of dollars and employing millions of Americans, they operate as a shadow financial system—in secret, free to take on outsized risks, and make huge bets with no outside supervision. Approximately $1 trillion in leveraged buyout loans were issued in 2006 and 2007, the height of the leveraged buyout bubble. In December 2008, the Boston Consulting Group predicted that almost half of companies owned by leveraged buyout firms are likely to default, resulting in massive job losses and further pressure on our fragile economy.

Reform is essential, and transparency would be a good start. The Securities and Exchange Commission must have full access to information about private investment funds and the authority to require them to provide disclosures to investors, prospective investors, trading partners and creditors.

Comprehensive regulation of the shadow financial system is equally necessary to prevent the buildup of systemic risk like that which brought our economy to the brink of financial ruin.

The House of Representatives took some positive steps toward regulating the private-equity industry late last year, but didn’t go far enough. Similarly, the Senate bill put forth by Banking Committee Chairman Chris Dodd falls far short on the regulation of private investment funds.

Meanwhile, more jobs are being lost and workers hurt. When their plans to squeeze employees to gain higher profits fail, private-equity firms often walk away.

In February, Connecticut-based private-equity firm Brynwood Partners shut down the 77-year-old Stella D’Oro bakery in Bronx, New York, after a labor ruling sided with workers protesting a massive pay cut. In the latest example, the private-equity firm that owns clothier Hugo Boss in suburban Cleveland tried to slash wages. When the workers resisted, the firm announced plans to move operations—including its 375 jobs—overseas.

It’s time to bring the shadow financial system into the light of day. It’s time for Congress to stand up to these firms that gamble with working people’s retirement money and insist that they provide the public with full disclosure and essential oversight.

Mr. Trumka is president of the 11.5 million member AFL-CIO.

Our Legacy

This man’s other son served in Special Forces, so he’s even more upset:

Elizabeth City, N.C. – Police say six Army Special Forces solders beat up a man at a topless bar in Elizabeth City, sending him to the emergency room with a fractured skull.

Travis Howard never expected to be in the emergency room after a night out on the town with his son Devan.

They were celebrating Devan’s 21st birthday at Headlights topless bar in Elizabeth City early Wednesday morning.

Travis says he was sitting alone at a table when out of nowhere, some soldiers in the Special Forces command out of Fort Bragg attacked him, fracturing his skull in four places

“I can remember feeling 2 punches but then my eyes were swelling shut … I don’t remember actually seeing a whole lot after that. I went to the ground with my hands to my face and had my hands covering my face and was trying to protect what I had left.”

Six soldiers are charged with assault causing serious injury. A spokesman for the Army Special Forces Command out of Fort Bragg says they had just completed training at Blackwater, also known as Xe in Moyock. One of the soldier’s stories is that Howard said something to them in the bathroom. Howard denies this.

“I don’t even know that anything that could be spoken out of one person’s mouth in a limited amount of time would warrant them getting beat to the sense of 4 or 5 skull fractures just because of something that would have come out of their mouth.”

Howard also says he suffered a broken nose, sprained neck, and a concussion. After the fight broke out, police say the soldiers left the club.

Ah yes, Blackwater. The outsourcer of choice for torture.

Philadelphia Daily News Wins Pulitzer – Company’s Up For Auction

Yeah, the Washington Post won a bunch of Pulitzers yesterday, and so did Pro Publica, the new non-profit investigative organization. (Hank Williams won, too.) But I really have to give props to the scrappy little paper that could, my hometown paper: the Philadelphia Daily News.

Even though they’re operating in the shadow of an April 27 bankruptcy auction, and functioning with a threadbare staff, the Daily News pulled it out and won the Pulitzer prize for investigative reporting yesterday for their investigation into a squad of corrupt narcotics cops that sounded like something out of “The Shield.”

With good old-fashioned shoe-leather reporting, journalists Barbara Laker and Wendy Ruderman did a very unpopular thing – they stood up for justice, at great personal risk. This is the kind of reporting that’s all too rare today, and now they have a Pulitzer to show for it:

The newsroom was quiet this afternoon, save for the sound of a nervous editor repeatedly clicking his mouse while staring at a computer screen.

Refresh. Refresh. Refresh.

Finally, at 3 o’clock, the silence was pierced by a euphoric cry of, “YES!”

With that, word spread instantly: Daily News reporters Barbara Laker and Wendy Ruderman were named winners of the 2010 Pulitzer Prize for investigative reporting for the “Tainted Justice” series, their takedown of allegedly corrupt narcotics cops.

Their investigation into Officer Jeffrey Cujdik and other members of the Narcotics Field Unit began last February, when an informant told the reporters that the cops sometimes lied on search warrants.

Other serious allegations were uncovered during their reporting, which prompted an FBI investigation and numerous changes to police policy.

More than 50 convicted drug dealers are now fighting for new trials, alleging that officers fabricated evidence against them.

Laker, 52, and Ruderman, 40, are the third and fourth journalists to win a Pulitzer in the Daily News’ 85-year history.

[…] Laker and Ruderman were visibly overwhelmed by the news of their award. They hugged, laughed and jumped up and down while colleagues cheered wildly around them.

“I always felt like this is something that happens to other people, and not us,” said Laker, who joined the People Paper in 1993.

“We couldn’t have done it without our police sources, who were fantastic and who I adore,” added Ruderman, who joined the paper in 2007, following a five-year stint at the Inquirer.

[…] Daily News editor Michael Days said he believed all along that Laker and Ruderman deserved the Pulitzer Prize for the investigative work they did on “Tainted Justice.”

“They went through thousands of search warrants and knocked on hundreds of doors,” he said. “Nobody worked harder than those two.”

Because the paper is operating under the possibility of layoffs or even closure, this win was especially bittersweet:

Ruderman says winning the award is a journalist’s dream come true:

“Yeah, I feel like I can die or go into P.R. or something terrible like that. I just feel like I accomplished something that I never dreamed I’d accomplish.”

Laker agrees it’s a dream come true, but adds it’s more rewarding to give voice to the voiceless, remembering one night when she tracked down a woman who’d allegedly been sexually assaulted:

“She got out of the car and came over to me and she started to cry. And she hugged me and she said ‘I’ve been praying for this day.’ And at that one moment, I thought this is why I do what I do.”

Class War

I’ve been thinking lately about a story my mother told me about when she was young and worked in a bank. She said President Roosevelt was coming to town and there was going to be a downtown parade.

She said the bank bosses sternly warned the employees not to attend, and made it clear it would be frowned upon. But of course, she went anyway and was still excited about it, some six decades later.

The rich and powerful of this country have never gotten over their hatred of FDR and his New Deal policies. They fight tooth and nail about anything remotely resembling FDR’s philosophy that the poorest and weakest among us deserve our help – even when there’s not much of a resemblance.

What a great man FDR must have been, that he haunts them even today.

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