I can think of very few reasons (none of them good) why Obama is so determined not to fix the actual problems in the banking industry. James Galbraith spells out what needs to be done:
When the crisis went public in August 2007, Henry Paulson’s Treasury took every step to prevent the final collapse from happening before the 2008 elections, extracting billions from the Federal Housing Authority and from Fannie Mae and Freddie Mac to relieve the pressure on bank balance sheets. It worked until it didn’t. In September 2008 the collapse of Lehman triggered the collapse of American International Group (AIG) and the steps that led to the Troubled Assets Relief Program (TARP) and to the effective nationalization of the commercial paper market, meaning that the Federal Reserve has become the primary short-term funder of major American corporations.
Upon taking office, President Obama had a chance to change course and didn’t take it. By seizing the largest problem banks, the government could have achieved clean audits, replaced top management, cured destructive compensation practices, shrunk a bloated industry, and cut the banks’ lobbying power and therefore their capacity to obstruct financial reform. The way to write-downs of bad mortgage debt and therefore to financial recovery would have been opened.
None of this happened. Instead the Treasury administered fake “stress tests” and relaxed mark-to-market accounting rules for toxic assets which permitted the banks to defer losses and to continue to carry trash on their books at inflated values. This reassured the banks that they would not be permitted to fail—and so back to bonuses-as-usual they went. The banks survived, and the administration today claims this “proves” they didn’t need to be taken over. But to what end did they survive? The banks are bigger, more powerful, and more obstructionist than ever—and largely uninterested in making new commercial, industrial, or residential loans.
Continue Reading →
Rep. Patrick Murphy is holding another town hall on Revitalizing American Manufacturing.
This one’s SATURDAY, 11am at the Bristol Jr/Sr High School, 1801 Wilson Ave. (h/t eRobin.)
Good thing Democrats control the White House, House and Senate, huh? Because we know they’re working hard to correct these horrible income discrepancies!
The gap between the wealthiest Americans and middle- and working-class Americans has more than tripled in the past three decades, according to a June 25 report by the Center on Budget and Policy Priorities.
New data show that the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest parts of the population in 2007 was the highest it’s been in 80 years, while the share of income going to the middle one-fifth of Americans shrank to its lowest level ever.
The CBPP report attributes the widening of this gap partly to Bush Administration tax cuts, which primarily benefited the wealthy. Of the $1.7 trillion in tax cuts taxpayers received through 2008, high-income households received by far the largest — not only in amount but also as a percentage of income — which shifted the concentration of after-tax income toward the top of the spectrum.
The average household in the top 1 percent earned $1.3 million after taxes in 2007, up $88,800 just from the prior year, while the income of the average middle-income household hovered around $55,300. While the nation’s total income has grown sharply since 1979, according to the CBPP report, the wealthiest households have claimed an increasingly large share of the pie.
Arloc Sherman, a researcher for CBPP, said the income gap is expanding not because the middle class is losing income, but because the wealthiest incomes are skyrocketing.
I was talking to a cashier from the local supermarket the other night, and she told me a super-Walmart is opening around the corner from my house.
“My boss was telling us he’ll have to cut overtime,” she said.
The supermarket clerks are unionized and it’s a strong union neighborhood. I told her they should start a campaign, asking people to support their local union workers. She looked doubtful. “Times are tough. It’s hard to ask somebody who’s out of work not to buy the cheapest food they can,” she said.
She’s right. It’s a tough moral call to make. I’ve always gone out of my way to support local business (I paid $20 more for the new air conditioner than I would have at a chain store), and union companies. But I know I’m in the minority.
I hope Walmart doesn’t kill my neighborhood.
Another dispatch from the front lines of the class war informs us that the rich are more ruthless than the rest of us. And in other news, dog bites man:
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.
The rich can also afford lawyers. In some states, despite your mortgage being a secured debt, the mortgage holder can still come after you. So if you’re going to walk away, by all means, do so. But don’t do it until you check your legal status.
The new air conditioner arrived this morning. I put it together and slid it into the window frame (yes, I know my back will pay for it later). And thank God, just in time.
Because even though the “heat” wave has officially broken, it’s now so humid that 81 degrees feels like 100. So I’m very grateful to everyone who chipped in. Thank you, a million thank yous. (And thanks to those who couldn’t contribute, but felt my pain. And panic.)
Not only that, this was the first time in a very long time I didn’t wake up feeling like crap. (This happened last summer, too, as I recall.) Until today, I would wake up every day with pounding sinuses, sore throat and blurry vision. Today, not only did nothing hurt, I could see as soon as I woke up!
So whatever was wrong with that air conditioner, I’m really happy it’s gone. But spread the news, because if anyone else is having these symptoms, you need to check your AC.
Just as a point of interest: I still can’t figure out if this was made in America (Gibson, made by Frigidaire). Neither could the saleswoman in the appliance store.
Oh my. Looks like one of those campaigns progressive Democrats may want to favor with their “short-sighted” support! How dare Carolyn Maloney not put the needs of Wall Street above those of consumers?
What the hell is up with this? Imagine. They can’t even recognize a good deed when they see one.
Why are there so many perverts in the Republican party?