Laura Flanders contrasts Barack Obama’s happy talk to the graduating class at Barnard College with the realities of the student loans racket:
…Except it’s a different sort of debt bomb. It the sort that individuals have to carry about. Thanks to federal law, there’s no declaring bankruptcy on student loans and there’s no debt relief. There’s no getting a refund for an education that did you no good. At the end of the day those payments can be drawn directly out of your social security check…
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington.
Bill Black is a white-collar criminologist. He was on the committee that investigated banking fraud in the Savings and Loan crisis, and he’s been an often critic of the media and how it covers the current financial and economic crisis. He recently wrote a piece about The New York Times journalists and how they don’t even read some of their own financial guys, like Krugman. And he now joins us to talk about his critique of The New York Times and the media. Thanks for joining us. Bill joins us from D.C., where he’s now visiting. Bill, I think I did the whole introduction, except to say that you’re also the author of the book The Best Way to Rob a Bank Is to Own One. Thanks for joining us again.
WILLIAM K. BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Thank you.
JAY: So talk a bit about your piece about The New York Times. And what was your point?
BLACK: Well, there were a series of articles in The New York Times covering the recent elections in Europe, particularly in France and Greece, but also mentioning Germany and England. And the common denominator in each of these elections was that the people rose up against the parties imposing Berlin’s austerity program, which has forced Europe back into recession and forced the periphery of Europe back into depression. And they rejected this soundly in these votes.
But the amazing thing was that The New York Times reporters were treating this like, well, these people must be financially illiterate, because everybody knows austerity is the only thing that can be done, and austerity must be done, and it’s good and such. So the more they destroy the economy, the more the New York Times reporters seem to think that destroying the economy is the objective.
And Paul Krugman has been very good. He is, after all, Nobel laureate in economics. He writes a regular column for The New York Times, and for months he’s been explaining how insane the austerity program is. But apparently the New York Times reporters don’t read their own Nobel prize winning economists.
JAY: Well, the same thing was happening here during the high tide of the super committee and all the focus on the American debt and deficit. The same thing was happening. The media was just presupposing that you need to have these kinds of cuts and they’re good for the economy, and this kind of notion that if you have austerity, it frees up the society for growth. I mean, that’s the argument, and I guess most journalists seem to buy into that. So what’s wrong with that?
BLACK: Well, it’s the opposite is true. If you’re in a recession, the problem is you don’t have sufficient demand to keep people employed. And so that typically means private-sector demand is seriously inadequate. Austerity means that you reduce public-sector demand at the same time that private-sector demand is already inadequate. Well, if you do that, then you have really inadequate demand and you have really severe unemployment, which is why unemployment has shot upward throughout Europe, why it’s over 20 percent in a number of the nations of the periphery, why youth unemployment is over 50 percent, why immigration is a leading strategy of European kids when they get their college degree. And it’s a policy that is tearing the European Union apart politically, and socially as well.
You know, this is the equivalent up bleeding a patient, and then, of course, they don’t get better, because you bled them, so you bleed them some more, and then you yell at them for—you know, what’s wrong with you? Why aren’t you recovering? And you bleed them some more. And, you know, pretty soon they’re pretty near death’s door and you’re—can’t understand why they’re not praising you and instead they’re voting you out of office.
Continue reading “Bill Black on austerity”
America has been colonized by corporations, but Chris Hedges is still counting on Occupy to spark a backlash. More here.
I hear all kinds of numbers when the unemployment figures for the U.S.A. are discussed. To listen to someone that has never studied statistics explain to me an unemployment rate, how a statistic is calculated and all about the “shell game” involved and all nefarious conspiracies that go along with the unemployment figures can be a bit frustrating, but, then I just see the entertainment value I am getting in a bad situation.
In any statistical analysis, method, variables and other “messy” stuff come into play. Jim Stratton at the Orlando Sentinel had a reader that wasn’t buying into the drop in unemployment in Florida…..
“The government has manipulated how they count the unemployed,” he wrote in an email. “Since I don’t currently receive unemployment checks, I’m not counted. There are plenty of others like me.”
Jim retorted:
To determine the statewide jobless rate, officials do not simply report the number of people receiving unemployment. That would understate the problem because fewer than 35 percent of those out of work qualify for jobless benefits.
Instead, officials combine state data with the findings of a national monthly survey of about 60,000 households. The federal survey asks who has a job, who is out of work and who is looking for work.
Method or madness? Maybe both. Scandal or conspiracy? Naw. Just folks trying to persuade.
But, then we have people using all kinds of numbers when it is convenient. Apparently, Joe Biden and the President will use different numbers according to the Washington Post. There seems to be a bit of confusion about “overall” job growth and private sector job growth. Private sector growth seems to be pretty OK, sad to say the “overall” job growth is tepid, mostly due to public sector losses. Public Sector mean firemen, teachers, folks like that.
Let’s check in with the numbers by the folks a little “Right of the Dial”. According to biased sources the web site Shadow Government Statistics webmaster, John Williams, is a self proclaimed statistician that he said he spread his sage advice and observations to the New York Times and Business Investor’s Weekly. No articles written by him have been found in either publication. But, just for giggles here is his latest statistics. John Williams says it is around 23%. That is pretty close to the Depression of the 30’s, which was around 25% at peak. He didn’t explain his method.
OK.
Well, there are several ways the Bureau of Labor Statistics calculates unemployment figures. It’s a scale system adding in more factors, starting with “U3” to “U6.” Moving up the scale factors are added like, available to work, working part time instead of full time, and the category of “marginally attached.”
My conclusion: The job market still sucks. Spruill County is at 10.5% (not seasonally adjusted.) Seasonally adjusted. Another variable. My cousins in Whitfield County are at 12.5% . I can make it anecdotal. I am still looking for a job. Thank heavens, Daddylonglegs and I saw the crash coming.
I look at all these austerity measures in place in Europe and the results of austerity in Britain as double dip recession in Britain and I have to think, why the heck would that work here? I mean, for real?
MoveOn.org lives inside a liberal bubble where no one acknowledges how little leadership and passion the president has shown on most progressive issues, especially the ongoing disaster of unemployment in this country. More here.
Being a schmuck means never having the balls to say you’re sorry. More importantly, it means knowing you’re wrong about the course of action you took, in this case economy austerity, but continuing to pursue the same course because changing it would be an admission that you didn’t know what the hell you were doing. From Guardian UK:
Europe’s collective response to the 2008 credit crunch ranks with the treaty of Versailles and German reparations among the great follies of history. While the peoples of Greece, Spain, Italy and France wrestle with counter-productive austerity policies, Britain’s rulers have no more idea of what to do next. On Tuesday David Cameron and Nick Clegg renewed the coalition marriage vow of two years ago, but there were no smiles of rapture in a Downing Street garden, just gritted teeth in an Essex factory. Cocks of the walk had become headless chickens.
Those who warned at the time that the coalition risked double-dip recession by over-suppressing demand have been proved right. The chancellor, George Osborne, raised [the value added tax] to 20%, tightened benefits and allowed banks to restrict credit (while saying the opposite). He declared that private sector growth would more than compensate for public sector contraction. He meant well, but he was wrong.
He was also wrong to dismiss the desire of Gus O’Donnell, then cabinet secretary, for a plan B. It was clear 18 months ago that demand was collapsing. A government obsession with rescuing banks took the cabinet’s eye off the ball and had nothing to do with the case. The longer course correction was delayed, the more demand drained from the economy, until the gangrene of double-dip set in. Britain is now having one of the worst recessions in the OECD…
From the Wall Street Journal, columnist Justin Lahart takes a look at how state and local job losses drove up the unemployment rate. Let’s remember that the states run by Republican governors insisted on paying for tax cuts by laying over government workers, and that the Republicans in Congress and their Blue Dog enablers who blocked government spending to the states did their part, too. (Remember “jobs, jobs, jobs”? Thanks, Grand Old Piranas!)
One reason the unemployment rate may have remained persistently high: The sharp cuts in state and local government spending in the wake of the 2008 financial crisis, and the layoffs those cuts wrought.
The Labor Department’s establishment survey of employers — the jobs count that it bases its payroll figures on — shows that the government has been steadily shedding workers since the crisis struck, with 586,000 fewer jobs than in December 2008. Friday’s employment report showed the cuts continued in April, with 15,000 government jobs lost.
But the survey of households that the unemployment rate is based on suggests the government job cuts have been much, much worse.
In April the household survey showed that that there were 442,000 fewer people working in government than in March. The household survey has a much smaller sample size than the establishment survey, and so is prone to volatility, but the magnitude of the drop is striking: It marks the largest decline on both an absolute and a percentage basis on record going back to 1948. Moreover, the household survey has consistently showed bigger drops in government employment than the establishment survey has.
The unemployment rate would be far lower if it hadn’t been for those cuts: If there were as many people working in government as there were in December 2008, the unemployment rate in April would have been 7.1%, not 8.1%.
Ceteris is rarely paribus, of course: If there were more government jobs now, for example, it’s likely that not as many people would have left the labor force, and so the actual unemployment rate would be north of 7.1.
Economist Jared Bernstein adds:
A few additional points, if I may:
- these are real jobs by real people of the type you see everyday when you drop your kid off at school, get a speeding ticket (whoops…bad e.g., but you know what I mean), or pass a firehouse. You see their work when you go to a soccer game at a public field that’s in decent shape or stroll in a public park.
- there’s a significant multiplier to state and local spending, both in terms of contracting out work to private entities and spending by public workers in their communities (Zandi puts it at 1.4–for a dollar of state fiscal relief, GDP grows $1.4).
Europe is at a crossroads now, and you can rest assured that the Powers That Be will be trying to influence the new leadership in whatever friendly way they can to change their minds about austerity – and in some not-so-friendly ways as well. The reality is, governments usually do what the IMF and the World Bank “persuade” them to do. The persuading has probably already begun:
Socialist Francois Hollande defeated conservative incumbent Nicolas Sarkozy today to become France’s next president, heralding a change in how Europe tackles its debt crisis and how France flexes its military and diplomatic muscle around the world.
Exuberant, diverse crowds filled the Place de la Bastille, the iconic plaza of the French Revolution, to fete Hollande’s victory, waving French, European and labor union flags and climbing its central column. Leftists are overjoyed to have one of their own in power for the first time since Socialist Francois Mitterrand was president from 1981 to 1995.
“Austerity can no longer be inevitable!” Hollande declared in his victory speech Sunday night after a surprising campaign that saw him transform from an unremarkable, mild figure to an increasingly statesmanlike one.
Sarkozy is the latest victim of a wave of voter anger at government spending cuts around Europe that have tossed out governments and leaders over the past couple of years.
[…] Hollande inherits an economy that’s a driver of the European Union but is deep in debt. He wants more government stimulus, and more government spending in general, despite concerns in the markets that France needs to urgently trim its huge debt.
While some market players have worried about a Hollande presidency, Jeffrey Bergstrand, professor of finance at the University of Notre Dame, said it’s a good thing that Hollande will push for more spending throughout Europe to stimulate the economy.
Europe is “going into a really serious and poor situation,” Bergstrand said. Hollande “is going to become the speaker for those countries that want to do something about economic growth.”
Meanwhile, the situation in Greece after yesterday’s election is much more volatile as long as they remain chained to the euro. The country is dependent on loans from the European Union and the IMF just to survive, and they will release those funds only if Greece continues to beggar her own people:
In a surprise result, Greece’s Coalition of the Radical Left, or Syriza, which seeks to annul the austerity program, saw its share of the vote more than triple, to 16.2% of the vote and 50 seats—making it the second-largest party in parliament, the ministry projections showed.
Greece’s Coalition of the Radical Left, or Syriza, saw its share of the vote more than triple to 15.5%-18.5%-making it the second-largest party in parliament, exit polls showed. Alkman Granitsas reports from Athens.
Continue reading “Tremors”
Here’s an excerpt from a much lengthier piece in the New York Review of Books, in which Krugman makes the not-implausible case there’s reason to hope for a return to Keynesian policies before the election:
Pundits are always making confident statements about what the American electorate wants and believes, and such presumed public views are often used to wave away any suggestion of major policy changes, at least from the left. America is a “center-right country,” we’re told, and that rules out any major initiatives involving new government spending.
And to be fair, there are lines, both to the left and to the right, that policy probably can’t cross without inviting electoral disaster. George W. Bush discovered that when he tried to privatize Social Security after the 2004 election: the public hated the idea, and his attempted juggernaut on the issue quickly stalled. A comparably liberal-leaning proposal—say, a plan to introduce true “socialized medicine,” making the whole health care system a government program like the Veterans Health Administration—would presumably meet the same fate. But when it comes to the kind of policy measures I have advocated—measures that would mainly try to boost the economy rather than try to transform it—public opinion is surely less coherent and less decisive than everyday commentary would have you believe.
Pundits and, I’m sorry to say, White House political operatives like to tell elaborate tales about what is supposedly going on in voters’ minds. Back in 2011 The Washington Post’s Greg Sargent summarized the arguments Obama aides were using to justify a focus on spending cuts rather than job creation:
A big deal would reassure independents who fear the country is out of control; position Obama as the adult who made Washington work again; allow the President to tell Dems he put entitlements on sounder financial footing; and clear the decks to enact other priorities later.
Any political scientist who has actually studied electoral behavior will scoff at the idea that voters engage in anything like this sort of complicated reasoning. And political scientists in general have scorn for what Slate’s Matthew Yglesias calls the pundit’s fallacy, the belief on the part of all too many political commentators that their pet issues are, miraculously, the very same issues that matter most to the electorate.
Most real voters are busy with their jobs, their children, and their lives in general. They have neither the time nor the inclination to study policy issues closely, let alone engage in opinion-page-style parsing of political nuances. What they notice, and vote on, is whether the economy is getting better or worse; statistical analyses say that the rate of economic growth in the three quarters or so before the election is by far the most important determinant of electoral outcomes.
What this says—a lesson that the Obama team unfortunately failed to learn until very late in the game—is that the economic strategy that works best politically isn’t the strategy that finds approval with focus groups, let alone with the editorial page of The Washington Post; it’s the strategy that actually delivers results. Whoever is sitting in the White House next year will best serve his own political interests by doing the right thing from an economic point of view, which means doing whatever it takes to end the depression we’re in. If expansionary fiscal and monetary policies coupled with debt relief are the way to get this economy moving, then those policies will be politically smart as well as in the national interest.
