Obama finally states the obvious! Maybe someone in his inner circle forced him to read columns by Paul Krugman and Robert Reich that accused Republicans of practicing social Darwinism. More here.
Survival of the foulest
Category: The New Depression
Too big to fail
The head of the Dallas Fed lays out a persuasive case for why it has to stop:
Rosenblum lists many reasons why he thinks the TBTF banks must be broken up, but the one that might be the most damning is his criticism of the Dodd-Frank financial reform bill, which ostensibly created a mechanism for winding down troubled TBTF institutions with reduced cost to the taxpayer. Under Dodd-Frank, banks are supposed to create “living wills” that contain plans for orderly wind-downs in the case of a Lehmanesque disaster.
But in his criticism of Dodd-Frank, Rosenbaum points to what Josh Rosner in our recent Bank of America piece called “the worst-kept secret on Wall Street”: the high probability that when “the big one” finally hits, no one in government will have the guts to let a TBTF company go down the drain. Why? Because these firms are so deeply intertwined and interconnected that when one of them starts taking water, they essentially all do — and so any president who chooses to refuse to reach into the cookie jar for a big bailout would likely be signing off on the political suicide of a broad systemic collapse.
“In all likelihood,” Rosenbaum writes, “TBTF could again become TMTF – too many to fail, as happened in 2008.” He adds that, “For all its bluster, Dodd-Frank leaves TBTF entrenched.”
The significance of the Dallas Fed report isn’t that yet another person has come out to make public note of the impossible-to-miss, gigantic, oozing wart on the face of American capitalism that is the TBTF system. What’s significant is that we’re moving closer to a time when the extremely critical view of TBTF, and the demand for an end to the system, becomes bipartisan consensus.
Scalia — joker with a mean streak
It’s no exaggeration to say the Supreme Court’s chief buffoon would feel more at home in the antebellum South than in America after the New Deal. More here.
The housing recovery pipe dream
by Odd Man Out
From Firedoglake:
…Home prices have fallen a whopping 34.4% from the peak set in July 2006…. The reaction from those with that deep investment is to say that prices aren’t coming back to the bubble years, nor should they. And that’s true. But the notable part of all this is the trend. You have new and existing home sales falling month-over-month, and now prices falling as well. And what we know is that the coming months will probably lead to a spike in foreclosures and a new set of inventory dumped onto the market. In fact, we’re already seeing this. It’s a result of the foreclosure fraud settlement, and the very reasonable belief from the banks that they will never face sanction for their misdeeds…
Foreclosure sales start to make up a larger portion of the market, and sellers must set their price accordingly. This lowers prices overall, and the negative equity increases. Eventually people either cash out or they succumb to being underwater, leading to more foreclosures. Leading to lower prices. Leading to more negative equity.
Maybe it’s better to be on the pipe. The reality of the government allowing the mortgage giants to get away with fraud on the grandest scale possible, and the inevitable effect this has on the housing market, is too painful to think about.
OK, but who is Dubya endorsing?
Ever the maverick, Former Florida Gov. Jeb Bush has announced that he’s endorsing Mitt Romney for president, mainly because “we need a leader who understands the economy.” Right. Does that mean he regrets supporting the successful presidential bids of his dim-witted brother, who played a key role in destroying the economy?
New chapter in jolly-good scandal
by Odd Man Out
Pull yourself together, David Cameron! Don’t you know those hot-tempered redheads — Daily Beast called Rebekah Brooks the “flame-haired Murdoch favorite” — are nothing but trouble? I thought you were a stalwart advocate of austerity… or did you merely mean austerity for the poor? More here.
Tax-dodging corporate liars
By Odd Man Out
What a surprise. It seems those those CEOs from Business Roundtable who met behind closed doors with Barack Obama Tuesday and with “blue dog” Democrats on Capitol Hill yesterday were much more interested in pushing for lower corporate tax rates than in discussing job creation. The CEOs argued that Congress “tax reform” shouldn’t be delayed until after the November elections. One of them, quoted in Roll Call, repeated an oft-heard complaint about corporate tax rates in America:
Procter & Gamble’s president and CEO Bob McDonald, who chairs the Roundtable’s tax and fiscal policy committee, said that the country’s corporate tax rate will become the highest in the world when Japan lowers its rate three weeks from now. The Obama administration recently released its own proposal for lowering the corporate tax rate from about 35 percent to about 28 percent. The CEOs said they support lowering it to about 25 percent.
McDonald is a liar, and Roll Call should have said so — politely, of course — by citing, as Salon did in November, the results of a study conducted by Citizens for Tax Justice and the Institute on Taxation and Economic Policy. More here.
Why we haven’t recovered
Compare and contrast: While Beltway insiders insist there is nothing more we could have done to heal the economy, the Shrill One (who, I seem to remember, is supposed to know something about economics) is pointing out the effect of providing only inadequate aid to the states.
Now, it’s certainly true that the Republicans continue to obstruct any of the president’s efforts. (Hell, you just know when Gov. Kasich turns down federal aid for his tornado-devastated state that more Republican posturing on the debt is imminent.) When Congress balks at raising the debt ceiling, the administration has some real problems.
But Obama doesn’t have to encourage them. He doesn’t have to lead cheers for the budget hawks. He doesn’t have to keep talking about how the U.S. needs to cut, cut, cut to live within its means, just like Americans do when they budget at their kitchen table.
Because here’s the thing: Americans don’t usually pay cash for their houses, their new cars or their kids’ college educations. We frequently go into debt for our long-term good, and he’s just undermining the public perception of a nation hopelessly in debt when he talks like that. (Bug, or feature?)
I have this habit of getting off the highway when there’s a traffic jam. I just can’t stand sitting in traffic, so I get off at the nearest exit and find my way via alternate routes. But here’s the thing: Usually it’s faster to sit in traffic and wait it out, but I’m too impatient.
I wonder if President Obama is doing the same thing. Maybe he’s so eager to present the appearance of progress that he’ll settle for any damn thing at all – much to our detriment:
Under President Obama, however, the dire fiscal condition of state and local governments — the result of a sustained slump, which in turn was caused largely by that private debt explosion before 2008 — has led to forced spending cuts. The fiscal straits of lower-level governments could and should have been alleviated by aid from Washington, which remains able to borrow at incredibly low interest rates. But this aid was never provided on a remotely adequate scale.
This policy malpractice is doing double damage to America. On one side, it’s helping lose the future — because that’s what happens when you neglect education and public investment. At the same time, it’s hurting us right now, by helping keep growth low and unemployment high.
We’re talking big numbers here. If government employment under Mr. Obama had grown at Reagan-era rates, 1.3 million more Americans would be working as schoolteachers, firefighters, police officers, etc., than are currently employed in such jobs.
And once you take the effects of public spending on private employment into account, a rough estimate is that the unemployment rate would be 1.5 percentage points lower than it is, or below 7 percent — significantly better than the Reagan economy at this stage.
Continue reading “Why we haven’t recovered”
Cheeseheads battle billionaires
I hope it’s clear to most Americans what the recall battle in Wisconsin is about, and that it’s really being fought on a national scale. More here.
Greenspan’s legacy is Rand’s
Gary Weiss’s new book about Ayn Rand sheds more light on how Alan Greenspan became a true believer in the unregulated free-market economy that has brought America to its knees. More here.