Economic policy

I don't remember who wrote this or where I got it but, amid the current discussions of our baleful economy, I thought it needed to be put out there again.

Some grown ups respond

One of the "haves" responds to Ben Stein's whining.



h/t to Nicole Belle at Crooks and Liars

Garrett Gruener, a venture capitalist, chimes in with an op-ed at the LA Times:

Instead, Congress should let the Bush tax cuts expire for the wealthiest Americans and use the additional tax revenues that are generated to invest in infrastructure and research. "Invest" is the right word. Putting money into infrastructure — such as roads, bridges, broadband, the smart grid and public transit — as well as carefully chosen research initiatives provides a foundation for future growth. As important, it puts funds in the hands of those who will spend them, generating demand that will pull us out of our economic crisis and toward a new cycle of growth.

No one particularly enjoys paying taxes, but one lesson we should have learned by now is that for the good of the country, we need to tax people like me more. At a minimum, we need to return to the tax rates of the Clinton era, when the economy performed far better. Simply taxing the wealthiest 2% of Americans at the same rates they were taxed before the Bush tax cuts could reduce the national deficit by $700 billion over the next 10 years. Remember, paying slightly more in personal income taxes won't change my investment choices at all, and I don't think a higher tax rate will change the investment decisions of most other high earners.

What will change my investment decisions is if I see an economy doing better, one in which there is demand for the goods and services my investments produce. I am far more likely to invest if I see a country laying the foundation for future growth. In order to get there, we first need to let the Bush-era tax cuts for the upper 2% lapse. It is time to tax me more.

Nice to see folks step up to the plate.

--the BB

Two tax plans

Chart from Ezra Klein at the Washington Post.

There is much more analysis that should be done and is done. But while it makes almost no difference to me at my bracket whether the Bush tax cuts are extended, it makes a great deal to our economy.


Benefiting the wealthy at the expense of the overall economic well-being.... How might we describe that? Oh yes, class warfare, a war that has been steadily waged against the middle class by the wealthy for as long human history has records.

What a lovely swath of deficit vanishes if the Bush tax cuts lapse. So if you are going to posture about the deficit (I am looking at you congressional Republicans), you will undoubtedly let them lapse without a squawk. But if your real interest is the happiness of your wealthy overlords and not the health of the American economy, you will try to preserve them.

Oh. I guess we already know the answer, don't we?

--the BB

The growth of unemployment

Not for the faint of heart.



--the BB

Too big to hide anymore

The three of us, as experienced investigators and prosecutors of financial fraud, cannot answer these questions now. But we know where the answers are. They are in the trove of e-mail messages still backed up on A.I.G. servers, as well as in the key internal accounting documents and financial models generated by A.I.G. during the past decade. Before releasing its regulatory clutches, the government should insist that the company immediately make these materials public. By putting the evidence online, the government could establish a new form of “open source” investigation.

...

So far, prosecutors and regulators have been unable to build such evidence into anything resembling a persuasive case against any financial institution. Most recently, a jury acquitted Bear Stearns employees of fraud related to the collapse of the subprime mortgage market, in part because available e-mail messages suggested the employees had done nothing wrong.

Perhaps A.I.G.’s employees would also be judged not guilty. But we would like to see the record to find out. As fraud investigators, we would like to examine the trading patterns of A.I.G.’s financial products division, and its communications with Goldman Sachs and other bank counterparties who benefited from the bailout. We would like to understand whether the leaders of A.I.G. understood that they were approaching a financial Armageddon, and whether they alerted their counterparties, regulators and shareholders to the impending calamity.
--ELIOT SPITZER, FRANK PARTNOY and WILLIAM BLACK (NYT)

Fair enough. We, the taxpayers, bailed their sorry asses out.

--the BB

It's not about the money

Paul Krugman:

Yes, we can
Get more or less universal coverage, that is. The CBO scoring on an incomplete bill sent everyone into a tizzy — and also led to an avalanche of bad reporting, with claims that it said terrible things about the public option. (There was no public option in the bill.)

Now the real thing has been scored — and it’s OK. Something like 97 percent coverage for people already here, at a total cost somewhere in the $1 trillion range. Bear in mind that the Bush tax cuts cost around $1.8 trillion over a decade. We can do this — and have no excuse for not doing it.

There is a lot of fearmongering around the cost of healthcare reform. If any of those screaming about cost just happen to have voted for or otherwise supported W's tax cuts, then they have zero credibility and may be dismissed out of hand. I wish the tradmed would point this out and just laugh at them. They have no claim on public air waves.

Arm yourselves with facts, people, so you can counteract codswallop.

h/t to John Aravosis at Americablog

--the BB

Have you been enjoying The Daily Show - CNBC feud?

I know I have. Just a few more minutes before I watch tonight's show with Tim Cramer facing Jon Stewart. Teehee.

I love YouTube:


Such a principled man.

h/t to mtosner at Daily Kos
--the BB

Wow.

On September 13, 2001, still in shock from the terrorist attacks, I left Grand Central and walked west on 42nd Street to Times Square. It was bustling. There was considerable construction going on, and the construction workers had hung American flags on the scaffolding. Some of them had flags attached to their hard hats. There were many expressions of defiance against the terrorists, spraypainted on signs and sheets and flapping in the wind high above the streets.

Most of all, Times Square was busy. New York City was bursting with prosperity in those days. As terrible as the week was, as grief-stricken and as angry as people were, outside the financial district the city was beautiful. The cafes were overflowing with diners, and shoppers were everywhere.

Did Republican economics finish the job the 9/11 terrorists started?
--Maha

I suppose I should comment, analyze, add value, or something but I just wanted to share the thought.

--the BB

What BarbinMD said

So, requirements to track how the money is being spent, capping the salary of incompetent executives to a half a million dollars, and not being able to replace high-tech American workers with cheap, high-tech foreign workers is unfair? Seriously? Then give the damn money back. We could use it in the real world.

--Barbara Morrill at Daily Kos, on Wall Street banks

Ladies and Gentlemen, the President of the United States

h/t to Joe Sudbay at Americablog
--the BB

MIsguided criticisms

President Obama speaks out at the Washington Post today on "The Actions Americans Need." Read it all here.

Sample:

In recent days, there have been misguided criticisms of this plan that echo the failed theories that helped lead us into this crisis -- the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures; that we can ignore fundamental challenges such as energy independence and the high cost of health care and still expect our economy and our country to thrive.

I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change. They know that we have tried it those ways for too long. And because we have, our health-care costs still rise faster than inflation. Our dependence on foreign oil still threatens our economy and our security. Our children still study in schools that put them at a disadvantage. We've seen the tragic consequences when our bridges crumble and our levees fail.

As I asked last night, why does he seem to be the only Democrat doing the lifting?

h/t to Joe Sudbay at Americablog
--the BB

The Republicans in Congress don't give a shit if this nation is destroyed from within so long as they can circle the wagons around the plutocracy

Paul Krugman on Brainless Broder's bipartisanship:

You see, this isn’t a brainstorming session — it’s a collision of fundamentally incompatible world views. If one thing is clear from the stimulus debate, it’s that the two parties have utterly different economic doctrines. Democrats believe in something more or less like standard textbook macroeconomics; Republicans believe in a doctrine under which tax cuts are the universal elixir, and government spending is almost always bad.

Obama may be able to get a few Republican Senators to go along with his plan; or he can get a lot of Republican votes by, in effect, becoming a Republican. There is no middle ground.

If there were ideas to be contributed - ideas with some kind of proven value, not tax cuts, which we know don't stimulate growth, and trimming inconsequential spending - that would be one thing. But more of the same bad thinking and faulty fantasy economics that put us in this mess just do not constitute a valid contribution. There is no value added.

Dicking around with the whole thing for the sake of posturing and trying to safeguard those tax cuts for the wealthy (as in trying to make them permanent) is not sound economics, not clear thinking, and not patriotic action in a time of crisis.

So, as the poster says, How about a nice cup of shut the fuck up?



Where's my chainsaw?

And why are we doing such a lame-ass job of getting actual facts out to the American People? Why are Republicans and Villagers on the airwaves with hardly anyone else out there framing the debate? Why isn't as technically sophisticated a team as the Obama crew not blanketing the public with a clear presentation of what we stand to gain or lose? And why, oh, why is anyone listening to such economic dim bulbs as McCain, Limpbone, and Broder? The treatment in the media of our global economic crisis and attempts to address it constitutes another layer of disaster.

[Yes, I know one reason we have this problem is that virtually unregulated, overly consolidated media tend to suppress anything that would upset the applecart of the corporatist plutocracy that controls access. And in a situation like that you don't really have a free press, do you? Into that vacuum step things like blogs and because of that vacuum we tend to get shrill.]

As BarbinMD writes: "It's pretty sad that President Obama seems to be the only Democrat making the case for the economic stimulus and pushing back against the GOP attacks against it."

Bipartisanship only works when both sides play the same game. That has not happened in so long that it is really delusory (= stupid) to think it will work in today's climate. It is itself a wedge issue designed to defeat any attempt to serve the common people, to maintain the pretense of a conservative social agenda, to crush unions, and to keep the powerful in power and the rich unhampered in maintaining and increasing their wealth, the rest of us be damned.

It is appropriate for the President to attempt to work with the opposition. It is also clear that they are not going to return the favor. It is not the President who is not collaborating; it is the obstructionists. Their ability to project is stunning - and sickening. The louder they shout that Democrats are not being bipartisan the more you know it is they who are guilty. The louder they shout about ethics, morals, corruption, fiscal responsibility, or any other topic, the more certain you can be that they have serious problems in these areas. The track record is clear and the hypocrisy is patent.

This is class warfare and it has been going on forever. Folks, rise up! Fight back! Do not let them screw us over!

h/t to Joe Sudbay at Americablog
--the BB (who was raised in a Republican anti-union household)

Doing the math

SusanG at Daily Kos picks up on Josh Marshall's radical act: doing the math. As in looking at the items Republicans in Congress have been quibbling and caviling over.

Josh "grabbed a representative list of bogeyman programs cited by Rep. LoBiondo (R-NJ) and did the math."

Set aside whether you think these line items are worthwhile. (And it seems obvious to me that it's good for the economy to buy more vehicles for the government fleet, when our auto industry is cratering and demand for cars is flatlining.) But just add those up and you get a total -- $3.51 Billion -- out of $819 Billion.

Well, all right then. I have spent not quite half of my life working in accounting. I know how to let a spreadsheet do the calculating for me. So, with the help of Excel, I offer you this:

3.51 divided by 819 gives us 0.4286%. LESS THAN HALF OF ONE PERCENT OF THE TOTAL.


I have included a pie chart for the graphically inclined. The blue sliver represents that half a percent.

If that's all they have to gripe about then it's time for them to STFU. In accounting, amounts like this are commonly referred to as "ant turds" or "mouse nuts" (you have to love technical terms) or, in more formal parlance, as immaterial. You really don't need to worry about them. They are the equivalent of a SMALL rounding error.

I know that a billion dollars is A LOT of money, but you have to consider scale and proportionality. You don't screw over the American economy over a very small part of the total picture.

So pass the damn bill and get on with it already.

Did I mention that David Broder is an idiot and the Goopers have absolutely no ideas left to contribute other than the crap that's gotten us into this mess in the first place? I have? Good. And why the hell does anyone listen to - or provide a forum for - Grover Norquist who hates government and the People it represents?

SusanG concludes:

And this is exactly the kind of information that needs to be out there as the president tries to explain his program to the American people: All those "high-principled" no votes cast last week were about 1%-2% of the recovery plan.

Spread the word. Because it's looking more and more like the traditional media won't.

Now you know.

"Tag, you're it," as Thom Hartmann likes to say. " Democracy begins with you."

You are now responsible to spread the truth.

--the BB

What Maha said - updated with Kagro X

This is a follow-up to my earlier post - and Senator McCaskill's remarks, and President Obama's.

Barbara O'Brien, one of my favorite political commentators who writes at Mahablog, discusses the economy and some of the whining coming from Wall Street types these days, as they attempt to justify outrageous bonuses.

One choice paragraph:

The idea seems to be that because they work very, very hard, they deserve enormous amounts of money. The thing is, normally the economy doesn’t reward a person based on how hard he works. It rewards people for producing something that has value to other people. The fact is that America is full of people who work very, very hard and who are not paid well at all for it.

She really nails it here. A lot of hard work is done in this nation without huge financial rewards.

To this I might add: So get over yourself. People struggling at minimum wage are not likely to feel sympathy for your plight. Nor can I think of any reason why they should.

Anyway, I commend her entire article (and her blog) to you all. She also writes on Buddhism.

UPDATE:
Kagro X had a great comment at Daily Kos today:

"On Main Street, ‘bonus’ sounds like a gift," he said. "But it’s part of the compensation structure of Wall Street. Say I’m a banker and I created $30 million. I should get a part of that."

So, say you're a banker and you flushed $30 million down the toilet, which is the actual scenario we're looking at. When can we expect you to pay a part of that back?

Well, yes. Exactly.

--the BB

"These People Are Idiots" Executive Compensation Bill Discussions - Sen Claire McCaskill

It is an amazing thing to hear someone speaking common sense, plainly and firmly.

Thank you Senator McCaskill.

I hope this passes.
--the BB

Why common folk think ill of Wall Steet

We are emerging from eight years with a president who was born on third base and thought he'd hit a triple. There is something ordinary folk resent about other folk who carry with them a sense of entitlement. Of course the world owes them deference, they seem to assert without a second thought. It's that sense of being owed something, most especially something the rest of the world does not perceive as having been earned.

Now, I have to acknowledge having received bonuses during my business career. I was in middle management and the bonuses were not immense. They were deemed a reward for my contributions and I, at least, am convinced I earned them. The largest came when I was involved in the formation of an R&D partnership and I worked incredible overtime hours and sacrificed my health in the process. I am quite certain that I earned every penny (and more).

I am thus not averse to the notion of bonuses as forms of incentive and reward.

However....

I do not believe they should take the form of incommensurate extravagance that goes along with executive salaries that do not truly reflect effort and performance. Businesses are built on the labor of workers and no amount of putative executive vision and leadership can justify making hundreds of times more than folks working on the line. That it should even be considered reflects the most outrageous values and clearly implies dehumanizing all others who make a company succeed. And if a company is not succeeding, exorbitant rewards at the top not only make no sense, they are a scandal and an affront.

So massive layoffs of workers combined with massive rewards to executives offend most people. And they should.

You may read Ben White's article at the New York Times today titled "What Red Ink? Wall Street Paid Hefty Bonuses." David@Montreal sent it to me this morning. The dear man may have thought I needed something other than caffeine to kick-start me today.

Here is a stage-setting excerpt:

Despite crippling losses, multibillion-dollar bailouts and the passing of some of the most prominent names in the business, employees at financial companies in New York, the now-diminished world capital of capital, collected an estimated $18.4 billion in bonuses for the year.

That was the sixth-largest haul on record, according to a report released Wednesday by the New York State comptroller.

While the payouts paled next to the riches of recent years, Wall Street workers still took home about as much as they did in 2004, when the Dow Jones industrial average was flying above 10,000, on its way to a record high.

Here's the kicker:

On Wall Street, where money is the ultimate measure, some employees apparently feel slighted by their diminished bonuses. A poll of 900 financial industry employees released on Wednesday by eFinancialCareers.com, a job search Web site, found that while nearly eight out of 10 got bonuses, 46 percent thought they deserved more.

What can one say?

In the current economy I am grateful to be employed.
--the BB

Having had my rant

... below, this is far more serious in the short run. May Godde have mercy on those who suffer for the cupidity and stupidity of others.

Chrysler shuts down all production
CNNMoney.com - 2 hours ago
Close of business Friday will be the start of a month-long closure of 30 US plants. Company cites 'continued lack of consumer credit.
Chrysler Idles Plants for a Month; GM Halts Volt Engine Factory Bloomberg
Chrysler to idle Fenton North plant Friday Bizjournals.com

--the BB

Time for the gummint to kick some ass

This is appalling.

The Treasury plans to invest up to $250 billion in a wide swath of U.S. banks in return for ownership stakes, which the government will relinquish when it is repaid.

Among other restrictions, participating institutions cannot increase dividend payments without government permission. They also are barred from repurchasing stock, which increases the value of outstanding shares.

The 33 banks signed up so far plan to pay shareholders about $7 billion this quarter. Companies generally try to pay consistent dividends and, at the present pace, those dividends will consume 52 percent of the Treasury's investment over the initial three-year term.

You mean that instead of using the money to increase lending and inject capital - the ostensible purpose of the bailout - they are planning on using 52% of that money to pay dividends? In which case they don't really need the fucking money from the Treasury, do they?

Banks have been making money hand over fist in recent years; look at the outrageous fees they charge and the low interest they pay the customers. I am of the opinion that their investors, having had such a cushy ride for a while at customer expense can bloody well feel some of the pain now.

Put another way, why do GOP politicians and servile pundits raise a hue and cry about redistribution of wealth only when it is distributed downward and not upward, as it has been quite rapaciously since reaganomics took over? Gross hypocrisy of the first order.

I wish Waxman and Cuomo every success:

New York Attorney General Andrew Cuomo is demanding information about executive compensation and bonuses at nine banks that have received federal funds under TARP, the U.S. Treasury's Troubled Asset Relief Program.

In a letter to each institution's Board of Directors, Cuomo warns the bonuses could violate New York's state fraudulent conveyance law.

"Obviously," he writes, "we will have grave concerns if your expected bonus pool has increased in any way as a result of your receipt or expected receipt of taxpayer funds from TARP."

Indeed.

h/t to Chris in Paris at Americablog for pointing all this out (here and here)
--the BB

Some folks worked hard to make this mess

Froma Harrop:

McCain's former economic adviser is ex-Texas Sen. Phil Gramm. On Dec. 15, 2000, hours before Congress was to leave for Christmas recess, Gramm had a 262-page amendment slipped into the appropriations bill. It forbade federal agencies to regulate the financial derivatives that greased the skids for passing along risky mortgage-backed securities to investors.

And that, my friends, is why everything's falling apart. That is why the taxpayers are now on the hook for the follies of Fannie Mae, Freddie Mac, Bear Stearns and now the insurance giant AIG to the tune of $85 billion.

--lifted from the abbreviated pundit round-up at Daily Kos

--the BB