After Insisting Debt Was "Issue Number One," Fox Slams Obama For "Pivoting" To Jobs

Published: Tuesday 8 January 2013

How Bad is Our Debt Problem, Anyway? And Will a Deal Fix it?

DISCUSS

Published: Sunday 30 December 2012

As Washington tries to hash out a deal, we've taken a step back to break down the numbers behind our deficit.

President Obama will meet with congressional leaders today in another attempt to avert the fiscal cliff — the automatic tax increases and spending cuts set to take effect Jan. 1 unless Congress can strike a deal. The cuts and tax hikes, which total more than $500 billion, are so large and so sudden that many economists fear they would plunge the country back into recession.

As Washington tries to hash out a deal, we've taken a step back to break down the numbers behind our deficit — how it grew so big, why it is actually shrinking and whether a deal can bring it under control.

GOP Gov’s Group Raises $100 Million in Mostly Losing Effort

Published: Sunday 16 December 2012

“The DGA and RGA have devised national strategies for collecting unlimited funds from unions, corporations, and wealthy individuals, and funneling the money into state races.”

Despite outraising its Democratic counterpart by a 2-to-1 margin, the Republican Governors Association won only four of 11 races in the 2012 election, a far cry from the success it enjoyed two years ago.

The Washington D.C.-based political organization raised almost $100 million, according to recently released Internal Revenue Service data. The group targeted six states it considered winnable, losing five of them. Overall, Democrats won seven of this year's 11 contests, but the GOP still managed to pick up one seat in North Carolina, long held by Democrats.

The top donors to the so-called “527” organization, which can accept unlimited contributions from billionaires, corporations and unions, are familiar Republican Party patrons — No. 1 is Bob Perry, a Texas homebuilder and perennial RGA supporter, who gave $3.25 million. That’s a little more than half of what he gave in 2010.

Billionaire casino magnate Sheldon Adelson is No. 2, with $3 million in donations between him and his wife. According to the ...

Why the Fed’s Jobs Program Will Fail

Published: Sunday 16 December 2012

So two cheers for Ben Bernanke and the Fed. They’re doing what they can.

For the first time, the Federal Reserve has explicitly linked interest rates to unemployment.

Rates will remain near zero “at least as long” as unemployment remains above 6.5 percent and if inflation is projected to be no more than 2.5 percent, said the Federal Open Market Committee in a statement Wednesday.

Put to one side the question now obsessing stock and bond traders — whether the new standard means higher interest rates will kick in sooner than the middle of 2015, which had been the Fed’s previous position.

By linking interest rates directly to the rate of unemployment, Bernanke is explicitly acknowledging that the Federal Reserve Board has two mandates — not just price but also employment. “The conditions now prevailing in the job market represent an enormous waste of human and economic potential,” said Fed Chairman Ben S. Bernanke.

These are refreshing words at a time ...

Avoiding a New American Recession

Published: Saturday 1 December 2012

“America’s national debt has more than doubled in the past five years, and is set to rise to more than 100% of GDP over the next decade unless changes in spending and taxes are implemented.”

The United States may be headed for a recession in 2013. Even if the country avoids going over the “fiscal cliff,” a poorly designed political compromise that cuts the deficit too quickly could push an already weak economy into recession. But a gradual phase-in of an overall cap on tax deductions and exclusions (so-called tax expenditures), combined with reform of entitlement spending, could achieve the long-run fiscal consolidation that America needs without risking a new recession.

The US economy has been limping along with a growth rate of less than 2% during the past year, with similarly dim prospects in 2013, even without the shock of the fiscal cliff. That is much too weak a pace of expansion to tolerate the fiscal cliff’s increase in tax rates and spending cuts, which would reduce demand by a total of $600 billion – about 4% of GDP – next year, and by larger sums in subsequent years.

President Barack Obama’s proposed alternative to the fiscal cliff would substantially increase tax rates and limit tax deductions for the top 2% of ...

How to Build a Grassroots Power Base

22 COMMENTS

Published: Sunday 11 November 2012

A month before the 2010 election, Obama strategist David Axelrod noted that “almost the entire Republican margin is based on the enthusiasm gap.”

This article originally appeared in the November 26, 2012 edition of The Nation magazine.

Millions of Americans are eager, even desperate, for a political movement that truly challenges the power of Wall Street and the Pentagon. But accommodation has been habit-forming for many left-leaning organizations, which are increasingly taking their cues from the party establishment: deferring to top Democrats in Washington, staying away from robust progressive populism, and making excuses for the Democratic embrace of corporate power and perpetual war.

It’s true that many left-of-center groups are becoming more sophisticated in their use of digital platforms for messaging, fundraising and other work. But it’s also true that President Obama’s transactional approach has had demoralizing effects on his base. Even the best resources—mobilized by unions, environmental groups, feminist organizations and the like—can do only so much when many voters and former volunteers are inclined to stay home. A month before the 2010 election, Obama strategist David Axelrod noted that “almost the entire Republican margin is based on the enthusiasm gap.” A similar gap made retaking the House a long shot this year.

For people fed up with bait-and-switch pitches from Democrats who talk progressive to get elected but then govern otherwise, the Occupy movement has been a compelling and energizing counterforce. Its often-implicit message: protesting is hip and astute, while electioneering is uncool and clueless. Yet protesters’ demands, routinely focused on government action and inaction, underscore how much state power really matters.

To escape this self-defeating trap, progressives must build a grassroots power base that can do more than illuminate the nonstop horror shows of the status quo. To posit a choice between developing strong social movements and ...

It’s the Interest, Stupid! Why Bankers Rule the World

6 COMMENTS

Published: Friday 9 November 2012

“They must pay for labor and materials before they have a product to sell and before the end buyer pays for the product 90 days later.”

In the 2012 edition of Occupy Money released last week, Professor Margrit Kennedy writes that a stunning 35% to 40% of everything we buy goes to interest. This interest goes to bankers, financiers, and bondholders, who take a 35% to 40% cut of our GDP. That helps explain how wealth is systematically transferred from Main Street to Wall Street. The rich get progressively richer at the expense of the poor, not just because of “Wall Street greed” but because of the inexorable mathematics of our private banking system.

This hidden tribute to the banks will come as a surprise to most people, who think that if they pay their credit card bills on time and don’t take out loans, they aren’t paying interest. This, says Dr. Kennedy, is not true. Tradesmen, suppliers, wholesalers and retailers all along the chain of production rely on credit to pay their bills. They must pay for labor and materials before they have a product to sell and before the end buyer pays for the product 90 days later. Each supplier in the chain adds interest to its production costs, which are passed on to the ultimate consumer. Dr. Kennedy cites interest charges ranging from 12% for garbage collection, to 38% for drinking water to, 77% for rent in public housing in her native Germany.

Her figures are drawn from the research of economist Helmut Creutz, writing in German and interpreting Bundesbank publications. They apply to the expenditures of German households for everyday goods and services in 2006; but similar figures are seen in financial sector profits in the United States, where they composed a whopping 40% of U.S. business profits in 2006. That was five times the 7% made by the banking sector in 1980. Bank assets, financial profits, interest, and debt have all been growing exponentially.

From Chaos to a New World Order

6 COMMENTS

Published: Monday 5 November 2012

“Existing political/economic structures that serve not the people are in decay, a new world order based on universal principles of goodness: justice, equality, unity and freedom Is the call of many around the world.”

Living at this time is to bear witness to a world in acute turmoil Noam Chomsky describes the current climate, saying, “we are living in an era of irrationality, deception, confusion, anger, and unfocused fear an ominous combination, with few precedents.” Existing political/economic structures that serve not the people are in decay, a new world order based on universal principles of goodness: justice, equality, unity and freedom Is the call of many around the world.

“Human beings are members of a whole, in creation of one essence and soul. If one member is afflicted with pain, other members uneasy will remain.” These startling words spoken not by a Greek philosopher or renowned Indian spiritual Master were uttered by President Mahmoud Ahmadinejad of Iran during his final address to the General Assembly of the United Nations (UN) on 26^th September.

Free from the usual confrontational rhetoric and overflowing with uncharacteristic inspiring language the message, whilst open to criticism and shouts of hypocrisy is beyond political clichés and, consonant with an army of reasonable voices calling for change throughout the world. The content is remarkable, indeed one wonders from whence such a stream of righteousness arose – out of the blue it seems. Love was repeatedly spoken of, the ‘L’ word being mentioned no less than 13 times, justice was repeated 15 times and peace 12 in his half hour an hour at the podium.

A poetical rant from an unpredictable, and among many at home and abroad unpopular politician approaching the home straight to be dismissed, or something more significant and in tune with the times. The speaker as stunned as the listener, giving voice to a unifying vision of change that on many counts has the ring of truth about it would ...

GMOs at the Polls: 7 Things to Tell Your Friends Before Election Day

Published: Sunday 4 November 2012

“Sixty-one countries already require such labeling. But here in the U.S., GMOs took off in the 1990s with no public debate, and today they’re in most processed foods, making Americans the world’s GMO guinea pigs.”

Farmers and eaters around the country and the world are watching the November 6 election with a very important question at the forefront of their minds: Will California’s Proposition 37—requiring labeling of GMOs—pass?

Sixty-one countries already require such labeling. But here in the U.S., GMOs took off in the 1990s with no public debate, and today they're in most processed foods, making Americans the world’s GMO guinea pigs.

We know it’s easy to get sunk by "information overload" and agribusiness advertising. So far the largest GMO maker, Monsanto, and other industry giants have plowed at least $35 million into killing Prop 37.

To help us think straight, we’ve prepared seven points—backed by peer-reviewed studies, a physicians’ 10-year investigation, and UN data—to consider and share with your friends. Here’s what they reveal:

1. GMOs have never undergone standard testing or regulation for human safety.

And now that they’re in 70 percent of processed foods, it’s extremely difficult for scientists to isolate their health risks.[i]

2. But we know that GMOs have proven harmful in animal studies.

A 2009 review of 19 studies found mammals fed GM corn or soy developed “liver and kidney problems” that could mark the “onset of chronic ...

DId JPMorgan Chase Really Take a “Ten Billion Dollar Hit” for Uncle Sam?

Published: Wednesday 31 October 2012

“Recently a lawsuit was filed against JPMorgan Chase which details massive investor fraud at Bear Stearns, the firm it acquired at the government’s request - and at considerable public expense - during the 2008 crisis.”

Even in these tempestuous times, some things are still predictable. Bank CEOs still plead poverty after receiving billion-dollar favors from the government. And there are apparently still reporters who take their word for it.

Recently a lawsuit was filed against JPMorgan Chase which details massive investor fraud at Bear Stearns, the firm it acquired at the government’s request - and at considerable public expense - during the 2008 crisis. And right on time, JPM CEO Jamie Dimon ran to reporters to claim that his bank really lost money on that extraordinarily cushy deal.

Such is the credulousness of our journalistic class that this well-timed disclaimer didn't raise any red flags at the Washington Post. And when the bank claimed that it lost $10 billion in the Bear Stearns acquisition. This extraordinary assertion is simply repeated, without challenge or investigation.

The figure wasn’t even put in quotes.

The paper's editors punched up the bank-friendly spin by headlining the piece, "JPMorgan remorse on Bear Stearns prompts question: Were crisis mergers worth it?" Let's help readers out with that question.

Yes.

The Ten Billion Dollar Hit

In fact, as we noted yesterday, this was one hell of a deal for JPMorgan Chase. And nevertheless the Post unquestioningly asserts today that "JPMorgan took a $10 billion hit on the Bear Stearns portfolio."

Readers are entitled to an explanation for a statement that bold, but none is forthcoming. Instead, the Post wants us ...

Before the Election was Over, Wall Street Won

Published: Tuesday 23 October 2012

Banks trump citizens, and absent severe reconstruction of the banking system, the cycle will absolutely, unequivocally continue.

Before the campaign contributors lavished billions of dollars on their favorite candidate; and long after they toast their winner or drink to forget their loser, Wall Street was already primed to continue its reign over the economy.

For, after three debates (well, four), when it comes to banking, finance, and the ongoing subsidization of Wall Street, both presidential candidates and their parties’ attitudes toward the banking sector is similar – i.e. it must be preserved – as is – at all costs, rhetoric to the contrary, aside.

Obama hasn’t brought ‘sweeping reform’ upon the Establishment Banks, nor does Romney need to exude deregulatory babble, because nothing structurally substantive has been done to harness the biggest banks of the financial sector, enabled, as they are, by entities from the SEC to the Fed to the Treasury Department to the White House.

In addition, though much is made of each candidates' tax plans, and the related math that doesn’t add up (for both presidential candidates), the bottom line is, Obama hasn’t explained exactly WHY there’s $5 trillion more in debt during his presidency, nor has Romney explained HOW to get a ...

How Obama Can Smoke Out Mitt: Call for Breaking Up the Biggest Banks, and Resurrecting Glass-Steagall

Published: Friday 19 October 2012

“Mitt Romney, private equity manager and financier — well within the top one-tenth of 1 percent, collecting more than $20 million a year yet paying 14 percent in taxes because of tax preferences for capital gains and for private-equity — is the avatar for all that’s happened.”

President Obama should propose that the nation’s biggest banks be broken up and their size capped, and that the Glass-Steagall Act be resurrected.

It’s good policy, and it would smoke out Mitt Romney as being of, by, and for Wall Street — and not on the side of average Americans.

It would also remind America that five years ago Wall Street’s excesses almost ruined the economy. Bankers, hedge-fund managers, and private-equity traders speculated on the upside, then shorted on the downside — in a vast zero-sum game that resulted in the largest transfer of wealth from average Americans to financial elites ever witnessed in this nation’s history.

Most of us lost big — including over $7 trillion of home values, a $700-billion-dollar bailout of Wall Street, and continuing high unemployment.

But the top 1 percent have done just fine. In the first year of the recovery they reaped 93 percent of the gains. The latest data show them back with 20 to 25 percent of the nation’s total income — just where they were in 2007.

The stock market has about caught up to where it was before the crash. The pay and bonuses on the Street are once again sky-high. So are the pay and perks of top corporate executives. The Forbes list of richest Americans contains more billionaires than ever.

And the tax rates of the top 1 percent are lower than ever — courtesy of their armies of lobbyists.

Mitt Romney, private equity manager and financier — well within the top one-tenth of 1 percent, collecting more than $20 million a year yet paying 14 percent in taxes because of tax preferences for capital gains and for private-equity — is the avatar for all that’s happened.

Just like the rest of the Street, Romney used other peoples’ ...

Moral Leadership: What Obama Has to Show Today In the Debate Performance, and for Real

9 COMMENTS

READ FULL POST 11 COMMENTS

Published: Tuesday 16 October 2012

You, the citizens, use our common government to make this country what it is.

As Nate Silver, NY Times polling expert put it, “Instant polls conducted after the debate are suggestive of something between a tie and a modest win for Vice President Joseph R. Biden Jr.”

Biden held his own and maybe a bit more. That was important. But President Obama has to do a lot better than that. He has to go beyond the policy wonk to be a moral leader once more. Here’s how Jennifer Granholm put it on her Current TV show video.

On the whole, the public and especially the undecided voters don’t keep track of policy details and which numbers are right. The worst thing the president can do is to just compare details of policy. That just elevates Romney to the status of an equal, who can come back with lies that will sound just as good if not better to most of the undecided.

The TV debates are not primarily about policy details and the numbers in themselves. As Ronald Reagan showed, the debates are about choosing a moral leader. And we do this through a performance.

QE Infinity: What is it Really About?

Published: Sunday 7 October 2012

“As suggested in an earlier article here, QE3 is not likely to reduce unemployment, put money in the pockets of consumers, reflate the money supply, or significantly lower interest rates for homeowners, as alleged.”

QE3, the Federal Reserve’s third round of quantitative easing, is so open-ended that it is being called QE Infinity. Doubts about its effectiveness are surfacing even on Wall Street. The Financial Times reports:

Among the trading rooms and floors of Connecticut and Mayfair [in London], supposedly sophisticated money managers are raising big questions about QE3 — and whether, this time around, the Fed is not risking more than it can deliver.

Which raises the question, what is it intended to deliver? As suggested in an earlier article here, QE3 is not likely to reduce unemployment, put money in the pockets of consumers, reflate the money supply, or significantly lower interest rates for homeowners, as alleged. It will not achieve those things because it consists of no more than an asset swap on bank balance sheets. It will not get dollars to businesses or consumers on Main Street.

So what is the real purpose of this exercise? Catherine Austin Fitts recently posted a revealing article on that enigma. She says the true goal of QE Infinity is to unwind the toxic mortgage debacle, in a way that won’t bankrupt pensioners or start another war:

The challenge for Ben Bernanke and the Fed governors since the 2008 bailouts has been how to deal with the backlog of fraud – not just fraudulent mortgages and fraudulent mortgage securities but the derivatives piled on top and the politics of who owns them, such as sovereign nations with nuclear arsenals, and how they feel about taking massive losses on AAA paper purchased in good faith.

On one hand, you could let them all default. The problem is the criminal liabilities would drive the ...

GMO Study Broadcast: Russian GMO Rat Experiment to be Broadcast 24/7

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Published: Thursday 4 October 2012

“The National Association for Genetic Safety (NAGS) researchers in Russia have publicly condemned genetically modified organisms (GMOs) and have declared plans to conduct an experiment which members of the public can see, allowing the latter to formulate well-informed opinions about GMOs themselves.”

Russian researchers will stream a live experiment to show the effects of GMO feed on rats. This comes after a French study found GMOs to have negative effects on rats, which lead to a provisional Russian suspension on imported Monsanto genetically modified corn.

Russian Scientists Condemn GMOs, Plan a Unique Experiment

French scientists at the University of Caen sounded the alarm on September 19 after publishing images from their study of tumors on rats fed American GM maize. The National Association for Genetic Safety (NAGS) researchers in Russia have publicly condemned genetically modified organisms (GMOs) and have declared plans to conduct an experiment which members of the public can see, allowing the latter to formulate well-informed opinions about GMOs themselves.

These researchers will install web cameras in the cages of four groups of rats.

Group 1 will be fed a diet high in GM soybeans and corn.
Group 2 will be fed a diet low in GM soybeans and corn.
Group 3 will be fed a diet with no GMOs.
Group 4 will be fed a diet with standard rat feed.

How Class Tunnel Vision Hurts Social Movements

Published: Thursday 4 October 2012

If owning-class volunteers aren’t stepping forward in our movements, then movements need to learn how to support the visionaries wherever we find them.

One of the saddest things to watch is dedicated people in education and human services burn themselves out for lack of a winning strategy.

In the U.S. “playing defense” has dominated liberals and centrists since Ronald Reagan became President. Canadians started that disastrous policy more recently. This summer, I learned that in the United Kingdom the British have joined the defensive trend, along with too many places on the continent.

On its face, anyone who’s ever played checkers can see what’s gone wrong for advocates of public education, health care and other services. Gandhi said it long ago: you can’t win until you go on the offensive.

The strategy of the right wing is to put the left on the defensive by using every opportunity to cut the budget. In Reagan’s day it was the so-called necessity of buying missiles to prevent the Soviets from invading. Under George W. Bush we heard the arbitrary claim that Amtrak should pay its way, while in Canada at the same time there was a similar claim for the postal service. A long time ago the strategy of the U.S. auto industry was to buy public transit companies, cut the service and therefore force frustrated riders to buy a car.

Now we are told (in Canada, the U.K. and the U.S.) that the 2007-08 economic crisis has left our nations poor, although the 1 percent has never been ...

Fire Congress, Vote Out Incumbents

Published: Monday 1 October 2012

“Yet this year as in past years, unless Americans take back control of their country, voters will again reelect nearly all incumbents.”

For politicians to do what is right, first citizens must do what is right.

Of all the many, many stupid things that most Americans do, nothing is more insane than the ritual every two years of reelecting incumbent members of Congress. Countless opinion polls find that the public has incredibly low levels of positive regard for Congress. Just one in 10 Americans approves of the job Congress is doing, according to a Gallup poll released a few weeks ago, tying the branch's lowest approval rating in 38 years.

Yet this year as in past years, unless Americans take back control of their country, voters will again reelect nearly all incumbents. Often, some incumbents do not even have any significant opposition. For example, in the 2000 election cycle, out of 435 House seats, 64 members had no major-party opponent, and in 2008 every House race in Arkansas was uncontested by a major party according to the Center for Voting and Democracy. Political redesign of congressional districts, gerrymandering, is widely done to ensure reelection of incumbents or one party.

The main way that incumbents get removed from office these days is when they lose in a party primary election, or die, or get themselves into a sex or corruption scandal. Primaries often replace the incumbent with someone else from the same party who will, in time, become an incumbent. That replacement is often a more extreme partisan than the previous incumbent.

The usual rationale for this survival of incumbents given by ...

Hedge Fund Hype, Wall Street Horoscopes, and Drop-Top Jets: The Magical Minds of the “Radical Rich”

18 COMMENTS

Published: Thursday 27 September 2012

Most wealthy people aren’t part of this new, financially-propelled class of sales-driven billionaire - at least not yet.

Strange stories from the newswires: Thousands of Wall Street traders subscribe to “financial astrology” newsletters. A series of wealthy Americans erupt into rage-filled public outbursts. Mitt Romney wonders why you can't open a jet's windows in mid-flight.

This isn't an episode of the X-Files. These seemingly unrelated stories are part of a larger pattern. What appears to be a sudden epidemic of magical thinking actually reflects something else: the rise of a financial sector whose economic incentives have tilted away from core business competencies - and toward something like that looks a little more like madness.

The $-Files

Here are some more non-random facts:

The financial sector, which historically has captured roughly 20 percent of the nation's profits, has returned to its bloated pre-2008 level of forty percent or so.
Financial firms and takeover groups like Bain Capital are increasinglyrepresented among the nation's wealthiest households, including the Forbes "400 richest" list.
Ultra-high wealth individuals are capturing an ever-increasing percentage of our nation's wealth, leaving even the "merely wealthy" behind.
Nine out of ten hedge funds are performing worse than the stock market as a whole.
Stock performance for the country's too-big-to-fail banks lags behind that stock market as a whole - despite their massive bailouts snd constant infusions from the Federal Reserve,

This mosaic of data points illustrates an economy that ...

Enlightened Economics: There is an Alternative

Published: Monday 24 September 2012

“Unlike the euro, the dollar is a sovereign, fiat currency, unconstrained by exchange rates or treaties.”

Both Republicans and Democrats have been explaining that “There Is No Alternative,” we need public policies promoting austerity because government is “out of money.” The question seems to be not “do we need austerity?” but “will we be austere sooner or austere later?” Meanwhile, the bipartisan consensus is that the government is definitely out of money.

But these assertions are at odds with the common knowledge that the U.S. government literally creates its own money. Unlike the euro, the dollar is a sovereign, fiat currency, unconstrained by exchange rates or treaties. And since Nixon closed the gold window, government can issue dollars without waiting for gold or silver mines to provide any backing for them. So we can’t possibly be “out of money,” any more than the Bureau of Weights and Measures can be “out of inches.”

Nevertheless, even the private sector agrees with that “out of money” message. Billionaire Pete Peterson recently sponsored the Fiscal Wake Up Tour, essentially trying to drum up popular support to cut social safety nets, retirement programs and Medicare because we’re “out of money.”

Perhaps it’s a coincidence, but investors like Peterson profit from the “out of money” sentiment since it’s deflationary. When borrowers repay loans to creditors like Peterson with inflated money his investor class suffers investment returns that are lower than when dollars are scarce, and deflation prevails.

Even more conveniently, during deflationary times, the investor class can buy assets in the public realm at bargain-basement prices. If the public sector is “out of money,” then German bankers can demand, as they have, that the Greeks mortgage the Parthenon and their ports. The City of Sacramento can propose selling $500 ...

Why QE3 Won’t Jumpstart the Economy - And What Would

10 COMMENTS

Published: Sunday 23 September 2012

“As the psychological boost from QE3 wears off and the ‘fiscal cliff’ looms, perhaps Congress and the Fed will consider some of these more direct approaches to relieving the economy’s intractable doldrums.”

The economy could use a good dose of “aggregate demand”—new spending money in the pockets of consumers—but QE3 won’t do it. Neither will it trigger the dreaded hyperinflation. In fact, it won’t do much at all. There are better alternatives.

The Fed’s announcement on September 13, 2012, that it was embarking on a third round of quantitative easing has brought the “sound money” crew out in force, pumping out articles with frighting titles such as “QE3 Will Unleash’ Economic Horror’ On The Human Race.” The Fed calls QE an asset swap, swapping Fed-created dollars for other assets on the banks’ balance sheets. But critics call it “reckless money printing” and say it will inevitably produce hyperinflation. Too much money will be chasing too few goods, forcing prices up and the value of the dollar down.

All this hyperventilating could have been avoided by taking a closer look at how QE works. The money created by the Fed will go straight into bank reserve accounts, and banks can’t lend their reserves. The money just sits there, drawing a bit of interest. The Fed’s plan is to buy mortgage-backed securities (MBS) from the banks, but according to the Washington Post, this is not expected to be of much help to homeowners either.

Why QE3 Won’t Expand the Circulating Money Supply

In its third round of QE, the Fed says it will buy $40 billion in MBS every month for an indefinite period. To do this, it will essentially create money from nothing, paying for its purchases by crediting the reserve accounts of the ...

Democratic Senators Will Call for Stronger Rule Against Risky Bank Trades after Investigation of JP Morgan Chase

8 COMMENTS

Published: Friday 21 September 2012

“The rule is a piece of the 2010 Dodd-Frank financial reform law that bans taxpayer-backed banks from certain types of risky trades.”

The Senate panel responsible for probing the $9 billion “London Whale” trading loss that shook JP Morgan Chase earlier this year will release its findings before the end of the year and will call for a stronger Volcker Rule, sources told Bloomberg. The rule is a piece of the 2010 Dodd-Frank financial reform law that bans taxpayer-backed banks from certain types of risky trades.

Michigan Sen. Carl Levin (D), who chairs the Senate Permanent Subcommittee on Investigations, said at the time of the loss that the draft version of the Volcker Rule had a loophole so large “a Mack truck could drive right through it.” Now, according to Bloomberg, he and Sen. Jeff Merkley (D-OR) will push regulators to close loopholes in the rule and strengthen it to prevent trades like the London Whale loss, which could have caused larger market problems at smaller or more vulnerable banks.

At the same time, some Republican senators are still pushing to further weaken the rule, which was watered down so much by bank lobbyists and Republicans that its namesake, former Federal Reserve Chair Paul Volcker, said he didn’t like it.

Massachusetts Sen. Scott Brown (R) cast the deciding vote for the Dodd-Frank law, but not before he successfully weakened the Volcker Rule by inserting certain exemptions for big banks. Since then, Brown has continued to lobby regulators to take even

GMO Study: Rats Fed Lifetime of GM Develop Mass Tumors, Die Early

Published: Thursday 20 September 2012

“It is essential that not only are GMOs labeled around the world for public consumption, but ultimately banned.”

A new GMO study may very well change the way that the world looks at GMOs once and for all. Complete with shocking and very disturbing photos of rats with tumors larger than a golf ball in size, a new French GMO study has concluded that rats fed a lifelong diet consisting of Roundup-containing genetically modified corn suffered serious consequences. While the onset of tumors was the most obvious and damaging effect, the researchers reveal that the rats also received heavy amounts of damage to multiple organs.

As a result of the mass tumors, liver and kidney damage, it was concluded that around 50% of the males and 70% of the females died prematurely as a result of eating only Roundup tolerant seed or drinking water with Roundup as approved levels set by the United States government. In comparison, only 30% of males and 20% of females died prematurely while consuming traditional alternatives. The San Francisco Chronicle rightly states that the study ‘rocks the GMO debate’. NaturalNews, one of the first alternative news websites to report the study, explained just what this means for you and your family:

“This is the same corn that’s in ...

Occupy Wall Street Celebrates Its First Birthday

6 COMMENTS

Published: Tuesday 18 September 2012

The protests were all unique, in size, location, style and message; nevertheless, the anniversary illustrated occupy movement is still very alive and very relevant.

Yesterday, September 17^th, 2012, marked the first birthday of the Occupy Wall Street movement. Peaceful demonstrations were planed in 30 cities world wide, including its birthplace in New York, for the purpose of celebrating the anniversary of the original protests and to breath life into the atrophying movement before the November elections.

Over 1,000 occupy protesters and supporters armed with posters, camera-phones, as well as guitars and drums assembled in Zuccotti Park in New York’s financial district. In the spirit of the OWS, the demonstrators had no set agenda or itinerary of activities except to express their dissatisfaction with the power and influence of monied lobbyists in Washington, the ever-widening income disparities, and the sky-high unemployment rate, among many other issues. According to one report, the protesters had separated lower Manhattan into different section, each representing a different cause.

The situation became volatile when occupy protesters attempted to block the entrance to New York Stock Exchange, the symbol of political nepotism and corporate greed for the demonstrators. The protesters clashed with a large, well-organized and armored police force. The police officers bounded the streets and sidewalks leading toward the exchange with metal barricades and requested identification for anyone seeking entrance, including employees.

Despite the police presence, occupiers continued to march though the streets, waving banners, strumming guitars, and banging on drums. At several points during the morning, crowds of protesters numbering in the hundreds briefly blocked intersections before being dispersed, with arrests in some instances.

By the end of the day, over 180 protesters had been arrested in New York.

Demonstrations were more peaceful elsewhere in the US. In San Francisco, for example, a crowd of 250 protesters from the city and the greater Bay Area, including ...

What Happened to the Fed’s “Expectations Channel” Did it Work? Maybe Not.

Published: Monday 17 September 2012

Two Cheers for the Fed, but Thumbs Down for Moody’s and the Deficit Hawks

Published: Sunday 16 September 2012

“A smaller portion of American adults is now working than at any time in the last thirty years.”

With deficit hawks circling overhead, the responsibility for creating jobs has fallen by default to Ben Bernanke and the Federal Reserve. Last week the Fed said it expected to keep interest rates near zero through mid 2015 in order to stimulate employment.

Two cheers.

The problem is, low interest rates alone won’t do it. The Fed has held interest rates near zero for several years without that much to show for it. A smaller portion of American adults is now working than at any time in the last thirty years.

So far, the biggest beneficiaries of near-zero interest rates haven’t been average Americans. They’ve been too weighed down with debt to borrow more, and their wages keep dropping. And because they won’t and can’t borrow more, businesses haven’t had more customers. So there’s been no reason for businesses to borrow to expand and hire more people, even at low interest rates.

The biggest winners from the Fed’s near-zero rates have been the big banks, which are now assured of two or more years of almost free money. The big banks haven’t used the money to refinance mortgages – why should they when they can squeeze more money out of homeowners by keeping them at higher rates? Instead, they’ve used the almost free money to make big bets on derivatives. If the bets continue to go well, the bankers will continue to make a bundle. If the bets sour, well, you know what happens then. Watch your wallets.

The truth is, low interest rates won’t boost the economy without an expansive fiscal policy that makes up for the timid spending of consumers and businesses. Until more Americans have more money in their pockets, government spending has to fill the gap.

On this score, the big news isn’t the Fed’s renewed determination to keep interest rates low. The big news is global ...

The Fed Takes Action, Is it Enough?

31 COMMENTS

Published: Friday 14 September 2012

How Occupy Made Me Stronger

DISCUSS

Published: Friday 14 September 2012

“I got arrested with about 30 others as part of a foreclosure-auction blockade.”

In its first year, Occupy Wall Street was called a “movement of movements.” Some likened its broad reach to an octopus. One person described occupied Zuccotti Park to me, wistfully, as a “city on the hill.” Then again, over dinner with the organizers of the National Gathering in Philadelphia this July, I heard OWS compared to “a bad dating scene.” As Occupiers gear up for a weekend of one-year-anniversary activities, it seems like the right time to offer my reading. For me, Occupy was more like psychotherapy — a process that helped me see new things about myself and overcome some of my fears.

Last winter, at the height of my Occu-enthusiasm, I did things that, for me, took a lot of gumption. I got arrested with about 30 others as part of a foreclosure-auction blockade. Alone, I stood up and interrupted the governor of New York when he gave a speech at my campus. I spoke before large crowds through the “people’s mic,” sometimes in support of public education, sometimes against corporate personhood, and often on the theme of love.

What motivated me to do these things? I had never been an activist before OWS. I hadn’t even been to a protest. The idea of joining a rowdy, confrontational demonstration never appealed to me. Or else, I thought, I didn’t have enough time or job security to put energy into activism.

It’s true that I had just spent a couple of years studying the history of nonviolence. The abolitionists, Gandhi, Tolstoy, and the Bhagavad Gita all captivated me. And I’ve long been a student of Iyengar yoga. Along with the stretching and breathing, that meant learning about satya (truth) and ahimsa (non-harming, love). ...

Republicans Admit Federal Reserve can Help the Economy, but Prefer it Wouldn’t

Published: Thursday 13 September 2012

“For several years now, the Fed has hit its inflation target while utterly failing in its mandate to reduce unemployment, even as some members of the central bank have argued for the Fed to do more.”

The Federal Reserve Board will wrap up its latest meeting today and may announce a new round of efforts to boost sluggish job growth. Federal Reserve Chairman Ben Bernanke estimates that the first two rounds of so-called quantitative easing increased employment by about two millions jobs.

Republicans have consistently criticized the Fed’s QE programs, claiming that the central bank would spark inflation (even though inflation has been near-nonexistent). Many GOP’ers, in fact, have said that the Fed should ignore its mandate to produce full employment entirely, and only monitor inflation. According to The Hill, some Republicans believe that the Fed should do nothing more to help create jobs, even as they admit that READ FULL POST 3 COMMENTS

Farewell to Bill

Published: Tuesday 11 September 2012

In short, the Clinton-era policies sent the U.S. economy on a seriously wrong path. They created an absurd obsession with budget deficits, a pattern of bubble-driven growth, an incredibly bloated financial sector and an unsustainable trade deficit.

Bill Clinton is clearly the most talented politician of our era. It is difficult to imagine Clinton losing an election to any of the people who have run for office in the last two decades. But his skills as a politician should not prevent us from understanding the track record of his economic policies. In fact, until we get a clear understanding of these policies, it unlikely that we will be able to restore the economy to a path of sound economic growth.

The mythology of Clintonomics is that Clinton took the hard steps to bring the deficit down. He cut spending and raised taxes. This supposedly shifted the budget from large deficits to large surpluses and led to a booming economy. In the late 90s we had the lowest unemployment in three decades, and we saw real wage growth up and down the income ladder for the first time since the early 70s. There was in fact much here to celebrate.

However the reality is quite different from the mythology. The reduction in the deficit was supposed to lead to an increase in investment and a fall in the trade deficit. These are the two components of GDP that increase our wealth for the long-term, the former by increasing out productive capacity and the latter by giving us ownership of more foreign assets.

It turns out that the investment ...

Culture of Peace Should Replace Culture of Violence

13 COMMENTS

Published: Monday 10 September 2012

“The culture of violence, he believes, has to be replaced with the culture of peace – even as military conflicts and insurgencies have destroyed human lives and caused devastation in Sudan, Syria, Cote d’Ivoire, Somalia, Colombia, Mali, Libya, Afghanistan, Iraq and Palestine.”

When U.N. Secretary-General Ban Ki-moon addresses the High-Level Forum on Culture of Peace later this week, he will transmit a message that underlines his political philosophy: all disputes need to be resolved by peaceful means, not through military might.

And time and again, he has warned that the militarization by both parties of the 17-month political crisis in Syria, which has claimed over 18,000 lives, would never result in a peaceful settlement.

The culture of violence, he believes, has to be replaced with the culture of peace – even as military conflicts and insurgencies have destroyed human lives and caused devastation in Sudan, Syria, Cote d’Ivoire, Somalia, Colombia, Mali, Libya, Afghanistan, Iraq and Palestine.

In his address, Ban is expected to reiterate the urgent need to comply with the basic principles of the U.N. Declaration and Program of Action on the Culture of Peace adopted by consensus by the General Assembly back in September 1999.

“Unfortunately,” said a Third World diplomat, speaking on condition of anonymity, “violence seems to be a cultural thing worldwide, judging by the recent shootings in South Africa, the ruthless suppression of demonstrators in Bahrain and Syria and the suicide bombings in Iraq, Pakistan and Afghanistan.”

As the Declaration points out, he said, the United Nations should strengthen its ongoing efforts to promote a culture of peace and effectively implement the Program of Action (POA).

Article 1 of that Declaration calls on all U.N. member states to commit to peaceful settlement of conflicts.

And Article 3 says the fuller development of a culture of peace is integrally linked to promoting peaceful settlement of conflicts, mutual respect and understanding, and international ...

The Bailout: By the Actual Numbers

DISCUSS

Published: Thursday 6 September 2012

“The fate of the Fannie and Freddie bailouts is even harder to figure, although the Treasury recently announced that all of the companies’ profits from now on will be handed over to Uncle Sam each quarter.”

Quick, how many billions in the red are taxpayers on the bailout of GM? AIG? Fannie and Freddie? Is it true that the government has reaped a profit from bailing out the banks?

It should be easy to find answers to such questions. But while it's a snap to find rosy administration claims about the bailout, finding hard numbers is much more difficult. That's why, since the bailouts began in 2008, we've maintained a frequently updated site to provide them. Now we've retooled our database to make it even easier to find these sorts of answers.

So you can effortlessly discover that it's $27 billion for GM,

Are Republicans ‘Crazy?’ Not if You Follow the Money

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(See "An Old Industrial Era": GOP Platform Mocks Blue-Collar America, Declares It Dead.)

Published: Friday 31 August 2012

“The ugly causes it supports include bribery (through its attacks on the Foreign Corrupt Practices Act), child labor (through its promotion of Uzbek cotton sales and other goods), totalitarian Communist workforces (through its Shanghai and other chapters), and environmental destruction (through its defense against the authority of Ecuadorian courts).”

Their opponents shouldn't be too quick to call Republicans "crazy." It makes more sense to employ that time-honored investigative principle: Follow the money. Sure, they've said crazy things -- in their speeches and in their official platform. But crazy?

Like a fox.

Take that "we built it" theme. Sure, they're lying about a selectively-edited phrase for political advantage. But why this particular phrase? Because the President was defending government's role in building America's infrastructure, educating its children, and improving its technology.

They don't want those things anymore. The argument fell on deaf ears because GOP isn't really the "party of business." It's the the party of mega-business, of globalized multinational corporations. Those corporations don't need America any more. They don't need its roads, they don't need its technology, and they certainly don't need its educated middle-class workforce.

It's time to follow the money.

Money Source: Bankers

The rapid rise in the abuse of (c)(4) organization has allowed corporations and the mega-wealthy to inject hundreds of millions of dollars into election campaigns without revealing their identity. The Romney campaign has refused to follow Obama's lead by revealing the names of its "bundlers." But thanks to the efforts of the <>Sunlight Foundation, USA Today and others we know that 25 percent of them are Wall Street types who include:

Steve Schwarzman, who notoriously compared taxing bilionaire hedge funders like himself the same way we tax teachers or firefighters to Hitler's invasion of ...

Big Banker Bill Harrison’s Bogus Brief for Broken Big Banks

8 COMMENTS

Published: Friday 24 August 2012

Today it’s William B. “Bill” Harrison, Jr., the retired banker who engineered the mega-merger which created JPMorgan Chase.

Every day we rise and tell ourselves this will be a good day, free of that unique combination of predation, self-pity, mediocrity and disingenuousness which characterizes the modern bank executive. And every day somebody proves us wrong.

Today it's William B. "Bill" Harrison, Jr., the retired banker who engineered the mega-merger which created JPMorgan Chase. That means the capstone of Harrison's career was the creation of an institution that has repeatedly broken the law, deceived its customers, foreclosed on homeowners with a motley crew of college-aged temps known as "the Burger King kids," received billions in public assistance ...

... and still underperformed the Dow Jones average, dropping in stock value to $37.23 (Thursday's closing price) from around $53 per share when it was created by Harrison in 2000.[1] You'd have been better off buying Treasuries.

If that's your idea of a stellar resume you will no doubt read Harrison's defense of mega-banks in the New York Times with great anticipation, which will be followed promptly thereafter by profound disappointment. Harrison's apologia is as mediocre in its conception, as deceptive in its packaging, as vacant in its morality, and as unimpressive in its execution as JPMorgan Chase itself.

And believe me, that's saying something.

Harrison begins by oversimplifying and misstating his opponents' arguments (and goes downhill from there), characterizing their position as follows: "In the years before the crisis, greedy bankers used their political muscle to grow from small, specialized banks into giant, all-purpose financial ...

The Fed, Ben Bernanke, and the Rotten Libor

DISCUSS

Published: Sunday 12 August 2012

There are trillions of dollars of car loans, mortgages, and other debts, in the United States, tied to the Libor.

The case of the rigged Libor turns out to be the scandal that just keeps on giving. It reveals a great deal about the behavior of the Federal Reserve Board and central banks more generally.

Last month, Federal Reserve Board Chairman Ben Bernanke gave testimony before Congress in which he said that he had become aware of evidence that banks in England were rigging the Libor in the fall of 2008. According to Bernanke, he called this to the attention of Mervyn King, the head of the Bank of England. Apparently Mervyn King did nothing, since the rigging continued, but Bernanke told Congress there was nothing more that he could do.

The implications of Bernanke’s claim are incredible. There are trillions of dollars of car loans, mortgages, and other debts, in the United States, tied to the Libor. There are also huge derivative contracts whose value depends on the Libor at a moment in time. People were winning or losing on these deals not based on the market, but rather on the rigged Libor rate being set by the big banks.

Bernanke certainly had an obligation as Fed chair to expose and stop this rigging, which was interfering with the proper working of U.S. and world financial markets. But hey, Mervyn King didn’t want to take any action, what could Bernanke possibly do?

It is truly incredible that Bernanke would make such a statement to Congress and the public. There was nothing he could do about the rigging?

Suppose that he told the head of the Bank of England that he had no choice but to stop the rigging. Bernanke could have said that if King doesn’t immediately take the necessary steps to end the rigging then he would hold a press conference in which he would publicly display the evidence of the rigging and report King’s failure to take action.

Is it conceivable that this threat would have left King unmoved? Would King continue to tolerate ...

America’s Deficit Attention Disorder

Published: Saturday 11 August 2012

“In highly unequal societies, the very rich are prone to seek affirmation of their personal worth through extravagant displays of excess.”

The political debate in the United States and Europe has focused attention on public financial deficits and how best to resolve them. Tragically, the debate largely ignores the deficits that most endanger our future.

In the United States, as Republican deficit hawks tell the story, “America is broke. We must cut government spending on social programs we cannot afford. And we must lower taxes on Wall Street job creators so they can invest to get the economy growing, create new jobs, increase total tax revenues, and eliminate the deficit.”

Democrats respond, “Yes, we’re pretty broke, but the answer is to raise taxes on Wall Street looters to pay for government spending that primes the economic pump by putting people to work building critical infrastructure and performing essential public services. This puts money in people’s pockets to spend on private sector goods and services and is our best hope to grow the economy.”

Democrats have the better side of the argument, but both sides have it wrong on two key points.

First, both focus on growing GDP, ignoring the reality that under the regime of Wall Street rule, the benefits of GDP growth over the past several decades have gone almost exclusively to the 1 percent—with dire consequences for democracy and the health of the social and natural capital on which true prosperity depends.
Second, both focus on financial deficits, which can be resolved with relative ease if we are truly serious about it; and ignore far more dangerous and difficult-to-resolve social and environmental deficits. I call it a case of deficit attention disorder.

To achieve the ideal of a world that secures health and prosperity for all people for generations to come, we must reframe the public debate ...

GMO-Fed Hamsters Become Infertile, Have Stunted Growth

11 COMMENTS

Published: Tuesday 7 August 2012

“Overall, GM sounds like a sweet deal only for Monsanto (and our own FDA and USDA, repeatedly found in bed with them). It remains a bad deal for us, the consumers.”

Yet another study has concluded that feeding animals GMOs results in higher rates of infant mortality and causes fertility problems. Russian biologist Alexey V. Surov and other researchers fed Campbell hamsters (which have fast reproduction rates) Monsanto GM soy for two years. It should be noted that hamsters do not evolutionarily eat soy—just as cows fed Monsanto corn are actually ruminants and would not naturally eat corn.

“Originally, everything went smoothly,” Surov told broadcasting service The Voice of Russia. Surov and the researchers fed the same diet to three generations of the hamsters, and that’s when they noticed things going awry.

GMO Causes Fertility Problems, Slow Growth, Hair Growth in Mouths

“We noticed quite a serious effect when we selected new pairs from their cubs and continued to feed them as before. These pairs’ growth rate was slower and reached their sexual maturity slowly.” By the third generation, the hamsters were infertile.

Many animals on the GM diet even displayed rare, strange pathologies like hair growing in recessed pouches inside their mouths. “Some of these pouches contained single hairs,” said Surov in Doklady Biological Sciences, “others, thick bundles of colorless or pigmented hairs reaching as high as the chewing surface of the teeth. Sometimes, the ...

Romney: Federal Reserve Should not Enact New Measures to Boost the Economy

Published: Monday 6 August 2012

During an interview with CNN’s Gloria Borger yesterday, Mitt Romney said that the Federal Reserve should not enact a new round of stimulus aimed at boosting the still-sluggish economy, even as he admitted that the Fed’s first round of so-called “quantitative easing” did some good:

BORGER: Should — should the Fed intervene at some point?
ROMNEY: Well, I think the Fed’s first action, in quantitative easing, was effective to a certain degree. But I believe that the QE2, the second round of easing — I don’t think it had the impact that they were hoping for. And I’m sure the Fed is watching, will try and encourage the economy. But I don’t think a massive new QE3 is going to help this economy.

The Fed itself announced last week that, though it “anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate,” no new action will be taken. This is consistent with the Fed’s actions over the last few years, when it has tolerated high unemployment, even as inflation, the other half of the Fed’s mandate, has stayed low:

Federal Reserve Chairman Ben Bernanke said in a speech today that, “even though some key aggregate metrics — including consumer spending, disposable income, household net worth, and debt service payments–have moved in the direction of recovery, it is clear that many individuals and households continue to struggle with difficult economic and ...

Romney Doesn’t Believe Fed Stimulus Will Help the Economy

8 COMMENTS

Published: Monday 6 August 2012

U.S. Jobs Created While Unemployment Rises

DISCUSS

Published: Friday 3 August 2012

Titanic Banks Hit LIBOR Iceberg: Will Lawsuits Sink the Ship?

DISCUSS

Published: Sunday 22 July 2012

“Billions of dollars were skimmed from cities all across America by colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion.”

At one time, calling the large multinational banks a “cartel” branded you as a conspiracy theorist. Today the banking giants are being called that and worse, not just in the major media but in court documents intended to prove the allegations as facts. Charges include racketeering (organized crime under the U.S. Racketeer Influenced and Corrupt Organizations Act or RICO), antitrust violations, wire fraud, bid-rigging, and price-fixing. Damning charges have already been proven, and major damages and penalties assessed. Conspiracy theory has become established fact.

In an article in the July 3^rd Guardian titled “Private Banks Have Failed – We Need a Public Solution”, Seumas Milne writes of the LIBOR rate-rigging scandal admitted to by Barclays Bank:

It's already clear that the rate rigging, which depends on collusion, goes far beyond Barclays, and indeed the City of London. This is one of multiple scams that have become endemic in a disastrously deregulated system with inbuilt incentives for cartels to manipulate the core price of finance.

. . . It could of course have happened only in a private-dominated financial sector, and makes a nonsense of the bankrupt free-market ideology that still holds sway in public life.
. . . A crucial part of the explanation is the unmuzzled political and economic power of the City. . . . Finance has usurped democracy.

Bid-rigging and Rate-rigging

The “Story of Change” Told by Citizens, Not Consumers

17 COMMENTS

Published: Sunday 22 July 2012

“Ever feel frustrated that, no matter how hard you try to make responsible choices, live in harmony with your community, or take care of the planet, there are 7 billion other humans who just don’t give a crap?”

Do you ever feel like your efforts to make the world a better place just aren't working?

Ever feel frustrated that, no matter how hard you try to make responsible choices, live in harmony with your community, or take care of the planet, there are 7 billion other humans who just don't give a crap?

Annie Leonard, creator of "The Story of Stuff" and other animated exposés, knows exactly how you feel. "Like many who care about the environment, I spent years thinking that information would lead to change," wrote Leonard in a recent blog post. "So I wrote reports, gave speeches, even testified before Congress. Some things changed. Sadly, the big picture didn’t."

After a few years of reflection, Leonard started to see the problem. It wasn't that people aren't aware that they need to change, they just don't have the strength to take action. We've been told that we can buy everything we need to be happy, so when buying things doesn't fix the problem, we're lost.

I’ve come to see that we have two parts to ourselves; it’s almost like two muscles – a consumer muscle and a citizen muscle. Our consumer muscle, which is fed and exercised constantly, has grown strong. So strong that “consumer” has become our primary identity, our reason for being. We’re told so often that we’re a nation of consumers that we don’t blink when the media use “consumer” and “person” interchangeably. Meanwhile, our citizen muscle has gotten flabby. There’s no marketing campaign reminding us to engage as citizens. On the contrary, we’re bombarded with lists of simple things we can buy or do to save the planet, without going out of our way or breaking a sweat.

Consumerism can't get us out of the social, economic, and ...

House to Vote Fed Audit Bill Tuesday

Published: Saturday 21 July 2012

Climate Emergency Action Plan

Published: Saturday 21 July 2012

“If we had acted 20 or 30 years ago, when the alarm bells were first sounded, the transition to a climate safe world could have been more gradual and less disruptive, and we could have saved many more coral reefs, forests, glaciers, and species.”

The extreme heat, storms, and drought sweeping most of the nation are finally convincing a large majority of Americans that climate change is upon us. According to Bloomberg News, 70 percent of Americans now believe the climate is changing.

It's late to be getting to solutions, but now, perhaps, we're finally ready to take on the challenge.

Bill McKibben lays out how dire the picture really is in the upcoming issue of Rolling Stone: We’ve already warmed the planet by 0.8 degrees centigrade, and the weather is getting frightening. At the Copenhagen Climate Conference, the one thing the world agreed on is that we must stay within a 2-degree centigrade heat increase—although climatologist Jim Hansen has called even that level of increase a recipe for disaster. And if current trends continue, we're headed for much more global heating. But powerful oil, gas, and coal companies have blocked needed action. With billions in profits, they have plenty of money to channel to political campaigns, climate-denying think tanks, and right-wing media. Together, these groups have prevented progress.

If we had acted 20 or 30 years ago, when the alarm bells were first sounded, the transition to a climate safe world could have been more gradual and less disruptive, and we could have saved many more coral reefs, forests, glaciers, and species.

Now, time is short.

Although there is already enough extra carbon in the atmosphere to make major ...

17 COMMENTS

American Pie in the Sky

Published: Saturday 21 July 2012

“In 2013, as transfer payments are phased out, however gradually, and as some tax cuts are allowed to expire, disposable income growth and consumption growth will slow.”

While the risk of a disorderly crisis in the eurozone is well recognized, a more sanguine view of the United States has prevailed. For the last three years, the consensus has been that the US economy was on the verge of a robust and self-sustaining recovery that would restore above-potential growth. That turned out to be wrong, as a painful process of balance-sheet deleveraging – reflecting excessive private-sector debt, and then its carryover to the public sector – implies that the recovery will remain, at best, below-trend for many years to come.

Even this year, the consensus got it wrong, expecting a recovery to above-trend annual GDP growth – faster than 3%. But the first-half growth rate looks set to come in closer to 1.5% at best, even below 2011’s dismal 1.7%. And now, after getting the first half of 2012 wrong, many are repeating the fairy tale that a combination of lower oil prices, rising auto sales, recovering house prices, and a resurgence of US manufacturing will boost growth in the second half of the year and fuel above-potential growth by 2013.

Follow Project Syndicate on Facebook or Twitter. For more from Nouriel Roubini, click here.

The reality is the opposite: for several reasons, growth will slow further in the second half of 2012 and be even lower in 2013 – close to stall speed. First, growth in the second quarter has decelerated from a mediocre 1.8% in January-March, as job creation – averaging 70,000 a month – fell sharply.

The Biggest Banking Scandal this Summer (Hint: It’s not LIBOR)

Published: Friday 20 July 2012

While corporate news media speculate on just how many luxury cars Mitt Romney owns or whether Chief Justice John Roberts is a Subaru-driving, soy-loving, closet-liberal, they’re missing what is arguably the most decisive political story of the summer: regulatory capital “reform.

Just over a month ago the Federal Reserve quietly released a proposal to implement Basel III, an international agreement signed by twenty-seven nations aimed at ensuring the global economy’s resilience against financial disintegration. The directive, drafted by a cadre of central bank representatives and national regulators known collectively as the Basel Committee on Banking Supervision, devised rules focused on both the type and amount of capital banks must hold to protect themselves against potential losses.

Since the first iteration of the Basel Accords in 1988 (Basel I), one of the most critical features of the international agreement has been the leverage ratio requirement. Financial leverage refers to the relationship, often expressed as a percentage, between the money a bank borrows and the capital (both liquid and long-term) it has available to it. More simply, leverage for a bank is essentially the amount of equity a bank possesses relative to its assets; the leverage rate is defined as the ratio of total assets to equity. That is, leverage is a measure of how much a firm borrows relative to its total assets and low leverage rates often indicate the strength and stability of a financial institution.

Prior to 2004 when the Securities and Exchange Commission (SEC) relaxed leverage requirements on lending institutions, most depository banks had leverage ratios of around 10:1.

14 COMMENTS

The Story of Change

Published: Wednesday 18 July 2012

“Can shopping save the world? Put down your credit card and start exercising your citizen muscles with Annie Leonard's new film.”

I used to think the truth would set us free. Like many who care about the environment, I spent years thinking that information would lead to change. If only people realize the mess our planet is in, I thought, things will change. So I wrote reports, gave speeches, even testified before Congress.

Some things changed. Sadly, the big picture didn’t.

For a long time I couldn’t understand why. Now I’ve realized we don’t need more data, white papers or documentaries to tell us we’re in trouble. Every day, the news is full of extreme weather disasters, toxic chemical scares and the cruel consequences of economic inequality. At this point, most people know.

And the good news is that most people care. Most of us want a safe and healthy environment. Most of us are horrified by the idea of babies born with harmful chemicals in their blood. Most of us would rather see investments in clean energy than billion-dollar subsidies for fossil fuel fat-cats. Most of us would prefer to live in a just society.

So, if people know, and if people care, why aren’t we generating the level of change needed to turn things around? My new movie, The Story of Change, argues it’s partly because we’ve gotten stuck in our consumer mode.

I’ve come to see that we have two parts to ourselves; it’s almost like two muscles—a consumer muscle and a citizen muscle. Our consumer muscle, which is fed and exercised constantly, has grown strong: So strong that “consumer” has become our primary identity, our reason for being. We’re told so often that we’re a nation of consumers that we don’t blink when the media use “consumer” and “person” interchangeably.

Meanwhile, our citizen muscle has gotten flabby. There’s no marketing campaign reminding us ...

Six Ways the Federal Reserve Could Boost the Economy

Published: Tuesday 17 July 2012

“Since the crisis began, the Fed has taken some out-of-the-ordinary measures to help boost employment, but can it do more? The answer is undoubtedly yes.”

The Federal Reserve, America’s central bank, has two jobs: make sure that inflation stays low, and make sure that employment stays high. Of late, with the economy still in a funk, the Fed’s first job has been easy to manage; the second, much less so.Today and tomorrow, Federal Reserve Chairman Ben Bernanke will testify before the House Financial Services Committee and the Senate Banking Committee. While the private sector continues adding new jobs — each month for the past 28 months —

The Real Libor Scandal

Published: Monday 16 July 2012

“The last thing the banks want is a rise in interest rates that would drive down the values of their holdings and reveal large losses masked by rigged interest rates.”

According to news reports, UK banks fixed the London interbank borrowing rate (Libor) with the complicity of the Bank of England (UK central bank) at a low rate in order to obtain a cheap borrowing cost. The way this scandal is playing out is that the banks benefitted from borrowing at these low rates. Whereas this is true, it also strikes us as simplistic and as a diversion from the deeper, darker scandal.

Banks are not the only beneficiaries of lower Libor rates. Debtors (and investors) whose floating or variable rate loans are pegged in some way to Libor also benefit. One could argue that by fixing the rate low, the banks were cheating themselves out of interest income, because the effect of the low Libor rate is to lower the interest rate on customer loans, such as variable rate mortgages that banks possess in their portfolios. But the banks did not fix the Libor rate with their customers in mind. Instead, the fixed Libor rate enabled them to improve their balance sheets, as well as help to perpetuate the regime of low interest rates. The last thing the banks want is a rise in interest rates that would drive down the values of their holdings and reveal large losses masked by rigged interest rates.

Indicative of greater deceit and a larger scandal than simply borrowing from one another at lower rates, banks gained far more from the rise in the prices, or higher evaluations of floating rate financial instruments (such as CDOs), that resulted from lower Libor rates. As prices of debt instruments all tend to move in the same direction, and in the opposite direction from interest rates (low interest rates mean high bond prices, and vice versa), the effect of lower Libor rates is to prop up the prices of bonds, asset-backed financial instruments, and other "securities." The end result is that the banks' balance sheets look healthier than they ...

Fixing the Lie-More Economy

9 COMMENTS

After The Fireworks Have Faded: Intimations of Bosons Among a Cacophony of Bozos

Published: Friday 13 July 2012

“The derivatives market, of which the vast majority is made up of interest rate products, is one manifestation of the political-financial monopoly.”

The Libor-Barclay’s scandal has made us increasingly aware of the collusion between politics and finance. The fix already lies in on our LIE MORE economy, where corporate raiders can easily siphon money out of our economy, leaving us fighting among ourselves for a shrinking economic pie. We debate safety nets, taxes, jobs, the deficit, and stimulus spending when the very first thing we should do is simply disconnect the siphon.

The derivatives market, of which the vast majority is made up of interest rate products, is one manifestation of the political-financial monopoly. As Goldman Sachs’ employee Fabrice Tourre so eloquently described in his emails to girlfriend Marrine Serres, he was the “fabulous Fab” creating “Frankenstein” products that were nothing more than “pure intellectual masturbation” for sale to unwitting clients. The financial wizards of this monopoly include Wall Street banks, of which I will only highlight three. These unregulated derivative products were very profitable and from 1998 to 2008, Bank of America reported profits of $135 billion, Citibank $145.8 billion, and JP Morgan Chase $97.6 billion. The political cronies of this monopoly included appointed and elected members of our federal government. A few of the top federal government regulators who ignored the warning signs to regulate the derivatives were Greenspan, Rubin, Levitt, Geithner, and Summers. Obviously the White House and Congress were active participants in the monopoly because of the benefits this collusion brought to them:

READ FULL POST 7 COMMENTS

Published: Monday 9 July 2012

The existence of the Boson Particle would pose essential questions regarding the nature of interconnection and interdependence, cosmological and terrestrial, and our place, as a species, among the order of things.

On July 4, the people of the U.S. marked the passing of another year's perfunctory, Independence Day festivities. The date, also, was occasioned by the formal announcement from physicists at CERN (European Organization for Nuclear Research) that, according to the banner headline at CERN's official website, "Higgs within reach […] Our understanding of the universe is about to change […] [Our] experiments see strong indications for the presence of a new particle, which could be the Higgs boson."

Thus, augur the smart people at CERN, a change in our fundamental understanding of the universe, and our place as human beings in it, is at hand. From their lips to the mouth of the God Particle, this development, if true, would be cause for celebration -- that a display of fireworks should be in order -- because of an embrace of the philosophical and social implications of this discovery could be the starting point of a profound form of independence: the release from ossified systems of thought and being, such as those dominating the present era, including the hagiography of U.S. Independence Day.

The people of the U.S. need independence from the demonstrably false notion, held by so many that within their debt-enslaved, corporate interest-beholden lives, they possess any degree of meaningful independence. As U.S. citizens, we are free to, without question, proclaim to the now credulous world how free we are-- but when a citizen resists and takes action (e.g., Bradley Manning) he will, in rapid order, grasp the true nature of this sweet land of liberty. As OWS activists have recently apprehended, under the present order, an individual is at liberty to practice freedom of speech, as long as by doing so, one does not threaten the agendas of the privileged and powerful.

The Jobs Doldrums and Obama’s Future

Published: Saturday 7 July 2012

“If the economy is moving in the right direction then - if unemployment is dropping and jobs are increasing - Obama has a good chance of being reelected. If the jobs doldrums continue - or worse - he won’t be.”

Bad news for the U.S. economy and for Barack Obama. We’re in the jobs doldrums. Unemployment for June is stuck at 8.2 percent, the same as in May. And only 80,000 new jobs were added.

Remember, 125,000 news jobs are needed just to keep up with the increase in the population of Americans who need jobs. That means the jobs situation continues to worsen.

The average of 75,000 new jobs created in April, May and June contrasts sharply with the 226,000 new jobs created in January, February and March.

In Ohio yesterday, Obama reiterated that he had inherited the worst economy since the Great Depression. That’s true. But the excuse is wearing thin. It’s his economy now, and most voters don’t care what he inherited.

In fact, a good case can be made that the economy is out of Obama’s hands — that the European debt crisis and the slowdown in China will have far more impact on the U.S. economy over the next four months than anything Obama could come up with, even if he had the votes.

It’s also out of the Fed’s hands. No matter how low the Fed keeps interest rates, it doesn’t matter between now and Election Day. Companies won’t borrow to expand if they don’t see enough consumers out there demanding their products. Consumers won’t spend if they’re worried about their jobs and paychecks. And consumers won’t borrow (or be able to borrow) if they don’t have the means.

Yet Obama must show he understands the depth and breadth of this crisis, and is prepared to do large and bold things to turn the economy around in his second term if and when he does have the votes in Congress. So far, his proposals are policy miniatures relative to the size of the problem.

The real political test comes after Labor Day. Before Labor Day, Americans aren’t really focused on the upcoming election. After Labor Day, they ...

Monsanto and Cargill Aggressively Pursue GE Soy Feed for Factory Fish-Farming Industry

11 COMMENTS

Published: Wednesday 4 July 2012

“Soy is being promoted as a better alternative to feed made from wild fish, but this model will not help the environment, and it will transfer massive industrial farming models into our oceans and further exacerbate the havoc wreaked by the soy industry on land—including massive amounts of dangerous herbicide use and massive deforestation.”

Food and Water Watch

If proponents of soy in aquaculture have it their way, soy will be used to feed fish in open ocean pens in federal waters, a move that would negatively impact the marine environment as well as the diets of both fish and consumers.

Food & Water Watch and Food & Water Europe’s new report, Factory-Fed Fish: How the Soy Industry is Expanding Into the Sea, shows how a collaboration between two of the most environmentally damaging industries on land and sea—the soy and open ocean aquaculture industries, respectively—could be devastating to ocean life and consumer health. And since much of the soy produced in the U.S. is genetically engineered (GE), consuming farmed fish would likely mean eating fish that are fed GE soy.

“Our seas are not Roundup ready,” said Wenonah Hauter, executive director of Food & Water Watch. “Soy is being promoted as a better alternative to feed made from wild fish, but this model will not help the environment, and it will transfer massive industrial farming models into our oceans and further exacerbate the havoc wreaked by the soy industry on land—including massive amounts of dangerous herbicide use and massive deforestation.”

The powerful soy industry, which is well represented in Washington, D.C. and Brussels, stands to gain more than $200 million (€160 million) each year by aggressively promoting the use of soy to feed farmed fish at a time when more and more consumers are eating seafood sourced from aquaculture or fish farms. Close to half of the seafood we consume globally comes from these factory fish farms.

Unfortunately, increased use of soy in fish feed could do greater harm to the health of fisheries by ...

Bernie Sanders: The American People are Angry

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Published: Thursday 28 June 2012

“What the American people are angry about is they understand that they did not cause this recession.”

Madam President, the American people are angry.

They are angry because they are living through the worst recession since the great depression.

Unemployment is not 8.2%, real unemployment is closer to 15%.

Young people who are graduating high school and graduating college, they're going out into the world, they want to become independent, they want to work, and there are no jobs.

There are workers out there 50, 55 years old who intended to work the remainder of their working lives, suddenly they got a pink slip, their self-esteem is destroyed, they're never going to have another job again and now they're worried about their retirement security.

Hey Congress, What About the “Doug Jones Average”?

Published: Wednesday 27 June 2012

“Foreclosures, lost jobs, wage declines and other reductions (combined with rising costs of everything from gasoline to child care) have become the norm, even shoving many proud middle-classers onto food stamp rolls.”

To report on how our economy is doing, media outlets keep a constant eye on the Dow Jones Average. But they're like cats watching the wrong mouse hole, for the great majority of Americans have between zero and next-to-nothing in the stock market.

The economic measure that matters most to most folks is the Doug Jones Average. The Doug is concerned about such key indicators as the pump price on a gallon of regular, the subprime value of today's seven-and-a-quarter minimum wage and the impact of global inflationary pressures on the cost of a six-pack.

So, how're Doug and Dottie Jones doing? Not well, report the number-crunchers at the Federal Reserve. In the latest Survey of Consumer Finances, Fed economists found that from 2007 through 2010, all but the wealthiest 10 percent of American households have been downwardly mobile, with the median net worth of U.S. households tumbling by a startling 39 percent, falling to the lowest level in 20 years.

In short, Americans are not merely feeling poorer — they are. Foreclosures, lost jobs, wage declines and other reductions (combined with rising costs of everything from gasoline to child care) have become the norm, even shoving many proud middle-classers onto food stamp rolls. Yet Washington remains fixated on propping up Wall Street's moneyed elites.

Congressional Republicans are actually clamoring for more financial deregulation and tax giveaways to coddle Wall Streeters (the same disastrous approach that caused the mess we're in) while also voting to slash funding for the food stamp program that more and more people need.

To keep a mighty tree, alive you must nourish the grassroots, not just spritz the few leaves at the top. But Washington has become a town of leaf-spritzers, ignoring the massive housing crunch, ongoing joblessness and mounting consumer debt. Indeed, three-fourths of Americans today have ...

America Realizes It Likes Federal Spending After All

Published: Wednesday 27 June 2012

“It’s been relatively easy to be anti-spending up to now because the reductions being proposed have mostly been theoretical and weren’t really likely to happen.”

There’s about to be a big change in the federal budget debate. In the end, the big winner will be the part of the budget that supposedly is so unpopular — federal spending — that a candidate for office this year cannot currently say he or she supports it without risking massive political condemnation and reprisals.

It’s been relatively easy to be anti-spending up to now because the reductions being proposed have mostly been theoretical and weren’t really likely to happen.

They also were mostly discussed in statistical terms that don’t typically strike fear into the hearts of most voters. After all, what does it really mean to reduce federal spending as a percentage of gross domestic product, to keep spending to its historical average or to implement an across-the-board cut?

And if all that has to be done — as some wishful thinkers have repeatedly said — is to eliminate waste, fraud and abuse and you’re sure what you care about doesn’t meet any of those definitions, then cutting federal spending isn’t really that worrisome.

The irony is that this is about to change because of something that spending cut proponents themselves demanded. The sequester — the spending-cut-only alternative they insisted on if the anything-but-super committee failed — that will occur on Jan. 2 is the opposite of most of the plans that have been part of the federal budget debate up to now: It’s in place and will happen unless Congress and the president take some action to prevent it.

And it’s forcing companies, industries and voters to face the reality that the spending cuts could actually occur and, despite what they’ve been saying publicly, that they really don’t want it to happen.

This is not a guess. The military community has been so actively opposing the spending cuts the ...

The Impotence of the Federal Reserve

Published: Wednesday 27 June 2012

“Although it is difficult to know how much of this decline reflected higher demand for Treasury bonds from risk-averse global investors, the Fed’s policies undoubtedly deserve some of the credit.”

The United States Federal Reserve’s recent announcement that it will extend its “Operation Twist” by buying an additional $267 billion of long-term Treasury bonds over the next six months - to reach a total of $667 billion this year - had virtually no impact on either interest rates or equity prices. The market’s lack of response was an important indicator that monetary easing is no longer a useful tool for increasing economic activity.The Fed has repeatedly said that it will do whatever it can to stimulate growth. This led to a plan to keep short-term interest rates near zero until late 2014, as well as to massive quantitative easing, followed by Operation Twist, in which the Fed substitutes short-term Treasuries for long-term bonds.

Follow Project Syndicate on Facebook or Twitter. For more from Martin Feldstein, click here.

These policies did succeed in lowering long-term interest rates. The yield on ten-year Treasuries is now 1.6%, down from 3.4% at the start of 2011. Although it is difficult to know how much of this decline reflected higher demand for Treasury bonds from risk-averse global investors, the Fed’s policies undoubtedly deserve some of the credit. The lower long-term interest rates contributed to the small 4% rise in the S&P 500 share-price index over the same period.

The Fed is unlikely to be able to reduce long-term rates any further. Their level is now so low that many investors rightly fear that we are looking at a bubble in bond and stock prices. The result could be a substantial market-driven rise in long-term rates that the Fed would ...

Three Big Lies about “Big Government”

Published: Saturday 23 June 2012

Many conservatives who stylize themselves as defenders of small government lean precariously on Reagan-era platitudes when pressed to justify their affections. Though Reagan’s alluringly demagogic 1981 decree that “government is not the solution to our problems [but rather], government is the problem” is easy to chew, its arbitrary application has led to a number of misconceptions about the role, size, and scope of “government.”

Time and again conservatives characterize those of us on the left as “large government loyalists,” as “tax and spend liberals” who “support the growth of an inefficient and parasitic public sector.” Unfortunately, the tales that conservatives use to vituperate those of on the left are as shallow as they are tall.

Let’s take a few minutes to debunk three common conservative critiques lodged against supposed “big government” sympathizers.

Myth #1: President Obama has created a “spending inferno.”

Did not Harvard Business School teach you anything, Mitt? In FY 2009—the last of George W. Bush’s presidency — federal spending rose by 18 percent from $2.98 trillion to $3.52 trillion. Then, in FY 2010—the first budget overseen by President Obama—federal government outlays fell by nearly 2 percent. In FY 2011 spending rose 4.3 percent to $3.60 trillion and in FY 2012 spending is scheduled to rise 0.7 percent to $3.63 trillion, according to the Congressional Budget Office’s (CBO) most recent budgetary estimates. Finally in FY 2013 — the final budget of President Obama’s term — spending is ...

Will the Fed Rescue the Economy?

16 COMMENTS

Published: Tuesday 19 June 2012

“The fact that the economy can use an additional boost should not be in dispute.”

The Federal Reserve Board’s Open Market Committee (FOMC) meeting this week likely presents its last opportunity to boost the economy before the end of the year. While the FOMC meets every six weeks, as a practical matter the FOMC has historically been very reluctant to take major moves close to an election. After this week’s meeting we will be in the window where the Fed is unlikely to move. This means that it is especially important that the Fed take steps to boost the economy now.

The fact that the economy can use an additional boost should not be in dispute. The rate of job creation in the last two months understates the underlying growth path since it is essentially a payback from the stronger growth due to an unusually mild winter.

Even the 165,000 average rate of job creation for the last five months is far too slow. With the economy needing roughly 100,000 new jobs a month to keep pace with labor force growth, it would take us more than 12 years to make up our 10 million jobs deficit at this point.

If there is a clear need for more rapid growth, the data also show there is no downside risk of excessive inflation. The consumer price index fell 0.3 percent in May. It has risen by just 1.7 over the last year. The core index rose 0.2 percent last month and is up 2.3 percent over the last year.

Of course many of us have ...

Paradise Lost: The Sinking Middle Class

Published: Monday 18 June 2012

“According to a new survey from the Federal Reserve, the median American family’s net worth dropped by nearly 40 percent from 2007 to 2010 — from $126,400 to $77,300 — wiping out 18 years’ worth of accumulated wealth.”

Deep down we know there's no paradise on earth, but as the children of immigrants who came to this country believing it was a land of milk and honey, we are stalwart. For generations now, it's the middle class that has sustained the dream of "America, the Beautiful" – with a dash of liberty and justice for all. But now the very foundations on which that dream has rested are crumbling. Consider the facts in this recent editorial in the New York Times:

[The] numbers on the loss of personal wealth [since 2007-2008] are staggering and say a lot about why the economic recovery has been so sluggish — and why the government will need to do a lot more to turn things around.

According to a new survey from the Federal Reserve, the median American family’s net worth dropped by nearly 40 percent from 2007 to 2010 — from $126,400 to $77,300 — wiping out 18 years’ worth of accumulated wealth. The crash in house prices accounted for most of that loss. Median family income, which was already edging down in the years before the recession, continued to decline, dropping from $49,600 in 2007 to $45,800 in 2010, about where it was in the mid-1990s.

The middle class was hit the hardest…

The recession "would have been much deeper and the weak recovery much weaker", we are told, but for past government support (for example, payroll tax cuts and extended jobless benefits). Of course, Republicans in Congress opposed these measures. Give the socialist Obama an inch, you see, and he will turn this country into a Marxist dictatorship.

The Times editorial calls for "…more support, including federal spending on education and public-works projects to create ...

Why the U.S. is not Greece

12 COMMENTS

Published: Sunday 17 June 2012

“The state is flush right now with gas and oil money, but energy-based economies can go bust as well as boom.”

America is not going the way of Greece, and North Dakota has shown us why. Residents were given the opportunity Tuesday to vote their property taxes out of existence, and they chose not to take it.

Why? Property taxes fund local government. Without it, communities would lose power to set their spending priorities. Lawmakers in Bismarck would have had to come up with over $800 million to replace the property tax revenue lost in 2012. The state is flush right now with gas and oil money, but energy-based economies can go bust as well as boom. Anyway, serious tax reform should be done in a comprehensive fashion, with personal income taxes, corporate incomes taxes and sales taxes also taken into account.

North Dakota's voters snubbed a ploy by anti-tax forces to grab a tax cut with little thought for the immediate consequences or the future. Let's be clear: Accepting taxation as a reality of modern civilization in no way implies that we like paying taxes or think they're fair or approve of everything they support.

If only self-described conservatives in Washington were so grown-up. Leading Republican voices blame only spending for our debt. They warn that if America follows the Democrats' vision, it will end up broke like Greece.

But spending does not cause debt if enough revenues are raised to cover it. During the George W. Bush era, Republicans engaged in the double insanity of manic spending and reckless tax cuts. By demonizing the surplus left by Bill Clinton as over taxation, they fed an anti-tax culture that has also made us more like Greece.

Greece's economic crisis stems both from heedless spending and a proud tradition of tax evasion. For example, when a tax collector on the island of Naxos recently went looking for cheats, a radio station reportedly broadcast his car's plate number.

Italy is also plagued by a culture of tax dodging.

"Only fools pay," goes an ...

See You at the Club: Fed Fat Cats Dip Into the Till

Published: Friday 15 June 2012

The Fed backed the bailout of Citigroup, the result of deals dreamed up by Dimon, who before his JPMorgan days had teamed with Sanford Weill to merge privately held investment firms with government-insured commercial banks, which would have been illegal under the Glass-Steagall law.

Statistics are boring, but it’s important to wrap your head around this latest one from the Federal Reserve as the definitive epitaph for the American dream. Wall Street’s financial shenanigans, the banking games that made some fat cats outrageously wealthy as they turned home mortgages into toxic securities, wiped out 20 years of growth in American families’ net worth.

“Americans saw wealth plummet 40% from 2007 to 2010, Federal Reserve says,” is how The Washington Post headlined the startling news that all of the economic gain of the past two decades had been destroyed by the banking meltdown. And with housing values—the bulk of middle-class savings—indefinitely moribund, the situation will not get better anytime soon.

“The recession caused the greatest upheaval among the middle class,” the Post noted. “... Their median net worth ... suffered the biggest drops. By contrast, the wealthiest families’ median net worth rose slightly.”

That outcome, disastrous to the American ideal of a nation of mostly middle-class stakeholders competing on a relatively equal economic playing field, was preordained. When tens of millions lost their jobs and homes as a result of financial swindles that the Federal Reserve failed to prevent, this ostensibly public agency, with strong bipartisan support in the White House and Congress, adroitly directed the flow of public funds to save the bankers while abandoning their victims.

On Tuesday, Sen. Bernie Sanders, acting under authority of the Dodd-Frank financial regulations, released the conclusions of a Government Accountability Office report showing that ” ... during the financial crisis, at least 18 former and current directors from Federal Reserve Banks worked in banks and corporations that collectively received over $4 trillion in low-interest loans from the Federal Reserve.”

One of those Fed directors, Jamie ...

Fed Survey Shows Middle Class Took a Big Hit

Published: Thursday 14 June 2012

“Between the 2007 survey and the 2010 survey, the typical family had lost 38.8 percent of their wealth.”

The Federal Reserve Board’s newly released triennial Survey of Consumer Finance (SCF) confirmed what most of us already knew: The middle class has taken a really big hit. It showed that between the 2007 survey and the 2010 survey, the typical family had lost 38.8 percent of their wealth. In fact, the wealth of the typical family was down 27.1 percent from where it had been a decade ago in 2001. This is in spite of the fact that the economy was more than 15 percent larger than in 2010 than it had been 2001.

It wasn’t just wealth that had dropped; the survey showed that income had fallen as well. Median family income in 2010 was down by 7.7 percent from its 2007 level and 6.3 percent from its level a decade ago.

There is not much surprising about these numbers. The SCF is picking up the impact of the collapse of the housing bubble. For the vast majority of middle-class families, their home is by far their largest financial asset. For decades they were encouraged to believe that it was a safest way to save for the retirement or other purposes.

This clearly was not true when house prices became inflated by a bubble. In the years when the bubble reached levels that were clearly unsustainable, from 2002-2007, housing was just about the worst possible place to keep wealth.

Unfortunately, tens of millions of Americans ...

Right-Wing Media Ignore Fed Report Showing Increase in Wealth Gap

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READ FULL POST 9 COMMENTS

Published: Thursday 14 June 2012

Right-wing media have ignored or misrepresented new federal report in order to attack President Obama.

A recent Federal Reserve study found that the wealth gap increased during the recent recession with the median net worth of the wealthiest Americans increasing between 2007 and 2010, while the median net worth for all Americans decreased. But right-wing media have ignored or misrepresented this aspect of the report in order to attack President Obama.

Fed: Net Worth Increased For The Wealthiest Americans, While Decreasing For Everybody

Federal Reserve: Median Net Worth For The Top Ten Percent Increased By 1.9 Percent Between 2007 And 2010. The Federal Reserve found that median net worth increased for top 10 percent families. In 2007 these families had a median net worth of $1,172,300 and in 2010 their median net worth increased to $1,194,300. By contrast, median net worth for all Americans decreased.

[Federal Reserve, June 2012]

Surprise! Fox Hosts Blame Obama for Americans’ Declining Net Worth

Published: Wednesday 13 June 2012

“The Federal Reserve Board's Survey of Consumer Finances (SCF) for 2010 provides insights into changes in family income and net worth since the 2007 survey.”

The Federal Reserve released a study this week showing that Americans' net worth fell dramatically between 2007-10. However, while reporting on the study, Fox News hosts falsely claimed the decline occurred during the "last three years," even though it's clear the decline began two years before President Obama took office.

Fed: American Families' Net Worth Declined Nearly 40 Percent From 2007-10Federal Reserve: "Median Net Worth Fell 38.8 Percent ... Between 2007 And 2010." From the Federal Reserve's June 12 bulletin:

The Federal Reserve Board's Survey of Consumer Finances (SCF) for 2010 provides insights into changes in family income and net worth since the 2007 survey.1 The survey shows that, over the 2007-10 period, the median value of real (inflation-adjusted) family income before taxes fell 7.7 percent; median income had also fallen slightly in the preceding three-year period (figure 1).

The decreases in family income over the 2007−10 period were substantially smaller than the declines in both median and mean net worth; overall, median net worth fell 38.8 percent, and the mean fell 14.7 percent (figure 2).Median net worth fell for most groups between 2007 and 2010, and the decline in the median was almost always larger than the decline in the mean. The exceptions to this pattern in the medians and means are seen in the highest 10 percent of the distributions of income and net worth, where changes in the median were relatively muted. Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices. [Federal ...

Why the Economy Can’t Get Out of First Gear

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Published: Wednesday 13 June 2012

“All of the gains from economic growth have been going to the richest 1 percent – who, because they’re so rich, spend no more than half what they take in.”

Rarely in history has the cause of a major economic problem been so clear yet have so few been willing to see it.

The major reason this recovery has been so anemic is not Europe’s debt crisis. It’s not Japan’s tsumami. It’s not Wall Street’s continuing excesses. It’s not, as right-wing economists tell us, because taxes are too high on corporations and the rich, and safety nets are too generous to the needy. It’s not even, as some liberals contend, because the Obama administration hasn’t spent enough on a temporary Keynesian stimulus.

The answer is in front of our faces. It’s because American consumers, whose spending is 70 percent of economic activity, don’t have the dough to buy enough to boost the economy – and they can no longer borrow like they could before the crash of 2008.

If you have any doubt, just take a look at the Survey of Consumer Finances, released Monday by the Federal Reserve. Median family income was $49,600 in 2007. By 2010 it was $45,800 – a drop of 7.7%.

All of the gains from economic growth have been going to the richest 1 percent – who, because they’re so rich, spend no more than half what they take in.

Can I say this any more simply? The earnings of the great American middle class fueled the great American expansion for three decades after World War II. Their relative lack of earnings in more recent years set us up for the great American bust.

Starting around 1980, globalization and automation began exerting downward pressure on median wages. Employers began busting unions in order to make more profits. And increasingly deregulated financial markets began taking over the real economy.

The result was slower wage growth for most households. Women surged into paid work in order to prop up family incomes – which helped for a ...

Right-Wing Media Disappear Fact that Conservative Money Swamped Union Message in Wisconsin

17 COMMENTS

Unemployment Figures Released Look Bleak

Published: Wednesday 6 June 2012

In a piece claiming that "Wisconsin was a disaster for Democrats and President Obama," The Daily Caller claimed that Democrats and Labor spent millions to unseat Walker and on the entire recall effort, without offering any information related to how much Republicans and their allies spent.

Right-wing media are arguing that Wisconsin governor Scott Walker's victory in the Wisconsin recall election was a victory for the grassroots over unions and progressives. But, due to Citizens United and a loophole in Wisconsin campaign finance laws, the progressive message was swamped by conservative special interest money.

Following Walker's Victory In Wisconsin, Right-Wing Media Disappear Walker's Massive Spending Advantage

WSJ: WI Race "Shows That An Aroused Electorate Can Defeat A Furious And Well-Fed Special Interests." The Wall Street Journal in a June 5 editorial analyzed the results of the Wisconsin recall election, claiming:

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Published: Saturday 2 June 2012

First Super Weeds, Now Super Insects -- Thanks to Monsanto

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