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Cognitive Dissidents: Progressives are having buyer’s remorse…

March 29, 2010 4 comments

But, they seem unable to figure out who sold them the bill of goods…

John Atcheson is suffering the nagging feeling that he, and progressives generally, have been had:

At the risk of being churlish, passing this health care bill was the palest of victories.

Yes, it’s better than nothing, but as the President himself has pointed out, it’s largely made up of proposals the Republicans advocated a little more than a decade ago.

So, while this is certainly a political victory, it is far from a triumph of progressive ideals. Indeed, this Legislation is a sign of how far the political center has drifted to the right in the last three decades.

He asks a question a few progressives seem willing to broach:

How did we let this happen?

Read more…

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Reads (3-5-2010)

March 5, 2010 Leave a comment

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Stiglitz, Nobel Prize-Winning Economist, Says Federal Reserve System ‘Corrupt’ – Huffington Post

Nobel Prize winner Joseph Stiglitz lashed out at the Federal Reserve system as so fraught with conflict of interest it could be characterized as corrupt. In a report from Huffington Post, Stiglitz point out the logical inconsistency of allowing the banking sector to choose it own regulators:

To Stiglitz, the core issue is that regional Fed banks, such as the New York Fed, have clear conflicts of interest — a result of the banks being partly governed by a board of directors that includes officers of the very banks they’re supposed to be overseeing.

The New York Fed, which was led by current Treasury Secretary Timothy Geithner during the time leading Wall Street firms like Citigroup, JPMorgan Chase, AIG, and Goldman Sachs were given hundreds of billions of dollars in taxpayer bailouts, presently has on its board of directors Jamie Dimon, the head of JPMorgan Chase. He’s been there for three years. He replaced former Citigroup chairman Sanford “Sandy” Weill.

“So, these are the guys who appointed the guy who bailed them out,” Stiglitz said. “Is that a conflict of interest?” he asked rhetorically.

“They would say, ‘no conflict of interest, we were just doing our job,'” he answered. “But you have to look at the conflicts of interest.”

A message left for a New York Fed spokeswoman after regular business hours was not returned.

“The reason you talk about governance is because in a democracy you want people to have confidence,” Stiglitz said. “This is a structure that will undermine confidence in a democracy.”

It is not clear from the report whether Stiglitz is ready to state that there is only the appearance of conflict, or an actual conflict of interest in this arrangement.

After the conference, Stiglitz said that his remarks on the Fed were “maybe a little hyperbole,” but then again made the case that if another country had presented a plan to reform its financial system, and included a regulatory regime that copied the makeup of the Federal Reserve system, “it would have been a big signal that something is wrong.”

His examples, however, provide evidence that the Federal Reserve is indeed a crony institution and should be broken up or subject to oversight. It is not as if Washington is not already substantially intervening in the sector. Dozens of failing banks have been forcibly merged in the past year – the highest in recent record. A number of too big too fail institutions are currently on life support at great public expense. Moreover the Fedweral Reserve is currently following a monetary policy that many believe will blow up in its face and result in further damage to the economy.

Stiglitz needs to stop playing his silly little populist games with the issue and press for dispossessing these leeches. There is no reason, short of Washington’s own interests, why the entire sector should not be nationalized and operated as a simple utility.

Food Stamp Participation Exceeds Katrina – Paper Economy

As a logical consequence of the prolonged economic downturn it appears that participation in the federal food stamp program is on the rise. In fact, household participation has been climbing so steadily that it has far surpassed the last peak set as a result of the immediate fallout following hurricane Katrina.

Is anyone else sick of this “Nascent Recovery” talk? – Mish Shedlock blog

Any minute now, the economy is going to take off. We promise! Our favorite Libertarian nutcase, Mish Shedlock, dissipates a little of the Wall Street-Washington happy talk fog with this funny piece showing that the economy has been just on the edge of nascent recovery since February, 2008. Recovery is just around the corner!

No, not that corner, the next corner.

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Reads: This is not your grandfather’s depression…

March 2, 2010 Leave a comment

Debtwatch No. 43: Declaring victory at half time – Steve Keen’s Debt Watch

Steve Keen, at DebtWatch, describes the debate so far on the next leg of the crisis – apparently some people in Washington have already begun to celebrate their victory, when the ball is still in play:

“Declaring victory at half-time” is a syndrome which afflicts the entire debate over our current economic situation: optimists are of the opinion that the crisis is all over now, while pessimists think it’s only just begun.

Keen thinks the optimists miss an important feature of the present crisis:

… [O]nce debt becomes a significant fraction of GDP, and its growth rate substantially exceeds that of GDP, the economy will suffer a recession even if the debt to GDP ratio merely stabilises.

A debt-dependent economy has no choice but to record rising levels of debt to GDP every year to avoid a recession. Unfortunately, this makes a debt-servicing crisis inevitable at some point, especially when a large fraction of the increase in debt is financing Ponzi-speculation on asset prices, since this adds to debt without increasing society’s capacity to finance that debt.

Joe Bageant: Americans Are “Hope Fiends” Because Honestly Looking at the Present Situation Would Destroy Just About Everything We Hold As Reality – Alternet

The “crisis” was set in motion by institutions lending each other non-existent money none of them can pay back. Consequently, the masses are once again expected to produce enough material value in the world to make the funny money real, and shore up the system one more time. To “raise the money” to do this will require generations of future productivity shoveled into the furnace of corporate capitalism’s banking machinery. There was nothing left to steal, so extorting the future was the only option left. Assuming the skimmers and the scammers manage to extract enough public monies to pump up corporations one more time, there will be another and bigger disaster not far down the road. We don’t need the Oracle of Delphi to predict this. Capitalism is unstable as hell, like an unbalanced dreidel that keeps tilting ever more wildly off center until it falls over or eventually hits the wall. We can now see the wall from here: Massive ecological collapse and species extinction. “Economic downturn,” even “crisis,” does not quite describe that approaching wall. All of America hopes we will miss that wall at least one more time.

An Extraordinary Coup? – Zero Hedge

I realize many of you will dismiss Mr. DeGraw’s writings as socialist banter, but I will add that as far as I am concerned, the real master coup revolves around pensions and mutual funds. Many people have no clue where their pensions are being invested, who is profiting off the misfortune of others and what a racket mutual funds are charging exorbitant fees for mediocre results.

There is a financial coup going on right now across the world and while it may have started in the United States, the debt disease is spreading across the globe at the speed of light. Where and how will this all end? Can capitalism survive if wealth is increasingly being concentrated in the hands of an economic elite that shows no sense of civic and moral duty to the societies they inhabit?

Karl Marx may be dead and his theories debunked, but I have a sick feeling in my gut that down the road, his dire prediction that capitalism is destined to self-destruct will ultimately be proven right.

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Reads (2-28-2010)

February 28, 2010 Leave a comment

President Scott Brown single-handedly writes, introduces, sponsors, co-sponsors, passes and signs the new jobs bill.

Jobs, Jobs, Jobs…

President Scott Brown Wins Jobs Bill, Tax CutsHuffington Post

If you were just a casual observer of politics, flipping through the cable news networks, you’d think the Republicans — not the Democrats — passed a jobs bill. A jobs bill that was somehow written, introduced, sponsored, co-sponsored, passed and signed by President Scott Brown. Naturally, my inclination would be to blame the easily distracted, superficial cable news people. And they’re partly at fault here, but it’s mostly the absent, muted Democrats.

Why wasn’t the entire leadership contingent from the Senate, along with the entire West Wing staff, all over television condemning the Republicans for trying to filibuster/block/obstruct a jobs bill stuffed with tax cuts for businesses? Is this not a midterm election year in which the Democrats are sure to lose a couple dozen seats? Have they seen the projections for the Fall?

All eyes on the job market – CNN

With the unemployment rate near 26-year highs just below 10% — and unlikely to improve much this year — the focus right now is on jobs.

On Wednesday, outplacement services firm Challenger, Gray & Christmas reports on planned job cuts for February. But a bigger market mover will be the February reading on private sector employment from payroll services firm ADP.

ADP is expected to report that private-sector employers cut 10,000 jobs from their payrolls in February after cutting 22,000 jobs in January, according to a consensus of economists surveyed by Briefing.com. The report is often a precursor to the more widely watched government jobs report Friday.

GDP Contraction Coming In Second Quarter 2010? – Mish Shedlock

With the consumer confidence present conditions index crashing to a low last seen in February 1983 (see Is Consumer Confidence a Contrarian Indicator? for details), there is no good reason to believe consumers will be doing a lot of heavy lifting.

Unemployed consumers typically do not spend a lot of money and Weekly Unemployment Claims Spiked To 496,000.

Couple that with the fact that New Home Sales Unexpectedly Plunge to Record Low it should not be too hard to envision a flat to negative GDP decline in the second or third quarter unless things turn around right now.

Finally, in light of the fact that economists are an amazingly optimistic these days (save a small group of notables like Dave Rosenberg, Steve Keen, and Nouriel Roubini) expect any economic surprises to be to the downside.

Throw away that V-shaped party hat. A stalled recovery or an outright economic relapse is likely just around the corner.

1.2 million Americans lose unemployment insurance today – The economic populist

As the unemployed face cutoff, Washington continues its infighting:

Without a long-term extension to unemployment, 5 million currently unemployed people will lose their benefits and be forced into welfare or outright homelessness by summer.

The National Employment Law Project (NELP) released a new report last week showing that …
1.2 million jobless workers will become ineligible for federal unemployment benefits in March unless Congress extends the unemployment safety net programs from the American Recovery and Reinvestment Act (ARRA). By June, this number will swell to nearly 5 million unemployed workers nationally who will be left without any jobless benefits.

Senator Burr (R-NC) is questioning the need for another unemployment extension.

To put this $10 Billion lifeline for working families into perspective, let’s look at what has gone down on Wall Street this week:
The federal government owned-AIG lost another $8.87 Billion. They still owe the taxpayers $70 Billion from their last bailout, and might be looking for yet another taxpayer bailout.

Cool Site: Economists for Firing Larry Summers

Who knew they cared?

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Reads (2-23-2010)

February 23, 2010 Leave a comment

Hooray! Mississippi decides to join the rest of us in the 21st Century

Notes on a difficult employment outlook –  Hussman Funds

Outlook for employment:

On the other hand, several aspects of the employment picture concern me quite a bit. First and foremost, the unemployment rate is reported as the ratio of individuals who are unemployed and actively seeking work (thereby still being counted as being in the labor force) divided by the labor force itself. The difficulty is that we have seen an unprecedented exodus of discouraged workers from the U.S. labor force over the past two years, which has the result of sharply understating the extent of the unemployment problem. Had labor force participation remained at the same level as it was in 2000, the unemployment rate today would be nearly 3 percentage points higher than is currently reported. Instead, mostly over the past 18 months, the U.S. labor participation rate has retreated to a level we haven’t seen in a quarter century. Moreover, the share of employed individuals who are employed full time has also dropped by 3 percentage points, resulting in a significant contraction of employment activity. Even this would not be a difficulty had we not also vastly expanded the debt burden on the average family since then. Unfortunately, the high debt burdens and weak employment conditions cannot coexist without producing credit strains. Simply put, current employment levels are incongruous with servicing existing levels of household debt.

Who’s Really In Control of the White House? Maybe Not Obama – Alternet

No. Who’s on first!

It began reemerging in September with Gen. Stanley McChrystal’s Afghan escalation plan. McChrystal didn’t just ask President Obama for more troops — protocol-wise, that would have been completely appropriate. No, McChrystal went rogue, preemptively leaking his request to the media, then delivering a public address telling Obama to immediately follow his orders.

Odierno: US Could Slow Exit From Iraq – Antiwar.com

Apparently, who’s on second thoughts as well…

One of Gen. Odierno’s top subordinates, Brigadier General Kevin Mangum said only days ago that the “biggest concern” officials have is not the rising violence ahead of the Iraq election, but the prospect of rising violence after the election. Though levels of violence has jumped all over the place in Iraq in recent months, the trend in sectarian tensions is decidedly toward more, a tailor-made excuse for stalling the pullout.

Ron Paul! – Antiwar.com

The followers of Ron Paul can’t stop slapping themselves on the back. Here Justin Raimondo takes on the NeoCons, Palin, the wars, and Beck:

A rebellion among conservatives has long been brewing, and the CPAC convention represents the first skirmish in a civil war on the right, a war that is essentially over foreign policy. The Paul movement is well-organized, activist-oriented, and well-funded: more importantly, it has a well-grounded ideology, one that offers an alternative to the brain-dead neoconservatism of Republican party hacks and third-rate politicians like Rudy Giuliani – whose single delegate to the 2008 Republican convention fairly represents the strength of the Rabinowitz wing of the conservative movement.


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Reads (2-21-2009)

February 21, 2010 Leave a comment

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Libertarian Ron Paul walks away with CPAC endorsement: Do Ron Paul’s supporters know that conservative means resistance to any change? Will libertarians ever get over the the “illegal” taking of  slave property during the Civil War? And, when will they stand up for reparations required by a century of state-sponsored Jim Crow devaluation of black economic prospects?

Rhode Island’s Jobless Tell Different Story About ‘Recovery’ – Common Dreams

“Rhode Island’s unemployment rate, 12.9 percent in the latest Bureau of Labor Statistics figures, is the third highest in the country due to the steady erosion of its manufacturing industries, which account for one in eight jobs, and a wave of layoffs and mergers in the health care sector. Only Nevada, at 13 percent, and Michigan, at 14.6 percent, are in worse shape.”

Fall of Dutch Government Bodes Ill for Afghanistan War – Antiwar Newswire

“The collapse of the center-right government was the result of discontent with policies that made the Netherlands a loyal ally of the United States in Afghanistan and previously in Iraq, and was a sign of the difficulty President Barack Obama faces in maintaining the international contingent in the Afghan battlefield at full strength.”

Tomgram: William Astore, The U.S. Military’s German Fetish – TomDispatch

“The American military’s fascination with German military methods and modes of thinking raises many questions.  In retrospect, what disturbs me most is that the military swallowed the Clausewitzian/German notion of war as a dialectical or creative art, one in which well-trained and highly-motivated leaders can impose their will on events.”

It Is Not a Jobless Recovery, It is a Growthless Recovery – Dean Baker

“As can be seen the growth coming out of the last two downturns has been very weak by historical standards. Most projections show that the growth coming out of the current recession will be similarly weak. In short, there is no mystery about the economy’s failure to create jobs. Weak growth typically means weak job creation.”

VIDEO: Man bulldozes his foreclosed home – Tim Iacono

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Reads (2-17-2010)

February 17, 2010 Leave a comment

Industrial capacity falls for 13th month in a row

Tomgram: Frida Berrigan, Pimping Weapons to the World Tom Dispatch

With an Iraqi army equipped with lots of whiz-bang-kill gadgets, this number should rise:

In 2008, according to an authoritative report from the Congressional Research Service (CRS), $55.2 billion in weapons deals were concluded worldwide. Of that total, the United States was responsible for $37.8 billion in weapons sales agreements, or 68.4% of the total “trade.” Some of these agreements were long-term ones and did not result in 2008 deliveries of weapons systems, but these latest figures are a good gauge of the global appetite for weapons. It doesn’t take a PhD in economics to recognize that, when one nation accounts for nearly 70% of weapons sales, the term “global arms trade” doesn’t quite cut it.

How a New Jobless Era Will Transform America The Atlantic

How long can you tread water?

The economy now sits in a hole more than 10 million jobs deep—that’s the number required to get back to 5 percent unemployment, the rate we had before the recession started, and one that’s been more or less typical for a generation. And because the population is growing and new people are continually coming onto the job market, we need to produce roughly 1.5 million new jobs a year—about 125,000 a month—just to keep from sinking deeper.

Even if the economy were to immediately begin producing 600,000 jobs a month—more than double the pace of the mid-to-late 1990s, when job growth was strong—it would take roughly two years to dig ourselves out of the hole we’re in. The economy could add jobs that fast, or even faster—job growth is theoretically limited only by labor supply, and a lot more labor is sitting idle today than usual. But the U.S. hasn’t seen that pace of sustained employment growth in more than 30 years. And given the particulars of this recession, matching idle workers with new jobs—even once economic growth picks up—seems likely to be a particularly slow and challenging process.

When is a Fraud Not a Fraud? (Greece-Goldman Edition) Naked Capitalism

The short answer to the question in the headline is “When there are no rules.”

A headline in a current Bloomberg story illustrates the problem: “Goldman Sachs, Greece Didn’t Disclose Swap, Investors ‘Fooled’.”

“Fooled” is an unusual choice of words, particularly when applied to to presumed grown-ups like institutional investors and international overseers. Bloomberg seems to be mincing around the more obvious F-words, like “fraud” (as in defrauded) or “fleeced.”

Although there is a considerable amount of well-warranted consternation about how Goldman sold swaps to Greece that allowed it to mask how bad its deteriorating finances were from the EU budget police, there has been perilous little discussion of why the fact that this was permissible says there is something very wrong with the rules in place.

The latest twist is that Goldman managed $15 billion of debt sales for Greece after the debt-disguising swaps were in place, and (needless to say) there was no disclosure of the existence of the hidden debt (Bloomberg was able to obtain only six of ten prospectuses in question and found no mention of the swaps; it seems pretty unlikely that the others disclosed their existence). That means investors were hoodwinked. It goes without saying they would have seen Greece as a worse credit risk if they had been in full possession of the facts, and would presumably have required a higher interest rate.

Housing Starts, Vacant Units and the Unemployment Rate Calculated Risk

An optimistic view of the unemployment worst case scenario: Calculated risk blog think there is a connection between housing starts and unemployment that may signal unemployment levels off in the summer.

Calculated Risk: Housing starts and unemployment

The second graph shows single family housing starts and unemployment (inverted). (The first graph shows total housing starts) You can see both the correlation and the lag. The lag is usually about 12 to 18 months, with peak correlation at a lag of 16 months for single unit starts. The 2001 recession was a business investment led recession, and the pattern didn’t hold. This suggests unemployment might peak in Summer 2010 since housing starts bottomed in April 2009. However, since I expect the housing recovery to be sluggish, I also expect unemployment to remain high throughout 2010.

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