Posts Tagged ‘reform’

Your Abbreviated Pundit Round-up for July 21, 2010

Jul 21st, 10 / 3 Comments

Evans Liberal Politics
July 21, 2010

 

Your Abbreviated Pundit Round-up for July 21, 2010

 

Your Abbreviated Pundit Round-up for July 21, 2010, Daily Kos, July 21, 2010, by DemFromCT, used with permission, quoted verbatim:

Wednesday (and a little Tuesday) punditry.

Nate Silver:

The usual rule of thumb is that publicly-released internal polls have a lean of about 5 points, so that if her campaign released a poll showing Lincoln down by 9 points, that means she’s really down by 14. But sometimes the bias in an internal poll is considerably more than 5 points, depending on the pollster, the candidate, and the circumstances of the race. In this case, the Lincoln campaign seems desperate to fend off the narrative that her campaign is dead in the water and doesn’t deserve fundraising or activist attention, and so the incentive to put out a favorable poll might be especially strong.

They’re desperate to fight off this narrative because it’s absolutely true. In a cycle where we have so many authentically competitive Senate races, it would be absurd for national Democrats to spend more than a pittance on her.

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Mary Brown, David Willis and Arthur Jaffe:

In March, America made history by passing the Affordable Care Act. As the summer heats up, so does the ongoing debate around the country about what the new health reform law actually means for all Americans.

Not everyone is convinced that the law is good for the country. But there is one constituency group that clearly came out as winners in the fight, one group that — although literally necessary for the future survival of our country — can’t speak up for itself and often is ignored. They are our nation’s most important, yet most vulnerable resource: our children.

Chris Cillizza:

South Carolina Sen. Lindsey Graham’s (R) announcement that he will vote in favor of Elena Kagan’s nomination to the Supreme Court is likely to further incite conservatives already unhappy with him and, according to close observers of the state’s politics, ensures he will face a serious primary challenge in 2014.

“I think there’s a good reason for a conservative to vote yes,” Graham said this morning.

Graham’s apostasy on Kagan comes after other high profile breaks with conservatives in his state (and nationally) over climate change and immigration reform and will likely make him a central target of those tea party Republicans who helped oust Utah Sen. Bob Bennett in his bid for renomination earlier this year.

Bennett had to get through a caucus, very different than a primary, it’s not like his is the 60th vote and 2014 is a long way away. But teabaggers like to make loud noises.

LA Times:

A third Los Angeles County infant has died of whooping cough, public health officials announced Tuesday.

The confirmation of the death — the sixth pertussis-related death this year in the state — comes a day after the California Department of Public Health expanded criteria for those who should be vaccinated against the highly contagious disease amid what is shaping up to be the worst outbreak in 50 years.

Vaccines save lives, a topic I’m discussing at Netroots Nation on Thursday morning.

Eugene Robinson:

That was quick. We now have proof the NAACP was right.

When the nation’s leading civil rights organization passed a resolution condemning displays of racism by Tea Party activists, leaders of the movement reacted with umbrage so thick you could cut it with a knife — then demonstrated that the NAACP’s allegation was entirely justified…

And if the Republican Party is going to try to harness the Tea Party’s passion on behalf of GOP candidates, responsible leaders need to make clear that racism will not be tolerated. Yet Senate Minority Leader Mitch McConnell declined to talk about the NAACP flap when asked about it Sunday, and Sen. John Cornyn volunteered that accusing the Tea Party of racism is “slanderous.”

It’s not slander if it’s the truth, senator. No one can deny that some fraction of the Tea Party’s considerable energy is generated by racism. Excommunicating Mark Williams was a start to disowning and discarding this element — but just a start.

Michael Lind:

The recent reforms in healthcare and financial regulation are too market-oriented for most liberals and too utility-oriented for most free-market conservatives. But this does not imply that each side is equally dogmatic. The center-left is much more flexible and open-minded.

For example, when the conditions that made a sector suitable for treatment as a utility change, liberals do not necessarily object to deregulation. As long as telephony was based on wires, regulated telephone monopolies like AT&T made sense. When technology, in the form of wireless telephony, made a competitive market in that industry possible, few liberals objected to deregulation.

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DemFromCT is a longtime member of the Daily Kos community with interests ranging from polling to Iraq to bird flu, and has graciously agreed to allow us here at Evans Liberal Politics to publish his articles on an ongoing basis. He is a founding editor of Flu Wiki (www.fluwikie.com) and its sister site, the Flu Wiki Forum (www.newfluwiki2.com). Since its inception in June 2005, Flu Wiki has grown into an international clearinghouse of pandemic influenza information and links.

You can view his diaries at Daily Kos, here. DemFromCT is a featured writer at Daily Kos, and you can read more about him here. You are invited to email DemFromCT.

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Is Obama for Financial Reform?

Jun 7th, 10 / 1 Comment

Evans Liberal Politics
June 7, 2010

 

Is Obama for Financial Reform?

 

From Wall Street To The Gulf Coast
When Will Obama Get In The Ring And Fight For Real Reforms?

 

Evans Liberal Politics, June 7, 2010, by Robert Kuttner and Danny Schecter, with Commentary by Paul Evans.

Financial reform is making it’s way through Congress in what is touted as the biggest overhaul since the Great Depression. In the worst economic turndown since that time, bipartisanship has found it’s voice as both parties are eager to be seen as favoring reform. But while the Obama administration publicly has taken on a strong voice for reform, behind the scenes the administration has worked to kill off progressive amendments and substantive reform is lacking.

a crystal ball with golden hands magically supporting a floating dollar highlight this article on financial reform

See From Wall Street To The Gulf Coast: When Will Obama Get In The Ring And Fight For Real Reforms?, AlterNet, June 2, 2010, by Robert Kuttner, excerpt quoted verbatim:

Imagine how much more reform we could get if Obama clearly weighed in on behalf of David rather than Goliath.

Question of the Day: What do the oil catastrophe and the Wall Street collapse have in common?

In both cases, a powerful, politically protected industry invented something that could not easily be repaired when it broke. We seem to be entering an age when complex technologies, whether financial or physical, sometimes literally have no solutions when they go haywire in unanticipated ways. We thought this might happen with nuclear power (and it still could); but for now deepwater drilling is the bigger menace.

Secondly, in both cases the proverbial ounce of prevention was not applied. Had existing laws been enforced, and had the political process not corrupted the regulatory process, these man-made calamities didn’t need to happen.

In the case of the oil disaster, which is fast becoming the worst single environmental catastrophe ever, America’s long-term failure to move away from dependence on carbon fuels combined with pure short-run political capture. By now, we should have been at the point of energy conversion where high risk, mile-deep undersea wells were not used at all. But even so, this blowout would have been averted had existing laws been enforced.

It’s the same story with the financial collapse. We didn’t need these exotic, doomsday financial instruments. And had the regulators not been in bed with the industry, the crisis would have been headed off at any of several earlier stages.

But the worst common element is this: both crises are teachable moments that our president could be using to transform public opinion. Yet despite these gifts from the progressive gods, President Obama seems congenitally unable to rise to the occasion.

Read the full article here

Back on May 28th, Danny Schecter was taking a much grimmer view:

Obama Talks a Lot of Game About Taking on Wall St,
While Killing off Reforms in the Shadows


See Obama Talks a Lot of Game About Taking on Wall St, While Killing off Reforms in the Shadows, AlterNet, May 28, 2010, by Danny Schecter:

In several high profile speeches, Obama lashed out at Wall Street for its greed and mendacity, proposing financial reforms that appeared to be hard hitting if only because of the way the lobbyists for the financial services industry squealed about them.

But even as he was feinting left, he and his main economic operative, Tim Geithner, were moving right to kill off amendments that the bankers hated like Senator Bernie Sanders’s proposal for a deep audit of the Federal Reserve Bank and the Brown-Kaufman Amendment that would have broken up the six biggest banks in America.”

As John Heilman explained in New York Magazine, “Geithner’s team spent much of its time during the debate over the Senate bill helping Senate Banking Committee chair Chris Dodd kill off or modify amendments being offered by more-progressive Democrats.”

He used an old trick: embracing reform publicly while modifying its toughest provisions privately.

No wonder bank stocks went up when the bill passed.

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Commentary by Evans Liberal Politics owner Paul Evans: In political parlance, according to Schecter, that’s called “talking left and moving right”. No wonder we have got, in this tough election climate, bipartisan support for this bill. In the final analysis, what’s left really isn’t all that progressive. Republicans would embrace it wholeheartedly if they didn’t have to campaign against Democrats. The Senate and House versions of the financial reform bill are now being reconciled, and the Obama administration is pushing hard for it. There won’t be any problem passing this bill, because it doesn’t really reform the system. Reform in the bills being considered by both houses of Congress is in other words quantitative rather than qualitative. Details are being tweaked but the system remains basically the same.

Now both Democrats and some Republicans can campaign on having worked hard for financial reform. Nobody wanted to be on the record as being against financial reform after what happened. But we still have complex and risky investment banking not separated from banking itself, we still have basically unregulated derivatives made up of worthless junk mortgage bonds and packaged as AAA investments for the unwary, and we still have Wall Street rampant and triumphant, with Goldman Sachs only paying out about 1 percent of it’s income last year in taxes.

The more things change in this “biggest financial reform since the Great Depression”, the more they stay the same. Should we have expected anything different than that with Summers, Geithner and Bernanke running Obama’s economic team?

Yes, the President is for regulatory reform of our financial system. But only in the details, not in terms of the fundamentals. One can only hope that now, with a competent and more honest group of regulators in place (as opposed to Hank Paulson’s wrecking crew during the Bush years), tweaking the system will be enough to avert future catastrophes.

Comment on this article at Daily Kos, by mojada:

Summers, Wolin, Sperling, Gensler, Geithner

These were Robert Rubin’s fixers during the Clinton administration, a filthy gang of corporate front-men and swindlers who lit the fuse that triggered phase one of the economic implosion. It was Rubin, Clinton’s Treasury Secretary, who first devised the deranged scheme to unshackle the Wall St. beast and free the monster from its regulatory cage.

Under Rubin, Neal Wolin became the point man responsible for the Gramm-Leach-Bliley Act, the corporatist wet dream that repealed Glass-Steagall and greenlighted the merger of commercial banks holding insured deposits with investment banks, brokerage firms, and insurance companies, giving birth to the financial Frankensteins that became “Too Big to Fail”.

Neal Wolin was confirmed as Deputy Secretary of the Treasury on May 19, 2009, by President Obama.

Derivatives, you say? Gary Gensler was instrumental in the deregulation of derivatives under Bill Clinton. He’s now in charge of the Commodity Futures Trading Commission under President Obama.

Gene Sperling was part of the crew that demolishished Glass-Steagall. He’s now an advisor to Treasury Secretary Tim Geithner.

Geithner, of course, was the Big Cheese at the Federal Reserve Bank of New York and faithful disciple of Robert Rubin and Lawrence Summers in the Clinton Treasury Department from ’99 to ’01.

And finally, Summers was named head of the National Economic Council by…you guessed it…President Barack Obama.

So there we have it. A team of criminal con-artists, the living symbols of a debunked economic theory that delivered a catastrophic financial failure, are Obama’s go-to guys in the quest for “reform”.

Call me crazy, but I’m not optimistic.

On the other hand, at Daily Kos, dvogel001 comments:

Or maybe he is killing off amendments that would effectively kill the chances for the passage of the bill in the Senate…just a thought…

Or we can have all sorts of great liberal amendments that have a snowball’s chance in hell of actually becoming law…

But is Obama using “the art of the possible” as an excuse not to intervene on behalf of truly liberal reform? To say “it couldn’t pass the Senate” is meaningless when the White House never pushes hard for progressive provisions. We saw the same thing on the health care reform bill when the final version introduced by the White House lacked a public option and Obama never pushed for that. It’s easy to simply dismiss actual reform saying “it can’t pass” but here Robert Kuttner’s caveat applies:

“Imagine how much more reform we could get if Obama clearly weighed in on behalf of David rather than Goliath.”

Finally, here are two news articles which shouldn’t be missed:

See Matt Taibbi: Obama’s Big Sellout, Naked Captialism, December 11, 2009, by Edward Harrison of Credit Writedowns.

and

See No One is Going to Save You Fools, Daily Kos, December 16, 2009, by thereisnospoon.

All the signs have been here for many months.

See Robert Reich: Why Wall Street’s Political Poison is Still Catnip for Many Incumbents, Robert Reich.org on Evans Liberal Politics, May 26, 2010, by Robert Reich.

See Elizabeth Warren:
“I am Afraid of What I See in the Real Economy”, Bob Swern on Evans Liberal Politics, March 7, 2010, with commentary by Paul Evans.

See Congress Begins the Final Push on Financial Regulation, Truthout and McClatchy Newspapers on Evans Liberal Politics, June 1, 2010, by David Lightman and Kevin G. Hall.

See Commentary – Wall Street Reform Begins with Obama: Leading from James K. Galbraith, Evans Liberal Politics, May 15, 2010, by James K. Galbraith and others and commentary by Paul Evans.

And see Wall Street’s War, Rolling Stone, May 26, 2010, by Matt Taibbi.

A little good news: Bank of America to Pay $108 Million in Countrywide Case, The New York Times, June 7, 2010, by Associated Press.

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Congress Begins the Final Push on Financial Regulation

Jun 1st, 10 / 7 Comments

FragranceNet.com

Evans Liberal Politics
June 1, 2010

 

Congress Begins the Final Push on Financial Regulation

 

Congress Begins the Final Push on Financial Regulation, Truthout, May 31, 2010, by David Lightman and Kevin G. Hall of McClatchy Newspapers, excerpt quoted verbatim:

Washington – The fate of the biggest overhaul of the nation’s financial regulatory system in generations now rests with a small group of Capitol Hill lawmakers who are known for their ability to compromise.

In early June, negotiators from the Senate and the House of Representatives are expected to begin work on merging two competing but similar visions for revamping the way the government regulates banks and financial markets.

Sen. Sanders: Deregulation Lead to
Financial Crisis and BP Oil Disaster


The Senate passed its version of the legislation on May 20; the House approved its bill last December.

“This is one of the rare occasions when the two bills are really very close to each other. There’s not a great deal of difference,” said Senate Banking Committee Chairman Christopher Dodd, D-Conn.

Even if they’re in the ballpark on the big issues, the two bills have some significant differences.

For example, while both chambers favor the creation of an equivalent of the Consumer Product Safety Commission for consumer credit products such as mortgages, student loans and credit cards, they’d go about it differently.

The House would create a new, standalone agency called the Consumer Financial Protection Agency; the Senate envisions a Bureau of Consumer Financial Protection within the Federal Reserve.

The U.S. Chamber of Commerce hopes to weaken the bill during the negotiations, arguing that the new consumer panel’s leader would have powers beyond those of other government agency heads.

“I don’t know that I’m going to persuade people that my approach to consumer protection is the right way, but we should have a debate about having this much power concentrated in one individual,” said David Hirschmann, senior vice president at the Chamber.

Assistant Treasury Secretary Michael Barr, an intellectual author of the consumer panel, countered that there are numerous checks built into the creation of the new independent agency. It’ll have public rulemaking, must conduct cost-benefit analyses on measures it proposes, and the agency head would serve at the pleasure of the president and require Senate confirmation.

“We’re in fundamental disagreement with the Chamber on this point,” Barr said.

Also contentious is whether auto dealers should be subjected to the consumer panel’s rules. Consumer advocates argue that some auto dealers make more money from lending than they do from selling cars.

“The whole point of this agency is to make sure that lenders have to play by better rules and be fairer,” said Travis Plunkett, legislative director for the Consumer Federation of America.

Pointing to support from the Pentagon, which thinks that auto lenders have preyed on servicemen and servicewomen, Plunkett added that resolving the dealer exemption “is going to be all about raw political power.”

House and Senate lawmakers agree with the auto dealers, who argue that they didn’t cause the financial crisis and aren’t financial institutions. The House bill exempted car dealers; the Senate bill didn’t, but a majority of senators have voiced support for the exemption.

Another battle will be over complex financial instruments called derivatives, which helped cause the near meltdown of financial markets in 2008. The Senate bill would force banks to spin off their derivatives businesses, but the Obama administration and House lawmakers think that goes too far and could prove disruptive.

The Senate language came out of the Agriculture Committee, where Arkansas Democrat Blanche Lincoln, the chairman, faced a primary challenge and wanted to show voters she was tough on Wall Street. Lincoln now faces a June 8 runoff, a day after the Senate returns from its Memorial Day recess — freeing her, and Democrats, from having to keep up the appeal to Arkansas liberals.

Congressional leaders, with the help of the White House, have chosen a bipartisan team of negotiators, called conferees, who’re likely to find common ground on these issues quickly.

…SNIP…

Among the reasons for the unusually conciliatory mood surrounding the talks:

_ Politics: “If I were a Republican, I’d be hard pressed to vote against financial regulation,” said Burdett Loomis, professor of political science at the University of Kansas, especially less than six months before congressional elections. Politicians must show they can get tough with Wall Street, erasing voters’ memories of the unpopular 2008 bailouts of troubled financial firms.

_ Bipartisanship: Dodd and Sen. Richard Shelby of Alabama, the top committee Republican, made sure during this month’s debate that the two parties alternated offering amendments. As a result, some major GOP changes were accepted, such as Florida Sen. George LeMieux’s plan to instruct government agencies to stop relying solely on credit ratings when measuring creditworthiness.

_ The Players: Dodd and Frank will lead the committee, and both have a long history of working with Republicans on major legislation. Sen. Bob Corker, R-Tenn., will participate, even though it’s unusual for a junior member of the Senate to be included in such talks. Corker was involved earlier this year in compromise efforts, complaining later that his views were largely ignored.

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GOP Wants a Country by Corporations for Corporations

May 27th, 10 / 6 Comments

Evans Liberal Politics
May 28, 2010

 

 

 

GOP Wants a Country
by Corporations for Corporations

 

GOP Wants a Country by Corporations for Corporations, AlterNet Speakeasy, May 27, 2010, by Leo Gerard, photo © PunditKitchen, quoted verbatim:

Tea Party darling and Republican U.S. Senate nominee Rand Paul spoke last week like the political novice he is – revealing unfiltered GOP “truths.”

First he informed MSNBC talk show host Rachel Maddow that government should not be able to force businesses to serve black people. Corporate desire to discriminate should trump the civil rights of black people, Muslims, Jews, Catholics, and pants-wearing women, according to this Republican candidate, who has since rushed to assure everyone that he personally is not a bigot.

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Rand Paul followed up the assertion of corporate-privilege-over-human-rights with two more Republican tenet revelations. First he called the Obama administration “un-American” for holding the corporation BP accountable for the explosion on the Deepwater Horizon oil rig that killed 11 workers and devastated the ecology of the Gulf of Mexico. Then Rand Paul added that society should refrain from the “blame game” in the case of another corporation, Massey Energy, the owner of the West Virginia mine that blew up killing 29 workers. “We had a mining accident that was very tragic,” he said, “Then we come in, and it’s always someone’s fault. Maybe sometimes accidents happen.”

The Republican candidate who openly espoused these views was embraced last Saturday by U.S. Senate Minority Leader Mitch McConnell at a rally in Frankfort, Ky. And during the primary, former GOP vice presidential candidate Sarah Palin and Republican senators Jim DeMint of South Carolina and Jim Bunning of Kentucky actively supported Rand Paul. He simply said what Republicans believe – that this country should focus on promoting corporations and those corporations should have privileges, but not responsibilities. To the GOP, the U.S.A. should be a country of corporations, by corporations, for corporations.

People, by contrast, are trifling to the GOP. In the past couple of weeks, the GOP has made its position on humans clear by trying to end an emergency fund that will create 186,000 subsidized jobs this year for poor people and by blocking an extension of unemployment insurance for those thrown out of work during the worst recession since the Great Depression, a downturn caused by reckless Wall Street corporations. Following the lead of Bunning, who delayed an extension in February, Republican Sen. Judd Gregg of New Hampshire said the unemployed shouldn’t receive the insurance because it “encourages people to, rather than go out and look for work, to stay on unemployment.”

While attempting to deny relief to the desperate, Republicans have also blocked efforts to force oil corporations to assume full liability for catastrophic spills – like the BP disaster in the Gulf. If the oil corporations – which vehemently oppose an increase in their liability — don’t pay for environmental clean up, then taxpayers – including the unemployed – will get the bill. Still, House Minority Leader John Boehner of Ohio opposed raising the laughably-low liability cap of $75 million, and Republicans James Inhofe of Oklahoma and Lisa Murkowski of Alaska have blocked efforts to lift the cap in the Senate.

Like Rand Paul, Boehner didn’t want to assign culpability to BP. Boehner said, “I think it’s important that we get to the bottom, get to the facts, before we begin to point fingers.”

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Murkowski and Inhofe have a financial interest in kissing up to Big Oil. Those corporations have handed them buckets of bucks. According to the nonpartisan OpenSecrets.org, the oil and gas lobby has given Inhofe $433,950 over the past five years. That lobby gave Markowski $240,326 in just the past year. That is 15 times what she got from oil and gas just two years ago, according to the Center for Responsive Politics. A Murkowski spokesman said the senator’s connection to oil and gas corporations is “the same relationship she has to all constituents.”

So, to Republican Murkowski, oil and gas corporations are constituents, exactly like the actual humans who live in her district. That characterization of corporations is consistent with the recent U.S. Supreme Court decision, written by its Republican-selected, right-wing majority, giving corporations the same rights as humans under the First Amendment of the U.S. Constitution, a ruling that will enable corporations to spend virtually unlimited money to influence elections.

Usually such rights come with responsibilities. But Republicans, by impeding an increase in the liability cap, have made clear their opposition to oil and gas corporations bearing the responsibility of paying all costs when their errors kill workers and destroy the environment. Not only that, under the guise of government downsizing, they have thwarted enforcement of regulations intended to prevent deaths and catastrophes. The Bush administration, for example, cut funds for the Occupational Safety and Health Administration (OSHA).

Also during the Bush administration, according to a Department of Interior inspector general report released this week, federal regulators responsible for oversight of drilling in the Gulf of Mexico allowed corporate officials to fill out inspection reports in pencil, then traced over those marks in pen and submitted them. That “self-regulation” is consistent with the Republican contention that the “invisible hand” of the market will adequately smack down bad corporate behavior.

Rand Paul reiterated the Republican policy on government during his rally with McConnell last Saturday. He said, “What unifies Republicans is a belief that the Constitution restrains the size and scope of government.” Louisiana Gov. Bobby Jindal, who Republicans chose to respond in February, 2009 to President Obama’s first address to a joint session of Congress, told that national TV audience he opposed “big government,” like all good Republicans do.

Also in that speech, Jindal joined the Republican chorus of “Drill Baby Drill,” calling for increased domestic oil and gas drilling. Now he’s got the ugly results of drilling-gone-wrong coating his coast.

Since the spill, Jindal has petitioned the federal government – yes, the very government Republicans want to shrivel – to solve his state’s problems. He asked Obama to pay for 6,000 National Guardsmen for 90 days to help clean up. He wants the U.S. Department of Commerce to provide financial help to fishermen, the Environmental Protection Agency to test air quality, and the U.S. Business Administration to suspend loan repayments for small businesses affected by the gushing oil.

The Republican policy, apparently, is “Drill Baby Drill;” taxpayers can always clean the “accidental” spill. In the Republican world, corporations have the right to do anything they want, but no responsibility to do it right or restore what they wreck. Republicans hold the unemployed accountable – but not corporations.

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The Cult of Subprime Central Bankers

May 27th, 10 / 1 Comment

Evans Liberal Politics
May 27, 2010

 

 

 

The Cult of Subprime Central Bankers

 

The Cult of Subprime Central Bankers, © The Huffington Post, May 27, 2010, by Dean Baker of the Center for Economic and Policy Research, quoted verbatim:

The world is suffering from the worst downturn since the Great Depression. The crisis has left tens of millions unemployed in the U.S., Europe, and elsewhere. The huge baby boomer generation in the United States, now on the edge of retirement, has seen much of its wealth destroyed with the collapse of the housing bubble.

It would be difficult to imagine a worse economic disaster. Prior periods of bad performance, like the inflation ridden seventies, look like mild flurries compared to the blizzard of bad economic news in which we are now enmeshed.

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None of this is new. People don’t need economists to tell them that times are bad. However, what the public may not recognize is that the same people who caused this disaster are still calling the shots. Specifically, there has been little change in personnel and no acknowledgment of error at the central banks whose incompetence was responsible for the crisis.

Remarkably, this crew of incompetents is still claiming papal infallibility, warning governments and the general public that bad things will happen if they are subjected to more oversight. Instead, the central bankers and their accomplices at the IMF are dictating policies to democratically elected governments. Their agenda seems to be the same everywhere, cut back retirement benefits, reduce public support for health care, weaken unions and make ordinary workers take pay cuts.

Given how much they have messed up, it is amazing that these central bankers have the gall to even show their face in public. They are lucky that they still have jobs — and very good paying ones at that. (Many of the boys and girls at the IMF can retire with six figure pensions at the age of 50.) Ordinary workers, like teachers, autoworkers, or custodians, would be fired in a second if they performed as badly as the world’s central bankers.

What was going through their heads when they saw house prices in the United States, the UK, Spain and elsewhere spiral upward with no basis in any of the fundamentals of the housing market? How did they think this bubble would end; did they think that trillions of dollars of housing bubble wealth could just disappear without any impact on the economy. Or, did they think the bubble would never end and that house prices would just continue to go skyward forever?

How about the central bankers who allowed the euro to be imposed on a mix of economies with very little in common and no controlling governmental organization? Did they think that wages and prices would follow the same pattern in Greece and Germany? If not, what adjustment mechanism did they envision once these widely different economies were tied to together in a single currency?


Yes, many of the central bankers are now saying that they knew the euro was a bad idea back when it was established. Some of them even muttered quietly to this effect. But the central bankers and the IMF in 1998 were not making the same bold pronouncements and issuing the same directives to elected governments about structuring the euro zone that they are now doing in telling them to dismantle their welfare states. In other words, these central bankers failed disastrously — why do they still have jobs and why on earth is anyone listening to them?

At the top of the list of villains in this story is the IMF. Its ineptitude managed to reverse the fundamental flows of capital in the world economy. In normal times capital is supposed to flow from wealthy countries with large amounts of capital, like the United States and the European countries, to the developing countries who need capital to fuel their development. Due to the failure of the IMF to establish a workable system of international finance, the flows went in the opposite direction in a huge way. The world’s poor were sending their capital to the United States because the IMF gave them little choice.

It is important to be clear about the responsibility of the central bankers and the IMF for this totally preventable disaster. The first reason is accountability, something that is very important to economists who believe in economics. Economic theory teaches us that if workers are not held accountable for poor work, then they have no incentive to do their jobs well. If the central banker and IMF crew can mess up disastrously and continue to draw their paychecks as though everything is fine, what is their incentive to do better next time?

The other reason why it is important to recognize the responsibility of the central bankers and the IMF for this disaster is so that we don’t continue to take advice from people who apparently don’t have a clue. Before anyone listens to Ben Bernanke, European Central Bank President Jean-Claude Trichet, or IMF Managing Director Dominique Strauss-Kahn, they should first be forced to tell us when they stopped being wrong about the economy. We cannot afford to let these subprime central bankers control economic policy any longer.

See, Geithner: U.S., Europe Broadly Agree On Financial Reform Details, The Hufffington Post, May 27, 2010, by Geir Moulson.

See, Michael Lewis’s ‘The Big Short’ Gets Up Close And Personal With Perpetrators Of Financial Catastrophe, The Huffington Post, May 27, 2010, by Jeff Madrick (book review).

See, Yves Smith: “Are The Guillotines Being Sharpened?”, Daily Kos, May 22, 2010, by Bob Swern, excerpt quoted verbatim:

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Continuing along the macro themes of many of my diaries over the past 2-1/2 years, and specifically with regard to my diary from yesterday, “Krugman: ‘…hope is not a plan,’” the truth is, when you build a “consensus” with regard to financial regulatory reform–or as it relates to any issue, for that matter–by definition, you’re not shutting the door on those that drove our economy into a ditch (or, those in the oligarchy that created some of our society’s other problems). You’re inviting them to the table, even though they already own everyone sitting at it, as well as the table, itself.

As I’ve stated it in other diaries, we are living in one of the final chapters of the Quiet Coup. Yes. Some erroneously call it “the recovery.” In fact, as Simon Johnson has also covered it so succinctly, it is a “Tale of Two Economies“. Even the term, “recovery,” provides us with the false concept of a positive transition into someplace better than where we are now. In fact, “the transition” is into something far different than a recovery. An excellent diary currently on the Rec List is telling us this (but from a slightly different vantage point).

Yes, there are many real world analogies that one may make between what we’re witnessing in our economy and what is playing out in the Gulf of Mexico (and with regard to health care, and a variety of other critical issues), right now, and it’s shameful.

Virtually all of these realities were (and are) the byproduct of decades of lax oversight of corporations driven by unbridled greed. All of these events were preventable were it not for a government ruled, not by the people, but by a deeply captured government owned by the status quo. And, at the end of the proverbial day, many of these events have scarred (and will continued to scar) our national psyche, as well as deprive many in our younger generation(s) of many of the basic societal benefits we enjoyed just three decades ago. (A relatively stable economy, better environmental policies, and on and on…)

See, Krugman + 100 Million: Mr. President, “Find Your Inner F.D.R.”, Daily Kos, May 24, 2010, by Bob Swern, excerpt quoted verbatim:

Monday’s NY Times is certainly a poignant reminder of some very harsh truths still ravaging our society, today. As Eric Dash’s and Nelson Schwartz’s lede, “As Reform Takes Shape, Some Relief on Wall St.,” reminds us that the snickering Wall Street fatcats are all about the high fives now, but even Paul Krugman is to the point where he’s virtually begging the President, in “The Old Enemies,” to step up to the plate when it comes to taking on the corporatists.

UPDATE: See The Jobs Deficit & The Breaking Point, Pt 1., Campaign for America’s Future, May 27, 2010, by Terrance Heath, excerpt quoted verbatim:

Like the college professor he is, Dr. Bernard Anderson, member of the National Urban League President’s Council of Economic Advisors, came to this weeks “Putting America Back To Work” forum with three points he wanted those gathered to take away with them.

  1. The depth and breadth of the economic crisis has worsened, increasing racial disparities, and threatening to wipe out gains made towards reducing those disparities in the 1990s.
  2. The unemployment crisis reflects a structural change in our economy. The link between job creation and economy growth has been weakened. Economic growth no longer results in job creation. Thus in recent recessions we have experienced the phenomenon of “jobless recovery.”
  3. Direct public job creation is imperative to economic recovery.


Unemployment for those making less than $20,000 a year now stands at 31 percent.

See Robert Reich: Why Wall Street’s Political Poison is Still Catnip for Many Incumbents, Robert Reich on Evans Liberal Politics, May 26, 2010, by Robert Reich.

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The Battle’s Lost. The War’s Begun.

May 25th, 10 / 3 Comments

Evans Liberal Politics
May 25, 2010

 

 

 

The Battle’s Lost. The War’s Begun.

 

The Battle’s Lost. The War’s Begun., Daily Kos, May 25, 2010, by Louie L aka Crashing Vor. Visit Lou’s website LouLost.com for some great and relevant tunes. Quoted verbatim:

As oil continues to pour from the wreckage of the Macondo lease, a new source of pollution has opened up. Politicians seeking electoral advantage, pundits seeking recognition and worried citizens seeking some answer to this growing hell-sea have been popping up with greater frequency, spewing blame and toxic rhetoric on the media beaches.

a gas pump hose in the form of a noose highlights this expose on Halliburton and their probable role in the Gulf oil disaster

Bobby Jindal wants more booms. David Vitter thinks Thad Allen’s stalling on building berms. Chris Matthews wants Barack Obama to wave a wand. Mike Papantionio wants supertankers with skimmers. Salazar wants to pose with his boot on somebody’s neck.

All of them want camera time. And none of them want to tell the truth. Me, neither, but it’s time someone does. If you’re a big fan of hope, you may want to skip this diary.

The Louisiana marshes, hatchery for the nation’s premiere fishery, are gone. The American Gulf is likely gone. The amount of oil and dispersants already in the water will adversely affect marine species for the rest of our lives.

All the booms and all the berms and all the hair and hay and cardboard will not stop the sea of poison that has already entered Breton Sound, Barataria Bay, Vermillion Bay and will soon be coming to an ecological niche near you.

Go ahead and boom, go on and dredge up some islands. And for god’s sake get some cement or golf balls or a pony nuke or something into that hole. Maybe it will keep the millionth gallon out of the marsh. But do not deceive yourselves. This is done.

Determining fault will not stop that, though it must be done. Suing the responsible parties into the poor house, though needed to compensate the legions of people robbed by this gooey monster, will not save one fish. Pandora can’t close that box.

There is only one possible redemption in this horror, and even that is a slim chance. If the enormity of what has happened in the Gulf can hold the country’s atrophied attention long enough, and if we can mobilize fast enough, we might, just might, be able to bring about a positive change from this:

Real and comprehensive energy and climate legislation.

We must act now to force our legislators to write law with teeth and real effect, law that requires consumers pay the true price of the carbon they burn, law that requires business to pay the true price of the carbon they spew, law that includes the costs of things “no one could have anticipated” into the price of doing business.

We are going to have to fight harder for this than for health care or finance reform or DADT repeal. We are going to have to find Republicans to turn. (You really don’t think Mary Landrieu is going to oppose her owners on this, do you?) And we are going to have to do it now, this summer.

Because, despite their never getting another decent shrimp, despite their condo in Destin halving in value, despite all the pictures of ugly, oily critters, America is going to forget this, the largest kill-off the environment will likely see in our lifetimes.

»

A new crisis will erupt, a new tragedy will befall an innocent, a celebrity will fuck someone they shouldn’t. Americans will drool by their TVs, remark, “Ain’t that somethin’?” and then hop in their vehicles to work and shop and play. More holes will be dug.

And all of this will have meant nothing.

Unless we use this moment, use the deaths of species and the suffering of people who depend on them, in the most cynical, calculated way, as bad as a Republican after 9/11, to make real, lasting change in how we address the costs of our way of life.

You cannot save the Gulf. But you can make its death mean something.

See Obama to Inspect Gulf Oil Spill, The New York Times, May 25, 2010, by Helene Cooper.

Comment by Evans Liberal Politics owner Paul Evans:   Lou’s article reaches us and connects to us and as people who follow politics, we have to ask, why? I think the main reason is that it reaches us where we live, and hits us in our values, cutting through all the references to who said what and what political games are being played about this entirely man-made catastrophe. Thanks for permission to republish your essay, Lou.

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Robert Reich: Obama’s Regulatory Brain

May 24th, 10 / 5 Comments

Evans Liberal Politics
May 24, 2010

 

 

 

Robert Reich: Obama’s Regulatory Brain

 

Obama’s Regulatory Brain, RobertReich.org, May 24, 2010, by Robert Reich, used with permission, quoted verbatim:

The most important thing to know about the 1,500 page financial reform bill passed by the Senate last week — now on he way to being reconciled with the House bill — is that it’s regulatory. If does nothing to change the structure of Wall Street.

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The bill omits two critical ideas for changing the structure of Wall Street’s biggest banks so they won’t cause more trouble in the future, and leaves a third idea in limbo. The White House doesn’t support any of them.

First, although the Senate bill seeks to avoid the “too big to fail” problem by pushing failing banks into an “orderly” bankruptcy-type process, this regulatory approach isn’t enough. The Senate roundly rejected an amendment that would have broken up the biggest banks by imposing caps on the deposits they could hold and their capital assets.

You do not have to be an algorithm-wielding Wall Street whizz-kid to understand that the best way to prevent a bank from becoming too big to fail is preventing it from becoming too big in the first place. The size of Wall Street’s five giants already equals a large percentage of America’s gross domestic product.

That makes them too big to fail almost by definition, because if one or two get into trouble – as they did in 2008 – their demise would shake the foundations of the financial system, even if there were an “orderly” way to liquidate them. Because traders and investors know they are too big to fail, these banks have a huge competitive advantage over smaller banks.

Another crucial provision left out of the Senate bill would be to change the structure of banking by resurrecting the Depression-era Glass-Steagall Act and force banks to separate commercial banking (the classic function of connecting lenders to borrowers) from investment banking.

Here, too, the bill takes a regulatory approach instead. It includes a provision barring banks from “proprietary trading,” or making market bets with their own capital. Even if this regulation were tough enough (and the current Senate bill requires various delays and studies before it’s applied), it would not erode the giant banks’ monopoly over derivatives trading, adding to their power and inevitable “too big to fail” status.

Which brings us to the third structural idea, advanced by Senator Blanche Lincoln. She would force the banks to do their derivative trades in entities separate from their commercial banking.

This measure is still in the bill, but is on life-support after Paul Volcker, Tim Geithner, and Fed chair Ben Bernanke came out against it. Republicans hate it. The biggest banks detest it. Virtually every major Wall Street and business lobbyist has its guns trained on it. Almost no one in Washington believes it will survive the upcoming conference committee.

But it’s critical. For years the big banks have relied on taxpayer-funded deposit insurance to backstop their lucrative derivative businesses. Obviously they want the subsidy to continue. Bernanke argues that “depository institutions use derivatives to help mitigate the risks of their normal banking activities.” True, but irrelevant. Lincoln’s measure would allow banks to continue to use derivatives. They just could not rely on their government-insured deposits for the capital.


Requiring banks to do derivative trading in separate entities would force them to raise extra capital. But if such trading is so useful, banks should foot the bill, not taxpayers. Bernanke and others say the measure would give foreign banks a competitive advantage. Even if he is right, since when is it up to taxpayers to guarantee profitability at America’s largest banks relative to foreign ones?

The trading of derivatives is not so crucial to the US economy that taxpayers should subsidise the practice. If the past two years have taught us anything, the lesson is just the opposite. Derivatives can generate huge risks unless carefully regulated.

Wall Street’s lobbyists have fought tooth and nail against these three ideas because all would change the structure of America’s biggest banks. The lobbyists won on the first two, and the Street has signalled its willingness to accept the Dodd bill, without Lincoln’s measure.

The interesting question is why the president, who says he wants to get “tough” on banks, has also turned his back on changing the structure of American banks — opting for a regulatory approach instead.

It’s almost exactly like health care reform. Ideas for changing the structure of the health-care industry — a single payer, Medicare for all, even a so-called “public option” — were all jettisoned by the White House in favor of a complex set of regulations that left the old system of private for-profit health insurers in place. The final health care act doesn’t even remove the exemption of private insurers from the nation’s antitrust laws.

Regulations don’t work if the underlying structure of an industry — be it banking or health care — got us into trouble in the first place. Wall Street’s big banks are just too big, and their ability to draw on commercial deposits for investment banking activities, including derivatives, will make them even bigger. It will also subject the economy to greater and greater risks in the future. No amount of regulation can cure that.

Similarly, the underlying system of private for-profit health insurance is a key driver of America’s bloated and ineffective health care delivery. We can try to regulate it like mad, but no amount of regulation will cure this fundamental problem.

A regulatory rather than structural approach to deep-seated problems in complex industries like banking and health care is also vulnerable to the inevitable erosion that occurs when industry lobbyists insert themselves into the regulatory process. Tiny loopholes get larger. Delays get longer. Legislative words are warped and distorted to mean what industry wants them to mean.

Both Senate and House financial reform bills exempt “customised” derivatives from the exchanges, for example, but leave it to regulators to define what contracts will be excused. Yet many of the derivatives that caused the most trouble (read Goldman Sachs and other banks’ deals with AIG) might well be thought of as customised. Another potential problem: in assigning consumer protection to the Fed, the bill puts it under Fed chiefs who in the past disdisplayed a patent disregard of such safeguards (read Alan Greenspan).

Inevitably, top regulators move into the industry they’re putatively trying to regulate, while top guns in the industry move temporarily into regulatory positions. This revolving door of regulation also serves over time to erode all serious attempt at overseeing an industry.

The only way to have a lasting effect on industries as large and intransigent as banking and health care is to alter their structure. That was the approach taken to finance by Franklin D. Roosevelt in the 1930s, and by Lyndon Johnson to health care (Medicare) in the 1960s.

So why has Obama consistently chosen regulation over restructuring? Because restructuring Wall Street or health care would surely elicit firestorms from these industries. Both are politically powerful, and Obama did not want to take them on directly.

A regulatory approach allows for more bargaining, not only in the legislative process but also, over time, in the rule-making process as legislation is put into effect. It’s always possible to placate an industry with a carefully-chosen loophole or vague legislative language that will allow the industry to continue to go on much as before.

And that’s precisely the problem.

Robert Reich was the nation’s 22nd Secretary of Labor under Bill Clinton and is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations. In 2008, Time Magazine named him one of the Ten Most Successful Cabinet Members of the century. He has written eleven books, including “The Work of Nations,” which has been translated into 22 languages. His latest book is “Supercapitalism.” For Professor Reich’s book page for Supercaptialism at Amazon, go here. The above article is from Reich’s new blog, and can be viewed here.

Thanks to Professor Reich for permission to publish his articles on an ongoing basis.

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The Rachel Maddow Show: The Volker Rule – “Change the culture of Casino-Capitalism…”

May 21st, 10 / 0 Comments

Evans Liberal Politics
May 22, 2010

 

 

 

The Rachel Maddow Show: The Volker Rule
“Change the culture of Casino-Capitalism…”

 

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