Late Great Middle Class

Dear President Obama

2016-11-03T20:04:00.000-07:00

Open Letter to President Obama

Mr. President:

When I cast my first vote as a Democrat in 1988, I was only 18 years old. I admit that didn’t know much about politics and I mindlessly registered as a Democrat. My dad was a Republican and my mom was life-long Democrat. I felt much more aligned with the DNC and in my eyes there were only two parties to choose from in the US. I continued to vote Democrat, without passion or interest until you ran in 2008. I was still fairly young and I had two small children. When I heard your speeches and I saw your face, I felt hope…I saw hope…I heard hope. It felt like for the first time in my life, my vote could make a difference. It seemed like you would make a difference. Life was not easy at the point. The recession was just starting and we were barely surviving. I was a stay at home mom, with a severely asthmatic child and health issues of my own. Medical bills, mortgage payments and credit card bills were piling up. I was beginning to wonder how we were going to make it.

I went to the polls with my kids that November day and proudly cast my ballot. Maybe I was naive and drank too much of the Koolaid, but I expected changes. Three years later, changes weren’t coming quickly enough and in four years my life wasn’t much better. In fact, life was harder. My husband was working multiple jobs and I was working odd jobs and selling off possessions on Ebay. I was feeling frustrated and I had marched with the Occupy Movement and I was becoming more active in progressive movements. I saw a sign at the first March. It said: 2012 Pres Dream Team Sanders and Warren. I started to research more on Elizabeth Warren now, as well. The more I learned, the more I saw that you weren’t very progressive.

Did I vote for you again in 2012? Of course I did. I did what all good Democrats did. I voted Blue, no matter who.

Bernie Sanders was on my radar in 2011 and I watched as he became more vocal, especially when it came to Wall Street Reform. When I saw the he was running for President and no less on the Democratic ticket a glimmer of hope sparked in my darkness. Could we have the change we so desperately needed?

I listened to his speeches and I watched as he became more and more popular. He was connecting with people on a level that even you didn’t do in 2008 nor in 2012. Thousands of people were showing up to listen to him speak. By January and February of 2016, lines snaked around city blocks with people desperate to hear his message. When a large march took place in Pasadena, CA I took my children and mother to march with me. When we returned home, my kids excitedly put the news on to see the coverage of the march. Why wouldn’t it be on tv? The Los Angeles news shows coverage of celebrities, animals, and endless news of Trump and Clinton. As we watched, only one station showed a spot.

It was a 5 second spot that said “a few hundred” people showed up. My 13 year old looked at me confused. “A few hundred people? There were a few thousand. It was a big deal. Why aren’t they talking about it”. It took that comment for me to realize what was happening. I started to pay attention. The news was blatantly not paying attention to Sanders and when they did it was negative or minimal. The more people that showed up to march or see him, the less coverage he received. I attended a rally in Palm Springs, CA and left with such hope and inspiration. Yet, something wasn’t right. We weren’t getting equal media time, there were polling/voting issues, claims of debate schedule issues, fraud accusations and more.

Any time I brought this up or anyone I know spoke of this, we were treated like Fox Mulder from the X-Files. We were treated like Conspiracy Theorists.

Flash forward to the convention. The first Wikileaks emails were exposed. I read them and you could almost cut my anger with a knife. We began to see that we weren’t crazy. We WERE Fox Mulder and if you watched X-Files, you know he wasn’t crazy. He was actually right the whole time. We were right the whole time. I could barely bring myself to watch any of the convention. When I saw Elizabeth Warren begin to speak, literally a piece of my heart broke away. She had been a champion of our cause for many years. Was she paid off? Was she threatened? Was she part of the game to begin with? Then the unthinkable happened. Bernie Sanders “conceded” to Hillary Clinton. He did it without a real fight and in light of what the DNC did to him and to us. Were we angry? Did we feel betrayed by the system? Hell yeah we did and we had every right to feel that way. This is the kind of betrayal and anger that can't be swept away and forgotten.

I watched as you didn’t condemn what your party had done. You quietly thanked Debbie Wasserman Schultz for her service and ignore everything going on in your own Party. You ignored the Bernie Sanders delegates in the crowd sobbing. The media mentioned them with contempt and mocked them. They were not sobbing because they lost. They were sobbing because they realized their party was never really going to let Sanders win. They were sobbing because their party lied to them. They were sobbing because you lied to them. They were sobbing because they were being treated like shit inside and outside the convention hall. They were sobbing because outside the hall, people were marching in anger and no one was talking about it. They were sobbing because that iconic photo of you, with the word HOPE written in the background was now a faded piece of paper, crumbling. They were sobbing because you had failed them and all of us.

As thousands of Wikileaks files are being released daily, you continue with your silence. You have lost more followers than you will ever know. We aren’t “just” millennials. We are moms, dads, Generation X’ers, sisters, brothers, Americans. We are fed up and we aren’t taking this anymore.

Your silence now extends to other progressive issues. I have watched the nightmare of the Standing Rock issue since it began. I have waited for your action and yet there is silence. You are quietly waiting for November 8^th to come and go. When Hillary Clinton is elected, you will let the pipeline continue and then it won’t affect your party’s chances of being elected. It is a cowardice move. Regardless of who is right or wrong on the matter, people are wrongfully being detained and hurt. There are innocent people that you are supposed to be protecting. Your job is to stop what is going on and at least pretend to care. Your job is to have it investigated further. Do your job.

You may think that this will not follow you when you leave the White House. But it will follow you. This will be a part of your legacy. When my 14 year old doesn’t trust his own government, you should know that you haven’t done your job. My job as a parent, is to teach him respect, love, discipline, educate them and to be a truth teller. A truth teller. That means even when that truth hurts. I have done my job. Do your job.

So IF Trump wins, don’t blame us. Blame yourself and your party. You had the chance to make this right. You had the chance to clean out dirty laundry in your party, even if that laundry was your candidate. Blaming us-the people that supported you until you didn’t support us-is the move of a 10 year old. One of the first lessons I taught my kids was to accept responsibility for their actions. We are acting like Trump is the only bully and bad influence for our kids in this election? He definitely is both. But so is your party. The lessons you are teaching are youth is it is ok to lie, cheat, cover it up and pretend like it is ok, as long as you don’t get caught or admit it.

If Clinton wins, know that we are not rejoicing. She will not be my President. The media can try to control the stories 24 hours a day to us and change the truth, but it can’t change what we know. I will vote for a woman I can trust. I will vote Green. Jill Stein has my vote.

And to the MEDIA…. I have a special message for you. You are nothing but a joke at this point. What happened to unbiased new coverage? What happened to journalists doing a job that entailed research, honesty and integrity? What happened to having the courage to do what is right? You have failed us, as well. You are a part of the problem.

You should take notes from journalists such as Jordan Chariton and Jimmy Dore from TYT, Bernie Sanders Delegates who reported from the ground like Jeff Day, Claudia Stauber, Progressive show creator-Tim Black at Night, truth teller Josh Fox and MANY others I have encountered on social media, in the past two years. Media- DO YOUR JOB.

Farewell Mr. President. Sleep well knowing that many people, especially kids who looked up to you will remember you for these things. A new generation of activism and revolution will be born from this. A viable third party will be born from this. The Green party will get the 5% it needs and this is just the beginning.

I once read that you recommended The Matrix to Scifi fans. I will leave you with this. Please know that we have taken the red pill and we are never going back.

This is your last chance. After this, there is no turning back. You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.

Sincerely,

The Late Great Middle Class

The end result of unfettered Free Market Capitalism is the distruction of the "Middle Class"

2014-04-16T20:46:00.000-07:00

The Middle Class Is Not ''Normal''

Wednesday, 16 April 2014 By The Daily Take, The Thom Hartmann Program | Op-Ed

The tax cuts introduced during the term of President Ronald Reagan prompted the Federal Reserve to push interest rates to extreme levels to suppress inflation. (George Tames/The New York Times).

There's nothing "normal" about having a middle class. Having a middle class is a choice that a society has to make, and it's a choice we need to make again in this generation, if we want to stop the destruction of the remnants of the last generation's middle class.

Despite what you might read in the Wall Street Journal or see on Fox News, capitalism is not an economic system that produces a middle class. In fact, if left to its own devices, capitalism tends towards vast levels of inequality and monopoly. The natural and most stable state of capitalism actually looks a lot like the Victorian England depicted in Charles Dickens' novels.

At the top there is a very small class of superrich. Below them, there is a slightly larger, but still very small, "middle" class of professionals and mercantilists - doctor, lawyers, shop-owners - who help keep things running for the superrich and supply the working poor with their needs. And at the very bottom there is the great mass of people - typically over 90 percent of the population - who make up the working poor. They have no wealth - in fact they're typically in debt most of their lives - and can barely survive on what little money they make.

So, for average working people, there is no such thing as a middle class in "normal" capitalism. Wealth accumulates at the very top among the elites, not among everyday working people. Inequality is the default option.

You can see this trend today in America. When we had heavily regulated and taxed capitalism in the post-war era, the largest employer in America was General Motors, and they paid working people what would be, in today's dollars, about $50 an hour with benefits. Reagan began deregulating and cutting taxes on capitalism in 1981, and today, with more classical "raw capitalism," what we call "Reaganomics," or "supply side economics," our nation's largest employer is WalMart and they pay around $10 an hour.

This is how quickly capitalism reorients itself when the brakes of regulation and taxes are removed - this huge change was done in less than 35 years.
The only ways a working-class "middle class" can come about in a capitalist society are by massive social upheaval - a middle class emerged after the Black Plague in Europe in the 14th century - or by heavily taxing the rich.
French economist Thomas Piketty has talked about this at great length in his groundbreaking new book, Capital in the Twenty-First Century. He argues that the middle class that came about in Western Europe and the United States during the mid-twentieth was the direct result of a peculiar set of historical events.

According to Piketty, the post-World War II middle class was created by two major things: the destruction of European inherited wealth during the war and higher taxes on the rich, most of which were rationalized by the war. This brought wealth and income at the top down, and raised working people up into a middle class.

Piketty is right, especially about the importance of high marginal tax rates and inheritance taxes being necessary for the creation of a middle class that includes working-class people. Progressive taxation, when done correctly, pushes wages down to working people and reduces the incentives for the very rich to pillage their companies or rip off their workers. After all, why take another billion when 91 percent of it just going to be paid in taxes?

This is the main reason why, when GM was our largest employer and our working class were also in the middle class, CEOs only took home 30 times what working people did. The top tax rate for all the time America's middle class was created was between 74 and 91 percent. Until, of course, Reagan dropped it to 28 percent and working people moved from the middle class to becoming the working poor.

Other policies, like protective tariffs and strong labor laws also help build a middle class, but progressive taxation is the most important because it is the most direct way to transfer money from the rich to the working poor, and to create a disincentive to theft or monopoly by those at the top.
History shows how important high taxes on the rich are for creating a strong middle class.
If you compare a chart showing the historical top income tax rate over the course of the twentieth century with a chart of income inequality in the United States over roughly the same time period, you'll see that the period with the highest taxes on the rich - the period between the Roosevelt and Reagan administrations - was also the period with the lowest levels of economic inequality.
You'll also notice that since marginal tax rates started to plummet during the Reagan years, income inequality has skyrocketed.

Even more striking, during those same 33 years since Reagan took office and started cutting taxes on the rich, income levels for the top 1 percent have ballooned while income levels for everyone else have stayed pretty much flat.
Coincidence? I think not.

Creating a middle class is always a choice, and by embracing Reaganomics and cutting taxes on the rich, we decided back in 1980 not to have a middle class within a generation or two. George H.W. Bush saw this, and correctly called it "Voodoo Economics." And we're still in the era of Reaganomics - as President Obama recently pointed out, Reagan was a successful revolutionary.

This, of course, is exactly what conservatives always push for. When wealth is spread more equally among all parts of society, people start to expect more from society and start demanding more rights. That leads to social instability, which is feared and hated by conservatives, even though revolutionaries and liberals like Thomas Jefferson welcome it.

And, as Kirk and Buckley predicted back in the 1950s, this is exactly what happened in the 1960s and '70s when taxes on the rich were at their highest. The Civil Rights movement, the women's movement, the consumer movement, the anti-war movement, and the environmental movement - social movements that grew out of the wealth and rising expectations of the post-World War II era's middle class - these all terrified conservatives. Which is why ever since they took power in 1980, they've made gutting working people out of the middle class their number one goal.

We now have a choice in this country. We can either continue going down the road to oligarchy, the road we've been on since the Reagan years, or we can choose to go on the road to a more pluralistic society with working class people able to make it into the middle class. We can't have both.

And if we want to go down the road to letting working people back into the middle class, it all starts with taxing the rich.

The time is long past due for us to roll back the Reagan tax cuts.

Keep your eye on the shiny object!

2014-03-04T12:55:00.000-08:00

It was March 2, 2014 and I was asked the inevitable question. “Are you going to watch the Oscars??!”. My answer is the same every year, a resounding “No!”. Don’t get me wrong, I love movies. I love everything the movies have to offer. I love the fantasy, the adventure, the comedy and most of all, the escape it gives to us. However, spending four hours or more of my already scarce time to watch very wealthy stars pat themselves on the back, is not how I choose to spend my evening. I find it harder and harder to watch the very wealthy burn money on the most unimportant things, while I look at my budget to see what is left for groceries.

I tried to watch our local morning “news” the other day and the headline was Ashton Kutcher and Mila Kunis’ engagement. The reporter was so excited and blabbering on about it, as if the cure for cancer had finally arrived. I saw posts on Facebook about it, as if people knew them. And then the Oscar “news” started. Did I know that the stars would receive a gift bag with $80,000 worth of merchandise? Yes, I said $80,000. The reality that many of these stars spend between $75,000 and up to $1 million from beginning to end, to look good and arrive at the Oscars is not a secret. Yet, people devour this news like crazy.

All of this non-news, got me thinking. I keep hearing that things are getting better and the economy is on its way to recovery. I guess I should believe this, because the media tells me it is true. Could the media really be wrong? Yes, I am being sarcastic. For my family, it has gotten slightly better, but not much better. We still work full time jobs and part time jobs. We will struggle to pay our bills, buy groceries, keep incurring thousands of dollars in medical expenses and maybe if we are lucky, take a camping trip in the summer. I still shop at thrift stores for clothes and if I am lucky, get a haircut every 6 months. Do I deserve more? According to many people, no.

These people that can’t get enough of the celebrity news are the same people that look at me and tell me to stop complaining. If only I worked harder and were more positive, then I would be more successful. If only I just thanked God for everything I had, I would be happier. So, let me get this straight. Julia Roberts (for example), can spend $500,000 on a dress, jewels, transportation, makeup, etc. for one night and the world loves it. She deserves it! Good for her! Or as Hollywood publicist Jack Ketsoyan said to a reporter, “You can’t put a value on the Oscars. It’s the biggest night in the world.” The biggest night? Really? Certainly it wasn’t for my family. I still had to worry about my family’s future, my job and the unexpected emergencies we can’t afford. But, at least Julia Roberts looked good. Thank God for that.

All of this ridiculous spending for one night. According to some reports, last year’s Oscars cost $38.3 million dollars to stage the event. However, if the people speak out about the minimum wage being raised, the need for adequate healthcare, better jobs or the banks to be regulated, we are whining and unappreciative. How dare we want so much and not just be grateful for what we have.

All of this reminds me of a zombie movie. Yes, I love a good or bad, zombie movie. The great George Romero’s Land of the Dead was showing recently. It depicts the humans in the film, distracting the zombies from them, by shooting up fireworks into the sky. The sound and lights, mesmerize the zombies to stop and just stare. They literally are unable to move, attack or do anything. That is what we have become, paralyzed zombies. We need more, but we literally can’t move. As long as the people are focused on something else, anything else, except what is important we are controlled.

I am a proud American, but I am angrier every day. I don’t want to look at the fireworks in the sky anymore. Something has to change.

Elizabeth Warren implies that AG Holder is Wall Street"s "Bitch" @ Justice

2013-08-21T10:41:00.000-07:00

Elizabeth Warren Presses Eric Holder On Mortgage Settlement

. 08/21/2013

WASHINGTON -- Sen. Elizabeth Warren (D-Mass.) sent a letter to Attorney General Eric Holder Wednesday questioning whether a major government settlement with the nation's largest mortgage companies is merely a way to absolve banks of malpractice under a "timid enforcement strategy."

The letter follows months of criticism from Warren over weak penalties imposed on banks accused of defrauding consumers and investors. She has denounced settlement strategies that allow financial firms to set aside past violations without acknowledging wrongdoing.

Wednesday's letter addresses a settlement among the U.S. Department of Justice, the Federal Housing Administration and 49 state attorneys general over charges that major banks submitted a torrent of false claims in pursuit of government benefits. In February 2012, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial agreed to pay $25 billion to settle allegations that they forged signatures, fabricated documents and engaged in other illegal practices during foreclosures.

The DOJ claimed the violations allowed banks to push through improper evictions, and receive government compensation for loans that homeowners did not repay. In the worst cases, homeowners were evicted without actually defaulting on their loans. In many others, banks instructed families to miss loan payments in order to apply for bank and government assistance, only to foreclose on them once the loan entered default proceedings.

"I am concerned that this might be yet another example of the federal government's timid enforcement strategy against the nation's largest financial institutions," wrote Warren. "I believe that if DOJ and our banking regulatory agencies prove unwilling over time to take the big banks to trial or even require admission of guilt when they cheat consumers and break the law -- either out of timidity or because of a lack of resources -- then the agencies lose enormous leverage in settlement negotiations."

Warren called on the DOJ to avoid "settling on the cheap," and said that "rushed and inadequate settlements fail to fully compensate victims and taxpayers, and insufficiently deter future misconduct."

While the headline dollar figure is the largest ever for a settlement against financial institutions, banks were able to reduce their liability with standard cost-saving business practices -- many of which they already were legally required to perform. In several cases, the government effectively paid banks to lower their own costs. Warren's letter takes specific aim at one type of violation included in the settlement deal, in which banks paid $225 million to get off the hook for submitting false mortgage insurance claims to the government. In Warren's calculations, the number of total insurance claims submitted by the banks between October 2008 and September 2010 would have subjected them to $37 billion in total liability, had every claim been fraudulent -- indicating that the government had only been compensated for 0.6 percent of the potential maximum. Although every claim was not likely fraudulent, failures in bank documentation were pervasive in the years following the financial meltdown, and continue to be problematic nearly 18 months after the settlement was announced.

We're Back

2013-08-20T07:52:00.000-07:00

We have had a difficult summer and we are not in a good mood. The trials that the middle class now have to endure to keep their head above water have taken their toll on our good humor. So with that warning, let truth telling begin.

Republicrats in Gov. Make Great Strides In Creating Informant Society. Orwell Was Right.

2013-06-28T07:56:00.000-07:00

America’s Informant Society

The seemingly endless “war on terror” has made government hostility to openness part of America’s permanent wartime mentality.

June 26, 2013

By Melvin Goodman

President Dwight Eisenhower’s Farewell Address more than 50 years ago is famous for its warning about the military-industrial complex, but he also warned that permanent war and a “permanent arms industry” would do great harm to American rights and liberties

Over the past decade, we have experienced a George W. Bush administration that deputized the Pentagon to spy on law-abiding citizens, with military officers attending antiwar rallies and staff sergeants engaged in the National Security Agency’s warrantless eavesdropping.

American World War II poster by Seymour R. Goff.

And now we have an Obama administration that has encouraged the creation of its own informant network among millions of federal employees and contractors to watch for “high-risk persons or behaviors” among co-workers.

The use of informant networks dates at least as far back as the Roman Empire. Delatores (informants) were recruited from all classes of society, including slaves, lawyers and philosophers. Prior to the death of Joseph Stalin, the Soviet Union used pervasive informant networks in the Communist Party’s efforts to eradicate so-called “crimes” against state property.

Massive citizen informant networks were used throughout the Soviet Bloc in Eastern Europe to destroy perceived opposition to dictatorial rule, particularly in Czechoslovakia, Poland and Hungary. The best example of an informant network in the communist world, of course, was in East Germany where the Ministry of State Security (or Stasi) controlled one informant for every 60 citizens. These informants were told that they were their country’s first line of defense against threats to national security.

The informant network of the Obama administration is similarly insidious, with federal employees required to keep close tabs on co-workers, and managers facing penalties, including criminal charges, for failing to report their suspicions.

According to Marisa Taylor and Jonathan Landay, reporting in McClatchyDC.com on June 20, there are government documents that equate leaks with espionage. A Defense Department paper issued in 2012 exhorts its employees to “hammer this fact home … leaking is tantamount to aiding the enemies of the United States.”

The Obama administration’s initiative is called the Insider Threat Program and it is not restricted to the national security bureaucracy. The Department of Education has informed its employees that co-workers going through “certain life experiences,” such as divorce or “frustrations with co-workers,” could turn a trusted employee into “an insider threat.”

According to Taylor and Landay, the Department of Agriculture and the National Oceanic and Atmospheric Administration have produced online tutorials titled “Treason 101” to teach employees to recognize the psychological profile of spies. They say that the Peace Corps is implementing such a program.

The Bush administration initiated similar programs to conduct surveillance against American citizens, not merely federal workers. Vice President Dick Cheney encouraged the Pentagon to create the Counter Intelligence Field Activity (CIFA) in 2003 to conduct surveillance against American citizens near U.S. military facilities, particularly against those Americans who attended antiwar meetings. In the summer of 2004, CIFA monitored a small protest in Houston, Texas, against Halliburton, the giant military contractor once headed by Cheney.

At the same time, Undersecretary of Defense Paul Wolfowitz created a fact-gathering operation called TALON (Threat and Local Observation Notice) to collect “raw information” about “suspicious incidents.” The unauthorized spying of CIFA and the computer collection on innocent people and organizations for TALON were illegal; both organizations were eventually shut down.

In addition to instituting the Insider Threat Program, the Obama administration has expanded the domestic reach of the intelligence community, perpetuated the culture of secrecy, and instituted a pervasive lack of transparency.

Although President Obama has stated that American citizens are not the targets of the NSA’s sweeping electronic collection system, it is possible that Britain’s G.C.H.Q., London’s counterpart to NSA, is collecting intelligence on Americans and sharing the information with Washington.
Under a program called Tempora, the British communications intelligence agency has an unequalled capacity to tap high-capacity fiber cables. Britain, moreover, has a weak oversight regime, and G.C.H.Q. has a unique and storied collaboration with NSA and CIA.

Our congressional intelligence committees have failed in their primary task – providing oversight over this pervasive and secret surveillance system. Oversight and accountability must be part of government, particularly the secret agencies within government, and congressional oversight is needed to correct the collective harm that has been done to the United States and its reputation at home and abroad because of the zealous actions of the past decade.

Vice President Cheney defended the Iraq War in 2003 on the basis of the infamous “one percent doctrine,” which justified the invasion on the grounds that if there was a one percent chance that something is a threat, it requires that the United States responds as if the threat were 100 percent certain.

This logic has been applied in many ways to the problem of terrorism with the Department of Homeland Security and the 16 agencies of the intelligence community assuming that “Today’s terrorists can strike at any place, at any time, and with virtually any weapon.” As a result, the “war on terror” has become a permanent fixture in our national security architecture, and an economic cornucopia for private contractors.

Last month, President Obama told a high-ranking military audience at the National Defense University that our torture and detention policies “ran counter to the rule of law;” that our use of drones will “define the type of nation that we leave to our children;” that even legal military tactics are not necessarily “wise or moral in every instance;” and that we must repeal the mandate of the Authorization to Use Military Force to fight terrorism.

Referring to Guantanamo, he argued that holding “people who have been charged with no crime on a piece of land that is not part of our country” is not “who we are.” And that “leak investigations [that] may chill investigative journalism that holds government accountable” is not “who we are.”

If so, then massive surveillance programs at home and abroad as well as massive informant networks within the entire federal bureaucracy should also not be who we are. It is long past time for President Obama to address these issues with operational policies and not mere rhetoric. The audacity of hope requires that he do so.

Melvin A. Goodman is a former CIA analyst and the author of the forthcoming “National Insecurity: The Cost of American Militarism” (City Lights Publishing, January 2013).

In this Bizarro World we live in only the serial liars, always wrong pundits, corporate shills are taken seriously. check out who is always on the sunday news talk shows.

2013-03-03T06:49:00.003-08:00

Ben Bernanke, Hippie

By PAUL KRUGMAN

Published: February 28, 2013

We’re just a few weeks away from a milestone I suspect most of Washington would like to forget: the start of the Iraq war. What I remember from that time is the utter impenetrability of the elite prowar consensus. If you tried to point out that the Bush administration was obviously cooking up a bogus case for war, one that didn’t bear even casual scrutiny; if you pointed out that the risks and likely costs of war were huge; well, you were dismissed as ignorant and irresponsible.

It didn’t seem to matter what evidence critics of the rush to war presented: Anyone who opposed the war was, by definition, a foolish hippie. Remarkably, that judgment didn’t change even after everything the war’s critics predicted came true. Those who cheered on this disastrous venture continued to be regarded as “credible” on national security (why is John McCain still a fixture of the Sunday talk shows?), while those who opposed it remained suspect.

And, even more remarkably, a very similar story has played out over the past three years, this time about economic policy. Back then, all the important people decided that an unrelated war was an appropriate response to a terrorist attack; three years ago, they all decided that fiscal austerity was the appropriate response to an economic crisis caused by runaway bankers, with the supposedly imminent danger from budget deficits playing the role once played by Saddam’s alleged weapons of mass destruction.

Now, as then, this consensus has seemed impenetrable to counterarguments, no matter how well grounded in evidence. And now, as then, leaders of the consensus continue to be regarded as credible even though they’ve been wrong about everything (why do people keep treating Alan Simpson as a wise man?), while critics of the consensus are regarded as foolish hippies even though all their predictions — about interest rates, about inflation, about the dire effects of austerity — have come true.

So here’s my question: Will it make any difference that Ben Bernanke has now joined the ranks of the hippies?

Earlier this week, Mr. Bernanke delivered testimony that should have made everyone in Washington sit up and take notice. True, it wasn’t really a break with what he has said in the past or, for that matter, with what other Federal Reserve officials have been saying, but the Fed chairman spoke more clearly and forcefully on fiscal policy than ever before — and what he said, translated from Fedspeak into plain English, was that the Beltway obsession with deficits is a terrible mistake.

First of all, he pointed out that the budget picture just isn’t very scary, even over the medium run: “The federal debt held by the public (including that held by the Federal Reserve) is projected to remain roughly 75 percent of G.D.P. through much of the current decade.”

He then argued that given the state of the economy, we’re currently spending too little, not too much: “A substantial portion of the recent progress in lowering the deficit has been concentrated in near-term budget changes, which, taken together, could create a significant headwind for the economic recovery.”

Finally, he suggested that austerity in a depressed economy may well be self-defeating even in purely fiscal terms: “Besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions.”

So the deficit is not a clear and present danger, spending cuts in a depressed economy are a terrible idea and premature austerity doesn’t make sense even in budgetary terms. Regular readers may find these propositions familiar, since they’re pretty much what I and other progressive economists have been saying all along. But we’re irresponsible hippies. Is Ben Bernanke? (Well, he has a beard.)

The point is not that Mr. Bernanke is an unimpeachable source of wisdom; one hopes that the collapse of Alan Greenspan’s reputation has put an end to the practice of deifying Fed chairmen. Mr. Bernanke is a fine economist, but no more so than, say, Columbia’s Joseph Stiglitz, a Nobel laureate and legendary economic theorist whose vocal criticism of our deficit obsession has nonetheless been ignored. No, the point is that Mr. Bernanke’s apostasy may help undermine the argument from authority — nobody who matters disagrees! — that has made the elite obsession with deficits so hard to dislodge.

And an end to deficit obsession can’t come a moment too soon. Right now Washington is focused on the idiocy of the sequester, but this is only the latest episode in an unprecedented run of declines in public employment and government purchases that have crippled our economy’s recovery. A misguided elite consensus has led us into an economic quagmire, and it’s time for us to get out.

Too Big To Fail, Too Incompetent To Be Profitable, Big Banks On the US Dole, Are America's Biggest Moochers.

2013-02-25T21:59:00.000-08:00

Illustration by Bloomberg View

Why Should Taxpayers Give Big Banks $83 Billion a Year?

A Bloomberg editorial

On television, in interviews and in meetings with investors, executives of the biggest U.S. banks -- notably JPMorgan Chase & Co. Chief Executive Jamie Dimon -- make the case that size is a competitive advantage. It helps them lower costs and vie for customers on an international scale. Limiting it, they warn, would impair profitability and weaken the country’s position in global finance.
So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?

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Granted, it’s a hard concept to swallow. It’s also crucial to understanding why the big banks present such a threat to the global economy.

Let’s start with a bit of background. Banks have a powerful incentive to get big and unwieldy. The larger they are, the more disastrous their failure would be and the more certain they can be of a government bailout in an emergency. The result is an implicit subsidy: The banks that are potentially the most dangerous can borrow at lower rates, because creditors perceive them as too big to fail.
Lately, economists have tried to pin down exactly how much the subsidy lowers big banks’ borrowing costs. In one relatively thorough effort, two researchers -- Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz -- put the number at about 0.8 percentage point. The discount applies to all their liabilities, including bonds and customer deposits.

Big Difference

Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of $83 billion a year. To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected.

The top five banks -- JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. - - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry -- with almost $9 trillion in assets, more than half the size of the U.S. economy -- would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

Neither bank executives nor shareholders have much incentive to change the situation. On the contrary, the financial industry spends hundreds of millions of dollars every election cycle on campaign donations and lobbying, much of which is aimed at maintaining the subsidy. The result is a bloated financial sector and recurring credit gluts. Left unchecked, the superbanks could ultimately require bailouts that exceed the government’s resources. Picture a meltdown in which the Treasury is helpless to step in as it did in 2008 and 2009.

Regulators can change the game by paring down the subsidy. One option is to make banks fund their activities with more equity from shareholders, a measure that would make them less likely to need bailouts (we recommend $1 of equity for each $5 of assets, far more than the 1-to-33 ratio that new global rules require). Another idea is to shock creditors out of complacency by making some of them take losses when banks run into trouble. A third is to prevent banks from using the subsidy to finance speculative trading, the aim of the Volcker rule in the U.S. and financial ring-fencing in the U.K.

Once shareholders fully recognized how poorly the biggest banks perform without government support, they would be motivated to demand better. This could entail anything from cutting pay packages to breaking down financial juggernauts into more manageable units. The market discipline might not please executives, but it would certainly be an improvement over paying banks to put us in danger.

The Best Thing About Sequestration is that it denies Obama the the one thing he really wants... The Chance ot CUT Social Security and Medicare.

2013-02-25T07:06:00.001-08:00

Why Sequestration May Not Actually Reduce America’s Deficit

By Travis Waldron

The United States is on the brink of sequestration, the $1.2 trillion in automatic budget cuts included in the summer 2011 deficit deal that will begin taking effect March 1 if Congress does not act to avert them. The goal of the cuts is to reduce America’s budget deficit, which remains Washington’s focus even as unemployment is high and the overall economic recovery is modest at best.

Despite the $85 billion in cuts that will take place this year, it is entirely possible that sequestration won’t actually lead to substantial shrinking of America’s deficit. There are a number of reasons for that, as Scott Lilly from the Center for American Progress explained in a column today. The primary reason, though, is that fiscal contraction caused by sequestration is likely to slow economic growth, reducing tax revenue and preventing meaningful deficit reduction, as CAP’s Adam Hersh notes:

Figure 1 also shows that the projected effect of the sequester will be to lower U.S. economic output by $287 billion from where we would be without any fiscal contraction—barely ahead of where the U.S. economy was at the end of 2012. To be certain—with sequestration on top of other fiscal contraction draining so much momentum—the U.S. economy would need to steer clear of all other risks to growth: potential oil- and commodity-price shocks, slowing global demand for U.S. exports, and the faltering confidence in the governability of U.S. economic policy. It is possible none of those risks will rear their ugly heads in the next year, but it would be foolish to bet America’s economic future on it.

Lilly estimates that the cuts could result in $17 billion in lost revenue this year, but because reducing government investment will also inhibit private sector growth, the effects may be even bigger than the Congressional Budget Office projects:
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Government is intertwined with private-sector activity throughout much of the economy, and in many instances, a reduction in government activity will cause commensurate reduction in private-sector activity. That will damage not only the nation’s economy but also the revenue that the government collects based on the strength of the economy. It is difficult to project with any accuracy how much overall economic activity might be affected by the sequester, but it is very likely that it will be by an amount much larger than is projected by standard econometric modeling.

It may seem counter-intuitive to say that cutting spending won’t reduce the deficit, but Europe provides evidence that that could be the case. The result of fiscal contraction in Europe has been slower economic growth, second (and possibly third) recessions, and high unemployment, all of which has hampered deficit reduction efforts. Spain and France have both missed deficit reduction targets because of slow growth. When the United Kingdom’s austerity efforts began in 2010, finance leaders projected its deficits would fall from 4.8 percent of the total economy to just 1.9 percent by now. Instead, three years and a second recession later, it stands at 4.3 percent.

If America’s goal is to reduce long-term deficits and debt, the fastest way to do so would be to invest more money now into programs that will foster job creation and economic growth. Previous economic downturns were bolstered by government spending, and the current recovery was aided by initial efforts to stimulate the economy. Focusing on spending cuts and other austerity measures now, however, will only hamper growth, meaning, as Lilly wrote, “the savings that can reasonably be expected from sequestration is far less than $85 billion promised, and the fact is there could be no savings at all.”

The Sequester, a celebration of greed, corruption and stupidity. A Beltway circle jerk..

2013-02-22T07:36:00.001-08:00

Sequester of Fools

By PAUL KRUGMAN

Published: February 21, 2013

They’re baaack! Just about two years ago, Erskine Bowles and Alan Simpson, the co-chairmen of the late unlamented debt commission, warned us to expect a terrible fiscal crisis within, um, two years unless we adopted their plan. The crisis hasn’t materialized, but they’re nonetheless back with a new version. And, in case you’re interested, after last year’s election — in which American voters made it clear that they want to preserve the social safety net while raising taxes on the rich — the famous fomenters of fiscal fear have moved to the right, calling for even less revenue and even more spending cuts.

But you aren’t interested, are you? Almost nobody is. Messrs. Bowles and Simpson had their moment — the annus horribilis of 2011, when Washington was in thrall to deficit scolds insisting that, in the face of record-high long-term unemployment and record-low borrowing costs, we forget about jobs and concentrate exclusively on a “grand bargain” that would supposedly (not actually) settle budget disputes for ever after.

That moment has now passed; even Mr. Bowles concedes that the search for a grand bargain is on “life support.” Let’s convene a death panel! But the legacy of that year of living foolishly lives on, in the form of the “sequester,” one of the worst policy ideas in our nation’s history.

Here’s how it happened: Republicans engaged in unprecedented hostage-taking, threatening to push America into default by refusing to raise the debt ceiling unless President Obama agreed to a grand bargain on their terms. Mr. Obama, alas, didn’t stand firm; instead, he tried to buy time. And, somehow, both sides decided that the way to buy time was to create a fiscal doomsday machine that would inflict gratuitous damage on the nation through spending cuts unless a grand bargain was reached. Sure enough, there is no bargain, and the doomsday machine will go off at the end of next week.

There’s a silly debate under way about who bears responsibility for the sequester, which almost everyone now agrees was a really bad idea. The truth is that Republicans and Democrats alike signed on to this idea. But that’s water under the bridge. The question we should be asking is who has a better plan for dealing with the aftermath of that shared mistake.

The right policy would be to forget about the whole thing. America doesn’t face a deficit crisis, nor will it face such a crisis anytime soon. Meanwhile, we have a weak economy that is recovering far too slowly from the recession that began in 2007. And, as Janet Yellen, the vice chairwoman of the Federal Reserve, recently emphasized, one main reason for the sluggish recovery is that government spending has been far weaker in this business cycle than in the past. We should be spending more, not less, until we’re close to full employment; the sequester is exactly what the doctor didn’t order.

Unfortunately, neither party is proposing that we just call the whole thing off. But the proposal from Senate Democrats at least moves in the right direction, replacing the most destructive spending cuts — those that fall on the most vulnerable members of our society — with tax increases on the wealthy, and delaying austerity in a way that would protect the economy.

House Republicans, on the other hand, want to take everything that’s bad about the sequester and make it worse: canceling cuts in the defense budget, which actually does contain a lot of waste and fraud, and replacing them with severe cuts in aid to America’s neediest. This would hit the nation with a double whammy, reducing growth while increasing injustice.

As always, many pundits want to portray the deadlock over the sequester as a situation in which both sides are at fault, and in which both should give ground. But there’s really no symmetry here. A middle-of-the-road solution would presumably involve a mix of spending cuts and tax increases; well, that’s what Democrats are proposing, while Republicans are adamant that it should be cuts only. And given that the proposed Republican cuts would be even worse than those set to happen under the sequester, it’s hard to see why Democrats should negotiate at all, as opposed to just letting the sequester happen.

So here we go. The good news is that compared with our last two self-inflicted crises, the sequester is relatively small potatoes. A failure to raise the debt ceiling would have threatened chaos in world financial markets; failure to reach a deal on the so-called fiscal cliff would have led to so much sudden austerity that we might well have plunged back into recession. The sequester, by contrast, will probably cost “only” around 700,000 jobs.

But the looming mess remains a monument to the power of truly bad ideas — ideas that the entire Washington establishment was somehow convinced represented deep wisdom.

Of course the pundits on tv and the corrupt politicians in DC will get this storm backward and say it shows the world is not warmer.

2013-02-09T07:24:00.000-08:00

Climate Change And The Blizzard: Nor'easters More Fierce With Global Warming, Scientists Say

Lynne Peeples
02/08/2013 8:41 pm EST

A car sits in the ditch as a winter snow storm bears down on Buffalo, N.Y., on Friday. (AP)

Climate change may or may not have helped generate the nor'easter lashing the East Coast this weekend. Such storms happen with some regularity, after all. But the amount of snow the storm called "Nemo" ultimately dumps, and the extent of flood damage it leaves in its wake, may well have ties to global warming, climate scientists suggested.

Michael Mann, a climatologist who directs the Earth System Science Center at Pennsylvania State University, compared a major storm like Nemo -- or Hurricane Irene or Superstorm Sandy, for that matter -- to a basketball slam-dunk with a lower net.

"If you take the basketball court and raise it a foot, you're going to see more slam-dunks," Mann said. "Not every dunk is due to raising the floor, but you'll start seeing them happen more often then they ought to."

The two key ingredients in a big snow: just cold-enough temperatures and a lot of moisture. Combine the chilled air converging on the East with the massive moisture coming from the Gulf of Mexico region and you've got the "perfect setup for a big storm," Kevin Trenberth, of the Climate Analysis Section at the National Center for Atmospheric Research in Colorado, told The Huffington Post in an email.

As Trenberth explained, the ideal temperature for a blizzard is just below freezing -- just cold enough to crystalize water into snow. Below that, the atmosphere's ability to hold moisture to create those snowflakes drops by 4 percent for every one degree Fahrenheit fall in temperature.

"In the past, temperatures at this time of year would have been a lot below freezing," Trenberth said. In other words, it's been too cold to snow heavily. But that may become less of an obstacle for snow in the Northeast.

In addition to warming the air, climate change is adding moisture to it.

Sea surface temperatures are about two degrees Fahrenheit warmer than they were before 1980, raising the potential for a big snow by about 10 percent, according to Trenberth. And any individual storm, including this nor'easter, will pick up more moisture as it spins across a warmer ocean. What's more, as Mann explained, a warm ocean clashes with cold air masses from the Arctic. A bigger contrast in temperatures may mean a bigger storm, he said.

Michael Oppenheimer, a climate change expert at Princeton University, said global warming is increasing extreme storms. "Storms like this tend to be heavier than they used to be," he told HuffPost. "That's a fact."

As HuffPost reported on Friday, National Oceanic and Atmospheric Administration records show that the Northeast saw a 74 percent increase in precipitation during the heaviest rain and snow events from 1958 to 2011.

Still, connecting any specific weather event to global warming remains inexact. A new area of study called "event attribution science" is mining data in an attempt to make more definitive links, or at least better gauge the odds of an extreme event in the context of climate change that results partly from human activities, including burning fossil fuels. But the field is young.

And, truth is, nor'easters happen.

In fact, Jeff Masters, a climatologist and founder of Weather Underground, noted that the number of intense nor'easters hasn't increased over the last three or four decades. A warmer climate, he explained, can decrease the length of the snowy season, and therefore the time window for nor'easters.

Further, nor'easters are defined not only by heavy snowfall, but by high winds. There's less evidence for links between winter winds and climate change. Warm weather storms, such as Hurricane Irene and Superstorm Sandy, are another story. "Since hurricanes are heat engines, they drive power from ocean waters," said Masters.

Another climate-linked ingredient could propel this weekend's storm into the history books: rising sea levels.

"A three-foot storm surge, on top of a higher sea level, will do more damage," Masters said, noting that sea levels in Boston, expected to bear the brunt of the nor'easter with an historic storm surge, have risen a foot in the last 90 years.

Penn State's Mann also likes to use baseball metaphors when describing climate's influence on major storms -- "home runs," he calls them. "What we're seeing now with climate change is weather on steroids."

If Dan Quayle And Ayn Rand had a child. Speaking Stupid in the Senate, Rand Paul.

2013-01-28T10:34:00.000-08:00

At least someone is doing something about the corporatist "Justice" Departments assault on our Constitution. THANKS Anonymous!

2013-01-26T07:49:00.001-08:00

Anonymous Hacks U.S. Government Site, Threatens Supreme 'Warheads'

Chris Taylor

The hacktivist group Anonymous hacked the US federal sentencing website early Saturday, using the page to make a brazen and boisterous declaration of "war" on the U.S. government.

The group claims mysterious code-based "warheads", named for each of the Supreme Court Justices, are about to be deployed.

As of midnight Pacific time, the front page of Ussc.gov — the Federal agency that establishes sentencing policies and practices for the Federal courts — is filled with a long screed in green on black, together with this YouTube video:

All areas of ussc.gov other than the front page appear to be functioning normally. In other words, there's no denial of service attack or widespread vandalism. (Update, an hour later: it's getting a little slow and has all the hallmarks of a DDoS.)

At the bottom of the page is a series of nine files, mirrored three times. Each file is named for a current U.S. Supreme Court Justice.

The statement opens with a lament for Aaron Swartz, the Reddit programmer and Internet activist who committed suicide earlier this month. Promising revenge for his treatment at the hands of a federal prosecutor, the screed veers into some of the most inflammatory — dare we say hyperbolic — language we've seen on a simple front page hack.

The group talks of planting "multiple warheads" on "compromised systems" on various unnamed websites, and encourages members to download a given file from ussc.gov that is "primed, armed and quietly distributed to numerous mirrors." It has given the warhead "launch" the name of "Operation Last Resort," the text said:

There has been a lot of fuss recently in the technological media regarding such operations as Red October, the widespread use of vulnerable browsers and the availability of zero-day exploits for these browsers and their plugins. None of this comes of course as any surprise to us, but it is perhaps good that those within the information security industry are making the extent of these threats more widely understood.

Still there is nothing quite as educational as a well-conducted demonstration...

Through this websites and various others that will remain unnamed, we have been conducting our own infiltration. We did not restrict ourselves like the FBI to one high-profile compromise. We are far more ambitious, and far more capable. Over the last two weeks we have wound down this operation, removed all traces of leakware from the compromised systems, and taken down the injection apparatus used to detect and exploit vulnerable machines.

We have enough fissile material for multiple warheads. Today we are launching the first of these. Operation Last Resort has begun...

Here's the list of files the group is encouraging its followers to download:

What's in the files, and does it have anything to do with the recent "Red October" series of security breaches, thought to be prevalent in China and Russia? Anonymous plays coy:

The contents are various and we won't ruin the speculation by revealing them. Suffice it to say, everyone has secrets, and some things are not meant to be public. At a regular interval commencing today, we will choose one media outlet and supply them with heavily redacted partial contents of the file. Any media outlets wishing to be eligible for this program must include within their reporting a means of secure communications.
We have not taken this action lightly, nor without consideration of the possible consequences. Should we be forced to reveal the trigger-key to this warhead, we understand that there will be collateral damage. We appreciate that many who work within the justice system believe in those principles that it has lost, corrupted, or abandoned, that they do not bear the full responsibility for the damages caused by their occupation.
It is our hope that this warhead need never be detonated.

What "collateral damage" is the hacktivist group talking about — and is there anything to their threats? We're continuing to update this story, but give us your take in the comments.

Corporatist DINO Obama has done more to help Corporations and TBTF Banks than any Prez. since WW11

2013-01-18T08:25:00.000-08:00

Corporate Profits Have Grown By 171 Percent Under ‘Anti-Business’ Obama

By Pat Garofalo posted from ThinkProgress Economy

Business executives like to portray the Obama administration as the “most anti-business” in history, creating an “increasingly hostile environment for investment and job creation.” However, the data tells a far different story. According to a Bloomberg News analysis, corporate profits have grown by 171 percent under Obama, the most in the post-war era:

U.S. corporations’ after-tax profits have grown by 171 percent under Obama, more than under any president since World War II, and are now at their highest level relative to the size of the economy since the government began keeping records in 1947, according to data compiled by Bloomberg.

Profits are more than twice as high as their peak during President Ronald Reagan’s administration and more than 50 percent greater than during the late-1990s Internet boom, measured by the size of the economy.

Average annual corporate profit growth under Obama is the highest since 1900, whereas profit growth declined during both Bush presidencies. As a share of the economy, corporate profits have never been higher.

Unfortunately, this profit deluge has not been shared by workers, whose wages as a percentage of the economy have fallen to all-time lows. Workers also got dinged by the recent increase in the payroll tax, which was large enough to wipe out a minimum wage increase in some states.

The elite deficit scolds pushing the "Fiscal Cliff" fantasy will not stop once January arrives and nothing happens, the news folk will still worship at their feet.

2012-12-24T08:46:00.001-08:00

When Prophecy Fails

By PAUL KRUGMAN

Back in the 1950s three social psychologists joined a cult that was predicting the imminent end of the world. Their purpose was to observe the cultists’ response when the world did not, in fact, end on schedule. What they discovered, and described in their classic book, “When Prophecy Fails,” is that the irrefutable failure of a prophecy does not cause true believers — people who have committed themselves to a belief both emotionally and by their life choices — to reconsider. On the contrary, they become even more fervent, and proselytize even harder.

This insight seems highly relevant as 2012 draws to a close. After all, a lot of people came to believe that we were on the brink of catastrophe — and these views were given extraordinary reach by the mass media. As it turned out, of course, the predicted catastrophe failed to materialize. But we can be sure that the cultists won’t admit to having been wrong. No, the people who told us that a fiscal crisis was imminent will just keep at it, more convinced than ever.

Oh, wait a second — did you think I was talking about the Mayan calendar thing?

Seriously, at every stage of our ongoing economic crisis — and in particular, every time anyone has suggested actually trying to do something about mass unemployment — a chorus of voices has warned that unless we bring down budget deficits now now now, financial markets will turn on America, driving interest rates sky-high. And these prophecies of doom have had a powerful effect on our economic discourse.

Thus, back in May 2009 the Wall Street Journal editorial page seized on an uptick in long-term interest rates to declare that the “bond vigilantes,” the “disciplinarians of U.S. policy makers,” had arrived, and would push rates inexorably higher if big budget deficits continued. As it happened, rates soon went back down. But that didn’t stop The Journal’s news section from rolling out the same story the next time rates rose: “Debt fears send rates up,” blared a headline in March 2010; the debt continued to grow, but the rates went down again.

At this point the yield on the benchmark 10-year bond is less than half what it was when that 2009 editorial was published. But don’t expect any rethinking on The Journal’s part.

Now, you could say that The Journal’s editors didn’t give a specific date for the fiscal apocalypse, although I doubt that any of their readers imagined that they were talking about an event at least three years and seven months in the future.

In any case, some of the most prominent deficit scolds have indeed been willing to talk about dates, or at least time horizons. In early 2011 Erskine Bowles confidently declared that we would face a fiscal crisis within around two years unless something like the Bowles-Simpson deficit plan was enacted, and Alan Simpson chimed in to say that it would be less than two years. I guess he has about 10 weeks left. But again, don’t expect either Mr. Simpson or Mr. Bowles to admit that there might have been something fundamentally wrong with their analysis.

No, very few of the prophets of fiscal doom have acknowledged the failure of their prophecies to come true so far. And those who have admitted surprise seem more annoyed than chastened. For example, back in 2010 Alan Greenspan — who is, for some reason, still treated as an authority figure — conceded that despite large budget deficits, “inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued.” But he went on to declare, “This is regrettable, because it is fostering a sense of complacency.” How dare reality not validate my fears!

Regular readers know that I and other economists argued from the beginning that these dire warnings of fiscal catastrophe were all wrong, that budget deficits won’t cause soaring interest rates as long as the economy is depressed — and that the biggest risk to the economy is that we might try to slash the deficit too soon. And surely that point of view has been strongly validated by events.

The key thing we need to understand, however, is that the prophets of fiscal disaster, no matter how respectable they may seem, are at this point effectively members of a doomsday cult. They are emotionally and professionally committed to the belief that fiscal crisis lurks just around the corner, and they will hold to their belief no matter how many corners we turn without encountering that crisis.

So we cannot and will not persuade these people to reconsider their views in the light of the evidence. All we can do is stop paying attention. It’s going to be difficult, because many members of the deficit cult seem highly respectable. But they’ve been hugely, absurdly wrong for years on end, and it’s time to stop taking them seriously.

Obama & Pelosi indicate she and the republicrats in her caucus are willing to throw the poor and middle class under the bus to protect the rich.

2012-12-18T20:42:00.000-08:00

Nancy Pelosi Predicts 'Democrats Will Stick With The President' On Fiscal Cliff Deal

Sam Stein
Amanda Terkel

House Minority Leader Nancy Pelosi (D-Calif.) said she expects Democrats to back President Barack Obama's fiscal cliff deal. (AP Photo/J. Scott Applewhite, File)

WASHINGTON -- House Minority Leader Nancy Pelosi (D-Calif.) is convinced her fellow Democrats will get behind the White House's latest "fiscal cliff" deal that cuts Social Security benefits and increases taxes on the middle class. Others in the party, however, hedged on the likelihood of that provision passing with a majority of Democratic votes.

President Barack Obama's latest offer in the fiscal cliff negotiations would allow the payroll tax holiday to expire, meaning middle-class workers will see smaller paychecks in 2013. It also proposes a Social Security reform known as "chained CPI" that would reduce the benefits senior citizens receive through Social Security.

Additionally, Obama's latest offer would permanently extend the Bush tax cuts for incomes of less than $400,000. Previously, the president had insisted that taxes increase on families with income above $250,000.

Despite these changes, Pelosi said she could convince her caucus to get behind such a plan, if need be.

Read More; Here

The "fiscal cliff" is a fiscal bluff that is being hyped by both side to ram through polices that protect the rich, and decimate the middle class and poor.

2012-12-14T08:32:00.001-08:00

The G.O.P.’s Existential Crisis

By PAUL KRUGMAN

Published: December 13, 2012

We are not having a debt crisis.

Fred R. Conrad/The New York Times

It’s important to make this point, because I keep seeing articles about the “fiscal cliff” that do, in fact, describe it — often in the headline — as a debt crisis. But it isn’t. The U.S. government is having no trouble borrowing to cover its deficit. In fact, its borrowing costs are near historic lows. And even the confrontation over the debt ceiling that looms a few months from now if we do somehow manage to avoid going over the fiscal cliff isn’t really about debt.

No, what we’re having is a political crisis, born of the fact that one of our two great political parties has reached the end of a 30-year road. The modern Republican Party’s grand, radical agenda lies in ruins — but the party doesn’t know how to deal with that failure, and it retains enough power to do immense damage as it strikes out in frustration.

Before I talk about that reality, a word about the current state of budget “negotiations.”

Why the scare quotes? Because these aren’t normal negotiations in which each side presents specific proposals, and horse-trading proceeds until the two sides converge. By all accounts, Republicans have, so far, offered almost no specifics. They claim that they’re willing to raise $800 billion in revenue by closing loopholes, but they refuse to specify which loopholes they would close; they are demanding large cuts in spending, but the specific cuts they have been willing to lay out wouldn’t come close to delivering the savings they demand.

It’s a very peculiar situation. In effect, Republicans are saying to President Obama, “Come up with something that will make us happy.” He is, understandably, not willing to play that game. And so the talks are stuck.

Why won’t the Republicans get specific? Because they don’t know how. The truth is that, when it comes to spending, they’ve been faking it all along — not just in this election, but for decades. Which brings me to the nature of the current G.O.P. crisis.

Since the 1970s, the Republican Party has fallen increasingly under the influence of radical ideologues, whose goal is nothing less than the elimination of the welfare state — that is, the whole legacy of the New Deal and the Great Society. From the beginning, however, these ideologues have had a big problem: The programs they want to kill are very popular. Americans may nod their heads when you attack big government in the abstract, but they strongly support Social Security, Medicare, and even Medicaid. So what’s a radical to do?

The answer, for a long time, has involved two strategies. One is “starve the beast,” the idea of using tax cuts to reduce government revenue, then using the resulting lack of funds to force cuts in popular social programs. Whenever you see some Republican politician piously denouncing federal red ink, always remember that, for decades, the G.O.P. has seen budget deficits as a feature, not a bug.

Arguably more important in conservative thinking, however, was the notion that the G.O.P. could exploit other sources of strength — white resentment, working-class dislike of social change, tough talk on national security — to build overwhelming political dominance, at which point the dismantling of the welfare state could proceed freely. Just eight years ago, Grover Norquist, the antitax activist, looked forward cheerfully to the days when Democrats would be politically neutered: “Any farmer will tell you that certain animals run around and are unpleasant, but when they’ve been fixed, then they are happy and sedate.”

O.K., you see the problem: Democrats didn’t go along with the program, and refused to give up. Worse, from the Republican point of view, all of their party’s sources of strength have turned into weaknesses. Democratic dominance among Hispanics has overshadowed Republican dominance among southern whites; women’s rights have trumped the politics of abortion and antigay sentiment; and guess who finally did get Osama bin Laden.

And look at where we are now in terms of the welfare state: far from killing it, Republicans now have to watch as Mr. Obama implements the biggest expansion of social insurance since the creation of Medicare.

So Republicans have suffered more than an election defeat, they’ve seen the collapse of a decades-long project. And with their grandiose goals now out of reach, they literally have no idea what they want — hence their inability to make specific demands.

It’s a dangerous situation. The G.O.P. is lost and rudderless, bitter and angry, but it still controls the House and, therefore, retains the ability to do a lot of harm, as it lashes out in the death throes of the conservative dream.

Our best hope is that business interests will use their influence to limit the damage. But the odds are that the next few years will be very, very ugly.

Obama policy of settling banking crimes with small fines compared to the illegal profits encourages law breaking.

2012-12-12T07:53:00.000-08:00

Obama Administration Essentially Admits That Some Banks Are Too Big To Jail, Which Is Troubling

One of the great things about being too big to fail is that you're also too big to jail, apparently.

So saith the Obama administration, via the New York Times, in its front-page story on Tuesday about HSBC's settlement with the government over money-laundering charges. Though the British banking giant had to pay a wrist-stinging $1.9 billion, the settlement helped it avoid formal criminal charges. The NYT quotes anonymous government officials who say they were skittish about indicting HSBC because formal charges would amount to a "death penalty" for the bank, potentially roiling the financial system.

This is at least three very specific flavors of bullshit.

For one thing, according to University of Notre Dame law professor Jimmy Gurulé, a former assistant U.S. Attorney General and former Undersecretary for Enforcement for the U.S. Treasury Department, the government could have formally charged Europe's biggest bank in such a way as to help it avoid death. The bank's U.S. business may have been disrupted for some time, but the bank could have survived. The punishment that was meted out -- taking about half a quarter's profit -- was so far removed from a "death penalty" that it can't possibly be a deterrent for any other big bank.

And even if the government felt it could not formally charge HSBC, it could easily have charged individuals at the bank without causing financial armageddon. Instead, not a single HSBC individual faces criminal prosecution, despite evidence that billions of dollars were laundered on behalf of Mexican drug lords, the Iranian government and other evildoers for years.

Nor have any individuals been charged at the five other big European banks that have also managed to dodge formal money-laundering charges in recent years, including British bank Standard Chartered, which entered its own deferred prosecution agreement on Monday. Apparently, all of this constant money laundering was done by robots.

"The message this is sending is if you want to engage in money laundering, make sure you're doing it within the context of your employment at a bank," Gurulé said in a phone interview. "And don't go small. Do it on a very large scale, and you won't get prosecuted."

"It's essentially telling the executives in these institutions crime pays," Neil Barofsky, former Special Inspector General for the Troubled Asset Relief Program, the government's bailout program, told CNN. "Go ahead, do whatever you want to do, enjoy your profits, and the worst thing that happens, well, you have some fines that really make up a couple of weeks of profits that you lose."

Finally, if the Obama administration's attitude about banks is truly that it is terrified of prosecuting them, for fear of upsetting the global economic order, then that is a damning statement about our financial system -- though it is of a piece with everything else we've learned since the crisis: If you're a bank and you're big enough, you're basically going to get away with everything short of murder. And maybe that, too. You can certainly create and sell toxic securities while also betting against them and trigger a global depression without having to worry about doing any jail time.

"Somebody else is bound to look for the next hole in the system at another international bank, and exploit it," Anthony Michael Sabino, a professor at St. John's University's Peter J. Tobin College of Business, wrote in an email. "It’s time we started asking are these banks just too big to meaningfully regulate.”

That time actually passed long ago.

The European economists like their American counter parts refuse to learn from their own actions. Debt and spending reduction during a recession doesn't work, stimulus does.

2012-12-07T07:30:00.000-08:00

Austerity Pushes Europe Into Its Second Recession In Four Years

By Travis Waldron

Continuing efforts to cut spending and reduce deficits have driven the Eurozone into its second recession in just four years, as its economy shrank for the second consecutive quarter. Struggling countries like Spain, Greece, Portugal, and Ireland are still pursuing deficit reduction to rein in their debt, cutting spending to the bone to do so. The spending cuts have driven unemployment to record levels and threatened the continent with a recession that became official during the last quarter, Bloomberg reports:

The euro-area economy was pushed into a recession for the second time in four years as trade slowed and government spending declined.

Gross domestic product in the 17-nation currency bloc slipped 0.1 percent in the third quarter from the previous three months, when it fell 0.2 percent, the European Union’s statistics office in Luxembourg said today, confirming an initial estimate published on Nov. 15.

Eurozone unemployment reached 26 percent in September. The youth unemployment rate has topped 50 percent and resulted in a “lost generation” for the continent’s young adults. Still, the pursuit of austerity continues.

Lawmakers around the world have ignored the European lesson, though. Australia’s growth slowed last quarter as its government pursued deficit reduction, and in the United States, the so-called “fiscal cliff” brought on by Republican-demanded spending cuts is threatening the country with a bigger austerity package than those that have been implemented in Europe, even with ample proof that the U.S.’s original preference toward stimulus was more effective than the austere European approach.

Non wealthy Republicans, are delusional travelers to crazy town, who vote against their own interests and believe ACORN stole election.

2012-12-05T07:34:00.000-08:00

Nearly Half Of Republicans Believe Defunct Organization Stole The Election For Obama

By Annie-Rose Strasser

Forty nine percent of Republicans believe that President Obama won reelection thanks to the allegedly illegal work of a group that no longer exists, according to a Public Policy Polling survey.
The Association of Community Organizations for Reform Now (ACORN) was at the center of anti-Obama energy in 2008, when Republicans cited some faulty registration forms obtained by ACORN as proof of voter fraud. The charge was particularly potent, since Obama hired one of the organizations associated with ACORN to run voter turnout for him in the primary.

But in 2010, ACORN filed Chapter 7 bankruptcy, putting an end to the community organizing effort altogether. Still, the fact that ACORN no longer exists hasn’t stopped the group from serving its role as scapegoat. Fifty two percent of Republicans blamed ACORN for Obama’s win in 2008, saying that they “stole” the election for him. That number only dropped by 3 percent, and 49 percent blame ACORN this time around.

Iceland the proof of the Austerity LIE. Iceland, a beacon of economic sanity, doing well in a world of economic crazies.

2012-12-03T08:09:00.000-08:00

Truthdiggers of the Week: Iceland’s Leaders

by Alexander Reed Kelly.

One country refused to bail out its derelict banks and slash social spending amid the financial crisis. And guess what? Unlike the eurozone and the United States, it’s making a sturdy comeback.

Iceland’s stock market plunged 90 percent in 2008. Inflation reached 18 percent, unemployment shot up ninefold and its biggest banks failed. This was no recession. It was a full-blown depression.

Since then, the country has steadily improved. By September of this year, it repaid its IMF rescue loans ahead of schedule. Unemployment dropped by half and its economy will have grown by roughly 2.5 percent by the beginning of 2013.

So what’s Iceland’s secret? According to the editors at Bloomberg News, it’s a refusal to do what virtually every other nation that was pummeled by the crisis did: adopt policies of economic austerity.Iceland’s approach was the polar opposite of the U.S. and Europe, which rescued their banks and did little to aid indebted homeowners. Although lessons drawn from Iceland, with just 320,000 people and an economy based on fishing, aluminum production and tourism, might not be readily transferable to bigger countries, its rebound suggests there’s more than one way to recover from a financial meltdown.

Nothing distinguishes Iceland as much as its aid to consumers. To homeowners with negative equity, the country offered write-offs that would wipe out debt above 110 percent of the property value. The government also provided means-tested subsidies to reduce mortgage-interest expenses: Those with lower earnings, less home equity and children were granted the most generous support

The International Monetary Fund’s mission chief to Iceland has sung the nation’s praises too. “Iceland has made significant achievements since the crisis,” Daria V. Zakharova told Bloomberg in August. “We have a very positive outlook on growth, especially for this year and next year because it appears to us that the growth is broad based.”

Letting the losses fall on bondholders rather than taxpayers, maintaining the country’s welfare system and imposing temporary controls on investments protected Iceland from collapse and pushed it toward recovery, she said.

American leaders are threatening to do the opposite at the end of this year when a potential failure to reach a deficit reduction deal will trigger a total of $54.7 billion in spending cuts from government offices and social programs, Medicare among them, per year.

Nobel Prize-winning economist Paul Krugman agrees that cuts to the social safety net are not the way. Ideology should not trump empirically based economics, he says. But right now, in the United States, it is. Krugman writes:

The doctrine in question amounts to the assertion that, in the aftermath of a financial crisis, banks must be bailed out but the general public must pay the price. So a crisis brought on by deregulation becomes a reason to move even further to the right; a time of mass unemployment, instead of spurring public efforts to create jobs, becomes an era of austerity, in which government spending and social programs are slashed.

Even in the face of evidence, including a recent return to recession for the eurozone economy, elected officials on the right and left are pushing what serious economists recognize as failed policies. And it appears they will continue to do so for the indefinite future. In the meantime, we honor the reality-based leaders in Iceland as our Truthdiggers of the Week.

Obama asks Republicans to make him screw the 99% and protect the 1%, with the "Grand Bargain"

2012-11-28T09:28:00.000-08:00

Obama and Boehner about to finally put it to the 99% and protect 1%

Why does Obama seem to get rolled by republicans even when he is in a strong bargaining position, because he wants to get rolled. He isn't weak he is just doing what he feels will get him what he wants with offense to the fewest number of people.

Obama is not a wild eyed liberal socialist. Obama is a conservative corporatist, to the right of Ronald Reagan. He wants to protect the wealthy and Wall Street, he wants to be the first president to cut medicare and social security. He has increased government spying on citizens, he doesn't want to restrict corporate spying on individuals. He pushed a health care bill that was a wet kiss to the insurance industry, and would not allow even talk of some kind of public option let alone single payer (medicare for all). Obama believes in trickle down economics, when ever he asks for economic stimulus the lions share he proposes is tax cuts.

Obama's main problem is that Americans are progressive and he is conservative. Americans want to tax the rich, Obama doesn't, Americans want to help home owners, Obama wants to help the banks. But Obama has a very strong ally, the Republican party. So Obama is a very talented politician, and he knows that if he talks progressive, but bargains poorly with conservatives he will arrive at the conservative position he desires while being able to to say its not my fault, they made me do it.

This “Grand Bargain” is a perfect example of how Obama works. He has created a false crisis at the end of the year, the “Fiscal Cliff”. There is no crisis, if nothing was done, middle class taxes would go up very slightly and the wealthy would go back to paying the tax rate they paid under Clinton, NO PROBLEM. The new revenue would be a great boon to lowering our national debt and balancing our budget. But Obama wants to keep taxes low on corporations and the wealthy, so he and his allays in the Republican party will create this “Grand Bargain” where Obama will be forced by Republican intransigence to accept a deal where there is a slight rise in the capital gains rate (15% to 18 or 20%) no change in the marginal rates with a few under used loop holes closed, but with cuts to Medicade, Medicare and if he is really lucky Social Security.

The middle class will pay more in taxes and the rich will not. in a year or two the loop holes will be back and the rich will be paying a lower effective tax rate.

But some one has to pay for all these gifts to the wealthy, so middle class get ready to kiss your mortgage deduction good bye.

Republicrats & Obama are getting ready to commit the "Grand Rape" of the Middle Class. Taxes from the 99.9% NOTHING from the .1% !

2012-11-27T08:40:00.000-08:00

Paul Krugman: Republicans Seem Ready To Throw Upper Middle Class 'Overboard'

By Bonnie Kavoussi

Paul Krugman says that the Republican Party may throw the modestly rich "overboard" to protect the fortunes of multi-millionaires.

In a blog post on Tuesday, Krugman focuses on one tax proposal floated by Congressional Republicans that would essentially create a "tax bubble," disproportionately hurting the upper middle class. (Nate Silver has an explanation and a chart here.) Krugman writes that taking this tack would let the GOP protect the super-rich at the expense of the working rich (using the decades-old language of Oliver Stone's Wall Street) who make six-figure salaries.

"When push comes to shove, the GOP seems ready to throw the bottom 90 percent of the top 1 percent overboard, in order to protect its real patrons, the superelite," Krugman writes.

The Obama administration and Congress are in talks to reach an agreement avoiding the fiscal cliff: a set of tax hikes and spending cuts scheduled to take place at the end of the year if they do not agree on a deficit reduction plan.

Some Congressional Republicans, including House Speaker John Boehner, have said they are open to raising tax revenue but remain opposed to raising marginal tax rates. Here's a great explanation of marginal tax rates from economist Dean Baker (h/t Jason Linkins):

The tax system brackets give marginal rates. This means that if the raise bumps you into a higher bracket then you pay more taxes only on the income in the higher bracket. Suppose that the tax bracket for income under $200k is 25 percent, and for income over $200k is 33 percent. If you get a raise that pushes your income from $195,000 to $205,000 then you only pay the higher 33 percent tax rate on the $5,000 that is above the $200k threshold not your whole income. Therefore, there is no (as in none, nada, not any) way that getting more money, and being pushed into a higher tax bracket will leave you with less money after taxes.

One Republican proposal would tax a household's entire income at the highest rate possible, rather than just the portion of income that exceeds a certain limit. Doing so would penalize some people for making more money, as Nate Silver noted.

Republican Congressmen also have proposed raising tax revenue by limiting deductions, which could disproportionately hurt the upper middle class. Some Senate Democrats have said they are open to capping deductions.

At least wal-mart keeps its sweat shop fires off shore so as not to bother US shoppers.

2012-11-26T08:38:00.004-08:00

Bangladesh Factory Fire Kills At Least 112 in Wal-Mart Sweatshop

By Diane Sweet

At least 112 employees of a Bangledesh garment factory perished in a blaze late Saturday after becoming trapped inside the building with no fire exits. The factory produced clothing for Wal-Mart, and other U.S. retailers. Were your Black Friday deals worth it?

There was no escape. A fire claimed 112 workers in a garment factory near the capital of Bangladesh late Saturday. A fire official said their last moments were spent in panic as they searched in vain for fire exits leading outside. “I want the factory owner to be hanged,” said one grieving mother who lost her daughter-in-law in the fire and whose son is still missing. “For him, many have died.” Firefighters have recovered 100 bodies from the gutted seven-story factory. Many of Bangladesh’s 4,000 garment shops lack proper fire protections.
The Telegraph:

"The factory had three staircases, and all of them were down through the ground floor," Mahbub said. "So the workers could not come out when the fire engulfed the building."
"Had there been at least one emergency exit through outside the factory, the casualties would have been much lower," he said.

Many of the victims were burned beyond recognition. The recovered bodies were kept in rows on the premise of a nearby school.

Army soldiers and paramilitary border guards were deployed to help police keep the situation under control as thousands of onlookers and anxious relatives of the factory workers gathered at the scene, Mahbub said. He would not say how many people were still missing.

Bangladesh's garment factories make clothes for brands including Wal-Mart, JC Penney, H&M, Marks & Spencer, Carrefour and Tesco.

Private equity firms like Bain Cap. are classic examples of crony capitalism and enemies of free market capitalism.

2012-10-18T11:48:00.001-07:00

The Dirty Little Secret of Private Equity Profits

Wednesday, 17 October 2012 11:41 By Jim Hightower

Today, for the first time, I am officially notifying the honchos of Bain Capital, Blackstone Group, Carlyle Group, Kohlberg Kravis Roberts and other big-time private equity funds that I am available. My little company, Saddle Burr Productions, can be had. For a price.

I publish this notice in response to a recent news item revealing that these firms have a unique and perplexing problem: They have too much money on hand. In all, they're holding a cool trillion dollars that super-rich speculators, banks and others have entrusted to them. Private equity funds are corporate predators that borrow huge sums from these richies, using the cash to buy out targeted corporations, dismantle them and sell off the parts to make a fat profit for the investors and themselves.

However, in these iffy economic times, these flush funds have hesitated to do big takeovers, so they've just been sitting on all that money (which the predators refer to as "dry powder"). The problem is that, under the rules of this high-stakes casino game, the firms have to spend their borrowed money by a set time -- or give it back. And the clock is ticking.

So, using Wall Street's macho lingo, the big players have announced that they're now ready to go "elephant hunting" and are prepared to fire big bucks to bag some companies. To which I say: Fire away at Saddle Burr Productions!

OK, my company is hardly an elephant. But maybe it could be what the equity hucksters refer to as a "hot potato." That's what they call it when one fund grabs a company just to sell it to another fund, which might pass it off to yet another.

This year, equity firms are expected to spend more than $22 billion this year selling hot potatoes to each other -- in part, just to move cash out the door so they don't have to give it back.

This is what passes for good business sense in the truly screwy world of private equity. It's just churning money, producing absolutely nothing -- except, of course, huge fees for the churners. But if that's the game, hey, put me in the mix. A billion dollars sounds about right.

Executives in private equity firms -- such as Mitt Romney of Bain Capital and Henry Kravis of Kohlberg Kravis Roberts -- tend to be peacocks who think quite highly of themselves.
Fanning their splendid tail feathers, they unabashedly claim to be the ultimate free-enterprise risk-takers -- worth every dime of the multimillion-dollar paychecks they award themselves each year. Excuse me, but the risks by these self-anointed "heroes of the market" are actually taken with other people's money, not their own. That's quite a bit short of heroic. But here's a revelation that really ruffles their feathers: It seems they've been hauling in their massive profits not by bold and savvy competition in the marketplace, but through old-fashioned financial collusion with each other.

An antitrust civil lawsuit filed in federal court against 11 of the biggest equity firms includes internal emails in which they agree not to compete. In 2006, for example, yhe head of Blackstone sent an email to the co-founder of KKR: "We would much rather work with you guys than against you. Together we can be unstoppable, but in opposition we can cost each other a lot of money." The KKR honcho happily emailed back a one-word response: "Agreed."

Collusion, of course, perverts the marketplace they pretend to worship, artificially lowering the market price they'd otherwise pay. And they are not shy about playing this mutual backscratching game. In the 2008 takeover of the giant HCA hospital chain, KKR expressly asked its market rivals "to step down on HCA" and not bid. Agreeing to this blatantly illegal collusion, one rival wrote in an email: "All we can do is do unto others as we want them to do unto us. It will pay off in the long run."

For his part, Romney insists that any collusion by Bain occurred after he left the firm. "He had no role," says a spokeswoman. Well, none besides pocketing the loot. Documents from the lawsuit show that Romney clearly received millions in profits from deals that Bain appears to have made through its collusion in the grand game of market manipulation. If so, can we expect him to return those ill-gotten gains?