TPMCafe

VIDEO: Media Matters on The Craziness of the GOP and Racism of Fox

2009-11-07T01:35:47Z

This Media Matters video from Thursday's hate fest sums up the GOP today.

Even Nixon and Goldwater would not recognize these whack jobs.

And here is a Media Matters video on the racism of Fox news.

Republican - Richard Nixon - Barry Goldwater - United States - GOP

On U.S Middle East Policy and Amateurism

2009-11-06T23:23:46Z

This was not a good week for the Obama administration's Middle East peace efforts. Speaking alongside Israeli Prime Minister Netanyahu in Jerusalem last Saturday, Secretary Clinton seemed to be praising the distinctively partial limitations that Israel was willing to implement on settlement non-expansion. During the following days in Morocco and Cairo, she walked those remarks back, but the damage had been done.

By Thursday, the American-sponsored Palestinian President Mahmoud Abbas was sufficiently exasperated to announce that he will not be standing for re-election, and all week the media and political commentary on the U.S. approach was scathing about America's efforts--even by Middle East standards.

Speaking to the Washington Post, I described the U.S. approach of the past days as amateurish--a perhaps harsh, but unfortunately apt, label. On the positive side, I think the administration folks are themselves aware that this is not going swimmingly. The overall administration scorecard on Middle East peace is slipping into the red.

But first, let's be fair about that record.

The Obama administration merits significant credit for having acknowledged from the get-go that advancing a solution on Israel-Palestine, or at least reaching a post-occupation equilibrium, is a key American national interest--a realization that was belatedly groped at by the Bush administration and was set forth from day one by its successor. That displays a keen understanding of the centrality of how the Israeli-Palestinian issue impacts America's standing and ability to advance its goals, including the push back against extremism in the region and beyond. National Security adviser General Jones repeated the assertion last week at the J Street conference. Credit, too, for the administration for acting on this. A senior envoy, Senator Mitchell, was appointed on day two, and deployed shuttling back and forth to the region. The President delivered a ground-breaking speech in Cairo, the Arab world was deeply engaged (unlike the past), and a marker was set down on settlements. It was on this latter issue of settlements, however, where things began to unravel.

The Obama team's call for a comprehensive settlement freeze was consistent with past U.S. policy (notably Bush's Roadmap of 2003), although it was perhaps treated with more seriousness coming from the new 'hope and change' President. The Israel Prime Minister's answer came in June, and it was a rejectionist one: no full freeze, and no limitations whatsoever on settlements in East Jerusalem. That is when the malaise set in.

The administration had three possible options in responding:

1) Stick to its guns and calibrate a set of escalating consequences in response to possible ongoing Israeli recalcitrance.
2) Make a smart pivot by declaring, for instance, that if Israel could not for its own reasons freeze settlements, then this would make all the more urgent the need to quickly define and agree a border for an Israel-Palestine two-state solution. And the U.S. could reasonably have adopted a formula regarding that border (such as based on the 1967 lines, minor mutual modifications to accommodate settlements close to the Green Line in a one-to-one land swap). The U.S. could have explained to its Israeli friends that absent a defined border, the settlement freeze would have to be comprehensive, but in the discussion on borders, there could be more flexibility given the one-to-one land swaps.

3) Dig themselves into a hole. Insisting on a freeze, heightening expectations, without a plan for achieving that end, and by then acceding to talks with the Israeli government over koshering aspects of settlements expansion.

It is certainly legitimate for the administration to have not chosen option one, and to have decided that this was the wrong issue and/or wrong timing to escalate with the Netanyahu government. My own preference would have been for option two, and indeed, the administration could reasonably be perceived to have laid the ground deftly for such a pivot. Unfortunately, they went for option three, and it all came crashing down around their feet this week.

The Secretary's last minute stop in Cairo to round off the trip said it all. The Mubarak regime tried to help salvage some American pride, lining up behind the Secretary's efforts. Except that it is precisely the Mubarak government whose credibility is so severely questioned in the region, it is the largest Arab recipient of American financial assistance, and is obsessed with leadership succession--in short, getting a smile out of the Egyptian leader doesn't even register on the congratulatory charts.

There is nonetheless potentially good news in all of this. Those who are writing off the administration's peace efforts, friend and foe alike, are being premature in the extreme. This is a benefit of starting on day one--you can acknowledge the need for a course correction in month ten. In fact, it is not the new approach of the Obama administration that has failed, but rather, this is a moment of clarity regarding the bankruptcy of the old approach that has guided policy for over a decade and that the Obama team had inherited and embraced.

As Rob Malley and others have argued, what is needed now is a review (as has been conducted in other foreign policy areas) and a testing and likely abandonment of many of the prevailing policy assumptions. These might include the notion that one can incrementally build confidence between the sides when the prevailing reality is one of occupation, that bilateral negotiations between representatives of an occupied people and the occupying party can deliver de-occupation, that Palestinian political division should be encouraged (not overcome), or that proven self governance capacity under occupation is a precondition for freedom and independence.

If the goal still is Israel's security, recognition, and a guaranteed future as a democracy and a Jewish national home, alongside a secure, viable, and post-occupation Palestine and advancing America's national interest, and this should be the goal, then a new path is needed for reaching that destination. It will certainly require more international and U.S. lifting.

The Obama team is perfectly capable of charting a course from a bad week to a game-changing success, but more of the same won't get them there.

Middle East - Israel Prime Minister - Israel - Jerusalem - Warfare and Conflict

Holocaust and Health Care - Cut it Out or Else!

2009-11-06T19:27:15Z

Yesterday the National Jewish Democratic Council's (NJDC) President, David A. Harris, released a statement outlining the outrageous behavior of the crowd at the Tea Party "press conference" sponsored by the GOP House leadership. The crowd held signs noting that "Obama takes orders from the Rothchilds" [sic] and likening the Democratic health care legislation to Nazi Health Care as represented by corpses at the Dachau concentration camp. Contained in NJDC's release was a call to House Minority Leader John Boehner (R-OH) and House Republican Whip Eric Cantor (R-VA) to rid Republican events of these inappropriate Holocaust comparisons and outright anti-Semitic messages, and to clearly condemn them once and for all.

The House Republican Leader's press spokesperson replied, "Leader Boehner did not see any such sign. Obviously, it would be grossly inappropriate."

This morning The Washington Post's Dana Milbank reported that these signs and other comparably disgusting ones could not possibly have been missed by Boehner and other GOP members of Congress because they were right in front of the GOP speakers. Moreover, Milbank highlighted the comments of other GOP-sponsored speakers speaking about Reverend Wright brainwashing President Barack Obama to "damn America" and fuming about "death panels."

Boehner and the other GOP members present -- including GOP House Whip Eric Cantor, and Representatives Bachman (MN), Foxx (VA), Hensarling (TX), King (IA), Broun (GA), Schmidt (OH), Cassidy (LA), Akin (MO), and Carter (TX) -- can no longer hide behind weasel words like that they "did not see any such sign." This was their press conference and the signs were right in front of their faces. The spelling-impaired "Rothchilds" sign-holder was spouting nonsense about a "Jewish plot to introduce the anti-Christ." These were their own speakers spouting outright lies. This was their political base. These types of disgusting, inappropriate Holocaust comparisons and hate filled, paranoid messages have been a part of GOP and conservative events since the carefully planned town hall meetings of last summer.

So we call upon these Republican Congressional leaders to listen to morality and their conscience and cut this language out. It is offensive and it is corrosive to a democratic society. Make it clear that anyone who uses Holocaust comparisons is not welcome under the GOP tent. Make it clear that outright anti-Semitism has no place at any GOP event.

If appeals to conscience are not enough then we are making an appeal to their political self-interests: if these GOP congressional leaders don't call out this behavior now and in the future, the NJDC promises to "stick it in your ear" in the coming electoral cycle. We will take GOP Holocaust comparisons and anti-Semitic statements to the Jewish electorate and to other fair-minded American voters and paint you as the party of bigotry and insensitivity toward the Holocaust. You can count on it.

Republican - National Jewish Democratic Council - Health Care - Tea Party protests - David A. Harris

The New Normal

2009-11-06T18:21:33Z

Here is a scary thought. The Pareto Principle in economics says that 80% of the effects come from 20% of the causes. In practical terms it might mean that 20% of your movies at Warner Bros. would generate 80% of the revenue. Pareto himself noted that 80% of the wealth in Italy was held by 20% of the people.

This morning unemployment hit 10.2%, a 26 year high. Yesterday the Labor Department reported that productivity surged to 9.5%. The U.S. has worked hard to transform itself into a knowledge economy and companies like Google and Goldman Sachs record record revenues per worker. What if some version of the Pareto Principle begins to apply itself to employment--20% of the workers produce 80% of the GDP? Dan Greenhaus of Miller Taback & Co has the grim reality of our future.

We have argued and continue to argue that another jobless recovery is materializing and if our estimates for G.D.P. growth going forward materialize, the unemployment rate will remain at elevated levels for several years. Nearly 16 million people are unemployed right now while another 9 million are working part-time jobs because they cannot get a full-time job.

So here is the reality of life for the bottom 40% of America's families. After they pay for food, housing and transportation they have $1200 per year to spend on "discretionary items" like clothing, medicine and doctors. Never mind telephone, Internet or cable TV which are supposed to be middle class entitlements. I don't believe the 25 million underemployed people in this country are not going to sit on their hands passively zoned out in front of the TV set in the next two years, especially when they see Hedge Fund managers taking home $100 million bonuses for successfully taking down companies like Abitibi-Bowater, CIT, General Growth Properties, Six Flags and even General Motors with their brilliant government subsidized Credit Default Swaps and bond packages that forced the companies into bankruptcy.

In earlier times we had outsider artists who could articulate the rage like Woody Guthrie in the Depression.

Yes, as through this world I've wandered

I've seen lots of funny men;

Some will rob you with a six-gun,

And some with a fountain pen.

I believe it's going to take a new renaissance of rebellious artists, spiritual leaders and politicians to wake up the public to the reality of the real America. Glenn Beck has no solutions but to retreat to a fantasy world of the 1950's. The truth is that for more than half a century Republicans and Democrats alike have been prisoners of the conventional wisdom propounded by Wall Street bankers, military contractors, the Chamber of Commerce and their academic neoclassical economics enablers. The result is a hollowed out economy with no manufacturing base for exports except in making weapons of mass destruction, dependent on financial bubbles to keep the party going. Well, the party is over. Anyone who thought that just electing Barack Obama was the solution to our problems, misunderstood the institutional power of the Establishment and their conventional wisdom.

As I have said before, we are in an Interregnum where the old is dying, but the new cannot be born. Obama's election was just the start of what needs to be a new age of reform. Writing of the Progressive Era 100 years ago, Richard Hofstadter noted that the reform movement "was the effort to restore a type of economic individualism and political democracy that was widely believed to have existed earlier in America and to have been destroyed by the great corporation and the corrupt political machine."

Of course the task of Teddy Roosevelt, Upton Sinclair and the Muckrakers of 1904 was a lot easier than the task of Barack Obama. America was entering a period of technological mastery and export superiority. Jobs were plentiful. What TR had to do was break up the monopolies and end the corruption and greed in industries like meat packing and coal mining. Obama will have to do all of that (break up the Big Banks and reform the food and energy businesses), but his task will be far greater because he has to help create 30 million new jobs in the next few years. To do that we will need to remake our industrial base, because it's clear these jobs are not going to come from the existing knowledge and service economy that gets more productive by the day.

Warner Bros - Pareto Principle - Barack Obama - Economics - United States

Hindery Report on Effective Unemployment: 19.2%

2009-11-06T15:42:53Z

Each month when I get the official unemployment figures from the US government, I quickly search in my inbox for a note from former cable network CEO and senior economic adviser in the John Edwards and Barack Obama campaigns Leo Hindery who sends me the "effective unemployment" figures that many economic commentators from Joseph Stiglitz to Mort Zuckerman to Bob Herbert are begninning to use.

Official unemployment surged to 10.2% according to an announcement today.

Here is the Hindery Report on Effective Unemployment:

Using its Current Population Survey (CPS) of Non-Farm Jobs, the Bureau of Labor Statistics just announced this morning, November 6, 2009, that, "Total non-farm payroll employment declined by 190,000 in October and the unemployment rate crept to a 26-year high of 10.2 percent, up from 9.8 percent in September."
However, as we have been noting, the public BLS figures, while widely distributed, notably exclude changes in employment among the nation's 10,968,000 farm and self-employed workers, who are more than 7% of the Civilian Labor Force, and they do not take into account the 14,905,000 workers who are part-time-of-necessity (9,284,000), marginally attached (2, 373,000), or "discouraged" and have left the labor force (3,248,000).

The Summary of U.S. Effective Unemployment - more accurately (1) includes farm and self-employed workers and (2) accounts for effectively unemployed workers not in the official BLS announcement. This Summary also identifies various measures of weeks unemployed, job openings, and job shortfalls.

Accordingly, as adjusted, at the end of October 2009 or for the month:

1. Total combined employment - nonfarm, farm and self-employed - declined by 484,000 jobs in the month instead of the BLS-announced non-farm only figure of 190,000;

2. The total number of effectively unemployed and underemployed workers is 30,605,000 not the BLS-announced number of 15,700,000; and

3. The effective unemployment rate is 19.18% not the BLS-announced rate of 10.20%.

Since the official start of the recession in December 2007, the number of effectively unemployed and underemployed workers has increased by 13,723,000, instead of by the aggregate 8,159,000 jobs loss figure that the BLS officially reports. In contrast, we needed to create 2,376,000 new jobs in these 22 months just to keep up with the natural growth in the labor force of 108,000 workers per month.

For workers in the official Civilian Labor Force, the average number of weeks unemployed is now 26.9. And the number of workers unemployed 27 weeks and longer stands at 8,842,000 (i.e., 5,594,000 officially counted plus the 3,248,000 discouraged workers).

-- Steve Clemons publishes the popular political blog, The Washington Note and directs the American Strategy Program at the New America Foundation

Barack Obama - John Edwards - Federal government of the United States - United States - Unemployment

Fannie Mae's results - oh, and what if Bank of America reported the same way...

2009-11-06T14:06:22Z

There have been some mathematical corrections to this post discussed in the comments. My pencil notes had the numbers right. By the time I got to writing it out errors had entered. Sorry.

Fannie Mae just put out awful looking results based primarily on massive (and increasing) credit loss provisions. Indeed their provisions this quarter were the largest thus far in the cycle.

Its worth looking a little closer because - like it or not - all Americans are owners of Fannie - both the downside (their current book) and the upside (if any) through taxpayer ownership of the common stock.
The nature of credit loss provisions

Each quarter almost every financial institution takes some charges when loans they have made settle at less than 100c in the dollar. At the moment charge-offs are at historic highs.

Every quarter a company makes an estimate of future losses - a "provision" if you will.

Provisions by definition are estimates - whereas charge-offs are real and mostly final.

The difference between provisions and charge-offs goes to a "reserve for future losses" or more commonly just "reserves".

Most financial institutions are taking more provisions than charge-offs - in other words they are building reserves. This is necessary because there are a lot of delinquencies and a lot of loans in the foreclosure process and - just frankly - a lot of loans that common sense tells you will end in charge-off.

Most institutions build reserves relatively slowly. Bank of America for instance - in broad numbers - has had 13 billion of provisions per quarter for the last three quarters and charge-offs of 6,8 and 9 billion respectively. If the charge-offs skyrocket (say to 20 billion) at bank of America then it will find itself under-reserved - and will wind up having to report very big losses. However if charge-offs slowly level off around 13 billion per quarter then BofA will - ex-post - look OK.

The honest answer in the case of BofA is that we really do not know where charge-offs will wind up but we can make educated guesses. In the last conference call BofA thought charge-offs would peak about the first quarter of 2010. If they are right then their current reserving is right and BofA is probably a steal as a stock right now. If however charge-offs continue to rise for another 18 months peaking out at say $35 billion per quarter then BofA will need to be recapitalised further and may wind up as government property.

I am inclined to think that BofA's current educated guess (charge-offs peaking early next year) is a little optimistic - but not very optimistic and I am happily long Bank of America common shares. This is - as I stated - an educated guess. Other people I respect have different educated guesses. The (very smart) Chris Whalen has a completely different view arguing (amongst other things) that the liabilities for fraudulently sold securitisations at Countrywide and Merrill will produce losses large enough to render BofA insolvent. I think he is spectacularly wrong - but difference of opinion makes a market.

In BofA's case 13 billion per quarter is sort of a magic number because it happens to approximate the pre-tax, pre-provision profitability of the bank. Provided actual end charge-offs remain around or below 13 billion per quarter BofA will be able to earn its way of its mess. If charge-offs go to 25 billion per quarter they can't earn their way out - and hence just the implicit government guarantee they currently have will not be enough to save them.

I note that current charge-offs are comfortably within the 13 billion per quarter so all is well for the moment. As to the future - all we can take are educated guesses. And that is all bank provisioning is. In BofA's case the 13 billion (plus or minus a couple) of provisions taken each quarter seems a little optimistic to me - and you can understand why when the gun is pointed at the executives head they manage to (miraculously) pick their provisions to roughly match their pre-tax, pre-provision profit. But as I have noted I think the provisions in BofA's case are only slightly optimistic - and the end charge-offs won't go very far above 13 billion per quarter.

Analysing the Fannie Mae result in this light

Fannie Mae - as stated - took an enormous loss this quarter. The key to this loss was a credit charge of $22 billion. This credit charge can be broken into two broad categories - which are (a) the actual charge-offs taken, (b) the addition to reserves.

Like BofA, Fannie (and Freddie and just about everyone esle) needs large reserves because - frankly losses and delinquency are still getting worse. The amount you need to add to reserves is an estimate. If your reserves are large enough (which doesn't seem to be the case in any financial institution I look at outside the GSEs) then you don't need to add and you might even be able to run the reserves down a little.

In Fannie's case this quarter there is one more thing complicating the reserves versus charge-offs picture. Fannie changed the way it accounts for one of its loan modification programs (the "Home Affordable Modification Program" or the HAMP) such that when loans are acquired from securitisation trusts for modification they are written down to market. This loss (which Fannie calls a "loss on acquisition") is not a final loss (as per a normal charge-off) but rather an estimate of the future charge-offs they would take on those loans.

So lets break up the credit charge.

The provision for credit charges was 21.96 billion - which I will round to 22.0 billion - given that the nearest 100 million seems close enough. The charge offs were 10.9 billion (see table 10 in the 10Q). Note 3 to that table tells us that of that 10.9 billion 7.7 billion came from the "loss on acquisition" on the HAMP. The actual loans that were charged-off (final) were 3.2 billion. They were probably a bit higher because there were some HAMP charges taken last quarter and maybe some were finalised this quarter.

But nonetheless the way to think about this is that final losses this quarter were 2.2 billion. Provision for future losses (HAMP losses and provision build) were 19.8 billion. Similar ratios have applied every quarter since Fannie Mae went into conservatorship.

Now I am going to make the obvious point. Bank of America provides roughly 1.5 to 2 times its charge-offs each quarter. Fannie Mae provides 7 times (and has been closer to 10 times in past quarters).

If Bank of America were to provide at the same rate its quarterly losses would be 50-80 billion and it would be completely bereft of capital - it would be totally cactus. It would be - like Fannie Mae - a zombie government property.

What I think is going on...

I think what is going on here is a different standard for Bank of America. And for Wells Fargo. And for Citigroup. And for PNC and for every other major bank in America. There is also a different standard for Goldman Sachs. That standard is different to Fannie Mae. BofA (like everyone else) gets to choose its reserving ratios - and to be a little optimistic. Fannie Mae chooses ratios that are so-off-the-scale high that it is different.

Remember provision build is an estimate not a fact - and Fannie is estimating extraordinarily bearishly and Bank of America's estimates are slightly generous. But regulators are controlling Fannie in such a way that keeps it down. They are allowing Bank of America to act as if all is well whilst Fannie Mae appears to be a complete zombie. Which I think corresponds roughly to the new policymaker consensus that what is good for big banks is good for America.

It is clear why BofA has chosen the 13 billion of provisions per quarter - which is that it roughly corresponds to their pre-tax pre-provision income. Moreover - in my view the 13 billion per quarter is not far wrong so the decision is defensible.

It is not clear why Fannie has chosen to reserve quite so aggressively. My guess is that there is no active conspiracy - but the pressure to make extraordinary provisions at Fannie is very high for a variety of non-commercial reasons. These provisions are defensible only if you believe the housing market gets substantially worse from here. That seems to belie the evidence on the ground - at least for now. Housing markets in the core bubble states have clearly stopped deteriorating. Current provisions (including mark to market provisions on the HAMP) are now 6 years current charge-offs. They are only 18 months or so at most banks including BofA.

Am I being too harsh?

Is it too harsh to apply the same provision to charge-off ratio to Bank of America as it is to apply it to Fannie Mae? Well if the credit was deteriorating faster at Fannie that BofA I would be too harsh. But if the credit were deteriorating faster at BofA then I would be too generous. The best test of that is non-performing loans.

At year end BofA non-performing loans were 18.2 billion. They were 31.9 billion by the end of the third quarter - a rise of 75 percent.

Fannie Mae NPLs were 111.8 billion at the end of the year (20.4 on balance sheet, 98.4 off balance sheet). They were 197.4 billion at the end of the third quarter - a rise of 76 percent.

75 percent versus 76 percent - I will call that a wash.

Indeed almost however I cut it the situation is getting worse for BofA at roughly the same rate as it is for Fannie Mae.

Except for one thing. The government wants BofA alive. Lots of people want Fannie Mae dead.

My views

Bank of America survives now but for the good grace of the quasi-government guarantee. So do all banks. But Bank of America is - in my view (a view open for dispute) ultimately solvent. Its provisions are optimistic - but not (in my view) excessively so. If the cash losses per quarter rise to (say) 30 billion dollars then BofA will die and will cost the taxpayers a lot of money. I think that is unlikely but it is not impossible. Provision additions are always just an educated guess - not a science.

If the same standard were applied to Fannie Mae as bank of America Fannie would still have needed government assistance. It started with less capital and more levered than BofA. But the position would not look anything like as bad as it does.

You can of course interpret this to suggest that the Fannie Mae standard should be applied to BofA - and indeed to the rest of the financial system. You would (in my educated guess) be wrong. But I would have little ground to dispute it.

Disclosure: Long preference shares of the GSEs, long Bank of America. Could be wrong about both

Bank of America - Fannie Mae - Business - Financial services - Banking Services

Roger Friedman: Are US and Iran Close To Nuclear Deal?

2009-11-06T12:03:12Z

Roger Cohen is, in my opinion, one of the best New York Times columnist because he (along with Krugman, Kristof, Blow, and Herbert) are the only ones who thinks outside the box. (Friedman designed the box).

He was in the streets in Iran during the post-election uprising whose cause it was clear he supported.

His contempt, however, for the Iranian ruling class has not led him to contempt for the Iranian people. On the contrary, he has faith that they will, on their own, change or dismantle this regime.

He also understands that the one thing that would solidify support for the regime on the part of all Iranians would be an Israeli or an American attack on Iran's nuclear sites.

Even the strongest opponents of the regime believe Iran has the same right to nuclear development as any other country in the world. As for nuclear weapons, there is little evidence that Iran is pursuing them but, even if there was, the Nonproliferation Treaty (NPT) to which Iran is a signatory spells out its rights and obligations. It is no big surprise that the Iranians believe it hypocritical that Israel, which has refused to sign the NPT, is cheerfully allowed to possess 200 nuclear bombs while any evidence that Iran is enriching uranium even at levels well under what is needed to create a weapon is treated like the end of the world.
But Iranians need to understand the neocon mentality. They believe that Israelis love their children and would never use a bomb that would produce a counter strike that would destroy its cities. Iranians, on the other hand, like most Muslims and especially Shiites, hate their children and would happily sacrifice them to eliminate Tel Aviv. Yes, that is how the neocons think.

Anyway, today in this column, Roger Cohen interviews Mohammed ElBaradei, in his last month as chief of the International Atomic Energy Commission. ElBaradei believes that the United States and Iran are close to an agreement on the whole nuclear issue and that both sides should move quickly to wrap it up (especially with the Israelis threatening an attack by Christmas that would both fail and embroil the world in war).

The neocons want an Israeli strike rather than the prospect of any deal with Iran that would both prevent war and provide for US recognition of the Islamic Republic. They prefer a war that would solidify support in Iran for the regime to a nuclear deal that could well cause it to unravel. But remember: the Feiths, Perles, Cheneys, Kristols, Boltons, Bennets, Pletkas, Krauthammers, Podhoretzes, Libbys and aptly named Wurmsers have a 100% record of being wrong at the cost of many American (and other) dead. That is who they are. That won't change. Their slogan: "Wars Are Us." But fought by other peoples' kids.

But they won't get this war or even the sanctions they are dying to impose on the Iranian people.

Nonetheless, vigilance is the price we must pay to prevent another neocon engineered catastrophe. These guys still have one war left in them (well, not in them exactly, in the people they dispatch to fight). When will this cursed philosophy disappear back into the pages of Commentary magazine, from which it first reared its simultaneously bloodthirsty and cowardly head?

NOTE: Commentary used to be the monthly of the American Jewish Committee. Nonetheless, the AJC recently produced this insipid (and pure neocon) video about Iran that needs to be seen.

Iran - New York Times - Roger Cohen - United States - Middle East

Presented By:

2009-11-06T12:03:12Z

Obama Needs To Start Acting Like a One Term President

2009-11-06T03:16:50Z

It has become increasingly clear that President Obama's term is going to be a very difficult slog. We live at a time when Congress no longer believes -- and that includes much of the President's own party -- that a landslide election victory by a Presidential candidate means that the new President has a mandate to enact the program he ran on.

I think Obama will be able to get the key elements of his program enacted, not all of it, but enough of it to make him a successful President. Of course, nobody knows.

In any case, either in 2010 (God forbid) or 2012 (more likely), the Republicans will be back. And, when they return, they will be worse than ever -- especially now with the Christianist bigots running the party.
That means that Obama should use the rest of this one term to which he is guaranteed to put in place programs that cannot be undone. That means using Executive Orders to do whatever is doable unilaterally. It means normalizing relations with Iran, addressing climate issues, labor rights, gays in the military, choice, raising taxes-- whatever issue that can be addressed either by executive order or a simple majority of Congress.

The politics of consensus is garbage and we cannot afford it, not with an opposition that rejects most American values and traditions waiting in the wings. The alternative to the Democrats is the party of Neocons, Bachmann, Palin and Glenn Beck. That means that Democrats need to lock in policies that cannot be reversed.

You know the saying: life is uncertain, eat dessert first.

Remember LBJ. He got it all done in the first two years because he feared that was all he had. He was right. He lost 47 House seats in 1966 and the Great Society was done.

But the amazing domestic legacy of those two years -- Medicare, Medicaid, Voting Rights, Clean Air, Clean Water, college loans -- is locked in forever, untouchable. That should be the model even though LBJ governed before the Party of Lincoln, Teddy Roosevelt, and Nelson Rockefeller became the Party of Limbaugh, Kristol and Beck. That makes Obama's mission different -- a difference LBJ's would characterize as the difference between "chicken salad and chicken sh*t."

Barack Obama - United States Congress - United States - Congress - Society and Culture

The Homebuyers Tax Credit and Free Market Fundamentalism

2009-11-05T10:53:49Z

The Senate just voted unanimously for extending unemployment compensation. The bill also included an $8,000 handout of taxpayer dollars to some people who buy homes (first time buyers and long-time homeowners). This $8,000 credit is not chump change. It is more than twice what it costs to pay for health care for a child for a year on the State Children's Health Insurance Program. It is about 50 percent higher than the average cash grant to a family on the much-maligned Temporary Assistance for Needy Families program (i.e. welfare).

The tax credit is noteworthy not only because it is an incredibly bad use of tax dollars. It is a great example of how so-called free market, anti-government conservatives are perfectly happy to use tax dollars to help people they like, specifically realtors, builders, bankers and the relatively affluent people who will be the primary beneficiaries of this tax credit.

This is not free market fundamentalism; it is crony capitalism. It is redistribution. It is "spreading the wealth around." However, the direction is upward. This should be obvious, but yet many progressives insist on denouncing free market fundamentalists. They should get paid by conservatives for these denunciations.

The point is simple. The concept of the market has real appeal. If the alternatives are leaving matters to the market or letting some pointy-headed government bureaucrat decide issues, most people will pick the market. If progressives let the conservatives hide their government for the rich agenda behind "market fundamentalism" then we have done them an enormous favor.

The truth is that the conservatives also have an ambitious agenda for the pointed headed bureaucrats. The big difference is that conservatives want the pointed-headed bureaucrats to be giving taxpayer dollars to the people who already have lots of money. They have no interest in leaving matters to the market, at least not if the outcome is to reduce the income of those at the top.

Progressives should expunge the term "free market fundamentalism" from their vocabulary. The bad guys are not believers in the free market; they are believers in using the government as a tool of the rich. We should never let them get away with pretending otherwise.

Unemployment benefits - United States Senate - Economic - Taxation - Society and Culture

Go Vikings! Keith Ellison Blasts Colleagues For Shameful Goldstone Vote -- Betty McCollum Rips Israeli Ambassador

2009-11-04T21:09:07Z

I have never simply cross posted something I wrote elsewhere but this is important and I am rushed big time. Besides, I am proud to be associated with Media Matters for America and proud that it is my home base these days.

I'm rushed because I am in Juneau, fishing and hunting with Levi Johnston and he is running me ragged what with the moose chasing and all.

Actually, I'm not with Levi. But I am in Juneau which is one of the coolest cities I have ever been in. Its dazzlingly beautiful, it is loaded with 60's types, and the people are cool and smart. (Sarah Palin hated Juneau). I came to Alaska to speak to the Juneau World Affairs Council on behalf of Media Matters.

Two hundred people showed up to the events, and there wasn't a Likudnik or neocon among them. It was a sophisticated crowd at the lovely University of Alaska (Southeast), They sat through two five hour sessions on the Israeli-Palestinian conflict! Levi left early with Trig, Track, Trace, and Tater.

Anyway, here is my reaction to the sickening House vote condemning the Goldstone report. It includes links to the roll call so you can see how your favorite liberal voted. And a great piece by Keith Ellison, who is, what we call in Yiddish, a shtarker (a tough guy).

If it's any comfort as you read that your favorite heroic lib voted with AIPAC, you can console yourself with this. He or she didn't almost surely was holding his nose while voting for it. These guys aren't dumb; they are just looking over their shoulders at an 800 pound gorilla. Hopefully, J Street will help stiffen their spines. That's a prayer, not a prediction.

PS I stopped in charming Sitka. It turns out that the Michael Chabon book must be fiction. I didn't see any Yiddish speaking cops or Jewish eskimos. Well, maybe one.

And here's McCollum story.

Media Matters for America - Keith Ellison - United States - Michael Chabon - Media Matters

Grover Norquist and Anti-Tax Movement Big Loser of the Night

2009-11-04T13:51:44Z

A lot of folks are declaring Obama -- who wasn't on the ballot -- the loser of the night based on two state elections, but the defeat of three anti-tax initiatives that were on the ballot in Washington State and Maine should emphasize that Grover Norquist and the anti-tax movement were big losers of the night -- and this just continues a multi-year roll of defeats.

In both states, voters rejected so-called TABOR ("Taxpayer Bill of Rights") initiatives that would have created rigid tax raising formulas that would have crippled those states' capacity to provide services like education, health care, emergency services, and public safety. Voters in Maine also rejected a proposal to slash the excise tax on new and hybrid cars, which would have undermined local revenue around the state.

Across the country, over thirty state legislatures raised taxes to deal with deficits this year and a number have specifically targeted tax increases on the wealthy - a bugaboo of the rightwing. And at the ballot, the anti-tax right has just lost and lost.

Back in the early 90s, the rightwing managed to pass a TABOR system in Colorado at the ballot box, which led to terrible results, including large declines in K-12 funding, higher education tuition rates, and hindering the state's ability to address the lack of medical insurance coverage for many children and adults (see a PSN Dispatch on "TABOR's Disastrous Record in Colorado"). Voters partially repudiated TABOR at the ballot in 2005; when the rightwing tried to enact TABOR-like initiatives in states across the country in 2006, progressives highlighted fraud in signature collecting in multiple states and issue was thrown off the ballot in Michigan, Montana, Nevada, Oklahoma and Missouri. On Election Day, voters in Maine, Nebraska and Oregon finished the job in voting down the remaining TABOR initiatives. And in 2008, anti-government tax measures were defeated overwhelmingly in Massachusetts, North Dakota and Oregon.

Here's the dirty little secret. The anti-tax movement is a paper tiger. They force progressives to waste a lot of money and time fighting their initiatives, but when voters are informed of the details, they walk away, preferring needed public services to the rigid anti-tax nostrums of Norquist and his allies.
While Corzine may have lost the election last night, the New Jersey state legislature which has voted for multiple tax increases in recent years was hardly touched by voter action last night. In fact, after the New Jersey legislature voted to raise taxes on the wealthy back in 2004, they expanded their legislative majority in 2005 to its present hefty margins. There's almost zero evidence of elected officials being punished for tax increases alone in recent elections.
Facts on Taxes, Jobs and Economic Growth: The public just recognizes that rightwing attacks tax increases as undermining economic growth are just rhetoric unsupported by facts.
Earlier this year, Economist Joseph Stiglitz wrote state leaders in New York in support of proposed tax increases on wealthier New Yorkers, highlighting the short-term economic gains from shifting that money towards state spending for low- and moderate-income families. But he also emphasized that such spending was crucial to long-term economic growth as well:

"Raising taxes and maintaining public expenditures (including investments) also helps America in meeting its long run needs. America today faces two major problems -- inadequate investments, especially in infrastructure, and growing inequalty...Investments in infrastructure also increase the productivity of private investment -- another important spillover."
in 2004 economist Robert Lynch with the Economic Policy Institute published Rethinking Growth Strategies: How State and Local Taxes and Services Affect Economic Development, one of the most extensive analyses of the relation of state tax policies to economic growth. The bottom-line conclusion of his study was that tax policies themselves have little effect on overall economic growth; what mattered was that states raise enough revenue to invest in the "public services such as education and infrastructure [that] spur economic growth and influence business location decisions."

Because higher-tax states invest more in their communities, they generally generate higher-wage jobs compared to lower-tax states. For example, states that enacted large tax increases between 2002 and 2004 - increasing state revenues by at least 5% - subsequently experienced stronger average growth in personal income than states that did not increase taxes at all. This builds on other analyses that states which collect the highest percentage of personal income in taxes actually sustain higher income growth.

The Wealthy Don't Leave High-Income Tax States: And despite rightwingers inevitably predicting economic doom, tax increases on the wealthy do not lead to wealthier residents leaving the state:

From 2004 to 2006, following California's implementation of a new national top rate of 10.3% on income over $1,000,000, there was a 38% increase in the number of millionaires in the State.
The number of half-millionaires in New Jersey grew by 70% since the state increased their highest rate from 6.37% to 8.97% in 2002, from 26,000 in 2002 to 44,000 in 2006.
New York experienced a comparable increase in high-income tax returns
after temporarily raising income tax rates earlier in the decade, from
250,000 in 2003 to over 325,000 in 2005, representing a 30% growth.
Lessons from the Anti-Tax Movement's Failures: Hopefully, our national progressive leaders can take a lesson from states, where anti-tax forces have shown both their political threats and economic arguments are hollow. If there are worries about long-term deficits and paying for programs like health care reform, the answer are new taxes assessed largely on the wealthy, who did so well financially in the last few decades. The public supports such taxes and they make both political and economic sense.

If only those national leaders will stop taking Grover Norquist and the anti-tax movement seriously.

Grover Norquist - Economic - Taxation - United States - New York

Connected Cars: The 'Killer App' For The Smart Grid--And The New Driver of Growth

2009-11-04T10:04:07Z

Job figures are lagging indicators but nobody feels reassured right now. It is hard to imagine Americans returning to something like the full employment of the 1980s and 1990s without new industries like telecom and computers engendering a vast new ecosystem of entrepreneurial businesses; companies in which American technological talent can distinguish itself; companies that either require local workers for infrastructure projects, or, design and manufacture products and components whose labor content is too small for managers to consider outsourcing to the Far East.
The good news is that the electric car is around the corner. The bad news--which is the best news of all for the economy, ironically--is that the electric grid cannot begin to cope with the electric car's demands and possibilities. Layering in all the network technology that will smarten the grid, and preparing electric cars to communicate with it (and each other), will transform our economic and physical landscape. These changes will require a new role for government--something the Obama administration seems to understand. I explore the new ecosystem and its implication in the current Inc. Magazine:

At ground level, electric cars like GM's Chevrolet Volt -- due to be launched in November 2010 -- are pretty much everything the U.S. economy is banking on. The cars promise innovative engineering and a resurgence of the American auto industry. They mean an America that is manufacturing things rather than just bundling financial instruments. Cosmically, electric cars mean green technologies that will migrate to China, India, and Brazil, where they will allow for Western styles of personal freedom yet not threaten to overheat the earth.

And you don't have to be George Clooney to want one. Electric cars may be vaguely cool, but GM executives are counting on drivers with nothing more than a householder's logic, something like the good sense to refinance a mortgage when the 30-year-fixed drops more than 2 percent. Jon Lauckner, GM's vice president of global product planning, tells me that his team set out to trump gas-powered cars as a matter of straightforward economics, especially as economic recovery pushes the price of gas back over $3 a gallon. "At that level," Lauckner says, "the cost of running a Volt in full electric mode will be about one-sixth that of a gas-driven car of the same size, 2 or 3 cents a mile rather than 12 to 15 cents a mile. We figured that, for most people, this means a savings of about $1,500 a year." Sticker prices will be high; the suggested price of the Volt will be about $40,000. But federal tax rebates are anticipated to be as much as $7,500, not to mention various state incentives. So the actual price will probably be closer to $30,000 -- not a bad deal, given that borrowing costs will be low for some time.

When he speaks of "full electric mode," Lauckner is acknowledging another barrier he expects the Volt to take down, namely range anxiety, the fear of getting stuck with rundown batteries while driving in a snowstorm, bumper to bumper, on a 150-mile trip to the in-laws'. The Volt will come equipped with a small gas engine, unlike its forthcoming competitors: the smaller Nissan Leaf, BMW's plug-in Mini Cooper E, and Ford's electric Focus. This engine will not drive the wheels, as with the hybrids now on the market (actually, GM likes to call the Volt an "extended range electric car," not a hybrid), but will act as a dynamo to supply the electricity for the car after 40 miles of running on stored power.

The Volt's designers assumed, per Department of Transportation data, that nearly 80 percent of Americans drive 20 miles or less to work. This is why GM was able to make the technically true but sly announcement that the Volt earned a 230-mpg rating for city driving from the EPA. "Most drivers will hardly ever use this engine," says Tony Posawatz, the Volt's line director. "We may have to educate people to change their oil because it hasn't been used for a year! Anyway, when the range-extending engine kicks in, drivers can go up to 300 miles, like a conventional car. In a pinch, they can make use of the existing gas-station infrastructure."

And so, assuming these cars prove safe and reliable, American consumers will almost certainly consume them. U.S. auto companies will make them, and that's good for the planet, right? Yes, but.
Continue with the article here.

United States - 1990s - 1980s - Technology - Energy

What Happened Tonight

2009-11-04T04:01:19Z

It's 10:45 PM at the White House and I hope Barack and David Axelrod are having a beer on the second floor. One year ago they won a generational election as the anti-establishment candidate of change. Tonight, no matter how you slice it, the Democrats lost two big statehouses (New Jersey and Virginia), because they were perceived as the party of the establishment. A little more than two hours ago I read a speech by a famous investor who explained in simple terms how a Democratic Congress, in the fall of 2008 and then a Democratic administration, in the spring of 2009, got played by the oligarchs on Wall Street.

David Einhorn, who runs Greenlight Capital is a pretty smart investor. I don't always agree with him, but he gave a speech a couple of weeks ago that I hope will eventually reach the desk of our President. Einhorn's belief, like mine, is that much of the backlash flowing around the health care debate (or even tonight's election) is not really about healthcare--but more about a general sense that the average citizen is a pawn in a rigged game run by corporate special interests and a clueless Congress. The real root of the populist anger was in the bailout of the banks.

In the context of the recent economic crisis, a highly motivated and organized banking lobby has demonstrated enormous influence. Bankers advance ideas like, "without banks, we would have no economy." Of course, there was a public interest in protecting the guts of the system, but the ATMs could have continued working, even with forced debt-to-equity conversions that would not have required any public funds. Instead, our leaders responded by handing over hundreds of billions of taxpayer dollars to protect the speculative investments of bank shareholders and creditors. This has been particularly remarkable, considering that most agree that these same banks had an enormous role in creating this mess which has thrown millions out of their homes and jobs.

The critical line here is, "but the ATMs could have continued working, even with forced debt-to-equity conversions that would not have required any public funds". In other words, Goldman Sachs, Citibank, JP Morgan Chase, Morgan Stanley and Merrill Lynch bondholders might have had to convert all their debt to equity, but the system would have survived without the $700 billion tax-payer bailout. But what is Geithner proposing now?

On the anniversary of Lehman's failure, President Obama gave a terrific speech. He said, "Those on Wall Street cannot resume taking risks without regard for the consequences, and expect that next time, American taxpayers will be there to break the fall." Later he advocated an end of "too big to fail." Then he added, "For a market to function, those who invest and lend in that market must believe that their money is actually at risk." These are good points that he should run by his policy team, because Secretary Geithner's reform proposal does exactly the opposite.

The financial reform on the table is analogous to our response to airline terrorism by frisking grandma and taking away everyone's shampoo, in that it gives the appearance of officially "doing something" and adds to our bureaucracy without really making anything safer. With the ensuing government bailout, we have now institutionalized the idea of too big- to-fail and insulated investors from risk.

And Einhorn also points out that the problem of Credit Default Swaps has not gone away, it's merely been subsidized by the taxpayers while the vultures throw more companies into bankruptcy (CIT yesterday, GMAC maybe tomorrow).

The proposed reform does not deal with the serious risks that the recent crisis exposed. Credit Default Swaps, which create large, correlated and asymmetric risks, scared the authorities into spending hundreds of billions of taxpayer money to prevent the speculators who made bad bets from having to pay. CDS are also highly anti-social. Bondholders who also hold CDS make a bigger return when the issuing firms fail. As a result, holders of so-called "basis packages" - a bond and a CDS - have an incentive to use their position as bondholders to force bankruptcy triggering payment on their CDS, rather than negotiate traditional out of court restructurings or covenant amendments with troubled creditors. Press accounts have noted that this dynamic has contributed to the recent bankruptcies of Abitibi-Bowater, General Growth Properties, Six Flags and even General Motors. They are a pending problem in CIT's efforts to avoid bankruptcy. The reform proposal to create a CDS clearing house does nothing more than maintain private profits and socialized risks by moving the counter-party risk from the private sector to a newly created too-big-to-fail entity. I think that trying to make safer CDS is like trying to make safer asbestos. How many real businesses have to fail before policy makers decide to simply ban them?

Larry Summers and Tim Geithner and even Rahm Emanuel, have been so inside the Wall Street game for so long that they have no idea of the level of anger directed at the capitalists who have managed to scam a few trillion out of the public coffers with phrases like "without the banks, we would have no economy". President Obama needs to listen to other voices on the economy or else the pitchfork brigade may show up outside the White House next November. We did not elect him to bring us more of the same--more dominance of our national policy by the military industrial complex, the Big Banks, Big Pharma, Big Insurance and Big Oil.

The irony is that if Obama started kicking ass and taking names with the syncophants of the Fortune 500 that sit in Congress, I bet a lot of Glenn Beck's audience might even take notice. And surely, Axelrod doesn't plan to run the 2010 campaign without the youth vote, which was totally absent tonight. This is a teaching moment. Let's hope the President understands this.

White House - David Axelrod - Rahm Emanuel - United States - Wall Street

How Obama Can Convince Congress to Enact a Larger Stimulus, and Why He Must

2009-11-04T00:49:00Z
The Administration's biggest economic mistake so far was to badly underestimate last January how bad the employment situation would become by Fall. As a result, it low-balled the stimulus -- settling for a plan that, while avoiding even worse job losses, didn't go nearly far enough.

Obama has to return to Congress, seeking a larger stimulus.

Yes, I know. We're already in the gravitational pull of the midterm elections (look at the bizarre attention given to gubernatorial elections in New Jersey and Virginia, and even to a congressional election in the 23rd district of New York, as supposed harbingers of voter behavior a year from now!) so it will be even harder to round up the needed votes from Blue Dog Dems fretting over the deficit. And you can forget the Republicans.

And yes, I know: Only about half the current stimulus has been spent, so it will be awkward to make the case that we need a larger one.

But here's the problem. Everything else on the table -- a new jobs tax credit, more loans to small businesses, more help to troubled homeowners, another extension of unemployment insurance, another round of subsidies to first-time home buyers -- are small potatoes relative to the importance and likely effect of a larger stimulus. Some of these initiatives may do some good, but even combined they'll barely make a dent in the growing numbers of jobless Americans.

Meanwhile, the states are slicing their budgets, laying off workers, and ratcheting up taxes. That's because state tax revenues are falling off a cliff, and almost every state is barred by its constitution from running a deficit. That means the states are actively implementing an anti-stimulus plan.

Let's be clear about this. The national rate of unemployment will almost surely hit 10 percent; we'll know Friday whether it already has. This is more a psychological and political threshold than an economic one (it doesn't include everyone who's too discouraged to look for work, or working part time who'd rather be working full time, or working fewer hours in an ostensible full-time job, or otherwise fully employed but being paid less; the Bureau of Labor Statistics' payroll survey, also due Friday, provides a more accurate picture). But it nonetheless represents a degree of hardship this country hasn't seen in decades.

Public approval of Obama’s handling of the economy has slipped to 46 percent in an Oct. 30-Nov. 1 CNN poll, from 59 percent in March. Remember, Obama was elected in part because the public didn't have confidence in McCain's ability to manage the economy. In exit polls last November, almost two-thirds of voters listed the economy as the nation's top issue. If the job numbers don't start moving in the right direction, not only will Obama's poll ratings continue to drop but congressional Dems will all be in trouble.

That should be Obama's selling point to the Blue Dogs. He should tell them the economy needs a bigger stimulus in order to show improved job numbers by the mid-term elections. And he should make sure they understand that they're more politically endangered next November if the the job numbers aren't moving in the right direction by then than if they vote for a larger stimulus now.

United States Congress - New York - United States - Politics - Society and Culture

Medical Technology Arms Race

2009-11-03T17:02:48Z

I must say I'm worried that the Democrats are setting a trap for themselves on Health Care Reform by not really confronting the issue of cost inflation. Why does a CT Scan in America cost so much more than any other country. And it's not just scans, it's the whole range of services. Although it's very hard to find, there is certain anecdotal evidence that part of the problem is an oversupply of hospitals and medical technology providers. Take Washington, DC for example.

The Washington, D.C., hospital sector has an excess of hospital beds and a concentration of services at the high end. Four community hospitals; three academic medical centers; a large, nonacademic tertiary care hospital; five specialty hospitals; and a public general hospital all compete to serve a city with a population of only 500,000. In addition, there are two military facilities. Forty percent of patients in this market are drawn from the adjacent Maryland and Virginia suburbs.

In the Libertarian's "perfect market" pipe-dreams, an oversupply should drive down costs of individual services. But that's not what happens. Each hospital that has invested millions in buying CT Scanners must amortize the cost over fewer patients by raising the cost of each scan. The same problem is plaguing Pittsburgh.

The region's hospitals are trying to add nearly 1 million square feet of clinical space between 2006 and 2009 -- a construction boom that is raising questions about a potential oversupply of costly hospital resources...

"There happens to be a lot of construction going on, but most of it deals with aging plants and the need to stay current with advances in technology," said Ms. Riefner, who helps hospitals obtain financing for capital projects. "It's not a matter of just spending money for the sake of spending money -- they truly want to deliver the best possible care that they can."

So all the region's hospitals are caught in a technology arms race. No one is trying to figure out how many CT Scanners we need in a region and normal market mechanisms that would punish hospitals or clinics for spending too much on technology don't work because we don't have single payer system that disciplines the free market in every other developed country.

So are we about to pass a big giveaway to the hospitals, insurance companies, and pharmaceutical firms without any way to control the medical technology arms race?

United States - Health care - Healthcare reform - Democratic - Health