Prairie Weather

Tinfoil hatties? Help me out here.

2009-07-10T09:47:26-05:00

Yesterday I heard one of those "of course" statements somewhere. Have you heard it? Got a source?

"Of course," the Uighur uprising in Xinjiang -- in western China -- was stirred up by American neo-cons. Those Project for the New American Century mobsters work through non-profits in their efforts to stir up trouble around the world that we "democrats" can go in and take over.

Know anything about that?

What in hell is happening to the economy?

2009-07-10T06:38:42-05:00

We're watching as critics blame the administration for not having immediate success with policies which weren't promised to take immediate effect. The Obama administration said from the get-go that the stimulus plan's benefits wouldn't be seen until the end of this year and well into 2010. My own take on the criticism is that it's purely political and its main purpose is to shoot down any prospect of healthcare reform as "irrelevant" and "too costly" now -- or ever.

David Brooks takes aim at healthcare proposals in his column today.

On the other side of the editorial page, Paul Krugman asks how we should respond to the unemployment reports and criticisms of the stimulus plan. Blame Obama? And, more to the point, how should the administration respond to its critics?

It’s perfectly O.K. for the administration to defend what it’s done so far. It’s fine to have Vice President Joseph Biden touring the country, highlighting the many good things the stimulus money is doing.

It’s also reasonable for administration economists to call for patience, and point out, correctly, that the stimulus was never expected to have its full impact this summer, or even this year.

But there’s a difference between defending what you’ve done so far and being defensive. It was disturbing when President Obama walked back Mr. Biden’s admission that the administration “misread” the economy, declaring that “there’s nothing we would have done differently.” There was a whiff of the Bush infallibility complex in that remark, a hint that the current administration might share some of its predecessor’s inability to admit mistakes. And that’s an attitude neither Mr. Obama nor the country can afford.

What Mr. Obama needs to do is level with the American people. He needs to admit that he may not have done enough on the first try. He needs to remind the country that he’s trying to steer the country through a severe economic storm, and that some course adjustments — including, quite possibly, another round of stimulus — may be necessary.

What he needs, in short, is to do for economic policy what he’s already done for race relations and foreign policy — talk to Americans like adults.

James Galbraith, one of the economists who anticipated the crash and how it would happen -- and who has consistently been right about what's needed to turn the economy around -- testified yesterday before a subcommittee of the House's Finance Committee. The hearing focused on the Federal Reserve's role in financial regulation, on whether the Fed is a rogue agency or whether it has Constitutional legitimacy, and above all how the government can effectively oversee systemic risk in large financial institutions.

If you're at all confused about the role of the Fed, Galbraith's opening statement is helpful.

So why, if "no one saw it coming" didn't we see the crash coming? Actually quite a few people like Galbraith, other economists, and even lay people and investors, did "see it coming." What was lacking was an official arm of the government whose only job is to focus on and evaluate systemic risk on an ongoing basis and call attention to the potential dangers. Should such an office be created within the Fed? No -- too easy for the Fed to "not see it coming" again.

To avert the development of dangerous practices within large institutions, systemic risk regulation needs to be deeply integrated into ongoing examination and supervision. Essentially,the job is to recognize emerging patterns of dangerous behavior. This function is best of regulatory capture or institutional identification with the interests of the regulated sector.That agency is the FDIC. The FDIC could establish a bureau for T1-FHCs ["Tier One Financial Holding Companies"] and stock it with the most experienced examiners, accountants, criminologists and statisticians, whose purpose would be to identify dangerous practices in systemically dangerous institutions and to stop them. Their function would not differ greatly from what the FDIC already does, except insofar as the supervised entities are not covered by the deposit insurance. But the point of designating T1-FHCs is to admit that there is taxpayer exposure in the failure of such institutions, so that from a functional point of view this is a distinction without a difference.

In short, if systemic risk is to be subject to consolidated prudential regulation, why not place that responsibility in the hands of an agency for whom it is the first priority? Heading off systemic risks requires a culture of examination, of accounting, and of actual enforcement,including criminal referrals where fraud is suspected. The FDIC and related entities are better suited to the job of examination and regulation, because they specialize in it.

Should some institutions be considered "too big to fail"? No.

If large banks and other large financial holding companies pose systemic risks, then why not require them to shrink, to divest, and otherwise reduce the concentration ofpower that presently exists in the financial sector? I do not argue that this would be, by itself, sufficient to control all systemic risks. But it would help, over time, bring the scale of financial activity into line with the capacity of supervisory authorities to regulate it, and the result would be a somewhat safer system.

Galbraith, of course, is one of the economists who, along with Paul Krugman, saw the original Obama stimulus plan as too lean and mean. The very critics who now are using the stimulus package against the administration -- Republicans and blue dogs -- are the very people who curtailed its impact with their votes. They are also the very people who are determined to defeat any real healthcare reform, even though the costs of healthcare as it's presently set up could put us in another, bigger crash not long from now.

Go figure.

"Death to Khameinei!"

2009-07-09T10:56:53-05:00

The "death to Khameinei" chants were there at time during the earlier protests -- largely at night and from rooftops. But the chant is louder now and more overt as protesters return to Tehran's streets and are met with government force. Here's an excerpt from a New York Times:

Security forces began clashing with protesters shortly after they began massing in the streets of Tehran on Thursday evening, as an initially festive demonstration quickly turned grim, witnesses said.

Tear gas was fired into Lelah Park, they said, and a woman whose coat was covered in blood ran from Revolution Square, one of the main gathering spots during the initial weeks of protests over the June 12 election. She said that police officers were beating protesters.

It was the first protest in 11 days, and was called to commemorate the 10th anniversary of violent confrontations at Tehran University when protesting students were beaten and jailed. Iranian authorities had announced earlier that the demonstration was illegal and would be met with a “crushing response.”

But at the end of the work day, hundreds of protesters began packing the streets of one area of Tehran, chanting, clapping and sitting in jammed traffic as drivers honked their horns, witnesses said. Families brought their children. Many held a hand in the air in the defiant V for victory. ...

... Thursday’s demonstration came against a backdrop of rising anxiety and continued arrests. According to Press TV, a reformist member of Parliament, Mohammad Reza Tabesh, said the government’s approach — holding prisoners incommunicado — had left families of the accused frightened. And the International Campaign for Human Rights in Iran, a group based in New York, said the government was continuing to make arrests.

The group said a prominent human rights lawyer, Mohammad Ali Dadkhah, was arrested in his office in Tehran around 4 p.m. on Wednesday.

“The Iranian government is trampling over every rule of due process,” Hadi Ghaemi, the group’s spokesman, said in a statement. “Not only are hundreds of detainees in incommunicado detention, in solitary confinement and possibly under torture, but their lawyers are rapidly being added to their ranks.”

Stuck with a lousy Court

2009-07-09T06:15:14-05:00

In case you haven't noticed, there is a hierarchy in the US which is protected by the Supreme Court. For the Court, we are primarily a white country. When it comes to the American people, non-whites have been given lower legal status and different treatment by the Court over the years.

In general, the people of America of are given a lower status than are their institutions and those institutions' economic activities, though more powerful and wealthy individuals have tended to maintain more legal clout than their less moneyed brethren. Corporations are more important "persons" than the rest of us, and are given considerably more clout than our government.

It's hard to not to conclude that conservative justices are wary of even the slowest and most basic social progress and work actively to discourage it.

According to James McGregor Burns, liberal historian and political scientist, the Court has been packed for over a century and a half -- packed against the interests of the individual and minorities. Burns calls the Court "a choke point for progressive reform" with only the Earl Warren Court an exception that rule.

There is little which is even-handed and disinterested about the Supremes, contrary to our fond misperceptions. As Michiko Kakutani writes in a recent review in the Times:

Instead, Mr. Burns says, the recipients of “beneficent decisions from the United States Supreme Court” in the post-Civil War years were entrepreneurs and corporations, who benefited from the justices’ eagerness to abet the country’s economic expansion. He writes that all of President Ulysses S. Grant’s appointees “were railroad attorneys” and that during the 1880s “a flock of major railroad cases arrived” at the court’s doorstep, and that in general, a philosophy of laissez-faire capitalism and “economic liberty” informed the court’s decisions.

He argues that with the 1895 case United States v. E. C. Knight Company, the court drastically narrowed “the scope of the 1890 Sherman Antitrust Act, which had been hailed as the first federal effort to regulate the huge monopolistic corporate combinations that were rapidly forming,” and that the court went on to frustrate many of Theodore Roosevelt’s efforts at reform, remaining wed to what Mr. Burns calls a “long outgrown economic philosophy.”

Indeed, Mr. Burns states that the principle of lifelong tenure has “produced a critical time lag, with the Supreme Court institutionally almost always behind the times”; since 1970, he notes, the average tenure of justices has increased to more than 26 years.

“Justices throughout the court’s history have clung to their seats long after their political patrons have retired,” he observes, “and long after their parties have yielded to their opponents or even disappeared. They have often perpetuated ideologies and attitudes that are outdated or that Americans have repudiated at the ballot box.”

As a result, Mr. Burns concludes in this tough-minded book, “too often the Supreme Court has seemed to be fighting the progress of history.”

A proposal to limit the term of a Supreme Court justice to 18 years has surfaced. I'd vote for that.

Nothing you didn't know (or suspect) already

2009-07-09T05:42:23-05:00

But it's official now. The CIA lied to Congress consistently during the Bush years.

Republicans will assert that this is a "Democrat" quibble -- a "partisan witchhunt." The president, evidently, agrees with Republicans.

Obama, in an effort to insure that cover-ups are "bipartisan", has said he will "veto the pending Intelligence Authorization Bill if it included a provision that would allow information about covert actions to be given to the entire House and Senate Intelligence Committees, rather than the so-called Gang of Eight — the Democratic and Republican leaders of both houses of Congress and the two Intelligence Committees." The White House statement goes on to say that "the proposed expansion of briefings would undermine 'a long tradition spanning decades of comity between the branches regarding intelligence matters.'"

Back to square one. In fact it's beginning to look as though "back to square one" is the discouraging response of the Obama administration, whether it comes to rescuing the economy (insufficient stimulus money working too slowly if at all) or rescuing the truth and the honor of a depressed nation (allowing the Bush administration's law-breaking to go unchallenged).

Economic quicksand and Congressional fatcats

2009-07-08T06:46:17-05:00

James Galbraith has seen it coming and says he's beginning to feel "vindicated."

I'm just scared, are you?

Galbraith warned from the get-go that Bush's stimulus package wouldn't work, that Obama's was insufficient*, and it looks as though he's right. He has also been a fierce critic of "toxic assets." He was on the right track there, too. From McClatchy:

In March, Treasury Secretary Timothy Geithner unveiled a Public-Private Investment Program in which the government and private firms would bid together to purchase toxic assets from banks, freeing them to increase lending and help revive the economy.

The program's still not operating.

"We're committed to getting it done, and expect to have it very, very soon," said Andrew Williams, a Treasury spokesman. "It's complicated and takes time."

Until the banking sector fully recovers, experts warn, the economy will face a long slog back.

"I don't see that we've put in place the foundations for a durable recovery. The freefall is over, and that allows some of the positives to show . . . but that doesn't mean that 2010 is a lock for expansion," said Vince Reinhart, a former top economist at the Federal Reserve.

McClatchy describes the economy as "stuck in quicksand."

How the Republicans are taking the prospect of deeper recession -- okay, let's say it, depression -- is summed up in a paragraph in WaPo.

With many economists forecasting that the jobless rate will continue to climb -- and is likely to stay above 10 percent through much of next year -- Republicans vowed to make the 2010 midterm election a referendum on Obama's stewardship of the economy. "I think they're going to have some significant problems," said Sen. John Cornyn (R-Tex.), who leads the GOP campaign operation in the Senate, "and I view those as opportunities for us."

As noted earlier, Harper's has a very illuminating article on the parallels between the Hoover and Obama administrations -- and the parallels extend to Congress in the early '30's.

More on what Galbraith -- and other economists and political analysts -- are saying about the economy in July 2009 here.

____

*This is the fault of the overly conservative members of the White House economic team and a pusillanimous Congress. That word has to be the source for "pussy" in the sense of scaredy-cat. Among other things, Republican members of Congress, for all their caterwauling, really are pussies.

Anger at Franken

2009-07-08T06:12:14-05:00

Yesterday, a liberal talk show host blew his stack -- Limbaugh-style, unfortunately - at Al Franken for insisting that his first loyalty is to Minnesota voters, greater than the importance he gives his position as Vote 60. My reaction was that Franken is a consummate politician and has been well-coached on the peril healthcare reform finds itself in. Talk show host Ed Schultz's display probably had its roots in personal ambition rathan than in his genuine worries that the healthcare reform "package" may be teetering on the edge of severe damage or total loss -- or unbearable compromise.

Others (including me) believe we're probably watching a public display of bipartisanship and flexibility covering up some very desperate politicking. The kind of compromise the White House faces becomes clearer this morning in a Herszenhorn-Stolberg report in the New York Times. Tom Daschle is very active in the fight. The former senator, tainted by his relationships with industry, is a behind-the-scenes White House negotiator. The politics are tough and probably more "compromising" than many even want to know.

"The very groups we have been talking to have been the most vocal opponents of health care reform; they are now becoming the vocal proponents for health care reform," said Rahm Emanuel, the White House chief of staff.

Emanuel's smooth assurance just begs for a peep under the curtain. Chris Dodd wants to know wht the pay-offs will be.

“I’m delighted to hear that people are stepping up to help reduce costs,” said Senator Christopher J. Dodd, Democrat of Connecticut, who is leading the Senate health committee, “but I want to know what the ask is, and the ask sometimes can exceed the value of your cost savings.”

The ask. What is the healthcare industry getting in return for its public embrace of reform?

Drug costs: "agreement from Mr. Baucus to oppose efforts by House Democrats to sharply reduce what the government pays for drugs for some Medicare recipients previously covered by Medicaid."

Limitations on fees to doctors: "The American Medical Association and other doctors’ groups have sought to change or repeal the provision, and they are likely to try to extract that as their price for boarding the Obama train..."

Employee coverage: "Wal-Mart said it wanted a guarantee that the bill would not 'create barriers to hiring entry-level employees' — in effect, code words to insist that lawmakers abandon the idea of requiring employers to pay part of the cost for workers covered by Medicaid, the government insurance plan for the poor."

The report finds the division among Democrats "deepening" with Harry Reid and Max Baucus in deep disagreement, with the public option at stake. And Al Franken? I think Franken is probably putting on his best smiling face. He surely knows he's walking into a situation in which his and Paul Wellstone's hopes have long ago been compromised out of all recognition.

Public option

2009-07-07T14:55:39-05:00

Thom Hartmann had some hard facts just now on the prospects for the public option -- that is to say, a public option that "doesn't look like swiss cheese" but is the real thing -- no ability to refuse payment for, say, cancer treatment or seeing a specialist.

First up, of course, is Obama's statement from Russia today that He Wants A Public Option Period. But then there's the news that the healthcare industry is spending a million and a half a day on lobbying.

Add to that the list (half a dozen?) of Max Baucus's former staffies who now are lobbyists for the healthcare industry, and you get the picture. Here's how the Sunlight Foundation puts it:

The Baucus-headed Finance Committee has been singled out by advocates and news organizations as the toughest obstacle for the President’s health care priorities. Containing more moderate and conservative members may not be the only reason. The committee is packed with lawmakers who have close ties to the health care and insurance industries, receiving large campaign contributions as their former staffers turn around to lobby for the very interests whose issues — in this case health care — they previously worked on. Baucus, as chair, stands out in particular.

Health co-ops

2009-07-07T06:51:44-05:00

One of the potential flaws in a "public option" which even this supporter of the public option worries about comes from the tendency to place all responsibility for one's health in a system. If you don't have incentives to take care of yourself, your health won't be very good and you're going to cost yourself and/or everyone else a lot of money.

When you're part of a cooperative, "contribute" doesn't mean feeding greedy corporations more than you can afford. It means making healthy decisions even when they don't give you an immediate taste thrill or allow you endless rope in your "life-style." Bad choices are felt immediately in your wallet area as well as your neighbors' and friends' accounts.

So even though the thought of compromising in the issue of "public option," there is a certain amount of sense in incorporating some principles of successful health co-ops.

Like the one in Puget Sound -- a health co-op which has already adopted electronic health records -- a change which gives your doctor more time to sit down and listen you.

"I surprise my patients by asking, ‘Is there anything else you want to talk about today?’ ” said Dr. Shriver, chief of a clinic near Seattle run by Group Health Cooperative of Puget Sound. “They’ve never heard a doctor say that.” Dr. Shriver has the time because Group Health, one of the country’s few surviving health insurance cooperatives, has recently embraced electronic medical records and a collaborative model of primary care, allowing him to practice proactive medicine for the first time in years. ...

That, in itself, makes the relationship between doctor and patient much more productive. Another important factor is being part of a system whose size tends to keep administration and costs down.

... “There’s a kind of accountability to the patients in our system,” said Scott Armstrong, president of Group Health. “And when you bring the principles of a cooperative to bear, patients feel responsibility for holding the system together and for their own health.”

_____

Henry Waxman, who seems to have no use for health co-ops, gave an interesting hour-long interview on the Diane Rehm show this morning on how things are progressing in Congress. He's optimistic about the healthcare bill -- certainly as far as the House goes -- and is candid about the pressures trying to prevent it. But not just healthcare: Waxman is low-key and candid about how things have been going in Congress.

Most days Republicans ...

2009-07-06T13:02:53-05:00

... scare the hell out of me. I mean it. I feel as though we all have a Tim McVeigh living right next door -- that's the degree of frightening craziness dominating the right wing.

But some days they make me laugh, and today is one of those days. Did you know that Al Franken is worse than some mini-skirted dolly being in the White House (this couldn't have been an obscure reference to Palin, could it)? Did you know that Al Franken has never really worked in his whole life? He had that stint on Air America but, as all Republicans now know thanks to a talk show I heard on the radio a few minutes ago, Franken's Air America show bombed.

Did he take Rachel Maddow with him into obscurity? I'll have to check that out.

No, really. If we were talking about a political party which didn't have a chance of a majority in Congress for, say, three decades -- and certainly couldn't take over the White House -- I'd never stop laughing at these guys.

The trouble is the money and the madmen among us who support the right. Like the guy who was changing a ten for me in a gas-'n'-go this morning. He pointed with a shaking finger at the "In God We Trust" on the back side of the bill and asking what I was willing to do to help him eradicate the people who think that phrase ought to be deleted from our currency. Me and my atheistic heart grabbed the change and hurtled out the door, fast as we could. You betcha.