Wednesday, November 17, 2010

Cat Food Commission Signals "Good Bye, Obama" - Stockman Told US What the Rich Want - Religion of Politics ("Exceptionally" Reverting to Dark Ages?)

(If throwing a contribution Pottersville2's way won't break your budget in these difficult financial times, I really need it, and would wholeheartedly appreciate it. Anything you can afford will make a huge difference in this blog's lifetime.)

We forget at times whom the real voices of the American goodness myth are.

Not the Bushes.

Certainly not the Cheneys.

And not Faux News. Knowledge of the mission of the Cat Food Commission particularly informs my change of heart about any hope for the improvement of our lot still residing in the Obama Administration. They either have no hearts or no brains as they believe that the rest of us will willingly give up our very lives so that the already dastardly enriched may be enriched even further at our expense. Adding on to what another blogger said the other day about Obama being secretly a Republican, it's probably true that Obama was only tapped to run because deep down, having grown up a poor, black kid in a mixed-signal white world he only wanted to be accepted by important, wealthy people. And to be thought intelligent, and well spoken, and, well, you know the rest. But really. Can we afford to continue on with the charade? For myself, that way lies madness (as the famous line goes).

One of the finest bloggers online, Avedon Carol at The Sideshow, informs us about the inside news on the Cat Food Commission (and it's not good): it's not enough for the rich to triumph spectacularly, what they really desire is "to push the rest of us back down into the dirt."

I would have thought there would be a point at which everyone would just get tired of this treatment. But no.

The hard-scrabble existence you and your children face is not just an unfortunate by-product of their "grown-up" program, it is the goal.

One commenter has heard that (emphasis marks added - Ed.):

. . . the Catfood Commission is part of some deal-making early on by Obama to extend the Bush tax-shift (his so-called "tax cuts" that lower costs to the wealthy and shift the costs to everyone else). I guess taking Social Security away from the people who paid for it is their way of "offsetting" the trillions of dollars it will cost to continue the Bush tax-shift. Of course, anyone with any decency, and any Democrat who wants to be re-elected in 2012, is decrying the recommendations of the commission, with the result that Obama (who apparently thinks no one else knows what this stuff is) says, "Before anybody starts shooting down proposals, I think we need to listen, we need to gather up all the facts. ... If people are, in fact, concerned about spending, debt, deficits and the future of our country, then they're going to need to be armed with the information about the kinds of choices that are going to be involved, and we can't just engage in political rhetoric."

Of course, we've been gathering up facts since before Social Security was passed in 1935, so if Mr. Obama still needs to gather facts at this late date, he belongs in a remedial reading class, not in the White House.

Economist Duncan Black: "Um I Have The Facts. And my political rhetoric is that the Catfood Commission cuts taxes for rich people and pays for it by getting rid of the EITC."

But Dr. Atrios and Mike Lux both say that, on looking at the proposals further, they are even worse than they originally seemed, containing many other plans for immiserating the populace and, get this, "You know what is most bizarre: all this pain for the economically stressed working and middle class, and they still don't actually balance the budget until 2037."

(Remember, these are the same people who keep harping on the fact that, maybe 40 years from now, Social Security might not be in quite as nice a surplus as it is now.)

We have a president who is in thrall to the "ideas" of conservatives, which are in fact not so much ideas as just a longing to return to those heady days of more than 200 years ago when no one had any rights except the richest and most powerful people in the world, a tiny class of callous, spoiled, nasty rich folk who claimed that God gave them the right to make everyone else miserable while they wallowed in the wealth created by others. But, as again Dr. Black points out, bright ideas like "austerity" aren't even helping stock prices, and some companies are even acknowledging (finally!) that the clever, "modern" idea of outsourcing costs more than it's worth .

None of our "Deficit Hawks", of course, are talking about getting rid of the genuinely wasteful public expenditures that harm rather than help us - an over-inflated war-making machine that squanders billions on destructive policies that actually make the world a more dangerous place for all of us, for example. And a security state that terrorizes ordinary people going about their ordinary lives while, with the help of the odiously destructive War on (Some) Drugs, imprisoning more hapless citizens than any other country in the world does.

The facts are simple common sense: If there is not enough money in the economy because the wealthy are sucking it out of the economy and sitting on it, the way to restore the economy is to take that money back and inject it back into the economy where it will do the most good - at the bottom, where the people who need that money to spend live. Welfare checks, Social Security, food stamps, numerous public programs (like free education) and a host of mid-level public servants are one way we ensure that we have a lot of people who can spend that money in the real economy. "Austerity" means reducing the amount of money that is being put into the economy. It's really that simple.

For quite a while now, The Sideshow has been trying to remind people that what the conservative ruling class wants is not merely to make money, but to push the rest of us back down into the dirt. The hard-scrabble existence you and your children face is not just an unfortunate by-product of their "grown-up" program, it is the goal.

David Michael Green adds to my assuredness about the time to quit believing in miracles with his latest argument:

America faces so many huge problems in our time. But I see none as consequential as the fact that our body politic is indeed ill-equipped to make thoughtful decisions. We are fast losing the capacity for anything even approximating dispassionate empirical observation and rational analysis. Ultimately, this will mark the greatest of the many triumphs of the dark forces of regressivism – to regress us as a society to a pre-Enlightenment modality in our relationship with our world. To push us back three hundred or more years, to a time when ‘knowledge’ was given, fixed and dogmatically defended. Or worse – when even questioning such ideas would itself be considered heretical if not absurd.

. . . This week, Jonah Goldberg, right-wing liar (pardon the redundancy) published a piece in which he trashed the (not really Christian, not really white, not really American) president for not embracing the idea of American exceptionalism with sufficient fervor. He quoted Obama. But, of course, he left out all kinds of other parts of what Obama said – in the exact same answer to the exact same question – that directly and completely contradicted his assertion that Obama doesn’t really believe in the greatness of the country he is (supposed to be) leading. Things like “I'm enormously proud of my country and its role and history in the world”. Or, “The United States remains the largest economy in the world. We have unmatched military capability. And I think that we have a core set of values that are enshrined in our Constitution, in our body of law, in our democratic practices, in our belief in free speech and equality, that, though imperfect, are exceptional.”

This stuff goes on all the time. Basically, with regressives, if their lips are moving, they are lying. The great wonder, of course is why do people like Goldberg and Limbaugh and Beck and Bush and Palin have a voice, let alone such prominence, in what is supposed to be a grown-up, sophisticated democracy? Why do we accord them legitimacy, while disdaining and jailing pedophiles or drug dealers who do far less damage? How can a country which once achieved so much now revel so joyously in the stench of its own soiled diapers?

Truth is a big problem for the right. A really big problem. And, regrettably, it is increasingly becoming a really big problem for America. This is a country that just elected a government which – for the third major iteration in a single generation – is once again promising radical tax cuts for the wealthy and a balanced budget at the same time. How willfully stupid do you have to be to believe that that little exercise will turn out differently this time than it did when Reagan instead tripled the national debt, or Lil’ Bush doubled it?

And how intentionally ignorant do you have to be to continue to take right-wing economic policy at face value anymore, anyhow? Thirty years ago, Reagan’s OMB director, David Stockman, told us to our faces that the whole trickle down line was pure bullshit, used for the purpose of justifying tax cuts for the wealthy to moronic voters. And yet we pretended like we never actually saw what was behind the curtain Toto pulled aside. And still we pretend, even as we’ve now lived through – and lived with the consequences of – the greatest transfer of wealth in all of human history, a massive looting of the middle class, working class and poor alike, all to benefit the already fantastically wealthy. So just what kind of fervently-held political religion must you desperately be clinging to in order to still take the economic policy pronouncements of a John Boehner or a Dick Armey seriously in the year 2010?

Or how about foreign policy? Paul Wolfowitz – a reptilian combination of academic aloofness and lethal arrogance not seen on the American stage since Henry Kissinger cashed it all in for the money – played the role of George Bush’s David Stockman. The son of a bitch came right out and told us to our faces that the whole WMD riff was nothing less than a Madison Avenue marketing campaign of epic proportions.

Then the Downing Street Memos confirmed that truth with leaked evidence from the highest levels of the British and American governments. And yet we nod and yawn today as a proven war criminal now tours the country hawking ridiculously deceitful lies in the form of a presidential memoir, to cover ridiculously destructive prior lies in the form of a government, and one which, for that matter, only came into being on the basis of ridiculously ominous earlier lies in the form of the conservative cabal on the US Supreme Court. But, hey, it’s only millions of lives at stake. Why bother noticing?

Frank Rich has a slightly different take (although really the same when you get right down to it) when discussing the millionaire election losers and the millionaire winners (emphasis marks added - Ed):

How can hedge-fund managers who are pulling down billions sometimes pay a lower tax rate than do their secretaries?” ask the political scientists Jacob S. Hacker (of Yale) and Paul Pierson (University of California, Berkeley) in their deservedly lauded new book, Winner-Take-All Politics. If you want to cry real tears about the American dream — as opposed to the self-canonizing tears of John Boehner — read this book and weep. The authors’ answer to that question and others amounts to a devastating indictment of both parties.

. . . The wealthy Americans we should worry about . . . are the ones who implicitly won the election — those who take far more from America than they give back. They were not on the ballot, and most of them are not household names. Unlike Whitman and the other defeated self-financing candidates, they are all but certain to cash in on the Nov. 2 results. There’s no one in Washington in either party with the fortitude to try to stop them from grabbing anything that’s not nailed down.

The Americans I’m talking about are not just those shadowy anonymous corporate campaign contributors who flooded this campaign. No less triumphant were those individuals at the apex of the economic pyramid — the superrich who have gotten spectacularly richer over the last four decades while their fellow citizens either treaded water or lost ground.

The top 1 percent of American earners took in 23.5 percent of the nation’s pretax income in 2007 — up from less than 9 percent in 1976. During the boom years of 2002 to 2007, that top 1 percent’s pretax income increased an extraordinary 10 percent every year. But the boom proved an exclusive affair: in that same period, the median income for non-elderly American households went down and the poverty rate rose.

It’s the very top earners, not your garden variety, entrepreneurial ultimillionaires, who will be by far the biggest beneficiaries if there’s an extension of the expiring Bush-era tax cuts for income over $200,000 a year (for individuals) and $250,000 (for couples). The resurgent G.O.P. has vowed to fight to the end to award this bonanza, but that may hardly be necessary given the timid opposition of President Obama and the lame-duck Democratic Congress.

On last Sunday’s “60 Minutes,” Obama was already wobbling toward another “compromise” in which he does most of the compromising. It’s a measure of how far he’s off his game now that a leader who once had the audacity to speak at length on the red-hot subject of race doesn’t even make the most forceful case for his own long-held position on an issue where most Americans still agree with him. (Only 40 percent of those in the Nov. 2 exit poll approved of an extension of all Bush tax cuts.)

The president’s argument against extending the cuts for the wealthiest has now been reduced to the dry accounting of what the cost would add to the federal deficit. As he put it to CBS’s Steve Kroft, “the question is — can we afford to borrow $700 billion?”

That’s a good question, all right, but it’s not the question. The bigger issue is whether the country can afford the systemic damage being done by the ever-growing income inequality between the wealthiest Americans and everyone else, whether poor, middle class or even rich.

That burden is inflicted not just on the debt but on the very idea of America — our Horatio Alger faith in social mobility over plutocracy, our belief that our brand of can-do capitalism brings about innovation and growth, and our fundamental sense of fairness. Incredibly, the top 1 percent of Americans now have tax rates a third lower than the same top percentile had in 1970.

Boston University economist Laurence Kotlikoff informs us of some real facts that our national accountants (who want to be sure that we continue to pay them without a true accounting) want to also be sure we don't understand fully (oh sure, they want us to understand just enough to abolish the rest of the safety net programs and give more tax cuts to the wealthy in hope of them inventing fantasy job programs that will save us, etc., but otherwise, no):

The scary real U.S. government debt is not $13.5-trillion (U.S.), which is 60 percent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP.

"Let's get real," Prof. Kotlikoff says. "The U.S. is bankrupt." Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged.

"The U.S. fiscal gap is huge," the IMF asserted in a June report. "Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP." This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF's fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling. – Globe and Mail (Canada)

Dominant Social Theme: What? That can't be. Let's not talk about it.

Free-Market Analysis: These numbers cited by Laurence Kotlikoff have been all over the Internet for a while now but have not been much reported by the mainstream press. No surprise there, but we are a bit shocked that the Globe and Mail chose to pick them up. Was it a slow news day? The story itself has been around since August.

Because the Globe and Mail has covered it, so shall we. Here is our question: Given these numbers, how can banks and institutions purchase US fixed income securities, let alone the dollar? What sense does it make? These large institutions, with fiduciary responsibility, are basically buying a bankrupt product. And it is not just the US. The entire Western world (maybe with the exception of Germany) is pretty much either flat broke or worse than broke.

For us, this shows as much as anything else how controlled the system really is. It's just a fiction and has little resemblance to reality.

Institutions are said to flee to the "safe-haven" of the US dollar when they are nervous. But as Kotlikoff shows, the safe-haven is nothing of the sort. When one adds up all of the various commitments that the US has made abroad and at home (to its own citizens) the debt begins to add up to the monstrous, impossible number Kotlikoff arrives at.

So we ask: Can't bond buyers at large institutions add? How are they comfortable buying the bonds of a bankrupt entity? And why has it taken until 2010 for a mainstream economics professor to measure the "real debt" of the US and speak out about it?

Heck we've known this for years now – and so have you! If the Western monetary system were a person, it would long ago have been declared clinically insane and shipped off to an asylum. What is worse is the conspiracy of silence about the "real" US debt, which we have to assume parallels at least partially the debt of other Western nations.

The whole of the West is busted, pretty much – and the "austerity" plans being put in place are just more window-dressing, albeit of a very nasty sort.

Of course there are several ways out of this dilemma. Probably the easiest one is inflation verging on hyperinflation. If the US prints enough dollars-from-nothing (as Bernanke seems intent on doing) perhaps the dollar will lose so much value that the growing debt will be partially erased. Of course this basically debases the goods and services that people currently count on. The services will remain as a kind of legal fiction – funded but not worth anything.

Another more controversial way to get rid of the "real" debt would simply be for the US to devalue or to announce that it was not going to honor current accumulated debts. Of course this would do nothing to reduce further debt burdens (though it would certainly anger debt-holders) – and this is why Professor Kotlikoff predicts that many of the promises made by the US to its citizens will not be met.

He does have some solutions though, and we are not going to like them, so, thus the lying still abounding now.

And on a now much lighter note (see how light things get right after they are at their heaviest?). (Emphasis marks added - Ed.).

Wall Street Quietly Seeks To Undo New Financial Rules November 16, 2010 WASHINGTON — The heavy hitters of finance lost big battles earlier this year during the overhaul of financial regulation, but they're working hard to win the war. They're quietly trying to soften, if not kill, some of the more controversial provisions.

Lobbyists for Big Finance are working hardest to neutralize the so-called Volcker Rule, which would force big banks to spin off their lucrative proprietary trading operations, in which they invest their own capital in speculative deals.

The measure - named after its proponent, former Federal Reserve Chairman Paul Volcker seeks to prevent big banks from betting against trades they made on behalf of their customers, a popular practice until the financial crisis exploded in 2008.

For example, big investment banks such as Goldman Sachs sold customers overvalued mortgage bonds even as they bet secretly that those bonds would default.

Financial lobbyists also are working to soften requirements that Wall Street firms put more "skin in the game" by retaining more mortgage bonds on their books to guard against shoddy lending. They're also trying to undercut the new Consumer Financial Protection Bureau. Through Republican lawmakers who will soon hold leadership positions in the House of Representatives, big banks are backing proposals that could lead to its being defunded or subject to conditions that weaken it.

The financial sector is also pushing to have the bureau headed by a board rather than a strong single leader.

"Taken all together, these are all proposals that were considered (by Congress) and rejected . . . these don't look like proposals that were designed to help the agency do better, but rather proposals designed to gut it," said Travis Plunkett, the Director of Legislative Affairs for the Consumer Federation of America. "This agency hasn't opened its doors yet, and already the House Republican leadership is carrying a lot of proposals that Wall Street and big financial interests have offered to eviscerate the consumer agency."

Big global banks already succeeded in softening new global rules that would have required banks to set aside considerably more funds in reserve to guard against future losses — generally called capital requirements or loan-loss reserves.

This happened at international banking negotiations held earlier this year in Basel, Switzerland. There, powerful banks weakened a proposal for a new international standard governing how much banks must keep in reserve.

These big banks also pressured global regulators to back off a mandatory requirement that would have forced banks to set aside even more capital during good times, on the premise that economic booms lead to excessive risk taking. This so-called countercyclical reserve requirement is now voluntary.

"I think the answer is they (global regulators) caved in to the pressures of the industry," said Morris Goldstein, a former top economist at the International Monetary Fund and now a senior researcher at the Peterson Institute for International Economics. "I'd like to say that things are more positive, but I have to say a lot of the momentum is fading. . . . I think on the whole, we're losing steam."

Big Finance argues that the new rules are job killers. "We believe that the Volcker Rule is in fact harmful to the ability of the United States to sustain vibrant capital markets and . . . to create private sector jobs," David Hirschman, the head of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness, wrote to the council.

. . . Joseph Stiglitz, a Nobel Prize-winning economist from Columbia University, reminded council members in a letter that proprietary trading helped cause the near meltdown of the U.S. financial system.

"Through the rise of proprietary trading at our nation's banks and the largest non-bank financial firms, firms doubled down on the accumulation of risk, much of it with little benefit to the real economy," Stiglitz wrote. He added that "the financial system in this country and around the world became disconnected from its fundamental purposes."

Now, wasn't that really light and fluffy news?


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