(EXTRA: If anyone could make a contribution to my PayPal account (or otherwise - contact me for further info), it will be really, really, really appreciated as I'm in quite a pickle financially right now. I sincerely appreciate everything that my kind readers have done for me in the past financially and otherwise. Especially, otherwise, as the support group for this blog is beyond belief. My belief anyway. Again, my heartfelt thanks. . . and now . . . back to your regular viewing.) "Check's in the mail!"
From the D.C. boys to the Wall Street boys (this time).
George Washington over at his personal blog coins the verbiage precisely. Why didn't I think of that first as it's what I've been fearing for over a year? Oh right. I still had some hope of something good coming from this huge catastrophe from our benefactors - you know, the ones we've been voting for - blindly - because we couldn't see through the BS coming from our side (emphasis marks added - Ed.).
Friday, June 25, 2010
We've known for over a year that real financial reform wouldn't happen. We knew that the proposed bill wouldn't do much. We knew Congress was just pimping out the American people, and partying at our expense.
After nearly 20 hours over two final days filled with backroom dealing, House and Senate negotiators struck a grand compromise to merge the two chambers’ competing bills to reform the nation’s financial system in a party-line vote. But the long hours of closed-door meetings also appear to have fulfilled Wall Street’s greatest wish: Many of the measures that offered the greatest chances to fundamentally reshape how the Street conducts business have been struck out, weakened, or rendered irrelevant. Bloomberg notes:
Legislation to overhaul financial regulation [won't] fundamentally reshape Wall Street’s biggest banks or prevent another crisis, analysts said. The bottom line is that nothing has really changed ... the government is continuing to strengthen the parasite and poison the real economy.
Congress is still continuing to pimp out the American people to Johns who have insatiable lusts.
Dean Baker goes one further as he has the last of the good times making fun of the arrogance of "reporters" like Tom Friedbrain. Where is the David F. Brooks call out when you need it? Wait - don't miss Driftglass! Particularly the current Driftglass who speaks for us all who've been unemployed due to no fault of our own - with no improvement in lot foreseen - ever. (Emphasis marks added - Ed.)
columnist Thomas Friedman is well known for pretentious columns that consist of letters that he suggests some prominent person write. I licensed Friedman's literary tool in order to present the following letter from the Wall Street CEOs to the political leadership in Washington.
New York Times
We want you know how much we value the support of the leadership of both political parties in your efforts to ensure that we did not suffer from the crisis that we ourselves created. As you recall, back in the fall of 2008, our banks were flat on their backs. If you had not rushed to our rescue with trillions of dollars in loans and guarantees from the Fed and the Treasury at a time where no sane investor would talk to us, most of us would be among the unemployed today. Instead, our banks are hugely profitable and we're happy to say that bonuses are again hitting record highs.
While this is the sort of support that we expect in exchange for our generous campaign contributions, we are especially impressed how you have managed to so effectively blunt any backlash from the public. After all, with the unemployment rate still near double-digit levels, millions of people facing the loss of their homes and tens of millions seeing their savings wiped out, there is naturally considerable anger. However, you have managed to deftly deal with this problem by diverting their attention elsewhere.
Instead of people being angry at us for the billions that we are pocketing while the economy is still in the tank, you have managed to make scapegoats out of the unemployed. At a time when there are five unemployed workers for every job opening, you have been able to whip up public resentment over unemployment benefits that average $300 a week (a few minutes' pay for us). This is truly skillful politics.
We were also impressed to see that you are taking steps to have the government punish people who default on their mortgage loans to us. Just because we are enormously rich and have huge banks doesn't mean that we know what we are doing when we issue a mortgage. We didn't think about things like the housing bubble when we issued a lot of those mortgages back in the boom. As a result, we lost a lot of money. We stand to lose even more if people keep defaulting - even when they are able to pay back our loans (sometimes referred to as a "strategic default").
Therefore, we appreciate your actions to have the government punish borrowers who default. By telling defaulters that they will not be able to have future mortgages insured by the Department of Housing and Urban Development or purchased by Fannie Mae, you are helping us squeeze more money out of these homeowners. This must be especially difficult since we know how much pressure there is on many of you to actually be helping the homeowners. But you folks have had the courage to stand with us even as foreclosures are continuing at a near record pace. We appreciate this.
And now, you have decided to put cuts to Social Security at the center of your agenda. This really takes courage. Here is a program that people have paid for with their taxes.
This tax will be sufficient to fully fund benefits for the next 33 years, according to the Congressional Budget Office, and even after that date it could indefinitely pay more than 70 percent of scheduled benefits, assuming no changes are ever made to the program. This means that current and near retirees have already paid for their Social Security benefits.
But you're going to cut Social Security benefits anyhow. And this is even after the collapse of the housing bubble and the resulting downturn wiped out most of the housing equity of the baby boomers and much of the value of their 401(k)s.
Frankly, under the circumstances, we wouldn't have been surprised if you were talking about increasing Social Security benefits. But, we're absolutely delighted to see you moving forward with plans for cuts. This will mean that we won't have to be taxed to repay the bonds held by the trust fund.
And, of course, there is the financial reform bill. You killed any plans to break up too big to fail banks (leaving us with huge government subsidies) and kept any talk of a financial speculations tax from being taken seriously. Keep up the great work; we'll remember you at campaign contribution time.
The Wall Street CEOs
Paul Krugman has no problem (finally) calling it O V E R. (Emphasis marks added - Ed.)
Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.
Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.
But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.
In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.
As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isn’t doing much better. The Fed seems aware of the deflationary risks — but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.
Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.
It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.
So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.
And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.
Who can doubt it now? Prices will not come down.
And the pain will not be borne in good faith anymore.
Mark my words.
Senator Robert Byrd died today and he was one of the brave few who knew exactly what was going to happen back in 2002 and spoke out against the push by the military-orchestrated "leaders" to go to war instead of choosing a diplomatic, measured-response solution to the mystery of 9/11. Rest in peace, Senator. You tried to warn us. And we are paying that horrendous price you saw coming so clearly.
The outcome was already apparent when the Senate began its official debate over the authorization of the Iraq war in October 2002. But Robert Byrd, then 85, still took to the floor and delivered one of the most significant speeches of his career, an impassioned plea to President Bush to reconsider his zeal for war. Months later, on the eve of the March 20 invasion, Byrd spoke up again, with a last-minute warning that proved tragically prescient.
You can listen to the complete 2002 speech and watch highlights from the 2003 speech . . . . Ironically, 14 years before this riveting speech, Byrd's fellow Democrats nudged him out as their Senate leader, in part because they felt he wasn't an effective communicator in the television age.