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Ex-Labor Secretary, Robert Reich tells us what the latest job creation number (115,000 in April) means (and it's not good news for anybody):
No set of policies between now and Election Day are likely to expand the economy. To the contrary, government at all levels continues to contract, acting as a fiscal drag when government needs to be doing the exact reverse – boosting the economy through additional spending. In 2013, when spending major cuts are scheduled, we’ll fall off a fiscal cliff.
Obama needs to push back loudly and clearly, saying he won’t support additional spending cuts until the economy is showing clear signs of improvement.
But widening inequality is the underlying culprit here. As long as almost all the gains from economic growth continue to go to the top, the vast middle class doesn’t have the purchasing power to boost the economy on its own. And rich Americans spend a much smaller portion of their incomes than does the vast middle class. Their marginal satisfaction from additional spending falls off. The second yacht isn’t nearly as much fun as the first.
Get it? We’ve still got a terrible cyclical problem – we can’t get out of the gravitational pull of the Great Recession.
Meanwhile, back in the jungle (er, Europe) . . .
Those Revolting Europeans
By Paul Krugman
Published: May 6, 2012
The French are revolting. The Greeks, too. And it’s about time.
Both countries held elections Sunday that were in effect referendums on the current European economic strategy, and in both countries voters turned two thumbs down. It’s far from clear how soon the votes will lead to changes in actual policy, but time is clearly running out for the strategy of recovery through austerity — and that’s a good thing.
Needless to say, that’s not what you heard from the usual suspects in the run-up to the elections. It was actually kind of funny to see the apostles of orthodoxy trying to portray the cautious, mild-mannered François Hollande as a figure of menace. He is “rather dangerous,” declared The Economist, which observed that he “genuinely believes in the need to create a fairer society.” Quelle horreur!
What is true is that Mr. Hollande’s victory means the end of “Merkozy,” the Franco-German axis that has enforced the austerity regime of the past two years. This would be a “dangerous” development if that strategy were working, or even had a reasonable chance of working. But it isn’t and doesn’t; it’s time to move on. Europe’s voters, it turns out, are wiser than the Continent’s best and brightest.
What’s wrong with the prescription of spending cuts as the remedy for Europe’s ills? One answer is that the confidence fairy doesn’t exist — that is, claims that slashing government spending would somehow encourage consumers and businesses to spend more have been overwhelmingly refuted by the experience of the past two years. So spending cuts in a depressed economy just make the depression deeper.
Moreover, there seems to be little if any gain in return for the pain. Consider the case of Ireland, which has been a good soldier in this crisis, imposing ever-harsher austerity in an attempt to win back the favor of the bond markets. According to the prevailing orthodoxy, this should work. In fact, the will to believe is so strong that members of Europe’s policy elite keep proclaiming that Irish austerity has indeed worked, that the Irish economy has begun to recover.
But it hasn’t. And although you’d never know it from much of the press coverage, Irish borrowing costs remain much higher than those of Spain or Italy, let alone Germany. So what are the alternatives?
One answer — an answer that makes more sense than almost anyone in Europe is willing to admit — would be to break up the euro, Europe’s common currency. Europe wouldn’t be in this fix if Greece still had its drachma, Spain its peseta, Ireland its punt, and so on, because Greece and Spain would have what they now lack: a quick way to restore cost-competitiveness and boost exports, namely devaluation.
As a counterpoint to Ireland’s sad story, consider the case of Iceland, which was ground zero for the financial crisis but was able to respond by devaluing its currency, the krona (and also had the courage to let its banks fail and default on their debts). Sure enough, Iceland is experiencing the recovery Ireland was supposed to have, but hasn’t.
Yet breaking up the euro would be highly disruptive, and would also represent a huge defeat for the “European project,” the long-run effort to promote peace and democracy through closer integration. Is there another way? Yes, there is — and the Germans have shown how that way can work. Unfortunately, they don’t understand the lessons of their own experience.
Talk to German opinion leaders about the euro crisis, and they like to point out that their own economy was in the doldrums in the early years of the last decade but managed to recover. What they don’t like to acknowledge is that this recovery was driven by the emergence of a huge German trade surplus vis-à-vis other European countries — in particular, vis-à-vis the nations now in crisis — which were booming, and experiencing above-normal inflation, thanks to low interest rates.
Europe’s crisis countries might be able to emulate Germany’s success if they faced a comparably favorable environment — that is, if this time it was the rest of Europe, especially Germany, that was experiencing a bit of an inflationary boom.
So Germany’s experience isn’t, as the Germans imagine, an argument for unilateral austerity in Southern Europe; it’s an argument for much more expansionary policies elsewhere, and in particular for the European Central Bank to drop its obsession with inflation and focus on growth.
The Germans, needless to say, don’t like this conclusion, nor does the leadership of the central bank. They will cling to their fantasies of prosperity through pain, and will insist that continuing with their failed strategy is the only responsible thing to do. But it seems that they will no longer have unquestioning support from the Élysée Palace. And that, believe it or not, means that both the euro and the European project now have a better chance of surviving than they did a few days ago.
And why is the U.S. still not using its ultra-low interest rates and demand- and job-ready population to kick itself out of its self-imposed New Depression?
Yves at Naked Capitalism thinks she has a hint:
Friday, May 4, 2012
Exclusive: How Obama’s Early Career Success Was Built on Fronting for Chicago Real Estate and Finance
BarackObama remains an icon to many on what passes for the left in America despite incontrovertible evidence that he does not represent their interests. There are many contributing factors, including his considerable skills as a speaker and his programmatic effort to neuter liberal critics by getting their funding cut.
A central component of the seemingly impenetrable Obama mythology is his personal history: a black man, son of a broken home, who nevertheless got on the fast track to financial success by becoming editor of the Harvard Law Review, but turned instead to working with and later representing a particularly disadvantaged community, the South Side of Chicago.
Even so, this story does not quite add up. Why did Obama not follow the usual, well greased path of becoming a Supreme Court clerk, and seeking to exert influence through the Washington doors that would have opened up to him after that stint?
A remarkable speech by Robert Fitch puts Obama’s early career in a new perspective that explains the man we see now in the Oval Office: one who pretends to befriend ordinary people but sells them out again and again to wealthy, powerful interests – the banks, big Pharma and health insurers, and lately, the fracking-industrial complex.
Fitch, who died last year, was an academic and journalist, well regarded for his forensic and archival work, as described by Doug Henwood in an obituary in the Nation. He is best known for his book Solidarity for Sale, which chronicled corruption in American unions, but his work that is germane to his analysis of Obama is Assassination of New York. In that, he documented the concerted efforts by powerful real estate and financial interests to drive manufacturing and low-income renters out of Manhattan so they could turn it over to office and residential space for high income professionals.
Fitch gave his remarkable speech before an unlikely audience at an unlikely time: the Harlem Tenants Association in November 2008, hard on the heels of Obama’s electrifying presidential win. The first part contains his prescient prediction: that Obama’s Third Way stance, that we all need to put our differences aside and get along, was tantamount to advocating the interests of the wealthy, since they seldom give anything to the have-nots without a fight.
That discussion alone is reason to read the piece. But the important part is his description of the role that Obama played in the redevelopment of the near South Side of Chicago, and how he and other middle class blacks, including Valerie Jarrett and his wife Michelle, advanced at the expense of poor blacks by aligning themselves with what Fitch calls “friendly FIRE”: powerful realestate players like the Pritzkers and the Crown family, major banks, the University of Chicago, as well as non-profit community developers and real estate reverends.
Don’t take my word for it. Download the speech and read it. And then circulate it widely. And thank Michael Hudson, Fitch’s friend for over 30 years, for making this document available.
Fitch on Obama
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And speaking of being exposed, finally.
Karl Rove's American Crossroads donors?
Why is there no amazement left anymore at who wants to control our country? And is willing to pay many millions in order to do so?
By Michael Beckel
Three Texas tycoons are responsible for more than half the funds that conservative super PAC American Crossroads has raised since it was founded by top GOP strategists Karl Rove and Ed Gillespie in 2010.Harold Simmons, Bob Perry and Robert Rowling have collectively donated $30.5 million, or just over 54 percent, to the high-profile super PAC either personally or through their corporate accounts, according to an iWatch News analysis of Internal Revenue Service and Federal Election Commission filings.
American Crossroads has raised $56 million, including a paltry $1.2 million in March. The top donor for the month was hedge fund executive Kenneth Griffin, who recently said that the ultrawealthy have “insufficient influence.” He gave the super PAC $700,000.
American Crossroads, the super PAC, and its sister nonprofit, Crossroads GPS, are set on defeating President Barack Obama and securing Republican majorities in both houses of Congress in November.
Thanks to court rulings, super PACs like American Crossroads can collect unlimited contributions from individuals, corporations and unions and spend the money on advertising urging voters to support or reject a candidate.
There are dozens of super PACs active this election, but none loom as large as Crossroads.
Simmons and Perry have long been financiers of conservative causes. Their beneficiaries have included the Swift Boat Veterans group that infamously attacked Democratic presidential candidate Massachusetts Sen. John Kerry in 2004 and helped keep President George W. Bush in the White House.
Rowling, too, has long been among the GOP’s premier moneymen. He was a “bundler” for Bush’s presidential campaigns in both 2000 and 2004, which means he solicited friends and business associates for contributions to Bush and was credited for raising a total greatly exceeding what he could personally give.
Simmons ranks as the No. 1 donor to American Crossroads since its inception in the wake of the U.S. Supreme Court’s Citizens United ruling that allowed corporate money to be used to expressly advocate for or against federal candidates.
He has donated $14 million to American Crossroads. His contributions include $10 million from his own checkbook and $4 million from corporate accounts that he controls — Contran Corp. ($2 million), Dixie Rice Agricultural Corp. ($1 million) and Southwest Louisiana Land, LLC ($1 million).
Of these donations, $12 million alone has come during the current election cycle, meaning he’s responsible for nearly 43 percent of the $28 million American Crossroads has raised for the 2012 elections.
Perry, meanwhile, ranks as the No. 2 all-time donor to Crossroads.
In 2010, Perry gave $7 million to the group — more than any other individual or company. He personally accounted for 25 percent of the $28 million that the super PAC raised ahead of the midterm elections.
So far this election cycle, he’s donated an additional $2.5 million to the pro-Republican group.
Rowling, the president, chairman and CEO of TRT Holdings — which owns the Omni hotel chain, Gold’s Gym and Tana Exploration Co. — has donated $7 million to American Crossroads, enough to rank him as its No. 3 all-time donor. His contributions have been split evenly between his own pocket and TRT’s corporate treasury.
Including money from Simmons and Rowlings’ companies, American Crossroads has raised about $14.6 million from corporations, according to an iWatch News analysis of data from the Center for Responsive Politics and the FEC. That’s about 26 percent of its overall take since its creation.
The prospect of a very small number of extremely wealthy donors having so much sway on the country’s elections and elected officials worries some political observers.
“Big super PAC donors will get access and influence that regular people can only dream of,” said Adam Smith, communications director of Public Campaign, which advocates for publicly financed elections.
“Our elections are turning into a parlor game for millionaires and billionaires,” he continued. “It skews the policymaking process and pushes regular people out of the political system.”
Conservative attorney Dan Backer, who has worked to loosen campaign finance regulations, however, thinks such concerns are overblown.
He says donors’ spending money in politics does not guarantee that their concerns will be addressed.
“Money provides access to opportunities to tell your story, and if your story is good, you’ll get results, and if it’s bad, you won’t,” he told iWatch News. “In a free society, we have a marketplace for ideas. If your ideas are good, they catch on, and money doesn’t have much to do with it.”
American Crossroads was largely quiet during the GOP presidential primary, but during the 2010 midterm election it spent more than any other super PAC on ads, according to the nonpartisan political money watchdog the Center for Responsive Politics – a feat the group could repeat this year.
As iWatch News has previously reported, American Crossroads and Crossroads GPS plan to raise more than $240 million this election cycle.
Notably, American Crossroads’ massive fundraising haul has been raised (at least mostly) in the sunlight.Crossroads GPS, on the other hand, as a nonprofit organized under section 501(c)(4) of the U.S. tax code, is legally allowed to keep the names of its donors secret — a comfort that many donors appear to prefer. In 2010 and 2011, Crossroads GPS alone raised $77 million from unnamed sources, as iWatch News has reported.
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