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Gail Collins in her Op-Ed today goes after the middlemen who are ripping off the students and making it practically impossible for young people to get a higher education today unless they are already Super Rich.

Here’s a couple of comments on her Op-Ed that I agree with:

The mess that is our student loan program is yet another legacy of the “Government is not the solution, Government is the problem” mantra bequeathed to us by generations of Republican (and all but Republican Democrats) “free market” fanatics: The same folks who brought the private health insurance catastrophe that has made our health care system the most expensive and least effective in the world. It’s time we cut that particularly hoary old Gordian knot and started to rely upon efficient and much less expensive government programs instead of the inefficient and horrendously expensive mess that “private enterprise” has handed us.

— calyban, fairfax, california

Well said, calyban!

Hello out there. White working-class ethnic here–from family with no interest in education, and no money to provide one to any of their five children (no birth control means lots of kids and no money for most people, FYI)-but I got a college education, thanks to scholarships, my own never-ending hard work, and low-interest loans, and graduated from college in 1981.

Anyone notice that this country is destroying its future, and any idea of reasoned discourse, in the name of fundamentalist capitalism, which is no less zealous and insane than jihad and Islamofascism that the phoney “All-Americans” claim to deride?

What would be All-American: to stop subsidizing the rich by taxing the poor. Education for all. A strong base for our future.

Stop the insanity of fundamentalist capitalism now. The right wing calls Obama “socialist”? What they mean is, they are afraid that the “socialism” that benefits them–that’s called insane capitalism, folks–has been revealed for what it is. A tax on our future, socialized risk, privatized gain.

America–let’s wake up together.

— Mother, Brooklyn

Right on, Mother! Down with socialized risk and privatized gain! TAX THE RICH!

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Taxes are way too low in this country. They need to be raised, but only on the high income groups, and raised somewhere around where they were during our great post-World War 1 economic boom.

Here’s why:

Bob, while I agree with you, and respect Felix Rohatyn greatly, his being “one of the biggest supporters of the creation of an infrastructure bank” does not answer the question of whether the government (we) can afford it.

I’ve recommended readers subscribe to John Mauldin’s weekly E-Letter before.… While I disagree with Mauldin’s politics (Republican) and almost of his socioeconomic policies and prescriptions (e.g., blasting Obama on national healthcare), to get economic facts he offers a concentrated and readable dose for free. This past Friday’s letter begins: “As of this week, total US debt is $11.3 trillion and rising rapidly. The Obama Administration projects that to rise another $1.85 trillion in 2009 (13% of GDP) and yet another $1.4 trillion in 2010. The Congressional Budget Office projects almost $10 trillion in additional debt from 2010 through 2019. Just last January the 2009 deficit was estimated at ‘only’ $1.2 trillion.” Mauldin goes on to explain why this is an optimistic set of estimates, followed by data on Europe and “The Global Recession Gets Worse” that reminds of Mr. Brooks’ image today of the “disembowelment scene in ‘Braveheart.'”

Mauldin asks where is the money going to come from?
“The world is going to have to fund multiple trillions in debt over the next several years. Pick a number. I think $5 trillion sounds about right. $3 trillion is in the cards for the US alone, if current projections are right.” He then talks about why bond rates are rising in what appears to be a deflationary period and concludes this thought with “I think the bond market is looking a few years down the road and saying that $1-trillion deficits are simply not capable of being financed. And if the debt is monetized, then inflation is going to become a very serious issue.”

As much as I dislike Republicans, sometimes we have to know what the analytical and thoughtful among them are saying. Mauldin is not a Bush, or Cheney, or Limbaugh. The irony is that while his facts appear to be sound, and pale yours today, he never seems to even realize that he’s making an argument for national healthcare, a wealth tax, slashing military spending, and in various ways coming up with enough funds for such as an infrastructure bank.

Way down deep — perhaps not all that deep — guys like Mauldin and the superrich (he’s more their advisor than one of them, as best I can tell) are worried that when the music stops they will no longer have a chair. And they’re correct, I think. We simply cannot have a nation in Great Recession I and almost in depression — sure to come if we don’t act — that does not take some drastic steps. Since there is no surplus at the bottom, and consumer-spending our way out of the crisis cannot be done, there remains only the top to pay for getting us out. Given that they got us into this mess, why not require them to bail us out? Yes, I know, the American consumer went a little crazy. Perhaps really nutty crazy. But who aided and abetted them? And who gained from consumer madness? We all know who, including our politicians in bed with these irresponsible and greedy Masters of the Universe. Bring ’em down, before we all go down.

— Butler Crittenden, San Francisco, CA

My man, Butler Crittenden is at it again. See my earlier post, Response to Krugman.

The “Bob” who Butler is replying to is Bob Herbert who has a great Op-Ed, Our Crumbling Foundation, in the NYT today.

Butler agrees with Bob that it would be great to have a national infrastructure development bank to turn this economy around, but asks how are we going to pay for it? So why not increase taxes on the super rich who got us into this mess, and who are way under taxed compared with those in most industrialized countries?

And I agree with him! In fact I think it’s time for a mass revolt in this country!

Here’s another sobering response to Bob’s article:

How many times have we heard these concerns voiced before? Add them to the lengthy list of things we know we need to do in the U.S. that go unaddressed while we save the skins of corporate bankers with trillions in taxes on current and future generations. It is interesting how what now look like insiginificant tens of billions were unthinkable sums to spend on education, health, transportation and infrastructure, while all it took was one weekend’s thought to cough up hundreds of billions, trillions, when it came time to save the banks.

One of the lessons the right wing took from the rebellions of the 1960s is that a populace that is well paid, educated and free is a danger to their wealth and position. They will bring the whole house down on our collective heads rather than risk masses of Americans who are free from fear and ready to ask that the resources that they produce be put to good use rather than merely fill the coffers of the wealthy.

— Vincent Amato, New York City

Right on, Vincent!

But in reality what will we do? Sit back and do nothing.

Boy am I pissed. Is anybody else?

Let’s rise up, masses, and fire calls and letters at our senators and reps, form community groups of like minded people, send barrages of letters to our newspapers (newspapers?), hit the incredibly stupid right wing talk shows. Blast Limbaugh, Cheney, and all the other idiots on the right. Blast the mainstream media as well. As we know, they just go along with their corporate sponsors!

Boy, am I pissed. Is anybody else?

OK, I’ll let CJGC have the last word:

The question is whether good sense and an acknowledgment of our obligation to address our social and physical structural problems to prevent even more dire problems in the future is going to prevail over the small-minded bean counters who can’t see beyond the ends of their noses and those politicians who want nothing more than for Obama to fail.

It’s touch and go. A perfect example is serious reform of health care financing by offering a single payer option. It’s the only way to cover everyone and bring costs under control. So far only the health care industry and the health insurance industry have been invited to participate and Senator Baucus assures us that single payer will never pass.

“Yes we can and change we can believe in” have morphed into “No we can’t. The comfortable hold the reins of power so the rest of you just sit down and shut up.” Of course the comfortable are also going to fall into the holes they think they are just digging under our feet.
Are there special bridges for the defenders of the status quo so they won’t fall in the river too?

Yes, it should be a no-brainer. Sadly, many sitting in comfortable chairs don’t themselves have enough brains to notice. Too smug.

— CJGC, Cambridge, MA

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Nobel prize winner in economics, Paul Krugman, has another good Op-Ed in the NYT this morning. I’ve been reading the comments to his article and found one I think is spot on and one-ups Paul. Here it is:

Dr. Krugman, without digging through dozens of books and articles, and hundreds of email newsletters and posts, I can’t say exactly how many I’ve read predicting both the current American disaster and explicating the stupid and selfish policies of the I.M.F., World Bank, and our Fed and financial system. America was drunk on power and self-satisfaction. Mr. Bush and his “team” — if that’s what we could call an emaciated shell of neocons and the likes of Greenspan and Paulson — were not borrowing from Peter to pay Paul but robbing both to support their bogus wars and pie-in-the-sky budgets. They deliberately pumped up the price of real-estate and allowed a reverse salami-tactic to add small slices of greed until finally the whole cancerous mess exploded in our and the world’s face.

Of course every word you write tonight makes sense, but I didn’t see the worst miscreants even mentioned. Yes, Rubin, Greenspan, and Summers were there about two-thirds of the way through the build-up of the house of cards, which began during Reagan’s first year in office. And, yes, they were blind to the disaster they were pushing further down the path. Mr. Clinton, who was so compromised after the CIA/Contra operation in Arkansas, was further weakened by scandal and Newt Gingrich, such that he stopped being a Democrat and rolled over to be an Eisenhower Republican (lite). Then along came liar George Bush, 9/11 (which somehow happened despite numerous warnings), the use of 9/11 as a pretext for what Mr. Bush had in mind all along, and the American people fat-dumb-and-happy from all the prosperity of the exploding housing market, which turned perhaps half the homes in the country into giant ATMs.

It is no wonder that Europeans don’t respect us, that U.S. G-20 efforts will be met with resistance. The one thing you say tonight with which I disagree is: “even when — as in this case — the Americans are right.” Perhaps from a purely economic perspective we’re more right than the Europeans, which is to say that they should make stronger stimulus efforts. Certainly you’re correct in saying that the whole world needs to pull together, especially the G-20 nations. But if we are deranged enough to think we can continue to wage war (or peace, or whatever today’s euphemism is) in Iraq and Afghanistan, maintain some 800 military bases around the world, be the de facto world cop, and march relentlessly ahead with our military budget, why would Europeans and others respect us? If we can’t simply pass a few laws about automobile mileage and emission standards and then enforce them, why would Europeans think we could lead the world economy? If we can’t figure out a way to shift to an economy based more on production and less on consumption — especially of foreign-made goods, again we can see why others are cynical about the U.S.’s ability to lead.

The ultimately ugly truth is that we are too hypocritical as a nation to be taken seriously by others. If a child’s parents are on drugs, they’d best not lecture the child about not using drugs.
— Butler Crittenden, San Francisco, CA

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Just finished Robert Reich’s great piece on AIG. He sums it up: AIG, being “too big to fail”, is accountable to no one. The “accountable to no one” is the really scary part. This sure is an example of capitalism run amok. We have a competition between the government and the big corporation. All these anti-government people take note. Who would you prefer run the country?

We just had a lovely corn beef dinner over at daughter Kate’s prepared by Don. Absolutely scrumptious!

Looks like the weather is finally moderating. Can spring soon be on the way?

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I’ve been getting pissed at what’s going on. Here we have Obama trying to make nice with the Republicans, and you know? They could care less*. Some of them are masters at speaking out of both sides of their mouths simultaneously, while others don’t even bother to hide their sanctimonious nastiness. Mitch McConnell would be in the former camp, John Boehner in the latter.

Oh, but Obama’s just as bad as the rest of them! Look at all these tax swindlers he’s appointed to high office. Sure, squeaky clean you’ve got to be to get into high office these days, especially if you’re a Democrat. Tom Daschle’s tax problems seem large to the “ordinary person”, and they are. However, he is not a crook! He would have been the best choice to beat back the Republican machine which will pull out all the stops, along with the insurance industry, to beat back any attempts to establish what they’ll call “socialized medicine”.

The best guy for Daschle’s job would be Arnold S. Relman, M.D., but nobody’s ever heard of him and he’d have zero political clout amongst the hyenas. That’s why we needed Tom Daschle, tax warts and all.

I’m so sick of the news media, especially the sanctimonious news anchors, you know, Katie, Brian, Chris and Charlie, not to mention that slime journalist Maureen Dowd of the NYT. Oh, I’m pissed alright!

I try to read people who really know what the hell’s going on like Paul Krugman and Robert Reich, plus a lot of financial blogs all over the place. Hey, Robert Reich’s latest blog entries are really great!

Many economists feel the stimulus plan isn’t large enough! Even the conservative well-known economist, Martin Feldstein, Ronald Reagan’s chief economist, told Congress that the stimulus should be $800 billion.

I could rattle on but why don’t you just read Barney Frank’s latest comment? Frank to bankers: People hate you! OK, I’ll stop now!

* Well, according to this article he is making some progress.

Here’s Josh Marshall on Denial As Political Strategy:

Behind all the back and forth over the Stimulus Bill is a simple fact: the debate in Washington is rapidly moving away from any recognition that the US economy — and the global economy, for that matter — is in free-fall. The range of outcomes stretches from severe recession to something closer to a replay of the Great Depression, though that label is perhaps better seen as a placeholder for ‘catastrophic economic collapse’ since the underlying place of the US economy in the world economy is very different from what it was in 1929. This reality was palpable in the political debate until as recently as a few weeks ago. But Republicans are using a strategy of conscious denial to push it off the stage.

Take stock of the last few weeks and you can almost visualize the two conversations — path toward economic calamity and debate over Stimulus Bill — diverging.

The other key into the current debate is that the Republican position is ominously similar to their position on global warming or, for that matter, evolution. The discussion of what to do on the Democratic side tracks more or less with textbook macroeconomics, while Republican argument track either with tax cut monomania or rhetorical claptrap intended to confuse. It’s true that macro-economics doesn’t make controlled experiments possible. And economists can’t speak to these issues with certainty. But in most areas of our lives, when faced with dire potential consequences, we put our stock with scientific or professional consensus where it exists, as it does here. Only in cases where it goes against Republican political interests or economic interests of money-backers do we prefer the schemes of yahoos and cranks to people who study the stuff for a living.

Of course, at some level, why would Republicans be trying to drive the country off a cliff? Well, not pretty to say, but they see it in their political interests. Yes, the DeMints and Coburns just don’t believe in government at all or have genuinely held if crankish economic views. But a successful Stimulus Bill would be devastating politically for the Republican party. And they know it. If the GOP successfully bottles this up or kills it with a death of a thousand cuts, Democrats will have a good argument amongst themselves that Republicans were responsible for creating the carnage that followed. But the satisfaction will have to be amongst themselves since as a political matter it will be irrelevant. The public will be entirely within its rights to blame Democrats for any failure of government action that happened while Democrats held the White House and sizable majorities in both houses of Congress.

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Cas says

Here’s what Cas says in a comment on Robert Reich’s post, The Logic of Keynes in Today’s World.

I was thinking of a deeper problem that’s related to this. We hear a lot of talk about the class differences between the banking and auto bailouts. What that reveals is that there’s no sense of common destiny between different parts of the country. It’s true that working people need a functioning banking system, but it’s also true that bankers need a functioning manufacturing system. The banks have long operated as if the capital they play with has no relation to anything made in the real world. So when they’re in trouble, most Americans don’t care because the financial world is so apparently irrelevant to most of us. And the bankers don’t care about the rest of us because our fate is not clearly intertwined with theirs.

What we need is a new social compact that explicitly links us to a common fate. The first thing we do is index all executive salaries to the lowest wages in society. No executive should make more than X times the lowest employee of the company or any of its subcontractors and outsourcers. What’s more, executives as a class should get bonuses only in years where other workers as a class get proportional bonuses. As for capital, whenever government bails out private industry it should get common shares that in the long run are held 50/50 by workers and the public at large. That means that a fully “nationalized” company would be 1/3 private management, 1/3 workers, and 1/3 public control. Everyone would have a stake. Regardless of whether there is public control, companies should be required to give stock to employees above and beyond a liveable salary proportional to executive stock bonuses using the same X:1 ratio used for income.

With this arrangement, profits would go to everyone in profitable years. Losses would be shared. No one would get a bonus or bailout without everyone getting a bonus or a bailout. We would have a common interest, and there wouldn’t be fully isolated classes living in different conceptual worlds.

What’s good for GM should be what’s good for its workers, and what’s good for America. And what’s good for workers should be good for GM and America. And what’s good for the country should be what’s good for its workers and companies like GM.

This would also lead to a reconsideration of reforms such as single-payer health insurance. We’re all in this together, so we should all have access to quality health care instead of creating a two or three-tier system that in th end fails almost everybody.

Monday, 15 December, 2008

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Paul Krugman is back with a great op-ed in Monday morning’s NYT. Here’s the point of his piece, taken from the second paragraph:

But there’s a problem: conservative politicians, clinging to an out-of-date ideology — and, perhaps, betting (wrongly) that their constituents are relatively well positioned to ride out the storm — are standing in the way of action.

There are already a goodly number of comments on Paul’s piece. Here’s one comment that sums up the situation perfectly in my estimation:

As a historian, I am utterly shocked by the response to this economic crisis by Conservative Republicans in Washington and Chancellor Merkel’s response in Germany. What planet are these people on? Have they ever opened up a history book? I hate to say it but it almost seems as if these people have absolutely lost their minds. Here in the U.S., I do feel that these Republicans are simply trying to score political points with their out-of-date ideology by killing another powerful labor union. Meanwhile, the middle class continues to shrink at an alarming rate. Companies like the Big 3 and other major manufacturers provide this country with thousands and thousands of middle-class decent paying jobs. However, all I hear from Republicans at my university and everywhere else is that any intervention is “socialism” or “communism” or part of some internationalist conspiracy for one world government. The Red Scare is over people and McCarthy has long been dead. Why do we keep bringing back these McCarthyist rants during these times of crisis? The truth is these economic conservatives have absolutely no clue what it is like working in a factory and being on the bottom of the ladder, struggling to make ends meet every month. All they want to do is criticize workers for wanting to make a decent wage that actually keeps up with inflation. What is wrong with that? Of course, these Conservative Republicans would have no problem voting for a raise for themselves. But at the second a poor man comes to them for help or wanting health care, they stick their noses in the air. Mr. Krugman, I hate to say this but if something is not done soon with this economic situation, this country is going to fall apart beyond description. What will it take for these people to understand the situation? Do people literally have to be starving to death in the streets, fighting for food, jumping out of windows, killing themselves in their forclosed homes before they notice the problem? I mean come on: it came out the other day that we have been in a recession since December of 2007….it took them this long to notice and fess up? We need to start acting with depression economics now before it is too late. It is time for a Kenyesian revolution now more than ever. The solution is staring in the face of not just the United States but the entire international community as a whole. Why will they not accept that their completely free-market ideology has failed them?

— Matt, Ball State University

Right! Their completely free-market ideology has failed them! And us! Let’s take some action. But we’re still in that state of limbo until Bush finally goes. :roll:

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I’ve been scanning through the comments on the New York Times to Washington Takes Risks With Its Auto Bailout Plans. Most of them are screaming mad at the “bailout” plan for the auto industry. Incidentally, it’s not a bailout; it’s a loan. Anyway, at last I found a comment (#232) I can agree with:

Now we’ve got the mobs all fired up, screaming for the heads of the big 3 CEOs. Meanwhile, the bankers are skulking off with the entire US treasury in their back pockets, and not a hint of oversight. They’re raising interest rates on credit cards. Making it almost impossible to get a mortgage, or to buy a car. Who’s going to buy a car anyway when you’ve lost your job? Toyota’s and Honda’s sales are down 30-40% too. They’re not encumbered with huge contracts like GM and the other domestic producers are, because their governments provide healthcare for their employees and invest heavily in their auto companies. The big 3 were doing just fine a year or two ago, when Americans were buying their gas-guzzlers by the millions because that is what we wanted! It takes time to re-tool factories and make something different. Sure, fine, they should have started earlier. They’ve made their share of mistakes, but the banks, the financial markets, the oil companies and THE GOVERNMENT have been complicit in creating this mess. Free trade is not fair trade. GM is still very successful in Europe, selling fuel-efficient, well built cars. But they’re not allowed to sell cars in Japan. (By the way, the Brits are on the verge of having to bail out their auto industry too – people can’t buy cars when there’s no credit available or they’re unemployed.) So we have a situation where our own manufacturers cannot compete in our own market. And what do we come up with for a solution? Let’s get the government to regulate them even more tightly and make it even harder to compete here! Great! Let’s give the bankers the next installment of their bailout, with no strings attached so they can continue to withhold credit and charge usurious interest rates on whatever they do issue. At least we’ll have the heads of those evil, arrogant CEO’s! That should satisfy the mobs!

— Jim Doyle, Honolulu

Way to go, Jim! And I might add, who cares about the 3.5 million people who will become unemployed if our auto industry fails? As Jim says, we’ve got the heads of those evil, arrogant CEO’s.

Frankly, my dears, I’m sick and tired of people pissing all over our auto industry. And what’s more, the unionized workers are not overpaid. See Missy’s post on this.

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Did I once say everthing’s going to hell in a handbasket? Yes, I think I did, in this post. Well, that was then! Look what’s happening now!

And yet, and yet, I see this this morning: S&P 500, Dow futures jump on Wal-Mart optimism. I guess everybody’s going to their local Wal-Marts these days to save money. Hey, when the barrel’s almost empty, why not scrape the bottom of it? So, let’s see what the new day brings. How low can things go? Pretty awful low! Way more to go? I think the world’s going to hell in a hand basket. HA HA?

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Everything was going fine on Wall Street. The anticipation was building. Wouldn’t it be great if it were a 75 basis points cut? Things were trending happily upward as 2pm approached. Then suddenly, shortly after 2pm, the dam broke. “They say it’s only a 25 basis point cut!”, somebody screamed. Let’s head for the exits! The stampeding herd leaped from the cliff, or rather, the herd created the cliff. See above. It’s amazing how the pack acted as a single unit and SELL was the cry. A sudden 300-point downdraft sunk the DOW for the day. All because of 25 basis points.