Thursday, September 24, 2009
Robert Reich explains: Viva Socialism!
The explanation is simple. The great consumer retreat from the market is being offset by government's advance into the market. Consumer debt is way down from its peak in 2006; government debt is way up. Consumer spending is down, government spending is up. Why have new housing starts begun? Because the Fed is buying up Fannie and Freddie's paper, and government-owned Fannie and Freddie are now just about the only mortgage games remaining in play.In other words, the stimulus package and the various bailouts are making up the difference. The problem is that ends next year, and that's when the real problems will begin. We're on borrowed time right now, the same government that conservatives rail against is the same government keeping everything together right now, literally the difference between a recession and a depression.
Why are health care stocks booming? Because the government is about to expand coverage to tens of millions more Americans, and the White House has assured Big Pharma and health insurers that their profits will soar. Why are auto sales up? Because the cash-for-clunkers program has been subsidizing new car sales. Why is the financial sector surging? Because the Fed is keeping interest rates near zero, and the rest of the government is still guaranteeing any bank too big to fail will be bailed out. Why are federal contractors doing so well? Because the stimulus has kicked in.
In other words, the Dow is up despite the biggest consumer retreat from the market since the Great Depression because of the very thing so many executives are complaining about, which is government's expansion. And regardless of what you call it -- Keynesianism, socialism, or just pragmatism -- it's doing wonders for business, especially big business and Wall Street. Consumer spending is falling back to 60 to 65 percent of the economy, as government spending expands to fill the gap.
The problem is, our newly expanded government isn't doing much for average working Americans who continue to lose their jobs and whose belts continue to tighten, and who are getting almost nothing out of the rising Dow because they own few if any shares of stock. Despite the happy Dow and notwithstanding the upbeat corporate earnings, most corporations are still shedding workers and slashing payrolls. And the big banks still aren't lending to Main Street.
Trickle-down economics didn't work when the supply-siders were in charge. And it's not working now, at a time when -- despite all their cries of "socialism" -- big business and Wall Street are more politically potent than ever.
But that rate of government influx is unsustainable. A new solution must be found by Obama and company, or we're all in serious trouble.
Former Federal Reserve Chairman Paul Volcker said Thursday that by designating some companies as critical to the broader financial system, the plans create an expectation that those firms enjoy government backing in tough times. That implies those financial companies "will be sheltered by access to a federal safety net," he said.Of course the problem with that is there's no such thing as a traditional bank anymore: they're all investment banks now. All of the Big 19 bailed out as part of TARP have investment arms, so Volker's basically saying that we need to reboot the entire financial system.
In testimony prepared for the House Financial Services Committee, Volcker said emergency measures by the Fed, Treasury and Congress during last year's financial crisis created the expectation that the government would step in to protect failing companies, their bond holders and stockholders.
Volcker said he does not differ with the administration on most of its proposals, and takes "as a given" that banks will be bailed out in times of crisis.
But he said he opposed bailouts of insurance firms like American International Group Inc., automakers' finance arms and others.
"The safety net has been extended outside the banking system," Volcker said. "That's what I want to change." He said the administration's proposal to create a new system for winding down large nonbank companies would make that easier.
The administration should make it clearer that "safety net" will apply only to traditional banks, not investment companies or others, he added.
Which is exactly what we need. These huge financial behemoths are killing the country. They now 100% expect to be bailed out of any serious issues by you the taxpayer. They know they can't be allowed to fall, so they will continue to make the riskiest, craziest investments possible, period.
Moral hazard is not a basic for an economy.
A man using a metal detector in a rural English field has uncovered the largest Anglo-Saxon gold hoard ever found -- an "unprecedented" treasure that sheds new light on history, archaeologists said Thursday.Also, metal detector sales? WAY up.
The hoard includes 5 kilograms (11 pounds) of gold and 2.5 kilograms (5.5 pounds) of silver. That is more than three times the amount of gold found at Sutton Hoo, one of Britain's most important Anglo-Saxon sites, said the local council in Staffordshire where the latest haul was found.
It's an "incredible collection of material -- absolutely unprecedented," said Kevin Leahy, an archaeologist with the Portable Antiquities Scheme, a voluntary group that records finds made by members of the public. "We've moved into new ground with this material."
Because the find is so large and important, experts haven't been able to say yet how much it is worth. They hope to make a valuation within 13 months, Staffordshire Council said.
The hoard was first discovered in July by Englishman Terry Herbert, who was using a metal detector he bought more than a decade ago in a jumble sale for only a few pounds (dollars). He belongs to a local metal detecting club in Staffordshire and was just out enjoying his hobby when he made the find.
There was so much gold at the site that Herbert said he was soon seeing it in his sleep.
"Imagine you're at home and somebody just keeps putting money through your letterbox. That's what it was like," Herbert told Britain's Press Association. "As soon as I closed my eyes I saw gold patterns. I didn't think it was ever going to end."
Herbert found 500 items before he called in experts, who then found a further 800 articles in the soil. Officials aren't saying exactly where the gold was found, other than to say it was in Staffordshire, in north-central England.
On a more serious note, this is a great story, and just goes to show you history may never be that far away. Stick that in your mead horn.
Kirk will fill the U.S. Senate seat left empty by the death of former Sen. Edward M. Kennedy. Patrick said Kirk will begin serving immediately.Looks like the GOP is in fact not going to fight this, and I can't see how it would be anything but lose-lose for them. On the other hand, this means Kirk is the 60th Democrat in the Senate.
Primaries to fill the seat for the remaining three years of Kennedy's six-year term are set for December 8, while the general election will take place on January 19.
Kirk will not seek the open seat, Patrick said Thursday.
Kirk was a longtime senior aide to Kennedy and served as chairman of the national Democratic Party in the late 1980s.
Two Kennedy family associates told CNN on Wednesday that Kirk was the family's favorite to fill his vacant Senate seat. One source said Kennedy's widow, Vicki Kennedy, was among the family members supporting a Kirk appointment.
Time to get to work.
Neil Barofsky, the special inspector general for the U.S. Treasury's $700 billion Troubled Asset Relief Program (TARP), said in prepared U.S. Senate testimony that the bailout fund played a significant role in stabilizing the financial system, but it may never fulfill certain policy goals.You mean we threw money down a rathole only to see it vanish for good into the TARP Dimension?
"The progress on meeting the goal of 'maximizing overall returns to the taxpayer' is unclear," Barofsky said in testimony to be delivered to the Senate Banking Committee. "While several TARP recipients have repaid funds for what has widely been reported as a 17 percent profit, it is extremely unlikely that the taxpayer will see a full return on its TARP investment."
For example, $50 billion in funds allocated to modify mortgages to reduce monthly payments will never yield a direct return, while full recovery of the more than $80 billion spent to prop up the U.S. auto industry "is far from certain," Barofsky said.
Gosh, never that saw that one coming.
The Massachusetts Legislature on Wednesday granted Gov. Deval Patrick the power to appoint a temporary replacement for the late Sen. Edward Kennedy, but with one catch: when the appointment can be made.The party of No rolls on, bound and determined to stop the Democrats from doing anything. Every issue is an existential assault on liberty, every battle a decisive defense of the American way of life, every Democrat is The Enemy.
Lawmakers declined to allow the law to go into effect immediately, meaning Patrick (D) will either have to declare an emergency situation or wait 90 days to name Kennedy’s (D) successor.The governor said after press time last night that he would declare an emergency so he can make the pick right away. He has scheduled an 11 a.m. announcement for Thursday.
Republicans have toyed with the idea of challenging Patrick’s legal authority to declare such an emergency, and legal challenges could also come from citizens.
“This is not an emergency," state Rep. Paul Frost (R) told The Associated Press, noting that it would be difficult for Patrick to declare an emergency after the State Legislature declined to do so.
The Massachusetts Republican Party responded early Thursday with a letter to the secretary of state requesting that he reject Patrick's emergency declaration and citing detailed legal precedent.
Truly, our Long War will go on for some time now.
We've got a long way to go still.
That's nice. Once again, we're back to Obama's not smart enough to handle more than one thing at a time, because Americans never have to worry about more than one problem at a time, ever. Republicans are so terrified of a real health care reform bill leaving them in the wilderness for a generation that they are trying completely absurd stuff now in order to "kill" reform legislation. They still do not have a health care plan of their own. They still don't have any solutions to our problems. All they have is the word "No."
On ABC’s Top Line today, Sen. Jim DeMint (R-SC) attacked Obama. “A lot of us are concerned that the President is putting off listening to the recommendations from his generals because he’s getting so much pressure from the left,” DeMint complained. When host David Chalian noted that Obama simply “wants to make sure that the resources are there to fit the strategy,” DeMint accused Obama of abandoning Afghanistan to focus on health care, which DeMint suggested is not a priority for the country:
DEMINT: The problem is, the war in Afghanistan and our economy are our two biggest issues. But he’s working on other issues such as health care and he’s putting off the decision on Afghanistan which I think puts our troops at risk. So he needs to focus on priorities right now and not try to ram so many things down our throat here in Congress. He needs to address the issue of Afghanistan quickly.
- A new vaccine for HIV is showing promise in one of the largest vaccine field trials in history.
- A census worker was found hanged in rural Clay County, Kentucky yesterday, the word "fed" on the body.
- All eyes are on Pittsburgh as the annual G-20 summit gets underway today in the Steel City.
- Bank of England Governor Mervyn King says two major British banks came "within hours" of collapse last October.
- Nintendo is cutting the price of its Wii console to $200 starting Sunday.