Last Call

In a statement that's sure to drive the Wingers insane, the UN is again calling for the greenback to be replaced as the de facto world currency for the second time in six months.

The United Nations Conference on Trade and Development said in a report published Monday that the U.S. dollar should be replaced as the world’s standard reserve currency, giving rise to a new global currency managed by an as-yet undetermined financial regulatory organization.

Heiner Flassbeck, director of the conference, told Bloomberg News that changes needed in the world’s financial systems rival the scope of the Bretton Woods or European Monetary System agreements.

The Bretton Woods agreement established in 1944 the International Monetary Fund and World Bank, following allied victory in World War II.

“[The] dominance of the dollar as the main means of international payments [has] played an important role in the build-up of the global imbalances in the run-up to the financial crisis,” the report says. “Another disadvantage of the current international reserve system is that it imposes a greater adjustment burden on deficit countries (except if it is a country issuing a reserve currency) than on surplus countries.”

The UN adds: “Such a multilateral system would tackle the problem of destabilizing capital flows at its source. It would remove a major incentive for speculation and ensure that monetary factors do not stand in the way of achieving a level playing field for international trade. It would also get rid of debt traps and counterproductive conditionality. The last point is perhaps the most important one: countries facing strong depreciation pressure would automatically receive the required assistance once a sustainable level of the exchange rate had been reached in the form of swap agreements or direct intervention by the counterparty.”

The move should not be surprising to observers of global economics, as a U.N. panel of currency experts came to the same conclusion in March, according to Reuters.

Frankly, the UN is simply being honest: having the dollar as the world reserve currency is one major reason why our financial crisis became a global systemic one. The rest of the world is tired of footing the bill for us, especially the Chinese. If everybody else decides to go with another world currency, then America is done for, we become a third world country overnight.

That date is coming closer, frankly. I think it's a question of when, not if. Between this and the Chinese complaining earlier today, gold has shot up above $1,000 an ounce and may hit much, much higher.

What recovery?

The Roberts Court's Biggest Ruling

Ironically, E.J. Dionne is correct when he says that the biggest event Wednesday is not Obama's health care speech, but the special Supreme Court hearing on campaign finance laws.

Judged by the standard of an event's potential long-term impact on our public life, the most important will be the argument before the Supreme Court (on the same day, as it happens) about a case that, if decided wrongly, could surrender control of our democracy to corporate interests.

This sounds melodramatic. It's not. The court is considering eviscerating laws that have been on the books since, in one case, 1907 and in the other, 1947 banning direct contributions and spending by corporations in federal election campaigns. Doing so would obliterate precedents that go back two and three decades.

The full impact of what the court could do in Citizens United v. Federal Election Commission has only begun to receive the attention it deserves. Even the word "radical" does not capture the extent to which the justices could turn our political system upside down. Will it use a case originally brought on a narrow issue to bring our politics back to the corruption of the Gilded Age?

Citizens United, a conservative group, brought suit arguing that it should be exempt from the restrictions of the 2002 McCain-Feingold campaign finance law for a movie it made that was sharply critical of Hillary Clinton. The organization said it should not have to disclose who financed the film.

Instead of deciding the case before it, the court engaged in a remarkable act of overreach. On June 29, it postponed a decision and called for new briefs and a highly unusual new hearing, which is Wednesday's big event. The court chose to consider an issue only tangentially raised by the case. It threatens to overrule a 1990 decision that upheld the long-standing ban on corporate money in campaigns.

The one swing vote on this is going to be the Chief Justice himself, John Roberts. If he chooses to side with the conservatives of the court and strike down the laws preventing direct corporate contributions and limiting indirect ones, the spigots will be opened. Races will literally be bought and sold in 2010 by big corporate interests.

In other words, it would actually be worse than it is now. We'll see where it ends up, but keep an eye out on Wednesday for news of this.

Labor Daze

The President spoke today here in Cincy, and his speech was fairly good, but more interesting was what Blue Dog Steve Dreihaus had to say.

President Barack Obama told a union audience in Cincinnati on Labor Day that the nation has "never been this close" before to health care reform. But he cautioned that special interests are trying to scare Americans to protect the status quo.

"We've never had such broad agreement on what needs to be done,'' Obama said in his appearance at the 23rd annual Cincinnati AFL-CIO Labor Day picnic. "And because we're so close to real reform, the special interests are doing what they always do - trying to scare the American people and preserve the status quo.''

Obama, in his first visit to Cincinnati as president, spoke for 36 minutes to nearly 5,000 people at the PNC Pavilion at Riverbend Music Center in Anderson Township.

Obama's speech came two days before he is scheduled to address a joint session of Congress on the progress of health care reform. Obama said he didn't want to give away many details of his speech -- "I want you all to tune in.''

But Obama reiterated some core principles of reform in which people wouldn't lose health insurance if they lost their jobs, where there is a cap on out-of-pocket expenses and where people would not be denied coverage because of a pre-existing medical condition.

He also backed the creation of a marketplace where individuals and small businesses could purchase insurance at a reasonable cost.

"And I continue to believe that a public option within the basket of insurance choices would help improve quality and bring down costs,'' he said, addressing one of the most contentious parts of health care reform.

One of the congressmen unsure about the extent of reform is US Rep. Steve Driehaus, D-West Price Hill, who said at the picnic that he will be returning to Washington with Obama. Driehaus said he expects to have “some time to talk to the president and get down to brass tacks on health care and other issues.”

Driehaus has been on the fence when it comes to health-care reform proposals by the Obama administration and Democratic leaders in Congress.

Driehaus said, “I think we have spent the last month here in the district listening to all points of view and I think I’m better for it. What I want to do now is get the president’s perspective on this.”

In other words, this Steve Dreihaus.

"Yes, I think money is access." And people wonder why health care is in trouble. Who has access to Congressmen and women like Steve Dreihaus?

Here's a hint: it's not the people of West Price Hill here in Cincy. Something to think about this Labor Day.

Not Trading On The Name

Former Congressman Joe Kennedy Jr. has decided not to run for his late uncle's Senate seat.

"Given all that my uncle accomplished, it was only natural to consider getting back involved in public office," said Kennedy on the website of the non-profit organization he founded, Citizens Energy.

"After much consideration, I have decided that the best way for me to contribute to those causes is by continuing my work at Citizens Energy Corporation."

Edward Kennedy held the Senate seat for almost five decades, giving the Boston-based family a major presence in Washington long after the assassinations of both president John F. Kennedy in 1963 and Robert F. Kennedy in 1968 as he campaigned for the White House.

That leaves the door open for other Bay State Dems, most notably Massachusetts AG Martha Coakley. We'll see if anyone else throws in.

In Which Zandar Answers Your Burning Questions

Josh Marshall asks:

Am I the only one who thinks that if the Dems pass a bill with mandates and subsidies for poor and moderate income people to purchase it but no public option or competition with the insurers, that it will be pretty much a catastrophe for the Democrats in political terms?

The answer of course is no. Once again, a national law that mandates health insurance but has no affordable public option is doomed to failure, it is nothing more than 50 million new customers and a trillion dollar gift to the insurance companies.

Yes, the Democrats will take massive political damage from it, it won't drive down costs at all, and the Republicans can rightfully say that they warned America and can run in 2012 on overturning it. Yes, there's a real danger here that a bad bill like a 100% mandate, no public option plan would actually be worse than no bill at all, because millions of Americans will get booted from their company plan and will have to go it alone, driving costs up even more.

Without cost controls, companies will simply not be able to afford health insurance coverage for employees, period. It'll be a train wreck.

Obama has to know this. Congress sure as hell is aware of it.

What will Obama's plan on Wednesday include?

[UPDATE 1:38 PM] Surprise! Max Baucus's plan drops the public option for "health insurance co-ops". No public option plus mandates equals disaster.

A Dollar And Change In Beijing

The Telegraph's Ambrose Evans-Pritchard is once again reporting that China is warning America about Helicopter Ben's little printing press problem.

"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.

China's reserves are more than – $2 trillion, the world's largest.

Such a public warning out of the otherwise inscrutable Chinese is tantamount to having China's ambassador to the US standing outside the White House and chucking eggs at the front door. Treasury is going to try to hem and haw this off as just talk, but this is a real problem. On one hand, when the stimulus wears off, 2010 and 2011 are going to be economically miserable. One the other hand, inflation is going to catch up with us at some point, resulting in the same thing, just further down the road. If Helicopter Ben raises rates too quickly, growth will get strangled, if he does it too slowly inflation will smash the country. It's an ugly position and Ben Bernanke role in getting us into this mess must be noted.

But hey, four more years!

[UPDATE 8:20 AM] The Telegraph also has an interesting article where two economists say America is headed down the Peronista collapse road that destroyed Argentina's economy and will put us in another depression.

Although the authors support the Federal Reserve's moves to slash interest rates to just above zero and embark on quantitative easing, pumping cash directly into the system, they warn that greater intervention could set the US back further. Rowley says: "It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron."

Which is funny, because the mistakes of the Depression were that not enough government intervention and oversight caused a major collapse. Since when do conservatives think deficit spending is bad? They've been doing it for 30 years.

Obama Comes To Cincy

President Obama will be here in Cincy today at the AFL-CIO's annual Labor Day Picnic this afternoon, where he will announce his new "manufacturing czar" Ron Bloom.

When President Barack Obama speaks at Coney Island Monday, he is expected to announce that Ron Bloom will be his senior counselor for manufacturing policy.

Bloom, who heads the Treasury Department's auto task force, is traveling with the president to Monday afternoon's annual AFL-CIO Labor Day picnic at Coney. The labor union has distributed 10,000 tickets for the president's afternoon address.

Obama is expected to speak around 1:15 p.m.; gates open at 9:30 a.m.

Bloom will remain head of the auto task force as he takes on the expanded task of working across federal agencies to integrate existing programs and develop new initiatives affecting the manufacturing sector.

According to prepared remarks released by the White House Sunday night, Obama is expected to tell the picnic attendees that he tapped Bloom to coordinate the administration's manufacturing policy because of his extraordinary service on the auto task force and his extensive experience with both business and labor.

"Ron has the knowledge and experience necessary to lead the way in creating the good-paying manufacturing jobs of the future," according to the White House statement. "We must do more to harness the power of American ingenuity and productivity so that we can put people back to work and unleash our full economic potential."

Ohio is still very much union country, folks. Maybe not as much as Michigan or Pennsylvania, but a lot of manufacturing jobs have been lost here lately and Ohio is most certainly a vital state to the Dems. This time last year the national unemployment rate was 3.5% lower. The state badly wants more green manufacturing jobs, and will need them.

I'll have more on the President's speech here later this afternoon.

StupidiNews, Labor Day Edition

Happy Labor Day, folks. Of course, an increasing number of us would of had the day off anyway...no job.

• Sen. Ben Nelson (D-NE) sees a health care bill compromise possible on a "trigger" mechanism for the public option.
• Scientists say they have discovered the genes that cause Alzheimer's, which may lead to genetic treatments.
• The loss of arctic ice is leaving summer shipping lanes more clear than ever before, saving some ships days worth of sailing.
• Taiwan's PM and cabinet will resign Thursday over the government's botched response to Typhoon Morakot last month.
• Google celebrates the 20th anniversary of the video game that brought us "All your base are belong to us!"