Tag: economics

Originally published at Wake Up. Please leave any comments there.

From Glenn Greenwald’s piece titled “What collapsing empire looks like:”

Does anyone doubt that once a society ceases to be able to afford schools, public transit, paved roads, libraries and street lights — or once it chooses not to be able to afford those things in pursuit of imperial priorities and the maintenance of a vast Surveillance and National Security State — that a very serious problem has arisen, that things have gone seriously awry, that imperial collapse, by definition, is an imminent inevitability?

Originally published at Wake Up. You can comment here or there.

It’s been a stellar week for Obama on the economic front.

Start with his decision to tap Senator Judd Gregg as his new Secretary of Commerce, a guy who voted to abolish the Commerce Department back when Clinton was President.

So, Judd Gregg will become Commerce Secretary, and a Republican will keep Gregg’s seat in the Senate. Gregg’s lifetime Progressive Punch rating of 10.08 out of 100.00, and 6.91 “when the chips are down,” should make him a much needed right-wing champion for the Commerce Department. Gregg should also be a useful voice during cabinet meetings, making sure that President Obama and the other radical liberals there don’t over-reach.

Then there’s the stimulus bill, where, despite Obama’s willingness to give the Republicans all sorts of concessions, there apparently still aren’t enough votes to get it through the Senate. The likely solution? More concessions, because that’s the bipartisan way.

If that comes out of spending and not tax cuts – and since Republicans and moderate Democrats are driving the boat on this one I assume it will – then the bill will be completely unable to accomplish its goals on job creation. It may provide a temporary boost, but won’t do what’s needed to stop the bleeding. The recession will continue for years and maybe slip into depression.

Lastly, there’s news that Obama and his administration are working on a bailout plan that will attempt to keep the shambling corpses of the big banks moving around for a while longer by letting the taxpayers guarantee huge amounts of toxic paper. No pesky nationalization for him, despite the many studies that show that’s the way most likely to actually work.

The Obama Administration, if the Washington Post’s latest report is accurate, is about to embark on a hugely expensive “save the banking industry at all costs” experiment that:

1. Has nothing substantive in common with any of the “deemed as successful” financial crisis programs

2. Has key elements that studies of financial crises have recommended against

3. Consumes considerable resources, thus competing with other, in many cases better, uses of fiscal firepower.

The Obama Administration is as obviously and fully hostage to the interests of the financial services industry as the Bush crowd was. We have no new thinking, no willingness to take measures that are completely defensible (in fact not doing them takes some creative positioning) like wiping out shareholders at obviously dud banks (Citi is top of the list), forcing bondholder haircuts and/or equity swaps, replacing management, writing off and/or restructuring bad loans, and deciding whether and how to reorganize and restructure the company. Instead, the banks are now getting the AIG treatment: every demand is being met, no tough questions asked, no probing of the accounts (or more important, the accounting).

Oh, wait, there were also the newly-announced executive compensation restrictions, which couldn’t be more obvious an attempt to appease the proles even as billions more of their dollars are spent trying to save zombie banks.

I was hardly expecting Obama to govern from the left, given the fact that he’s a center-right technocrat and all, but this is getting ridiculous and it’s only February.

Originally published at Wake Up. You can comment here or there.

Thank you, Senator Obama, for your brave speech on the Senate floor today where you spoke against the bailout bill and swore that you would stand strong against any attempt to give $700 billion to Wall Street without more oversight, equity in exchange for every dollar spent, mortgage relief for those in danger of losing their homes, new regulation to help keep this from happening again, and transactional taxes to help pay for the package.

Oh, wait, no, my mistake, you made this speech, in which you said the current bill isn’t perfect, but you’re going to vote for it anyway, and maybe someday down the road you’ll work to make sure this bailout for Wall Street doesn’t screw over everyone else in the country.

Originally published at Wake Up. You can comment here or there.

I’ll echo what was said over at Eschaton:

I think everyone who reads this blog who’s American, first thing on Monday morning, needs to call their Representatives and Senators and say: No. Blank. Checks. For. Crooks.

The current bailout plan, as presented, is a farce. Does something need to be done to keep the current financial system from collapsing under the weight of the failed gambles of the ridiculously greedy financial titans? Probably, yes. You can read more about how we got to this point here (the key phrase is “Gramm-Leach-Bliley”).

That doesn’t mean that the Bush plan is the right plan. In fact, if the events of the last 7+ years have taught us anything, it’s that any plan invented by the Bush administration is almost certainly the wrong plan. As the details of the bailout are released, it’s becoming increasingly obvious that the current plan is exceedingly flawed. As Paul Krugman says:

I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.

Calculated Risk notes:

We definitely do not want the Treasury to buy RMBS and CDOs at anywhere near the value on the bank’s books. Buying at those prices would help keep the banks lending, but it would also severely impact the taxpayers, it would be a transfer of wealth from the many to the few, and it would also encourage future excessive risk taking.

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