The Rotten Core: "Late empires are known for several things: a self-obsessed, self-serving governing class, small over-reaching wars that bankrupt the Treasury, debt that balloons until retreat from global power becomes not a choice but a necessity, and a polity unable to address reasonably any of these questions - or how the increasing corruption of the media enables them all."
The Two-Track Economy Arrives: "
So now it’s all about whether you are a preferred client of Goldman Sachs or another big finance house.
If you’re on the inside track, this is a great time to buy U.S. assets that are being dumped by people without access to cheap credit, or assets overseas (e.g., Asia, where the “carry” or interest rate differential relative to the Federal Reserve is already positive and the exchange rate risk is all upside).
If you’re on the outside track, you are experiencing a version of Naomi Klein’s “Shock Doctrine.” Some (former) members of the elite are in this category--this is another standard feature of emerging market crises and “recoveries.” But mostly, of course, it’s nonelite on the outside track and a more concentrated, reconfigured version of the elite on the inside.
This can lead to short-term growth--the speed of recovery in many emerging markets surprises many, from about 12 months after the crisis breaks. But it also leads to repeated crisis, to derailed growth, and to a loss of income, status, and prospects for most of society."
(Via The Plank.)
William Galston | The New Republic: "With the near-simultaneous release this morning of CBO's updated Budget and Economic Outlook and OMB's Mid-Session Review, we have the most detailed economic analyses and forecasts we are likely to see for the rest of the year.
If the consensus these documents represent is in the ballpark, the country and the Obama administration are in for a rough ride. Consider the following:
After shrinking over 2009, real GDP will grow only anemically in 2010 before that growth accelerates for a few years and then subsides to below 3 percent for the second half of the decade.
Unemployment will remain persistently high, averaging about 10 percent in 2010, when Democrats will be trying to defend their recent congressional gains. It will be close to 9 percent in 2011, but remain well above 7 percent as late as 2012, when President Obama presumably will run for reelection.
After years of economic recovery and growth, budget deficits will remain larger throughout the next decade than most economists (and the administration) consider acceptable, raising debt held by the public to between 67.8 percent (CBO) and 76.5 percent (OMB) of GDP by the end of the decade.
CBO’s forecast, which is required by law to take current legislation as its baseline, assumes that all the Bush tax cuts as well the AMT patch will expire on schedule without being renewed, increasing revenues sharply, and that no new spending initiatives will be adopted. But hardly anyone believes that taxes will be allowed to rise that much (the administration isn’t recommending it), so revenues are likely to be lower than the forecast. And if any portion of the administration’s health care proposal is adopted, federal spending will be even higher than the 23.5 percent of GDP the administration projects for the next decade (CBO projects a near-identical 23.4 percent average). Bottom line: Deficits are likely to be even higher than either document predicts.
How can we pay for this much government and finance deficits this large? In recent years, the answer could be summed up in one word: China. But the evidence suggests that we can’t count on this in the future. From a high of 55 percent in 2006, China’s willingness to finance the U.S. deficit has fallen to only 9 percent in the first half of 2009. In the short term, as much of the global economy remains sluggish and the appetite for risk remains low, this won’t matter much. Within a few years, however, the tension between private sector borrowing and the public sector’s need is bound to increase, with increasingly unpleasant consequences for interest rates and growth.
In its mid-session review, the administration acknowledges that ‘the fiscal situation will demand more action once the economic recovery is fully underway’ and that health insurance reform won’t be enough to do the job. If the president and his economic team mean what they say, they will be compelled to propose significant changes in the entire federal budget, including revenues and entitlements. But it’s not clear that many members of Congress from either party would be willing to step up to the plate. In any event, the ability of the United States to govern itself realistically and maturely will be tested, and the consequences of failure will be severe.
UPDATE: Because Noam Scheiber’s post also addresses the issue of China’s willingness to continue financing the U.S. budget deficit, I thought it would be useful to lay out the Treasury’s numbers more fully. In 2006, China purchased 55 percent of the annual increase in U.S. Treasuries outstanding. That fell to 33 percent in 2007, 22 percent in 2008, and 9 percent in the first half of 2009. If current trends continue, China will purchase about $145 billion this year, versus about $275 billion in 2008. This suggests that while the Chinese have many reasons not to destabilize our economy, their willingness to finance our deficit is waning. And if they accept the advice of just about everybody to deemphasize exports to the U.S. and build up their domestic market, the quantity of Chinese savings--public and household--available for overseas investment is bound to decline. It would, I repeat, be unwise to assume that the rest of the world would be willing to finance $9 trillion of new U.S. debt over the next decade on terms we would find attractive. So bringing that number down is more than a green eyeshade exercise; sustainable growth depends on it."
(Via The Plank.)
by Patrick Appel
Politifact evaluated the truthfulness of claims by supporters and opponents of health care reform. provisional graph based upon Politifacts data. Not exactly a scientific chart, but it is telling.
Op-Ed Columnist: Republican Death Trip: "President Obama had campaigned to move beyond divisive politics, but instead he is facing an opposition that eagerly seizes on every wild rumor manufactured by the right-wing media complex."
(Via NYT > Opinion.)
Les Leopold: The Pay Czar Has No Clothes: The Obama Administration Has No Guts?: "
'Citigroup Inc's contract with energy trader Andrew Hall, which reports say could pay him up to $100 million this year, will not be subject to rulings by the Obama administration's pay Czar, a source close to the bank said on Wednesday.'-Reuters
If ever we needed proof that the Obama administration really doesn't want to change the way Wall Street does business, this is it. Allowing Citigroup to shell out $100 million dollars to a contracted trader makes a mockery of any efforts to reign in executive pay and put an end to the fantasy finance casino that wrecked our economy.
We were led to believe that the Pay Czar would review all compensation packages and keep them at a reasonable level. Although the Obama Administration ditched the $500,000 cap, it 'felt that in cases where we're offering exceptional government assistance that we had a duty to the taxpayer to ensure that, even if the letter of the law had no restriction on overall salary, that there needed to be a review process to ensure that it was neither excessive, inappropriate or oriented to short term risk taking,' said Gene Sperling, a senior counselor to Mr. Geithner in a June 11th Wall Street Journal report.
Everyone knew there would be loopholes, but if $100 million is not 'excessive, inappropriate or oriented to short term risk taking' nothing is. Apparently, since the contract was executed before February 11, an arbitrary date set by the Treasury Department, it is exempt. But what's so special about February 11th? By then we had already provided Citigroup more than $387 billion dollars in loans and asset gurantees, according to the excellent accounting provided by Nomi Prins. Of that $45 billion came from the TARP program in November 2008, well before Andrew Hall's contract.
If the taxpayers had not bailed out Citigroup, Mr. Hall would have received bupkis. In fact, had we not bailed out Wall Street in general, Mr. Hall and many others financiers might be selling apples on the street-corner. (See The Looting of America for a detailed account of how we got here.)
I don't care what lame excuses the Czar or Citigroup come up with, Mr Allen is being paid with our money. He's walking off with a hundred million and for what? What value did he add to our economy? Just want did he do to help re-employ the more than 25 million who are now unemployed or underemployed? (This is the kind of stuff that makes you feel sorry for Bernie Madoff.)
But the real question is why is the Obama team is letting this happen. If ever there were a financial institution that is totally indebted to the government, it is Citigroup. Without Uncle Sam, it's a bankrupt enterprise from top to bottom. No one on Main Street would blink if Obama just told Mr. Hall that it was his patriotic duty to get by on only $500,000 year, not $100,000,000.
The Obama strategy is obvious. They want to soothe the markets and get the financial system get back to 'normal' as soon as possible, even if it means allowing the rip-offs to begin again. The first clear signal was when the Obama administration opposed the $500,000 wage cap. The next tip-off was when Goldman Sachs started selling risky derivatives without a peep from any regulator. And of course, the administration didn't say a word when Goldman and JP Morgan announced outrageous profits based entirely on government largess. Now the Czar is hiding behind arbitrary dates to allow Wall Street traders to rob us blind.
Clealy, the Obama administration is hoping that such largess will restore 'investor confidence' leading to a Wall Street boom, resuscitated 401ks, a happy upper-middle class, and even a few more jobs for the unemployed... all before election day 2010.
But the next election could be a real shocker. Americans might decide to protest the fact that the banks got everything and they got nothing, especially if unemployment hovers at record highs. They could easily blame the government for this failure. And you know, they'd be right. The government hasn't done nearly enough to help the average American during this crisis. It would be easy to design attack ads that picture Hall's $100 million bonus check side-by-side with shots of unemployed workers getting evicted from their homes. The administration's failure to come down hard on these excesses is creating the perfect conditions for a right-wing populism that only will further entrench the rich and the powerful.
Unless we start putting some serious progressive pressure on the Obama administration, we had better get used to watching the big boys on Wall Street cash their undeserved bonus checks -- financed with our tax dollars. Don't be surprised to hear them cheering all the way to the bank, 'Yes We Can! Yes We Can!'
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.
"(Via Huffington Blog.)
Drew Westen: Change We Can Believe In: Feelings Toward the Administration by Those Who Elected It: "
Over the last couple of weeks I've been hearing rumblings. They're not from the staged or misinformed protestors at town hall meetings who have decided that shouting down a member of Congress is their right as American citizens. They're not from 'the left' -- that wild, unruly group of bloggers and Birkenstockers the White House has called on repeatedly, both in pubic and in private, to be quiet.
They're from the parent who came to pick up her daughter after a play date with my five-year-old, as we stood in the door chatting. They're from my cousin, a family doctor, who called me when he heard about Big Pharma's sweetheart deal with the White House to prevent negotiations on the cost of prescription drugs. They're from a guy I sat next to on a plane this week who doesn't follow politics all that closely but follows closely enough to know that bankers seems to be getting bonuses as homeowners are getting foreclosure notices.
These people aren't 'raving liberals.' Most of them haven't even gotten word yet that they're supposed to call themselves progressives (and none of them knew the secret progressive handshake). They're ordinary voters who either sometimes or reliably vote Democratic, who were members of the Obama majority in 2008 and were convinced that this time their vote really mattered. Now they're disillusioned.
They can see the economic upturn. They see the Dow rising. They know that corporate profits are no longer in a free-fall. But they can also see that those profits are rising as their own company is considering another round of layoffs -- and that those two facts are not unrelated. And what they feel summarizes what they see: where before they had hope, now they feel primarily frustration and resentment.
As one of these people recently said to me, the cadence of Obama's speeches that used to give her shivers is now starting to grate on her nerves.
I knew just what she meant. I first had that feeling when I watched the President's speech in Africa. This time, superimposed on my usual response to Obama's eloquence (and his willingness to speak directly to people who American presidents have often failed even to notice) was a different feeling -- anger -- and a very different thought: What's he doing in Africa when the tide of public opinion is turning on health care reform back home? Africa will be there in 3 months. Public sentiment for genuine reform -- not a Botox bill, which will momentarily cover up the wrinkles in the pained face of our health care system long enough for a smiling Rose Garden ceremony -- may not.
A disquieting pattern seems to be emerging. When the President put in charge of our financial system a man who had led the New York Fed during a period of extraordinary Wall Street corruption and another who had helped dismantle protections against it, many of us scratched our heads in confusion. When he traded off billions in stimulus money that would have prevented precisely the cuts states are making today -- laying off workers and slashing essential programs, which runs counter to the whole point of the stimulus package -- for the same kind of tax cuts that ballooned the deficit during the Bush years, many of us thought he was just a really bad poker player. But he was playing solitaire, with no one on the other side of the table. We figured every President is entitled to his early mistakes.
But then came the news about the new law designed to protect consumers from credit card companies raising their rates. The President described how Americans had had enough of the fine print. But one provision seemed awfully odd: a 10-month grace period for credit card companies to 'adjust' to the new legislation and make whatever changes they wanted in the meantime. You normally don't give burglars your vacation schedule in advance so they have time to 'adjust.'
Then the reports started to come in from ordinary Americans who were seeing their interest rates hit the roof -- applied retroactively to money they had borrowed before the recession hit or they lost their jobs.
I got my own letter today:
Important Account Price Change NotificationWe are raising your Annual Percentage Rate (APR) on purchases and cash advances.
We are raising the Annual Percentage Rate (APR) on any balances that have a penalty rate because of a late payment.
We are increasing the late fee.
It was very thoughtful of them to tell me. But I was surprised the letter didn't say how much the new rates would be. I looked for a second page, but there wasn't one. Then I flipped it over, and there it was -- in fine print.
So the President and Congress passed a new law protecting consumers from predatory lending practices and credit-card fine print, but they gave the credit card companies a grace period during which they could raise the rates and put them in the fine print. Funny, I don't remember a similar grace period for homeowners who can't pay their mortgages. Couldn't we have had a homeowners' equivalent of the student loan program, through which the federal government would give homeowners no-interest loans for a couple of years to get them through the tough times so they don't lose their homes, particularly when the unemployment rate is near 10 percent because somebody else gambled with their incomes and assets, instead of giving banks zero-interest loans and allowing them to charge usurious rates on existing debt?
Of the millions of Americans who are receiving letters like this every day, I happen to be one of the lucky ones. I don't carry a balance on my credit cards, my home is still worth more than my mortgage, and I still have a job. But if Americans are starting to turn populist anger toward a White House that has doggedly refused to focus that anger where it belongs -- toward the banks, the mortgage brokers, the regulators who failed to regulate, the oil companies that have blocked energy reform for decades while racking up record profits, the health insurance companies that make their profits by denying coverage and discriminating against the ill, the pharmaceutical companies whose lobbyists have negotiated away the right to negotiate, and the Republicans who bankrupted the treasury during the eight long years of the Bush Presidency and crashed the economy on their way out -- I can understand why.
The American people did not vote for 'bipartisan' solutions that split the difference between the failed ideology of the last eight years, which continues to cost thousands of people their jobs and homes every day, and the change the President and the super-majorities they elected in both houses of Congress promised.
Drew Westen, Ph.D., is Professor of Psychology and Psychiatry at Emory University, founder of Westen Strategies, and author of 'The Political Brain: The Role of Emotion in Deciding the Fate of the Nation.'
"(Via Huffington Blog.)
Op-Ed Columnist - Is Obama Punking Us? - NYTimes.com: "
“AUGUST is a challenging time to be president,” said Andrew Card, the former Bush White House chief of staff, as he offered unsolicited advice to his successors in a television interview last week. “I think you have to expect the unexpected.”
He should know. Thursday was the eighth anniversary of “Bin Laden Determined to Strike in U.S.,” the President’s Daily Brief that his boss ignored while on vacation in Crawford. Aug. 29 marks the fourth anniversary of Hurricane Katrina’s strike on the Louisiana coast, which his boss also ignored while on vacation in Crawford.
So do have a blast in Martha’s Vineyard, President Obama.
Even as we wait for some unexpected disaster to strike, Beltway omens for the current White House are grim. Obama’s poll numbers are approaching free fall, we are told. If he fails on health care, he’s toast. Indeed, many of the bloviators who spot a fatal swoon in the Obama presidency are the same doomsayers who in August 2008 were predicting his Election Day defeat because he couldn’t “close the deal” and clear the 50 percent mark in matchups with John McCain.
Here are two not very daring predictions: Obama will get some kind of health care reform done come fall. His poll numbers will not crater any time soon.
Yet there is real reason for longer-term worry in the form of a persistent, anecdotal drift toward disillusionment among some of the president’s supporters. And not merely those on the left. This concern was perhaps best articulated by an Obama voter, a real estate agent in Virginia, featured on the front page of The Washington Post last week. “Nothing’s changed for the common guy,” she said. “I feel like I’ve been punked.” She cited in particular the billions of dollars in bailouts given to banks that still “act like they’re broke.”
But this mood isn’t just about the banks, Public Enemy No. 1. What the Great Recession has crystallized is a larger syndrome that Obama tapped into during the campaign. It’s the sinking sensation that the American game is rigged — that, as the president typically put it a month after his inauguration, the system is in hock to “the interests of powerful lobbyists or the wealthiest few” who have “run Washington far too long.” He promised to smite them.
No president can do that alone, let alone in six months. To make Obama’s goal more quixotic, the ailment that he diagnosed is far bigger than Washington and often beyond politics’ domain. What disturbs Americans of all ideological persuasions is the fear that almost everything, not just government, is fixed or manipulated by some powerful hidden hand, from commercial transactions as trivial as the sales of prime concert tickets to cultural forces as pervasive as the news media.
It’s a cynicism confirmed almost daily by events. Last week Brian Stelter of The Times reported that the corporate bosses of MSNBC and Fox News, Jeffrey Immelt of General Electric and Rupert Murdoch of News Corporation, had sanctioned their lieutenants to broker what a G.E. spokesman called a new “level of civility” between their brawling cable stars, Keith Olbermann and Bill O’Reilly. A Fox spokesman later confirmed to Howard Kurtz of The Post that “there was an agreement” at least at the corporate level. Olbermann said he was a “party to no deal,” and in any event what looked like a temporary truce ended after The Times article was published. But the whole scrape only fed legitimate suspicions on the right and left alike that even their loudest public voices can be silenced if the business interests of the real American elite decree it.
You might wonder whether networks could some day cut out the middlemen — anchors — and just put covert lobbyists and publicists on the air to deliver the news. Actually, that has already happened. The most notorious example was the flock of retired military officers who served as television “news analysts” during the Iraq war while clandestinely lobbying for defense contractors eager to sell their costly wares to the Pentagon.
The revelation of that scandal did not end the practice. Last week MSNBC had to apologize for deploying the former Newsweek writer Richard Wolffe as a substitute host for Olbermann without mentioning his new career as a corporate flack. Wolffe might still be anchoring on MSNBC if the blogger Glenn Greenwald hadn’t called attention to his day job. MSNBC assured its viewers that there were no conflicts of interest, but we must take that on faith, since we still don’t know which clients Wolffe represents as a senior strategist for his firm, Public Strategies, whose chief executive is the former Bush White House spin artist, Dan Bartlett.
Let’s presume that Wolffe’s clients do not include the corporate interests with billions at stake in MSNBC and Washington’s Topic A, the health care debate. If so, he’s about the only player in the political-corporate culture who’s not riding that gravy train.
As Democrats have pointed out, the angry hecklers disrupting town-hall meetings convened by members of Congress are not always ordinary citizens engaging in spontaneous grass-roots protests or even G.O.P. operatives, but proxies for corporate lobbyists. One group facilitating the screamers is FreedomWorks, which is run by the former Congressman Dick Armey, now a lobbyist at the DLA Piper law firm. Medicines Company, a global pharmaceutical business, has paid DLA Piper more than $6 million in lobbying fees in the five years Armey has worked there.
But the Democratic members of Congress those hecklers assailed can hardly claim the moral high ground. Their ties to health care interests are merely more discreet and insidious. As Congressional Quarterly reported last week, industry groups contributed almost $1.8 million in the first six months of 2009 alone to the 18 House members of both parties supervising health care reform, Nancy Pelosi and Steny Hoyer among them.
Then there are the 52 conservative Blue Dog Democrats, who have balked at the public option for health insurance. Their cash intake from insurers and drug companies outpaces their Democratic peers by an average of 25 percent, according to The Post. And let’s not forget the Democratic Senate Campaign Committee, which has raked in nearly $500,000 from a single doctor-owned hospital in McAllen, Tex. — the very one that Obama has cited as a symbol of runaway medical costs ever since it was profiled in The New Yorker this spring.
In this maze of powerful moneyed interests, it’s not clear who any American in either party should or could root for. The bipartisan nature of the beast can be encapsulated by the remarkable progress of Billy Tauzin, the former Louisiana congressman. Tauzin was a founding member of the Blue Dog Democrats in 1994. A year later, he bolted to the Republicans. Now he is chief of PhRMA, the biggest pharmaceutical trade group. In the 2008 campaign, Obama ran a television ad pillorying Tauzin for his role in preventing Medicare from negotiating for lower drug prices. Last week The Los Angeles Times reported — and The New York Times confirmed — that Tauzin, an active player in White House health care negotiations, had secured a behind-closed-doors flip-flop, enlisting the administration to push for continued protection of drug prices. Now we know why the president has ducked his campaign pledge to broadcast such negotiations on C-Span.
The making of legislative sausage is never pretty. The White House has to give to get. But the cynicism being whipped up among voters is justified. Unlike Hillary Clinton, whose chief presidential campaign strategist unapologetically did double duty as a high-powered corporate flack, Obama promised change we could actually believe in.
His first questionable post-victory step was to assemble an old boys’ club of Robert Rubin protégés and Goldman-Citi alumni as the White House economic team, including a Treasury secretary, Timothy Geithner, who failed in his watchdog role at the New York Fed as Wall Street’s latest bubble first inflated and then burst. The questions about Geithner’s role in adjudicating the subsequent bailouts aren’t going away, and neither is the angry public sense that the fix is still in. We just learned that nine of those bailed-out banks — which in total received $175 billion of taxpayers’ money, but as yet have repaid only $50 billion — are awarding a total of $32.6 billion in bonuses for 2009.
It’s in this context that Obama can’t afford a defeat on health care. A bill will pass in a Democrat-controlled Congress. What matters is what’s in it. The final result will be a CAT scan of those powerful Washington interests he campaigned against, revealing which have been removed from the body politic (or at least reduced) and which continue to metastasize. The Wall Street regulatory reform package Obama pushes through, or doesn’t, may render even more of a verdict on his success in changing the system he sought the White House to reform.
The best political news for the president remains the Republicans. It’s a measure of how out of touch G.O.P. leaders like Mitch McConnell and John Boehner are that they keep trying to scare voters by calling Obama a socialist. They have it backward. The larger fear is that Obama might be just another corporatist, punking voters much as the Republicans do when they claim to be all for the common guy. If anything, the most unexpected — and challenging — event that could rock the White House this August would be if the opposition actually woke up.
"
(Via NYT > Opinion.)
The Real Reason China Will Surpass Us: "
The usual concern about the U.S.-China balance of economic and political power is couched in terms of our relative international payments positions.'Weve run a large current account deficit in recent years (imports above exports); they still have--by some measures--the largest current account surplus (exports above imports) even seen in a'major country.'They accumulate foreign assets, i.e., claims on other countries, such as the U.S.'We issue a great deal of debt that is bought by foreigners, including China.
There are some legitimate concerns in this'framing of'the problem--no'country can increase its net foreign debt (relative to GDP) indefinitely without facing consequences.'And the Obama administration, ever since the Geithner-Clinton flipflop on Chinas exchange rate policy early in 2009, seems quite captivated by this way of thinking: Will they buy our debt? Can we control our budget deficit? What happens if China dumps its dollars?
The reason real to worry about China, however, has very little to do with external balances, Chinas dollar holdings,'or even capital flows.'Its about productivity and rent-seeking.
China mostly invests in activities that raise productivity, raising the amount of goods and services that they can produce.'This could be manufacturing or infrastructure or various kinds of services. Agriculture lags but continues to get some new investment. And of course they pour money into education.
Im not a fan of the Chinese way of organizing their economy or their society.'They no doubt have weaknesses that will catch up with them eventually (including waves of overinvestment in some sectors), and theres good reason to think they will be the center of a big new 'Asia Century' bubble that is just now starting to emerge.
But contrast their pattern of investment in recent years with ours.'What sector in our economy has expanded more than any other?'Where should you work if you want both the highest wages on average, potentially very big bonuses, and quasi-retirement by age 40?'Finance.
Of course, we need finance and an important part of modern economic development involves intermediating savings and investment.'The U.S. did this well, with some bumps in the road, and built a system that worked through the 1960s or 1970s.
But finance as a share of our activities (i.e., percent of GDP) has roughly doubled in the past 40 years.'What has this really added in terms of productivity?'The ATM and the credit card were great breakthroughs, but they are old.
What has 'financial innovation' brought us since the 1980s?'One answer, of course, is 'hedging strategies' that lower the cost of doing business for companies large and small.'This is plausible, although not likely to be'large relative to the economy--send me your favorite study on'the cost of capital'since 1990 (you choose the definition), and we can talk about whether this effect is significant,'sustainable, or even sensible.
Because financial innovation has mostly facilitated a big increase in finance.'If a sector grows, pays more wages, and rises as a share of GDP, surely this is a good thing?'Not necessarily--if this is a rent-seeking sector.
Rent-seeking means effectively a tax extracted by one sector from the rest of the economy.'Were used to thinking of this as something that occurs through trade restrictions and the big breakthroughs in this area came from analysis of tariffs and quotas (Anne Krueger, Jagdish Bhagwati).'If a tariff, for example, will make your life cushy, you will devote great resources to getting one established or increased - irrespective of the effects on the rest of the economy (call this strategy 'lets hammer the unprotected consumer').
Finance is rent-seeking.'The sector has devoted great resources to tilting all playing fields in its direction.'Consumers are taken advantage of; consumer protection is vehemently opposed.'And great risks are taken, with the downside handed off to the government (and the consumers again, as taxpayers).'This downside protection allows an overexpansion of debt-financed finance--reaching the preposterous levels seen in mid-2008 and now re-emerging.
Finance in its modern American form is not productive.'It is not conducive to further sustained economic growth.'The GDP accruing from these activities is illusory--most of finance is simply a tax on what is done by more productive members of society and a diversion of talent away from genuinely productivity-enhancing activities.
The rise of China does not necessarily imply slowdown or demise for the United States. But if they specialize in making things and we specialize in finance, they will eat our lunch.
On an urgent basis, we need real consumer protection against predatory financial practices and an end to all forms of Too Big To Fail behavior--which is actually just'the biggest, nastiest form of predation.'
This is our most pressing national and international strategic priority.
[Cross-posted at The Baseline Scenario.]
--Simon Johnson
"(Via The Plank.)
Obama Plays Cheney: "Barack Obama promised when he sought the presidency to usher in a new era of openness and transparency. "We'll have the negotiations televised on C-SPAN, so that people can see who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies," candidate Obama declared at a Pennsylvania campaign stop two months before the 2008 election.
Now, he is doing the opposite.
Worse yet, he is perpetuating the foul practices of the most corrupt administration in American history."
(Via The Nation: Top Stories.)
Bill Maher: New Rule: Smart President ≠ Smart Country: "
New Rule: Just because a country elects a smart president doesn't make it a smart country. A few weeks ago I was asked by Wolf Blitzer if I thought Sarah Palin could get elected president, and I said I hope not, but I wouldn't put anything past this stupid country. It was amazing - in the minute or so between my calling America stupid and the end of the Cialis commercial, CNN was flooded with furious emails and the twits hit the fan. And you could tell that these people were really mad because they wrote entirely in CAPITAL LETTERS!!! It's how they get the blood circulating when the Cialis wears off. Worst of all, Bill O'Reilly refuted my contention that this is a stupid country by calling me a pinhead, which A) proves my point, and B) is really funny coming from a doody-face like him.
Now, the hate mail all seemed to have a running theme: that I may live in a stupid country, but they lived in the greatest country on earth, and that perhaps I should move to another country, like Somalia. Well, the joke's on them because I happen to have a summer home in Somalia... and no I can't show you an original copy of my birth certificate because Woody Harrelson spilled bong water on it.
And before I go about demonstrating how, sadly, easy it is to prove the dumbness dragging down our country, let me just say that ignorance has life and death consequences. On the eve of the Iraq War, 69% of Americans thought Saddam Hussein was personally involved in 9/11. Four years later, 34% still did. Or take the health care debate we're presently having: members of Congress have recessed now so they can go home and 'listen to their constituents.' An urge they should resist because their constituents don't know anything. At a recent town-hall meeting in South Carolina, a man stood up and told his Congressman to 'keep your government hands off my Medicare,' which is kind of like driving cross country to protest highways.
I'm the bad guy for saying it's a stupid country, yet polls show that a majority of Americans cannot name a single branch of government, or explain what the Bill of Rights is. 24% could not name the country America fought in the Revolutionary War. More than two-thirds of Americans don't know what's in Roe v. Wade. Two-thirds don't know what the Food and Drug Administration does. Some of this stuff you should be able to pick up simply by being alive. You know, like the way the Slumdog kid knew about cricket.
Not here. Nearly half of Americans don't know that states have two senators and more than half can't name their congressman. And among Republican governors, only 30% got their wife's name right on the first try.
Sarah Palin says she would never apologize for America. Even though a Gallup poll says 18% of Americans think the sun revolves around the earth. No, they're not stupid. They're interplanetary mavericks. A third of Republicans believe Obama is not a citizen, and a third of Democrats believe that George Bush had prior knowledge of the 9/11 attacks, which is an absurd sentence because it contains the words 'Bush' and 'knowledge.'
People bitch and moan about taxes and spending, but they have no idea what their government spends money on. The average voter thinks foreign aid consumes 24% of our federal budget. It's actually less than 1%. And don't even ask about cabinet members: seven in ten think Napolitano is a kind of three-flavored ice cream. And last election, a full one-third of voters forgot why they were in the booth, handed out their pants, and asked, 'Do you have these in a relaxed-fit?'
And I haven't even brought up America's religious beliefs. But here's one fun fact you can take away: did you know only about half of Americans are aware that Judaism is an older religion than Christianity? That's right, half of America looks at books called the Old Testament and the New Testament and cannot figure out which one came first.
And these are the idiots we want to weigh in on the minutia of health care policy? Please, this country is like a college chick after two Long Island Iced Teas: we can be talked into anything, like wars, and we can be talked out of anything, like health care. We should forget town halls, and replace them with study halls. There's a lot of populist anger directed towards Washington, but you know who concerned citizens should be most angry at? Their fellow citizens. 'Inside the beltway' thinking may be wrong, but at least it's thinking, which is more than you can say for what's going on outside the beltway.
And if you want to call me an elitist for this, I say thank you. Yes, I want decisions made by an elite group of people who know what they're talking about. That means Obama budget director Peter Orszag, not Sarah Palin.
Which is the way our founding fathers wanted it. James Madison wrote that 'pure democracy' doesn't work because 'there is nothing to check... an obnoxious individual.' Then, in the margins, he doodled a picture of Joe the Plumber.
Until we admit there are things we don't know, we can't even start asking the questions to find out. Until we admit that America can make a mistake, we can't stop the next one. A smart guy named Chesterton once said: 'My country, right or wrong is a thing no patriot would ever think of saying... It is like saying 'My mother, drunk or sober.'' To which most Americans would respond: 'Are you calling my mother a drunk?'
Bill Maher is the host of HBO's 'Real Time with Bill Maher,' and will be joined on the show tonight by Arianna Huffington. 'Real Time' airs fridays on HBO at 10:00PM Eastern Time.
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Op-Ed Columnist: Rewarding Bad Actors: "Even before the bailouts, many financial-industry high-fliers made fortunes through activities that were worthless if not destructive from a social point of view. And they’re still at it."
(Via NYT > Opinion.)
