September 18, 2013 archive

No, Mr. President, the Economy Is Not Improving

Cross posted from The Stars Hollow Gazette

President Barack Obama briefly addressed the country on the fifth anniversary of the collapse of Lehman Brothers and the start of the financial crisis that would see the middle class loose most of its wealth. The president rightfully chastised the obstruction on congress, blasting the Republican threats to shut down the government unless the he agrees to de-fund the Affordable Care Act and he patted himself on the back for how far the economy has come in the last five years.

In his speech the president paints a glowing picture of the economy and his accomplishments:

And so those are the stories that guided everything we’ve done. It’s what those earliest days of the crisis caused us to act so quickly through the Recovery Act to arrest the downward spiral and put a floor under the fall. We put people to work, repairing roads and bridges, to keep teachers in our classrooms, our first responders on the streets. We helped responsible homeowners modify their mortgages so that more of them could keep their homes. We helped jump-start the flow of credit to help more small businesses keep their doors open. We saved the American auto industry.

And as we worked to stabilize the economy and get it growing and creating jobs again, we also started pushing back against the trends that have been battering the middle class for decades, so we took on a broken health care system, we invested in new American technologies to end our addiction to foreign oil, we put in place tough new rules on big banks, rules that we need to finalize before the end of the year, by the way, to make sure that the job is done, and we put in new protections that crack down on the worst practices of mortgage lenders and credit card companies.

We also changed a tax code that was too skewed in favor of the wealthiest Americans. We locked in tax cuts for 98 percent of Americans. We asked those at the top to pay a little bit more.

So if you add it all up, over the last three-and-a-half years, our businesses have added 7.5 million new jobs. The unemployment rate has come down. Our housing market is healing. Our financial system is safer. We sell more goods made in America to the rest of the world than ever before.

However, his rosy view of the current state of the economy isn’t shared by the 99% who are still struggling with low wage jobs, unemployment, and a housing crisis that is still looming.

The president’s speech makes one wonder who is advising this man and what economy was Obama talking about? Then one remembers that it was his best buddy Larry Summers and the Chicago School of Rubinite cohorts, as The Guardian‘s economics editor Heidi Moore notes in her column. Ms. Moore writes that is time to “end the delusion that this White House has done even a fraction of what it should to help the economy” and concludes that the president has had some poor economic advice:

The president’s economic initiatives – food stamps, manufacturing, infrastructure, raising the debt ceiling, appointing a new chairman of the Federal Reserve – have mostly ended in either neglect or shambles. After five years, the Obama Administration’s stated intentions to improve the fortunes of the middle class, boost manufacturing, reduce income inequality, and promote the recovery of the economy have come up severely short. [..]

Here’s the litany of failure: the president has not pushed through any major stimulus bill since 2009, and most of that was pork-barrel junk. Manufacturing is weak and weakening; the employment gap between the rich and the poor is the widest on record; the economic recovery is actually more like an extended stagnation with 12 million people unemployed; the housing “recovery” will be stalled as long as incomes are low and house prices are high; and quantitative easing as a stimulus, while a heroic independent effort by the Federal Reserve, is past its due date and is no longer improving the country’s fortunes beyond the stock market.

Shall we continue? We don’t have a food stamp bill even though 49 million Americans lack regular access to food. Goldman Sachs analysts have said the sequester is taking a toll on stubbornly growing unemployment: “since sequestration took effect in March, federal job losses have been somewhat more pronounced,” they wrote last week; and another debt ceiling controversy – the third of Obama’s presidency – looms in only a few weeks with the potential to hurt what meager economic growth we can still cling to.

The economy for the vast majority of people and small businesses is not going well and won’t improve in the neat future. One of the people that Pres, Obama has ignored is Pres. Bill Clinton’s former Labor Secretary and economics professor that the University of California, Robert Reich. Prof. Reich sat down with Democracy Now!‘s Amy Goodman to discuss the current state of the economy since the fall of Lehman Brothers.



Transcript can be read here

Meanwhile, the president is living in a bubble. Let’s hope his bubble bursts before ours does and he starts to really do something about it.  

Long Term Paybacks

Cross posted from The Stars Hollow Gazette

A long time ago, after an incident that had left me particularly furious with a disagreeable colleague, a friend told me to be patient eventually this person would fall on his own petard. After all, it wasn’t the short term paybacks that one needs to worry about, its the long term paybacks that get them in the end. And so it was, some years later, my nemesis got too arrogant, made some foolhardy decisions and was forced to retire in disgrace. I had long since moved on another path that was ultimately more satisfying but when I heard the story of his fall I had to wryly smile.

Over the weekend, after some weeks of speculation about who would succeed Ben Bernanke as chair of the Federal Reserve, President Barack Obama’s rumored favorite, his former chief economics adviser, Larry Summers, withdrew his name from consideration. Mr. Summers had come under fire from the progressive left for his Chicago School economic policies and his past history as President Bill Clinton’s Treasury Secretary. It was during Summer tenure as Treasury head that Glass-Steagal was repealed leading to the current economic mess. Add to that his misogynistic attitude and the rise of one of the women to whom he was so dismissive and you have the recipe for the down fall of one of the most “dickish” (Charlie Pierce’s term) personalities in government.

Washington bureau chief for The Huffington Post Ryan Grim summarized Larry’s fall from grace:

A progressive-populist coalition fueled by women’s groups and high-end donors was responsible for undoing President Barack Obama’s bid to install Larry Summers as the next chairman of the Federal Reserve. [..]

The five opposing senators were a combination of traditional progressives — Merkley, Elizabeth Warren (Mass.) and Sherrod Brown (Ohio) — and prairie populists — Jon Tester (Mont.) and, according to three Senate Democratic sources, Heidi Heitkamp (N.D.). Tester’s opposition was reported Friday by Reuters; Heitkamp’s intention was not previously public. [..]

Meanwhile, a coalition of progressive groups — which included UltraViolet and the National Organization for Women, two powerful women’s groups — teamed with the big donors and grassroots advocacy groups to pressure Banking Committee members and other Senate Democrats. ..]  The donors, who were mostly women, had [concerns that ranged from populist to feminist. [..]

Merkley, according to another aide, spoke to Democratic senators on the committee during caucus meetings on Tuesday and Thursday, and made Summers’ closeness to Wall Street and prior support for deregulation the key element of his pitch. He homed in on Summers’ backing for the Glass-Steagall repeal, which allowed banks to grow much larger and take on more risk. He also highlighted Summers’ opposition to regulating derivatives in a battle with then-Commodity Futures Trading Commission head Brooksley Born. Summers took both positions as treasury secretary during the Clinton administration. To make the point that Summers had not revised his approach, Merkley noted his intense behind-the-scenes opposition to the Volcker Rule, an attempt to reinstate some of Glass-Steagall’s restrictions that was added to the Dodd-Frank Wall Street reform law by Merkley and Brown. [..]

Summers had also opposed naming Warren to permanently head the Consumer Financial Protection Bureau, a decision that came back to haunt him, as Warren instead ran for the Senate and won a spot on the Banking Committee, where she has now helped tank Summers’ shot at the Fed chairmanship.

Essentially, Larry Summers was the author of his own demise. As Charlie Pierce observes:

The fact is that Senator Professor Warren was one of the driving forces behind a genuine populist uprising of liberal Democratic senators — and Jon Tester, too — and that uprising has kicked Larry Summers to the curb. She has quietly carved out a leadership role in the one area in which she is an acknowledged expert. (What she will do if it ever comes to a vote on making war in Syria is anybody’s guess.) Quite simply, she is doing what she said she would do when she was running for the Senate. She has enough allies to get done a lot of what she wants to get done. Anything this president — or his successor — wants to do as far as national economic policy now has to go through her, and through the coalition to which she belongs. I still don’t think the president will nominate Janet Yellin — He’s got his back up about it now — but whoever he does nominate is going to have to have a chat with the nice professor in the glasses who’s got just a few questions she’d like to ask.

I’m sure there are a lot of women, from Brooksley Born to Christina Romer, wryly smiling. Long term paybacks can be very satisfying.

On This Day In History September 18

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

September 18 is the 261st day of the year (262nd in leap years) in the Gregorian calendar. There are 104 days remaining until the end of the year.

On this day in 1793, George Washington lays the cornerstone to the United States Capitol building, the home of the legislative branch of American government. The building would take nearly a century to complete, as architects came and went, the British set fire to it and it was called into use during the Civil War. Today, the Capitol building, with its famous cast-iron dome and important collection of American art, is part of the Capitol Complex, which includes six Congressional office buildings and three Library of Congress buildings, all developed in the 19th and 20th centuries.

As a young nation, the United States had no permanent capital, and Congress met in eight different cities, including Baltimore, New York and Philadelphia, before 1791. In 1790, Congress passed the Residence Act, which gave President Washington the power to select a permanent home for the federal government. The following year, he chose what would become the District of Columbia from land provided by Maryland. Washington picked three commissioners to oversee the capital city’s development and they in turn chose French engineer Pierre Charles L’Enfant to come up with the design. However, L’Enfant clashed with the commissioners and was fired in 1792. A design competition was then held, with a Scotsman named William Thornton submitting the winning entry for the Capitol building. In September 1793, Washington laid the Capitol’s cornerstone and the lengthy construction process, which would involve a line of project managers and architects, got under way.

Cartnoon

The Demographics Unit

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Democracy Now: Spying on Campus: New York Police Caught Monitoring Muslim Student Groups Throughout Northeast

2/21/12

Democracy Now: From Mosques to Soccer Leagues: Inside the NYPD’s Secret Spy Unit Targeting Muslims, Activists

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