Stating the obvious


Will Durst, via Cagle Post:

Will DurstAt this point, you can’t even accuse the Democrats of being afraid of their own shadow because they don’t cast one. Besides, it’s hard to see your shadow when your head is so far up your butt you can tickle your spleen with your elbow. And if they expect any chance at all in 2012, they’d be wise to invest heavily in stem-cell research in hopes of regenerating their spine.

Exartly.

Here is her spout ….


If there is one thing Americans should remember after this debt ceiling debate is over—accepting, of course, that we won’t remember anything important—it ought to be this bizarre yet apt cartoon from Rainer Hachfeld, via Cagle Post:

Rainer Hachfeld, "Republican Descent to Hell"

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Robert Reich on credit ratings, debt ceiling


Former Secretary of Labor Robert Reich offered his thoughts this week on the debt ceiling and the spectre of a credit downgrade:

Robert Reich, October 31, 2010Now I don’t mean to be impertinent, but as long as America pays its debts on time, who is Standard & Poor’s to tell America how much debt it has to shed and by when?

Until the eve of Wall Street’s collapse in late 2007, S&P gave triple-A ratings to what turned out to be some of the Street’s riskiest packages of mortgage-backed securities.

Had S&P done its job, we wouldn’t have had the debt and housing bubbles to begin with. That means taxpayers wouldn’t have had to bail out Wall Street. We probably wouldn’t have had a Great Recession. Millions of Americans wouldn’t be jobless and collecting unemployment benefits. There’d be no need for the stimulus that saved 3 million other jobs. And far more tax revenue would have been pouring into the Treasury.

In other words, had S&P done its job, the federal budget deficit would likely be far smaller than it is today — and S&P wouldn’t be threatening the United States with a downgrade if we didn’t come up with a plan for shrinking it.

Unfortunately, while he has a point, it doesn’t really seem to matter. These are the rules of the game, and they’re not there for sake of anything or anyone other than the people who hope to run it.

On debt and deficits


The costs of two presidencies, juxtaposedJames Fallows of The Atlantic calls it, “The Chart That Should Accompany All Discussions of the Debt Ceiling“:

It’s based on data from the Congressional Budget Office and the Center on Budget and Policy Priorities. Its significance is not partisan (who’s “to blame” for the deficit) but intellectual. It demonstrates the utter incoherence of being very concerned about a structural federal deficit but ruling out of consideration the policy that was largest single contributor to that deficit, namely the Bush-era tax cuts.

An additional significance of the chart: it identifies policy changes, the things over which Congress and Administration have some control, as opposed to largely external shocks — like the repercussions of the 9/11 attacks or the deep worldwide recession following the 2008 financial crisis. Those external events make a big difference in the deficit, and they are the major reason why deficits have increased faster in absolute terms during Obama’s first two years than during the last two under Bush. (In a recession, tax revenues plunge, and government spending goes up – partly because of automatic programs like unemployment insurance, and partly in a deliberate attempt to keep the recession from getting worse.) If you want, you could even put the spending for wars in Iraq and Afghanistan in this category: those were policy choices, but right or wrong they came in response to an external shock.

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Trickle-down


The news is discouraging, unless, of course, this was the whole point:

Median Net Worth of Households 2005-09The median wealth of white households is 20 times that of black households and 18 times that of Hispanic households, according to a Pew Research Center analysis of newly available government data from 2009.

These lopsided wealth ratios are the largest since the government began publishing such data a quarter century ago and roughly twice the size of the ratios that had prevailed between these three groups for the two decades prior to the Great Recession that ended in 2009.

That is, many have long complained that trickle-down economic theory actually increases wealth gaps in society. The newly-released study from the Pew Center does not shock anyone for suggesting that the wealth gap is growing. But I suspect few trickle-down critics actually expected an eighteen- to twenty-fold gap reflecting ethnicity.

Hell, or, A Conversation with Brooks and Collins


This is your brain on drugs.I have a new vision of Hell, which is sitting around the “conversation pit” getting stoned with New York Times columnists David Brooks and Gail Collins. Apparently, the two get together and talk about issues for the newspaper’s Opinionator blog every Wednesday. To borrow a phrase from Supreme Court Nominee and current Solicitor General Elena Kagan, I wish they wouldn’t.

This week, the Dullard Duo took on one of the vital economic questions of the times: Deficit reduction or job creation?

Gail Collins: David, I was very interested in your column attacking the idea of a second stimulus. In fact, I was so interested that I almost put down my copy of this week’s New York Magazine, which has a big profile of you and your “charming, levelheaded optimism.” I agree totally with that assessment, although I part company with the author when it comes to your suits, which are certainly not shapeless.

The article also says that because of your book deadlines, you are only getting four hours of sleep a night. So I feel terrible asking you to converse about anything, let alone the economy.

David Brooks: My suits are absolutely shapeless. They are sartorial cumulus clouds. Given my body, shapeless is the best option, believe me. Other than that, I thought the profiler was admirably gentle and forgiving.

I’d like to say things could only get better from there, but … yeah. I’d also like to say it would be enlightening to hear an actual recording of this conversation in order to pick up some of the nuance, but, again … er … yeah. Continue reading

Meet Elizabeth Warren


Photo by Stephen Crowley/New York TimesSo The New York Times deems, and so it shall be: It is time to meet Elizabeth Warren:

Among all the dramatis personae of post-financial crisis Washington, there is no one remotely like Ms. Warren, 60, who has divided the town between those who admire her and those who roll their eyes at her ….

…. Ms. Warren has two roles here: officially, as head of Congressional oversight for the Troubled Asset Relief Program, and unofficially, as chief conceiver of and booster for a new consumer financial protection agency. Fusing those projects and her academic work, she has become the most prominent consumer advocate in years.

In a blitz of television appearances, she offers a story of how 30 years of deregulation has rewarded the financial industry but led to abusive practices and collapses that have hurt ordinary Americans — the same taxpayers who are paying for bank bailouts.

Ms. Warren’s climactic hour begins now: three years after she hatched the idea for the agency, the White House has backed it, the House of Representatives has approved it and it is a top Democratic priority in the Senate.

Many fans, including Representative Barney Frank, Democrat of Massachusetts, hope Ms. Warren will run it. But even if the agency is approved, it might be far weaker than what she envisioned, thanks to fierce opposition from the financial industry.

Her admirers are many, including President Obama and House Financial Services Chairman Rep. Barney Frank. As Jodi Kantor’s story for the NYT hits the newsstands, Professor Warren is already well-known to fans of Bill Maher’s Real Time, on HBO. Her two appearances to date have shown her endearing, such that my first response was like that of a child to a puppy: “Can we keep her?”

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Socialism sez ….


I suppose I would be remiss if I didn’t mention the March 17 statement of the International Committee of the Fourth International, which ran under the headline, “The Greek debt crisis signals a new stage in class conflict“:

1. The Greek debt crisis marks a new stage in the global recession triggered by the collapse of US investment bank Lehman Brothers in 2008. Governments all over the world reacted by handing over trillions to debt-ridden banks so as to avoid a complete financial breakdown. By moving to make workers pay for rescuing the banks, these governments are acting on behalf of finance capital. Their attempt to set back workers’ living standards by several generations must lead to a tremendous escalation of class conflict within Europe and throughout the world. As Moody’s, the credit rating agency, warned in a report issued on March 15, the measures that governments will be compelled to take in order to maintain the confidence of large global investors “will inevitably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion.” Significantly, Moody’s statement came in a report that warned that debt levels in the United States were dangerously high.

And it just goes on like that. For a while. Really.

Clowns and Coke


"Fresh Fish", by Mr. Fish (Dwanye Booth)Mr. Fish sounds off on the transformation of modern journalism—

In fact, if you were to compare the old, pre-merger LA Weekly and, while you’re at it, the Village Voice from 5 or 10 or 30 years ago, with today’s versions you’d see how Mr. Fish (not to mention Norman Mailer, Ezra Pound, Henry Miller, Barbara Garson, Katherine Anne Porter, M.S. Cone, James Baldwin, E.E. Cummings, Nat Hentoff, Marc Cooper, Ted Hoagland, Tom Stoppard, Lorraine Hansberry, Allen Ginsberg, Joshua Clover, Jules Feiffer and R. Crumb) no longer fits in with the TMZ/Your-ad-here!/journalism-produced-cheaply-will-produce-cheap-journalism look of the papers.

I recently received a letter from someone bemoaning the obvious drop in quality of the LA Weekly, as evidenced by the paper’s online incarnation, by saying that, “If I knew nothing about LA, I would think all that went on there were Burlesque shows.”

No kidding.

Sure, in response to a shitty economy and a pandemic shift by news junkies from pulp to PC, there have been definite changes in the print media industry over the last five years. And, sure, attempts to restructure the financial model on any business institution that sees its profit margins shrinking will always have some effect on the product that’s being produced, but mustn’t a shift to protect the body of an organization take special care not to jeopardize serious trauma to the head as well?

Does an incoming administration really assert its authority when it rips up the old Constitution so beloved by those it seeks to rule, saying, “This thing is pointless – it was written with a feather! We have Microsoft Office now!” or does it merely demonstrate its own arrogance and self-centeredness and misguided sense of intellectual privilege?

Haven’t we learned anything from the New Coke fiasco from the 1980s, for Christsakes?

—and, of course, his dismissal from the L. A. Weekly newspaper.

Once upon a time ….

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Inherent corruption


It’s really quite simple:

Wall Street can bite me.One focus of the inquiry is whether the firms creating the securities purposely helped to select especially risky mortgage-linked assets that would be most likely to crater, setting their clients up to lose billions of dollars if the housing market imploded.

Some securities packaged by Goldman and Tricadia ended up being so vulnerable that they soured within months of being created.

Goldman and other Wall Street firms maintain there is nothing improper about synthetic C.D.O.s, saying that they typically employ many trading techniques to hedge investments and protect against losses. They add that many prudent investors often do the same. Goldman used these securities initially to offset any potential losses stemming from its positive bets on mortgage securities.

But Goldman and other firms eventually used the C.D.O.s to place unusually large negative bets that were not mainly for hedging purposes, and investors and industry experts say that put the firms at odds with their own clients’ interests.

“The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen,” said Sylvain R. Raynes, an expert in structured finance at R & R Consulting in New York. “When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.”

This is capitalism.